East Tennessee Mortgage Co. v. United States Fidelity & Guaranty Co.

Carley, Justice.

Blue Ridge Mountain Marina, Inc. (Blue Ridge) borrowed money from First National Bank of Chatsworth (FNB) and, as a condition of the loan, was required to obtain hazard insurance on the property securing the loan. United States Fidelity & Guaranty Company (USF&G) issued an insurance policy, which contained a “loss-payable” clause requiring that payment for any covered loss be made to FNB. A covered loss occurred on January 9, 1988. USF&G received notice of this loss from Blue Ridge and, pursuant to Blue Ridge’s direction, improperly made payment for the loss to an entity other…