Concordia Fire Ins. Co. v. Commercial Bank

• Decision Date: 03 May 1930
• Docket Number: No. 8692.,8692.
• Citation: 39 F.2d 826
• Parties: CONCORDIA FIRE INS. CO. OF MILWAUKEE v. COMMERCIAL BANK OF LIBERTY, MO.
• Court: U.S. Court of Appeals — Eighth Circuit

39 F.2d 826 (1930)

CONCORDIA FIRE INS. CO. OF MILWAUKEE v. COMMERCIAL BANK OF LIBERTY, MO.

No. 8692.

Circuit Court of Appeals, Eighth Circuit.

February 13, 1930.

Rehearing Denied May 3, 1930.

Samuel Levin, of Chicago, Ill. (Frederick D. Silber, of Chicago, Ill., William S. Hogsett and Chester L. Smith, both of Kansas City, Mo., and Herbert W. Hirsh, of Chicago, Ill., on the brief), for appellant.

Henry S. Conrad, of Kansas City, Mo. (James Simrall, of Liberty, Mo., L. E. Durham and Hale Houts, both of Kansas City, Mo., on the brief), for appellee.

Before VAN VALKENBURGH and GARDNER, Circuit Judges, and MUNGER, District Judge.

GARDNER, Circuit Judge.

This is an action brought by the Commercial Bank of Liberty, Mo., to recover upon a policy of fire insurance which the appellant, Concordia Fire Insurance Company, issued to E. D. Moore, in the amount of $5,000, covering a two-story brick dwelling. The parties will be referred to as they appeared in the lower court. There was attached to the policy a National Board standard mortgage clause, which, in part, reads as follows:

"Loss, if any, payable to Commercial Bank or assigns, as mortgagee (or trustee) as such interest may appear.

"This policy, as to the interest therein of the said payee, as mortgagee (or trustee) only, shall not be invalidated by any act or neglect of the mortgagor or owner of the within described property nor by the commencement of foreclosure proceedings, nor the giving of notice of sale relating to the property, nor by any change in the interest, title, or possession of the property, nor by any increase of hazard; provided that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall, on demand, pay the same; and provided further that the mortgagee (or trustee) shall notify this company of the commencement of foreclosure proceedings, and of any notice of sale relating to the property, and of any change of ownership or occupancy or increase of hazard which shall come to the knowledge of said mortgagee (or trustee), and unless permitted by this policy, the same shall be noted thereon and the mortgagee (or trustee) shall, on demand, pay the premium for any increased hazard.

"Failure upon the part of the mortgagee (or trustee) to comply with the foregoing obligations shall render the insurance under this policy null and void as to the interest of the mortgagee (or trustee)."

The policy contained the following provisions:

"This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void * * * if the hazard be increased by any means within the control or knowledge of the insured; * * * or if the interest of the insured be other than unconditional and sole ownership; or if the subject of insurance be a building on ground not owned by the insured in fee simple; * * * or if any change other than by the death of an insured take place in the interest, title or possession of the subject of insurance (except change of occupants without increase of hazards). * * *

"If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee or of any person or corporation having an interest in the subject of the insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall be written upon, attached or appended hereto."

It is alleged in the plaintiff's petition that on or prior to August 18, 1924, E. D. Moore was indebted to the plaintiff bank in the sum of $5,000, to secure the payment of which Moore, on August 15, 1924, executed his deed of trust to the bank. It is further alleged that on January 24, 1927, the building covered by the insurance was destroyed by fire, and that at the time of the fire there was due plaintiff on Moore's indebtedness, represented by promissory note, the sum of $4,273.70, for which amount the plaintiff prayed judgment, with interest, and for penalty and attorney fees, by reason of the alleged vexatious refusal of the defendant to pay the loss.

By way of answer, the defendant alleged that, subsequent to the issuance of the policy and the attaching of the mortgage clause in favor of the plaintiff bank, the insured, Moore, conveyed the property, and that thereafter Moore's grantees entered into a contract for the sale of the property, which changes of ownership were with the knowledge of the bank, and that the plaintiff did not notify the defendant company of the changes of ownership, as required by the mortgage clause; by reason of which failure the plaintiff forfeited any right to recover under the policy or the mortgage clause attached thereto.

The answer further alleged that although the policy provided that the building insured should be occupied only for dwelling purposes, there was a change of occupancy with the knowledge of the plaintiff, of which change the plaintiff did not notify the defendant, as required by the policy, and that, by reason of such failure of the plaintiff to notify the defendant of the increase in hazard, plaintiff forfeited any right to recover under the policy, or under the mortgage clause attached thereto.

When the cause was called for trial, the defendant moved for a dismissal because of an alleged defect of parties, in that the mortgagor was not joined as a party to the action by the plaintiff. This motion was denied, and on trial the jury returned a verdict for the amount due the plaintiff on the mortgage debt, with interest from March 24, 1927, and for penalty for vexatious refusal to pay the loss in the sum of $213.68, and for attorney fees in the sum of $1,000; the verdict amounting in the aggregate to the sum of $6,664.09, for which amount judgment was duly entered.

In the assignments of error filed by defendant with his petition for appeal, forty-six alleged errors are assigned, but, in the brief, appellant specifies and urges only seven, which may be summarized as follows: (1) That the court erred in denying defendant's motion to dismiss by reason of the defect of parties plaintiff; (2) that the court erred in denying defendant's motion to direct a verdict for the defendant made at the close of plaintiff's case; (3) that the court erred in permitting the plaintiff to cross-examine defendant's witness Simrall relative to matters not the subject of direct examination; (4) that the court erred in not instructing the jury to return a verdict in favor of the defendant because the insured building was used, subsequent to the issuance of the policy, as a rooming house for transient roomers; (5) that the court erred in charging the jury as to the knowledge of the witness Simrall of the change in occupancy, or the change of ownership, or the alleged increase in the hazard of the risk; (6) that the court erred in refusing to instruct the jury that there was no evidence that the defendant had vexatiously refused to pay the loss; and (7) that the court erred in submitting to the jury the question of penalty and attorney fees for vexatious refusal to pay the loss.

The question of the alleged defect of parties plaintiff was not raised by the defendant, either by demurrer or answer. It appeared on the face of the petition and should have been raised by demurrer under the Missouri practice. Missouri Revised Statutes, 1919, § 1226. Had the alleged defect not appeared on the face of the petition, the objection should then have been taken by answer. Missouri Revised Statutes, 1919, § 1230. The objection not having been so taken, it was waived.

Section 1230, Missouri Revised Statutes, 1919, also provides that, when the matters enumerated in section 1226 do not appear on the face of the petition, the objection may be taken by answer, and, "If no such objection be taken, either by demurrer or answer, the defendant shall be deemed to have waived the same, excepting only the objection to the jurisdiction of the court over the subject-matter of the action, and excepting the objection that the petition does not state facts sufficient to constitute a cause of action." Wilson Co. v. Hartford Fire Ins. Co., 300 Mo. 1, 254 S. W. 266.

It is next urged that the court erred in overruling defendant's motion to direct a verdict in its favor at the close of pla...