American Alliance Ins. Co. of N.Y. v. McCallie, 37694

• Court: Supreme Court of Oklahoma
• Citation: 319 P.2d 295
• Docket Number: No. 37694,37694
• Parties: AMERICAN ALLIANCE INSURANCE COMPANY OF NEW YORK, Plaintiff in Error, v. R. D. McCALLIE, Defendant in Error.
• Decision Date: 10 December 1957

Page 295

319 P.2d 295

1957 OK 312

AMERICAN ALLIANCE INSURANCE COMPANY OF NEW YORK, Plaintiff in Error, v. R. D. McCALLIE, Defendant in Error.

No. 37694.

Supreme Court of Oklahoma.

Dec. 10, 1957.

Syllabus by the Court

1. A fire insurance policy is a personal contract with the party insured. It does not pass to the purchaser by the sale of the property insured, and, if the policy permits its assignment, provided the insurer consents in writing, that method must be pursued, because the insurer has a right to select his risks.

2. Where M, the owner of an auto, sells it to W, and, to obtain part of the purchase money therefor, W negotiates a personal loan from a bank, evidenced by his promissory note, co-signed by M, and secured by a chattel mortgage on the auto, and obtains from defendant insurer a fire insurance policy on the auto with a loss payable clause designating said bank, by name, as mortgagee; and thereafter, upon W's default in payment of the balance due on said note, said obligatiion and mortgage lien is totally extinguished by M's payment of it; and W transmits the auto and the insurance policy to M, who again becomes the auto's owner, but, before any formal assignment of the policy is made, or the insurer consents thereto, or receives notice of such change in the auto's possession and ownership, it burns, and M sues defendant for the amount of fire coverage prescribed in the aforesaid policy; Record examined and Held: In view of the undisputed evidence, M could not recover as a subrogated successor to the bank, as beneficiary, under the loss payable clause; and the trial court erred in overruling defendant's demurrer to the evidence and motion for judgment.

Appeal from the District Court of Hughes County; Bob Howell, Judge.

Action by R. D. McCallie, as plaintiff, against plaintiff in error and another insurance company, as defendants, to recover the fire insurance allegedly covering his automobile, previously destroyed by fire. After judgment for plaintiff, plaintiff in error appealed. Reversed and remanded with directions.

Hanson & Green, Oklahoma City, by Wm. L. Peterson, Jr., Oklahoma City, for plaintiff in error.

Woodford & Ballinger, Holdenville, for defendant in error.

BLACKBIRD, Justice.

This action was instituted in the trial court by defendant in error, hereinafter referred to as plaintiff, against plaintiff in error, as defendant, and another insurance company, to recover the alleged value of his automobile, previously destroyed by fire and allegedly insured against this hazard through insurance policies issued by said companies. There has never been any question as to plaintiff's loss, or the extent thereof, the only issue here being whether or not, under the circumstances hereinafter related, said loss was covered by the policy plaintiff in error issued.

The automobile involved first belonged to plaintiff. On March 3, 1952, he sold it to one Marvin Williams, who paid him a part of the purchase price as a 'down payment', and borrowed the remainder from a Wetumka, Oklahoma, bank. To obtain the bank president's approval of the loan, plaintiff co-signed Williams' peromissory note therefor, and Williams gave the bank a chattel mortgage on the car, as security for its payment. On the same day, Williams obtained on the car, the policy of so-called 'Automobile Insurance' here involved from a Mr. Peixotto, who was plaintiff in error's local agent. Payment for loss, or damage, to the car by fire was prescribed by 'Coverage F' of the policy's 'Insuring Agreements'; and, under 'Exclusions', paragraph '(h)', it provided that this (and some of the other 'Coverages') did not apply '(1) while the automobile is subject to any * * * mortgage or other encumbrance not specifically detailed and described in the policy; * * *'. Executed and attached to the policy by plaintiff in error's aforesaid agent, was a 'Loss Payable Clause' providing, among other things, that loss or damage, if any, under the policy should be payable '* * * as interest may appear to * * *' the aforementioned bank, 'Lienholder'. Said clause further provided, among other things, that it 'shall not be invalidated * * * by any change in the title or ownership' of the car, but it prescribed that the lienholder notify the insurer 'of any change of ownership or increase of hazard which shall come to the knowledge of said lienholder, and, unless permitted by such policy, it shall be noted therein and the Lienholder shall, on demand, pay the premium for sucn increased hazard for the term of the use thereof; otherwise such policy shall be null and void.'

A few months thereafter, Williams defaulted in his payments to the bank, which notified plaintiff. Plaintiff then contacted Williams by long distance telephone and, pursuant to an agreement the two then reached, Williams surrendered to plaintiff, the auto, the certificate of title thereto, and the aforesaid insurance policy thereon. Later, plaintiff obtained from the Oklahoma Tax Commission a new certificate showing title to the car in him. After using the car a short time, plaintiff paid the entire balance due on Williams' aforesaid note to the bank by negotiating, for himself, a larger loan from it, secured by a mortgage on the car and some other chattels. At that time, he executed an application for insurance on the car to be issued by another company called the 'Commercial Union Assurance Co., Ltd.' (for which the bank president was local agent) and paid the first premium due thereon by allowing the amount thereof to be included in the amount of the promissory note evidencing this new loan.

On February 23, 1953, when the auto burned, plaintiff in error had never been notified that the ownership of the car had been transferred from its insured, Marvin Williams, to plaintiff; but the next day, February 24, when plaintiff went to the office of plaintiff in error's aforenamed local agent to obtain the policy's assignment to him, he apprised the agent of this change in ownership; but did not tell him the car had burned. He did so apprise the agent, however, the next day, February 25th.

When plaintiff thereafter called upon plaintiff in error to pay for the fire loss, the latter denied liability; and plaintiff instituted the present action on both of the aforementioned policies.

At the trial, without a jury, the policy plaintiff introduced in evidence (as the one plaintiff in error had issued Marvin Williams on the car) had attached to it,...