Bacot v. Phenix Ins. Co. of Brooklyn

• Decision Date: 06 December 1909
• Docket Number: 13,822
• Citation: 50 So. 729,96 Miss. 223
• Court: Mississippi Supreme Court
• Parties: EDWARD M. BACOT ET AL. v. PHOENIX INSURANCE COMPANY OF BROOKLYN

50 So. 729

96 Miss. 223

EDWARD M. BACOT ET AL. v. PHOENIX INSURANCE COMPANY OF BROOKLYN

No. 13,822

Supreme Court of Mississippi

December 6, 1909

FROM the circuit court of Pike county, HON. MOYSE H. WILKINSON Judge.

Bacot Burton Bridges and Emily Bridges, appellants, were plaintiffs in the court below; the Phoenix Insurance Company of Brooklyn, appellee, was defendant there. From a judgment in favor of the defendant, the plaintiffs appealed to the supreme court. The opinion of the court states the facts.

Reversed and remanded.

Mixon &amp Cassidy, and Lotterhos & Hewitt, for appellants.

On the second count of the declaration Burton Bridges and Emily Bridges should recover the amount of the policy less the amount of the mortgage debt, even though the policy is written in the name of Burton Bridges. The declaration alleges that the property insured was a house on a homestead and even though the title was in the name of Emily Bridges, Burton Bridges, the husband, had a legal right to take out the insurance thereon in his own name for the benefit of himself and his wife. This is apparent under the common law. See also Code 1906, § 2161, preventing the alienation of the wife's homestead without the husband's consent; and Code 1906, § 1657, providing that exempt homestead property shall descend, free from the claims of creditors, and belong to the surviving husband and other heirs. Certainly it must follow that the husband would have the right to insure said property in his own name, notwithstanding the "sole and unconditional ownership" clause of forfeiture in the policy. Merrett v. Insurance Co., 42 Iowa 11; Continental Ins. Co. v. Wingfield (Tex. 1903), 73 S.W. 847; Warren v. Insurance Co. (Tex.), 35 S.W. 810; Insurance Co. v. Wicker (Neb.), 100 N.W. 130; Hanover Ins. Co. v. Bohn, 48 Neb. 743; Insurance Co. v. Barrowcliff, 45 N. J. L. 543; Webster v. Insurance Co., 53 Ohio 558; Mallery v. Frye, 21 App. D. C. 105; Miotke v. Insurance Co., 113 Mich. 166; 22 F. 503; Rockford Ins. Co. v. Nelson, 65 Ill. 415; Harris v. Ins. Co., 50 Pa. 341; Kausal v. Ins. Co., 31 Minn. 17; Lenaugh v. Commercial Union, 110 N.W. 748.

It was the evident intent of the parties to insure the house on the homestead to the amount of the policy; and the interest which Burton Bridges had was sufficient to uphold the contract and meet the requirements of the clause as to "sole and unconditional ownership." Insurance Co. v. Schmidt, 151 F. 681; Mass. v. Ins. Co. (Mich.), 111 N.W. 1044; Hough v. Ins. Co., 29 Conn. 10; Insurance Co. v. Pitts (Miss.), 41 So. 5; Insurance Co. v. Holmes, 75 Miss. 390; Home Ins. Co. v. Gibson, 17 So. 13; Georgia Home Ins. Co. v. Jones, 49 Miss. 80; London, etc., Ins. Co. v. McGuire, 52 Miss. 227.

In the declaration it is alleged that the description of ownership was by mistake, without fault on the part of insured, and the case should have gone before the jury with the evidence regarding the mistake.

There was no effort to reform or make a new contract, but the allegations and consequent offer of proof, was to meet what the appellee claims is a forfeiture of what would otherwise be a valid contract.

The parol evidence rule is relaxed to show mistake so as to avoid forfeiture. 16 L. R. A. (N. S.) 1188; Deitz v. Insurance Co., 33 W.Va. 526; Cook v. Insurance Co., 60 Neb. 127.

Now as to the claim of the mortgagee; if the demurrer to the second count be well taken, this should not affect his demand as set forth in the first count of the declaration, under the terms of his contract with the insurance company as expressed by the standard mortgage clause, attached to the policy, and clause of the policy providing that the only conditions that shall apply to mortgagee are such as shall be written upon, attached, or appended to the policy, the demurrer to this count should have accordingly been overruled.

In the case of East v. Insurance Co., 76 Miss. 697, the court said: "As the loss payable clause agrees to pay William Thomas East his interest in the insured premises at the time of the loss, and as the mortgage clause stipulates that the only conditions that shall apply to the interest of William Thomas East are those expressed in the loss payable clause, these two clauses constitute a promise to pay William Thomas East whatever sum may be due him by James W. East at the time of loss, without regard to any act or default of James W. East."

There is no contention made that the mortgagee here forfeited any rights which he may have had, but it is said that he cannot recover because the policy is of no force as to the mortgagors, under the warranty of title, and that the East case, supra, is plain, unequivocal, and positive in making the contract between the insurance company and the mortgagee independent of any acts or rights of the mortgagor; the opinion is plain and strong to this effect as are the many other authorities, in which by reason of the acts complained of having been before the affixing of the mortgage clause, the courts said that the mortgagee was not affected by acts of the mortgagor before, at the time of, or after. In the East case, supra, no qualification was made, and no distinction drawn between acts precedent and subsequent.

By the formerly used, but now obsolete loss-payable clause, a mortgagee had no protection, his rights in the policy being subject at any time to forfeiture by acts of the insured, and it was to the end that his rights might be made certain and subject to forfeiture for his own acts only, that the "union," or "standard" mortgage clause was devised. Indeed, in this state, it is by statute, Code 1906, § 2596, read into every policy. Oakland Insurance Co. v. Bank, 58 Am. St. Rep. 667.

Even before the adoption of the standard form, the New York court, in the case of Hastings v. Westchester, etc., Insurance Co., 73 N.Y. 141, decided that a loss payable clause made as between the insurer and the mortgagee, an independent contract of insurance giving the same benefit as if taken out in a separate policy, making the mortgagee responsible for his own acts only, the insurer cannot set up any defense based upon any act or neglect of the mortgagors, whether committed before or after the issuance of the policy, or the making of the agreement between the insurer and the mortgagee, the apparent purpose of the clause is that no distinction is to be drawn between acts before or after the agreement. This is the leading case in the United States, cited in numerous opinions. After adoption of the standard clause, nearly all of the courts adopted the construction in the Hastings case, supra, and in all cases involving attempted forfeiture for acts of the mortgagor subsequent to the making of the mortgagee agreement.

On the question of immunity of the mortgagee from the acts of the mortgagor at the time of, or prior to the affixing of the mortgagee clause, the courts are divided, and a most highly interesting and important question to the public is presented to this court for decision.

We contend that it is settled that this contract is independent, and the mortgagee's rights are certain and known as though he were insuring in a separate policy; and cite from the many authorities on this question, Eddy v. London Assurance Corporation, 143 N.Y. 311; Syndicate Insurance Co. v. Bohn, 65 F. 165; Smith v. Union Insurance Co., 25 R. I. 260; Magoun v. Firemen's Fund Insurance Co., 86 Minn. 486; Phenix Insurance Co. v. Omaha, etc., Co., 41 Neb. 834; Westchester, etc., Co. v. Coverdale, 29 P. 682; Hanover Insurance Co. v. Bohn, 48 Neb. 743; Hare v. Headley, N. J. Eq. 545; Oakland Insurance Co. v. Bank, 47 Neb. 717; Phenix Insurance Co. v. Floyd, 19 Hun. 287; Ormsly v. Phenix Insurance Co. (S. Dak.), 58 N.W. 301; City, etc., Bank v. Insurance Co., 122 Mass. 165; Hartford, etc., Insurance Co. v. Ollcott, 97 Ill. 439; Insurance Co. v. Field, 70 P. 149; Phenix Insurance Co. v. Hinds (Kan.), 73 P. 893; 13 Am. Eng. Ency. of Law, 205, 206.

It cannot be contended that Bacot was not a mortgagee. The fact that the mortgage is evidenced by two instruments, the one a conveyance, and the other for defeasance, is no concern of the appellee's. This was probably the first form of mortgage. This form has never been condemned. Even without the instrument executed by mortgagee, if all parties intended the conveyance as a mortgage, it would so be. The purpose of our statute, Code 1906, § 4783, is to prevent fraud on a vendee, and to that end makes a rule of evidence, but in no sense forbids the agreement to be a mortgage of this kind. These parties say these instruments were intended and recognized as mortgages; and they were also recognized by the insurance company as a mortgage when the clause was affixed to the policy. The insurance company furthermore knew that Bacot was claiming an interest as mortgagee, yet now denies liability on the grounds of the alleged defective mortgage.

If Burton and Emily Bridges, his wife, are entitled to recover, it is proper that they join the mortgagee; and whereas, on the other hand, if the insured cannot recover, the mortgagee's claim would equal the whole amount which might be recovered under the policy, and he could sue alone. East v. Insurance Co., supra; Lowrey v. Insurance Co., 75 Miss, 43; May on Insurance, § 449; Burlington Insurance Co. v. Lowrey, 61 Ark. 108; Home Insurance Co. v. Gillman, 112 Ind. 7; Lasher v. Insurance Co., 18 Hun, 98; Great Western v. Aetna Insurance Co., 40 Wis. 373; Georgia Home v. Leaverton (Tex.), 33 S.W. 579.

If Burton Bridges insured as husband, and, as some of the authorities hold, this was for the benefit of himself and wife, and if he insured as her agent, it is proper, in suing to recover, to sue for her use. If the court holds the second count bad and the first...