American Cent. Ins. Co. v. Weller
| Decision Date | 20 February 1923 |
| Citation | 212 P. 803,106 Or. 494 |
| Parties | AMERICAN CENT. INS. CO. v. WELLER. |
| Court | Oregon Supreme Court |
In Banc.
Appeal from Circuit Court, Multnomah County; W. N. Gatens, Judge.
Action by the American Central Insurance Company against E. R Weller. From a judgment for defendant, plaintiff appeals. Affirmed.
This is an action in which the plaintiff, insurance company, having paid to Ashley & Rumelin, Bankers, a loss of $300, resulting from the conversion of a certain automobile, seeks to be subrogated to the rights of Ashley & Rumelin, Bankers against the defendant, E. R. Weller, and to recover from the defendant the loss which it paid. The cause was tried to the court without a jury. At the close of plaintiff's testimony the defendant moved for a "directed verdict and judgment." The motion was granted, and a judgment entered in favor of defendant, from which plaintiff appeals.
W. B Shively and Henry Bauer, both of Portland, for appellant.
J. M. Hickson and Robert R. Rankin, both of Portland, for respondent.
The facts in the case are substantially as follows: On May 23, 1918, the defendant, Weller, who is a dealer in automobiles, sold an automobile to one Leon Miller upon a conditional contract of sale executed in the customary form. This contract recited the purchase price at $502.40, admitted payment of $150 at the time of the execution of the contract, and provided for the payment of the balance in monthly installments of $52.40 one month from date and $50 each month thereafter until paid. On May 27, 1918, the defendant sold the contract for cash at a discount to Ashley & Rumelin, Bankers, and assigned the contract to them, and guaranteed to the bank the payment of all monthly installments and all moneys due or to become due under the contract. At the time of the transaction Weller arranged to have the automobile insured, and on May 29, 1918, the plaintiff issued an insurance policy, in which L. Miller was named as the assured and the automobile was insured against fire and theft. The policy recited that the assured had purchased the car for $500, and had fully paid for the same, except "350.00 balance monthly payments." To the policy was attached a conversion clause in favor of Ashley & Rumelin, Bankers, reciting that the automobile had been sold under a conditional sales contract, loss "payable to the said vendor and the said vendee as their respective interests may appear." In consideration of $2 additional premium the company insured the vendor against all the direct loss or damage caused by the wrongful conversion of the automobile by the vendee, Miller.
Shortly after the issuance of the insurance policy, and before any further payments were made on the purchase price, the automobile was converted by Leon Miller, and no trace was thereafter found either of the automobile or of Miller. Thereupon the bank called upon the insurance company to make good its loss resulting from the conversion. The insurance company paid the bank $300, and took an assignment of the conditional contract of sale and the guaranty of Weller, refusing to pay the balance of $52.40, for the reason, as stated in plaintiff's brief, that the latter sum "did not in reality represent any part of the purchase price of the automobile, but represented brokerage charges, insurance premium, and costs of transfer of license fee, which had been tacked on and added to the purchase price of the automobile by the defendant Weller." After receiving the $300 from the insurance company, the bank required the defendant, Weller, under his guaranty, to pay the balance of $52.40 and also the interest due under the contract, which Weller did.
The plaintiff submits that after the issuance of the policy the bank was in this position:
"It had legal title to the automobile under contract of sale to Leon Miller, and was secured as to the balance of the purchase price under the contract in two ways: First, by the guaranty of the defendant, Weller; and, second, by the insurance policy issued by the plaintiff insurance company."
The insurance company claims in this action that it has a right to be subrogated to the rights of Ashley & Rumelin, Bankers, and is therefore entitled to recover the $300 which it paid from the defendant Weller on his guaranty. It is fairly shown by the testimony on behalf of the plaintiff that the policy of insurance was issued upon the request of the defendant, Weller, and that he paid the insurance premium. The defendant therefore claims that the plaintiff insurance company is not entitled to the right of subrogation as against him.
The ruling upon the motion for a judgment by the trial court shows that the court allowed the motion for the main reason that the defendant, Weller, was instrumental in obtaining the insurance policy and paid the premium. The payment of the premium by Weller on July 15, 1918, is shown by the receipt for the premium, with many other premiums of like kind, given by the Coast Underwriters Agency, the agent of the plaintiff, to Weller. There is practically no question in regard to the facts. If the defendant, Weller, is liable under the facts stated, it was error to grant the motion. If Weller is not liable, the motion and judgment were properly granted.
The plaintiff appropriately cites the law in regard to the right of insurer to subrogation where the policy is issued to a mortgagee, or mortgagor, with a loss payable clause in favor of the mortgagee. Ashley & Rumelin, Bankers, held the legal title to the machine as security for the balance of the payment therefor, and were in a position analogous to that of a mortgagee, while Miller's position under the conditional contract of sale was analogous to that of a mortgagor. E. R. Weller, as alleged in plaintiff's complaint, sold the car to Miller upon a conditional contract of sale, discounted and assigned the contract to Ashley & Rumelin, and guaranteed the payment of the balance of the purchase price. Weller was in no way responsible for the loss or conversion of the car. He is not accused of any wrongful act. The insurance company insured the car, and for a valuable consideration insured Ashley & Rumelin, the assignee of the contract of sale, against a wrongful conversion thereof by Miller. The company did not insure the payment of the debt due from Miller to the bank. The liability of the insurer to Ashley & Rumelin is simply measured by the balance due on the contract. In case of an honest loss by Miller the amount to be paid by the insurance company would not have been changed by the payment of a large part, or all of the monthly payments; the only difference would have been in dividing the insurance money or a change of payee. The company insured the car and not the debt.
Plaintiff cites 5 Joyce on Insurance, § 3563, which states the rule, that the mortgagee may effect insurance upon his interest as such in the mortgaged property, he himself paying the premiums and being chargeable with the same, and in case of loss may recover. The question thus arises as to the respective rights of the mortgagor, mortgagee, and the insurer. In such case the contract is between the mortgagee and the insurer, under which, a certain consideration having passed from the former to the latter, the latter agrees to indemnify the former on the happening of a certain event. Therefore upon the happening of such event the liability of the insurer is a fixed one as to the mortgagee, and to no other, and it is a liability which, as a general rule, he alone can enforce. If in such case the mortgagee first proceeds to enforce his rights under the policy, and the amount received equals the amount of the debt, the insurer should be entitled to be subrogated to the right of the former under the mortgage. This section of Joyce further states as follows:
"Instances may, however, occur where the mortgagor may be entitled to the benefit of the insurance effected by the mortgagee in the name of the latter; as where it appears that the insurance was effected by the mortgagee, acting in reality as agent for the mortgagor, the latter paying or being chargeable with the premiums, and there being nothing in the policy inconsistent with the mortgagor receiving the benefit of such insurance."
In the present case the assignor of the mortgage effected the insurance and paid the premium.
Plaintiff also cites Milwaukee Mechanics' Insurance Co. v. Ramsey, 76 Or. 570, 574, 149 P. 542, L. R. A. 1916A, 556, Ann. Cas. 1917B, 1132, which is authority for the rule in regard to the rights of an insurer where the mortgagee procures the insurance at his own expense, in substance as above stated, and also for the further proposition that, if insured property is burned by the tortious act of one not a party to the policy, the insurer, paying the loss to any one to whom by the terms of the policy payment must be made, is subrogated pro tanto to the chose in action the payee has against the tort-feasor. In that opinion Mr. Justice Burnett clearly states the reason for the two rules referred to in the Ramsey Case. Ramsey, the mortgagor, procured insurance making the loss payable to the bank, the mortgagee, as its interest might appear; otherwise to the insured. The policy was rendered nugatory as to the interest of the mortgagor, Ramsey, by reason of a change of ownership without an indorsement on the policy, or permission of the company. After referring to the policy, Mr. Justice Burnett states:
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