Aetna Ins. Co. v. Koonce

• Decision Date: 15 October 1936
• Docket Number: 8 Div. 743
• Citation: 171 So. 269,233 Ala. 265
• Parties: AETNA INS. CO. v. KOONCE.
• Court: Alabama Supreme Court

171 So. 269

233 Ala. 265

AETNA INS. CO. v. KOONCE.

8 Div. 743

Supreme Court of Alabama

October 15, 1936

Rehearing Denied Dec. 17, 1936

Appeal from Law and Equity Court, Lauderdale County; Orlan B. Hill Judge.

Action on a policy of automobile theft insurance by E.L. Koonce against the AEtna Insurance Company. From a judgment for plaintiff, defendant appeals. Transferred from Court of Appeals, under section 7326, Code 1923.

Reversed and remanded.

Wm Milliken, of Florence, and Coleman, Spain, Stewart & Davies of Birmingham, for appellant.

Merwin T. Koonce and A.A. Williams, both of Florence, for appellee.

BOULDIN Justice.

Appellee, E.L. Koonce, brought suit substantially in Code form (section 9531, No. 13) on a policy of insurance covering loss of an automobile by theft.

The policy named plaintiff as the assured, and stipulated: "Loss, if any, payable, as interest may appear, to Assured and Bankers Finance Corporation."

It appears the policy was given in connection with a loan by said finance corporation, payable in installments, secured by mortgage on the car, backed by this insurance. At the time of the loss of the car by theft, and at the time of suit brought, some installments on the mortgage were unpaid. The finance corporation, therefore, had an interest in the loss payable.

On the trial the court, over objections of defendant, admitted in evidence an assignment in writing from the finance corporation to plaintiff passing all interest in the policy.

The record discloses that, by amendment, the finance corporation was made a joint party plaintiff; that the cause went to trial and judgment recovered in favor of plaintiffs; that this judgment was set aside on motion for new trial; that thereafter the complaint was again amended striking out the finance corporation. The mortgage debt being fully paid pending the suit, the assured, as sole plaintiff, introduced in evidence the assignment in question, and was permitted to recover for the full loss.

The position in which these litigants find themselves gives emphasis to the whole question of proper procedure in actions of this sort.

Dealing with this contract on the same principles applicable to a policy issued to the mortgagor, the assured, with loss payable clause to a mortgagee, as his interest shall appear, we observe: It was held in Fire Insurance Companies v. Felrath, 77 Ala. 194, 54 Am.Rep. 58, that there was no intent by such contract to split the cause of action, so as to authorize a suit in favor of the mortgagee for a part of the loss, but he should be regarded as an appointee merely, and, if the mortgage debt covered only part of the loss, the action should be brought by the assured for the entire loss. That case was overruled on the point stated in Capital City Insurance Co. v. Jones, Assignee, 128 Ala. 361, 30 So. 674, 86 Am.St.Rep. 152, holding that, by the contract, the cause of action was so split that mortgagor and mortgagee could each maintain an action for his portion of the loss; that the liability became fixed as of the date of the loss; that, if the mortgage debt then covered the whole loss, the sole right of action was in the mortgagee, but, if the mortgagee's interest covered only a part of the loss, he could sue therefor as a beneficial owner of the policy. In either event the mortgagee must aver and prove the amount of the mortgage debt as of the date of the loss. This has become the established rule in Alabama. London & Scottish Assur. Corporation of London, England, v. Smith, 229 Ala. 556, 158 So. 892; St. Paul Fire & Marine Ins. Co. v. Crump, 231 Ala. 127, 163 So. 651; Union Ins. Soc. of Canton, Limited, v. Sudduth et al., 212 Ala. 649, 103 So. 845; Globe & Rutgers Fire Ins. Co. v. Home Insurance & Loan Corporation, 226 Ala. 275, 146 So. 610; Norwich Union Fire Insurance Co. v. Prude et al., 145 Ala. 297, 40 So. 322, 8 Ann.Cas. 121.

Appellant insists the assignment was inadmissible on the ground, among others, that recovery cannot be had on a cause of action acquired after suit brought; nor on a demand which was not due when suit brought.

The principles of law relied upon are elementary. 1 C.J. p. 1149, § 393. We are not impressed, however, that the case should be treated as involving no more than the principles stated.

It is obviously true that the mortgagor has a direct interest in the entire loss under a policy of this character. The portion going to the mortgagee is the mortgagor's indemnity against his personal liability for the mortgage debt.

The amount payable to mortgagor and mortgagee, respectively, changes with every monthly payment on the mortgage debt. All this is in contemplation when the policy is issued, is part of the contractual obligation arising from the transaction.

Appellant's view, as appears from briefs on file, is that even after loss, the cause of action accrues to the mortgagor as each installment is paid, and he may recover for the full loss, less any unpaid balance on the mortgage debt, at the time suit is brought.

Not debating that question here, we note that under such view, the mortgagor would seem to acquire a separate right of action every time he pays an installment on the mortgage debt after the loss has accrued, and could bring several suits thereon; or could sue for the entire loss after he has paid the mortgage debt in full.

Clearly a multiplicity of suits on these policies is undesirable from every standpoint.

There is but one contract, made with the assured, as the promisee; one transaction covering one loss, payable, however, to mortgagor or mortgagee, or in part to each, as their interests shall appear.

The insurer is primarily interested in protection against double liability; the mortgagee in getting what is due him when the loss is paid; the mortgagor in getting the entire loss paid.

This can all be readily accomplished by a joint action of the mortgagor and the mortgagee on the policy. The court, when the money is paid in, has full power, if need be, to apportion it between the plaintiffs.

Other courts have been confronted with cases under like or kindred policies, and have not always been in harmony as to the right of mortgagor or mortgagee to sue, where each was due a portion of the indemnity. But their right to sue jointly is generally recognized, and so far as we have found, not denied in any jurisdiction.

For full citation and review of authorities, see 8 Couch, Cyclopedia of Insurance Law, § 2081; also, sections 2051, 2052; 26 C.J. pp. 484, 485.

We now approve the rule sustaining a joint action. Under our statutes, the right to sue jointly, in the first instance, warrants bringing in the mortgagee as coplaintiff by amendment; such amendment relating back to the bringing of the suit. Code, § 9513; Birmingham Gas Co. v. Sanford et ux., 226 Ala. 129, 145 So. 485.

It follows that the mortgagee was properly brought in by amendment in this cause. But the mortgagee was later stricken out as before noted. The status resulting from this action is of moment in the proper decision of the cause on this appeal.

If it appeared the mortgage debt had been fully...