American Ins. Co. v. Newberry

• Decision Date: 24 March 1927
• Docket Number: 4 Div. 269
• Parties: AMERICAN INS. CO. v. NEWBERRY et al.
• Court: Alabama Supreme Court

112 So. 195

215 Ala. 587

AMERICAN INS. CO. v. NEWBERRY et al.

4 Div. 269

Supreme Court of Alabama

March 24, 1927

Appeal from Circuit Court, Geneva County; H.A. Pearce, Judge.

Action on policy of fire insurance by J.J. Newberry and E.R Vaughan, as Trustees of School District No. 24, Chancellor Ala., against the American Insurance Company. From a judgment for plaintiffs, defendant appeals. Affirmed.

Mulkey & Mulkey, of Geneva, for appellant.

Carmichael & Tiller and E.C. Boswell, all of Geneva, for appellees.

SOMERVILLE J.

Notwithstanding the statute (Code, § 5699) which provides that "actions on *** contracts, express or implied, for the payment of money, must be prosecuted in the name of the party really interested, whether he has the legal title or not," one to whom a contract is made payable as trustee for others may maintain an action in his own name. Rice v. Rice, 106 Ala. 636, 17 So. 628; Ala., etc., Ry. Co. v Kyle, 202 Ala. 552, 81 So. 54 (headnote 10).

The policy here sued on insured "trustees school district No. 24, Chancellor, Ala., route No. 1." The action is brought in the name of "J.J. Newberry and E.R. Vaughan, suing as trustees of school district No. 24, Chancellor, Ala., route No. 1." The general nature of the trusteeship thus indicated is a matter of judicial knowledge, and the law itself lays upon these trustees the duty--

"to care for the property, to look after the general interests of the school, and to make to the county board of education from time to time reports of the progress and needs of the school, and of the will of the people in regard to the needs of the school." School Code 1924, § 107.

Under the principle above stated, these trustees were authorized to prosecute this action in their own name, as such trustees, although the money, when collected, would be held in trust for the benefit of others.

The principle is well settled, also, that agents and trustees, who have the care and custody of property or the duty of keeping it safely, have an insurable interest therein. 26 Corp.Jur. 25, § 5, and cases cited in note 65; note to Strong v. Manufacturers' Ins. Co., 20 Am.Dec. 515; Ins. Co. v. Chase, 5 Wall. 509, 513, 18 L.Ed. 524. As said in the leading case of Waring v. Indemnity, etc., Co., 45 N.Y. 606, 6 Am.Rep. 146:

"Agents, commission merchants, or others, having the custody of, and being responsible for, property, may insure in their own names; and they may, in their own names, recover of the insurer not only a sum equal to their own interest in the property by reason of any lien for advances or charges, but the full amount named in the policy up to the value of the property."

And, where the insurance is for the benefit of other persons whom the agent or trustee represents, the proceeds of the policy, when collected, are held in trust for them. This insurable interest of an agent or trustee is recognized even when he is under no legal obligation to insure. Ins. Co. v. Chase, 5 Wall. 509, 513, 18 L.Ed. 524.

This court has several times approved the statement (May on Insurance, § 80) that--

"Whoever *** may fairly be said to have a reasonable expectation of deriving pecuniary advantage from the preservation of the subject-matter of insurance, whether that advantage inures to him personally or as the representative of the rights or interests of another, has an insurable interest." Continental Fire Ins. Co. v. Brooks, 131 Ala. 614, 618, 30 So. 876, 877; Commercial Fire Ins. Co. v. Capital City Ins. Co., 81 Ala. 320, 8 So. 222, 60 Am.Rep. 162.

Unquestionably, these plaintiffs, as trustees representing the state, the county or the citizens of their school district, had an insurable interest in this school property.

But, even were it otherwise, it is thoroughly well settled that--

"Where the company has, with knowledge of the nature of the interest of the insured, recognized such interest as sufficient to support a policy, it cannot question the sufficiency of such interest." 26 Corp.Jur. 36, § 22.

Conceding that this rule requires that the assured shall occupy such a relation to the property as would give him some sort of interest in its preservation, it cannot be denied that school trustees have a special as well as a general interest in their school property, such as would relieve their contract of insurance from the merely gambling element which is offensive to public policy. Quoting the language of the Supreme Court of Pennsylvania:

"This company demanded and received from this plaintiff, as the lawful holder of this policy, all the benefits and advantages which it was entitled to receive under it as a valid subsisting policy, up until the moment of the fire, and it would be a perversion of justice to permit it

...