Aetna Cas. & Sur. Co. v. Cameron Clay Products, Inc.

• Citation: 151 W.Va. 269,151 S.E.2d 305
• Decision Date: 06 December 1966
• Docket Number: No. 12545,12545
• Court: Supreme Court of West Virginia
• Parties: AETNA CASUALTY & SURETY CO., a corporation, et al. v. CAMERON CLAY PRODUCTS, INC., etc., et al.

Page 305

151 S.E.2d 305

151 W.Va. 269

AETNA CASUALTY & SURETY CO., a corporation, et al. v. CAMERON CLAY PRODUCTS, INC., etc., et al.

No. 12545.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 20, 1966.

Decided Dec. 6, 1966.

Syllabus by the Court

An executory contract to sell insured real property, although binding the insured to convey upon the performance of certain conditions, does not affect the validity of the insurance and, if a loss occurs before the conditions are performed, recovery may be had by the insured against the insurer even though the sale is afterwards consummated.

Steptoe & Johnson, Oscar J. Andre, Clarksburg, for appellants.

Richard G. Herndon, George G. Bailey, Wheeling, for appellees.

BROWNING, Judge.

Cameron Clay Products, Inc., one of the defendants herein, was the owner and operator of a pottery plant in Cameron, West Virginia, in the year 1964 and had entered into insurance contracts with the four plaintiff insurance companies in a cumulative amount of $65,000.00 insuring its buildings and fixtures against loss by fire during the period in question. Each of the policies included a provision limiting recovery to the actual cash value at the time of loss '* * * nor in any event for more than the interest of the insured, * * *' and also provided that such policy was non-assignable except with the written consent of the insurer. On September 14, 1964, Cameron entered into a contract to sell its plant and properties to one Kirman for the amount of $100,000.00, the sale to be closed no later than November 30, 1964. This contract contained a provision that, should the improvements be destroyed or materially damaged previous to closing, by fire or other casualty not due to the fault of the purchaser, the purchaser could, at his option, declare the contract null and void. The contract also granted to the purchaser the right to immediate possession subject to the purchaser's first obtaining fire insurance policies with a loss payable clause in favor of Cameron, in the face amount of not less than $250,000.00. Kirman, on October 12, 1964, assigned his right under this contract of sale to Meyer J. Myer, Trustee, etc., the other defendant in the present action, who obtained fire insurance in the amount of $300,000.00 in compliance with the contract and took possession of the property.

The property was damaged or completely destroyed by fire on November 15, 1964, previous to the closing of the sale, at which time the $300,000.00 insurance obtained by Myer and the $65,000.00 insurance obtained by Cameron were in full force and effect. Thereafter, Myer institued an action against Cameron for specific performance of the contract and on May 26, 1965, the Circuit Court of Marshall County granted the relief prayed for and adjudged Myer to be entitled to the benefits of the insurance policies maintained by Cameron and that any proceeds thereof should be received and held by Cameron as agent or trustee for Myer. Pursuant to this order the sales contract was consummated on July 8, 1965.

On August 5, 1965, plaintiffs, the four insurers of Cameron, instituted this declaratory judgment proceeding alleging the above facts and that the defendants are now asserting a claim against them in the full amount of $65,000.00, and praying for judgment declaring neither of the defendants to be entitled to recover the $65,000.00. Attached to the complaint as exhibits are the complaint in the specific performance suit with attached exhibits, the contract of sale and assignment, and the judgment order of May 26, 1965. The defendants answered admitting the factual allegations above set forth but denying any conclusions of law arising therefrom. Both parties moved for summary judgment on the basis of the complaint, answer, exhibits and the insurance policies issued by plaintiffs filed as exhibits with defendants' motion for summary judgment.

On September 15, 1965, the Court found that: each of the four insurance policies issued by plaintiffs was valid and in effect at the time of the fire; Cameron had an insurable interest in the property at the time of the fire; the sale from Cameron to Myer was completed on July 8, 1965; and, notwithstanding the contract of sale, there may be a recovery of the insurance issued by plaintiffs. The Court then granted the defendants' motion for summary judgment, entered judgment against each of the plaintiffs for the amount due under its policy, and directed Cameron to hold such judgments and the proceeds thereof as constructive trustee for Myer, to which order this Court granted an appeal on December 14, 1965.

It would appear from an examination of the cases that there are two lines of authority upon this question. What obviously is followed by most jurisdictions may be...