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Eagle Sales Company owns a warehouse that burns down ...

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Eagle Sales Company owns a warehouse, subject to a mortgage obtained from First National Bank. Separately, Eagle and First National obtain insurance policies from Good Hands Insurance, Inc., to cover the warehouse. Later, Eagle sells the property to Interstate Distribution Corporation but keeps the insurance policy. First National agrees to act as Interstate's mortgagee, and Interstate obtains an insurance policy from Good Hands to cover the property. A fire totally destroys the warehouse.

Who can recover an amount for its loss?

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Solution Summary

This solution addresses the following business law scenario:

Eagle Sales Company owns a warehouse, subject to a mortgage obtained from First National Bank. Separately, Eagle and First National obtain insurance policies from Good Hands Insurance, Inc., to cover the warehouse. Later, Eagle sells the property to Interstate Distribution Corporation but keeps the insurance policy. First National agrees to act as Interstate's mortgagee, and Interstate obtains an insurance policy from Good Hands to cover the property. A fire totally destroys the warehouse.

Who can recover an amount for its loss?

Solution Preview

Let's look at the facts.

Eagle owns a warehouse and the note is from 1st National. Eagle gets an insurance policy from Good Hands on the warehouse for coverage. The bank also gets an insurance policy from good hands on the same warehouse because they are the mortgager. Eagle sold the property to interstate but kept the insurance policy. Interstate gets their loan through the same bank. Interstate now takes out a policy for insurance from good hands on the warehouse. A fire destroys the warehouse.

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