American Equitable Assur. Co. v. Powderly Coal & Lumber Co.

• Citation: 225 Ala. 208,142 So. 37
• Decision Date: 28 April 1932
• Docket Number: 6 Div. 919.
• Parties: AMERICAN EQUITABLE ASSUR. CO. v. POWDERLY COAL & LUMBER CO.
• Court: Alabama Supreme Court

142 So. 37

225 Ala. 208

AMERICAN EQUITABLE ASSUR. CO. v. POWDERLY COAL & LUMBER CO.

6 Div. 919.

Supreme Court of Alabama

April 28, 1932

Rehearing Denied June 11, 1932.

Appeal from Circuit Court, Jefferson County, Bessemer Division Gardner Goodwyn, Judge.

Action on a policy of fire insurance by the Powderly Coal & Lumber Company against the American Equitable Assurance Company of New York. From a judgment for plaintiff, defendant appeals.

Affirmed.

Provision for apportionment of loss held inapplicable where insurance agent issuing policy informed materialman that fact that owner's widow and administratrix also carried insurance would not affect materialman's insurance.

The following is count F of the complaint:

"The plaintiff claims of the defendant the sum of $2,031.00 on a policy of fire insurance, together with the interest thereon, for that heretofore on to-wit, the 25th day of January, 1928, J. C. Hendrix, was duly authorized by the defendant to solicit and accept applications for fire insurance, and to countersign and issue said policies of fire insurance for the defendant, and to collect premiums for same. Plaintiff avers that on said date, a duly authorized agent, servant or employee of the plaintiff to-wit, Ben F. Davis, while acting within the line and scope of his authority and employment as such, requested the said J. C. Hendrix, while acting within the line and scope of his authority and employment as an agent, servant or employee of the defendant, to issue to the plaintiff a policy of fire insurance to protect the plaintiff's interest in the premises known as 2919 Exeter Avenue, Bessemer, Jefferson County, Alabama, to-wit; the furnishing of labor and building materials for the improvement of same, against loss or injury by fire, for a term of three years. Plaintiff avers that the defendant in compliance with the request of plaintiff's said duly authorized agent, servant or employee Ben F. Davis, issued said policy of insurance to the plaintiff by its said duly authorized agent, servant or employee, to-wit, J. C. Hendrix, in its present form, and that on to-wit, March 13th, 1928, said house was wholly destroyed by fire, of which the defendant has had notice. Plaintiff avers that, prior to and contemporaneous with the issuance of said policy of fire insurance by the defendant, through its said duly authorized agent, servant or employee, to-wit, J. C. Hendrix, while acting within the line and scope of his authority and employment as such, plaintiff, through its duly authorized agent, servant or employee, to-wit, Ben F. Davis, while acting within the line and scope of his authority and employment as such, told the said duly authorized agent, servant or employee of the defendant, to-wit, J. C. Hendrix, that the plaintiff was furnishing labor and material for the remodeling, repairing or rebuilding of the above described premises, and that the contract for the same was by and between Mrs. Mattie Bailey who was the administratrix of the estate of J. A. Bailey, deceased, and one J. C. Swinney, that said property was owned by J. A. Bailey, deceased, at the time of his death, and that Mrs. Mattie Bailey who contracted to have the said premises remodeled, repaired or rebuilt was only the administratrix of said estate. Plaintiff avers that, notwithstanding said knowledge by the defendant, through its duly authorized agent, servant or employee, to-wit, J. C. Hendrix, said policy was issued by the defendant in its present from as attached hereto, and made a part of this count, designating Mrs. Mattie Bailey as the owner of said property in fee simple, and designating the plaintiff as mortgagee (or trustee) as its interest may appear. Plaintiff avers that the premium on said policy of fire insurance, to-wit, $81.00, was paid by the plaintiff to the defendant's said duly authorized agent, servant or employee, to-wit; J. C. Hendrix."

Coleman, Coleman, Spain & Stewart, of

p>Page Birmingham, and Huey, Welch & Stone, of Bessemer, for appellant.

O. S. Finch and Jim Gibson, both of Birmingham, for appellee.

GARDNER J.

Upon former consideration of this cause (American Eq. Assr. Co. v. Powderly Coal & Lbr. Co., 221 Ala. 280, 128 So. 225), the Judgment was reversed upon the sole ground of a fatal variance in the pleadings and proof. But, in view of another trial, the court considered it proper to make some general observations, confessedly by way of dicta, concerning some of the important features of the case.

Count F, upon which the trial was had, conforms to the views therein expressed, and is sufficient. American Assr. Co. v. Powderly Coal & Lbr. Co., supra; National Fire Ins. Co. v. Tenn. Land Co. (Ala. Sup.) 139 So. 227; American Ins. Co. v. Inzer, 216 Ala. 553, 114 So. 187; Modern Woodmen of Am. v. Head, 209 Ala. 420, 96 So. 219. The argument that it fails to sufficiently allege an insurable interest in plaintiff overlooks the fact that the averments in substance embrace the language of our Code form (section 9531, form 13) which has been held as the equivalent, prima facie, of an averment that the assured owned an insurable interest in the property. Commercial Fire Ins. Co. v. Capital City Ins. Co., 81 Ala. 320, 8 So. 222; Alabama Gold Life Ins. Co. v. Mobile Mut. Ins. Co., 81 Ala. 329, 1 So. 561; Caledonian Ins. Co. v. Jones, 214 Ala. 520, 108 So. 331.

But, in an effort to make suggestions that might be of service upon a retrial of the cause, the author of the opinion on former appeal (who is also the writer here) fell into an error in some general observations as to the insurable interest of Mrs. Bailey, the widow of deceased, and thereby somewhat misled the learned trial judge as well as counsel for the parties. Doubtless the writer should confess that such observations, not being necessary to a decision of the cause on appeal were based upon too much surface consideration, and that Dryden's familiar lines:

"Errors, like straws, upon the surface flow;

"He who would search for pearls, must dive below,"

-find some application here, and appear to have been written as if with prophetic vision to this erroneous dictum, based as it was upon cursory examination, for all of which due apology is tendered. But the writer finds comfort (aside from the truism that "to err is human") from the fact that he rested largely upon the dictum in the opinion of Newberry's Case, 215 Ala. 587, 112 So. 195, relating to the matter of estoppel wherein was cited Light v. Countrymen's Mut. Fire Ins. Co., 169 Pa. 310, 32 A. 439, 47 Am. St. Rep. 904, and construed such dictum to mean that the estoppel could be rested merely upon some sort of an interest short of an insurable interest, sufficient to relieve the contract from a merely gambling element.

But in supplemental brief astute counsel differentiate the Light Case, supra, upon the theory that there the policy was valid when issued, and that at that time there existed an insurable interest. The point of differentiation is well taken.

The further argument that, unless there is an insurable interest, the contract is void on account of public policy, and that vitality cannot be injected into an illegal transaction by way of estoppel (Ellis v. Batson, 177 Ala. 313, 58 So. 193; Birmingham Water Works v. Brown, 191 Ala. 457, 67 So. 613, L. R. A. 1915D, 1086), is also well grounded. The assumption, therefore, in the former opinion that an estoppel need not have for its foundation an insurable interest was incorrect.

We are persuaded, however, upon more mature consideration of the question, that both the insured and the widow, Mrs. Bailey, at whose instance the property was being remodeled, had an insurable interest.

In the early history of insurance, there was a tendency to require title and ownership as a basis of insurable interest, but later decisions have adopted a more liberal doctrine, and it is not now essential to an insurable interest that one should have a property in the thing insured, or an estate, legal or equitable; the term "insurable interest" being more extensive than property or estate. Any qualified or limited interest in the subject of insurance is sufficient, and an equitable interest is sufficient to support an insurable interest. It has likewise been held that any reasonable expectation of legitimate profit or advantage to spring from property is sufficient to give an insurable interest. 1 Cooley's Briefs on Ins. pp. 204-217. Our cases are in accord with the modern doctrine (Commercial Fire Ins. Co. v. Capital City Ins. Co., 81 Ala. 320, 8 So. 222; Planters' & Merchants' Ins. Co. v. Thurston, 93 Ala. 255, 9 So. 268), supported as it is by the reason of the rule of public policy requiring an insurable interest as to eliminate any gambling element.

The house destroyed was the property of the estate of J. A. Bailey, deceased, of which his widow had been appointed administratrix, but no further steps taken in the administration than her appointment. It was not the homestead, and was subject to the widow's dower. The argument for appellant that such dower right cannot be deemed an insurable interest is based upon those authorities ( Francis v. Sandlin, 150 Ala. 583, 43 So. 829; Chavers v. Mayo, 202 Ala. 128, 79 So. 594), holding to the effect that prior to assignment dower is a mere chose in action, and not an interest or estate in realty. But, as previously noted, a right of property is not an essential ingredient of an insurable interest, but any limited or qualified interest, equitable right, or expectancy of advantage will suffice. To state it differently, whatever furnishes a reasonable expectation of pecuniary benefit from the continued existence of the subject of insurance is a valid insurable interest. 1 Cooley's Briefs on Insurance, p. 213.

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