Board of Education v. Winding Gulf Collieries
| Decision Date | 12 December 1945 |
| Docket Number | No. 5418.,5418. |
| Parties | BOARD OF EDUCATION OF RALEIGH COUNTY, W. VA., v. WINDING GULF COLLIERIES. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Clay S. Crouse, of Beckley, W. Va. (Grover C. Trail, of Beckley, W. Va., on the brief), for appellant.
J. W. Maxwell, of Beckley, W. Va. (Floyd M. Sayre, of Beckley, W. Va., on the brief), for appellee.
Before SOPER and DOBIE, Circuit Judges, and HAYES, District Judge.
The question to be decided in this case is whether the proceeds of certain blanket fire insurance policies, covering a school building in Raleigh County, West Virginia, should be paid to the Board of Education of the County or to Winding Gulf Collieries, a West Virginia corporation on whose land the building had been erected. To obtain a decision the Allemannia Fire Insurance Company, a Pennsylvania corporation, paid the adjusted proceeds of one policy in the sum of $4,771.27 into court and filed a bill of interpleader against the rival claimants so that their claims might be adjudicated. The total amount of the fire loss was adjusted in the sum of $67,201.02, and it was agreed by all of the insurance companies concerned, forty-two in number, and by the claimants that the decision in this case should determine the right to the entire fund. The case was submitted to the District Court on a stipulation of facts and the court decreed the payment of the fund to the Winding Gulf Collieries. From this judgment the Board of Education appeals.
On August 23, 1924 Winding Gulf Colliery Company conveyed to the Board of Education of the District of Slab Fork of Raleigh County a parcel of land, approximately a half acre in area. The deed contained a provision that as part of the consideration for the conveyance, the property was conveyed for free school purposes and for no other purpose, and that whenever the property should cease to be used for such purposes, it should thereupon revert to and become reinvested in the grantor in fee simple. By deed of August 15, 1929 the grantor conveyed to Winding Gulf Collieries all of its interest in both the school lot and the adjacent tract of which that lot was a part, excepting therefrom the property rights theretofore conveyed to the Board of Education. By an Act of the Legislature of West Virginia of 1933 the Board of Education of Raleigh County became successor to the Board of Education of the District of Slab Fork.
Shortly after the school lot was granted to the Board of Education in 1924 a large brick school building was erected by it on the lot and thereafter was continuously used for school purposes until January 5, 1944, when it was totally destroyed by fire. Thereafter the Board of Education ceased the use of the property for free school purposes and abandoned it and determined to rebuild the high school on a new site.
On December 1, 1943 the Board of Education had insured the school building on the property for the sum of $142,000 for the term of five years, and had paid insurance premiums of $4,265.68. The blanket policies of insurance name the insured as "The Board of Education of the County of Raleigh, as is now or may hereafter be constituted, for account of whom it may concern" and provide that the "loss, if any, under this policy shall be adjusted with and held payable to the Board of Education of the County of Raleigh." The policies further provide that "The Board of Education * * * shall be deemed the owner of the property * * * and no defect in the title to such property shall invalidate this policy"; and also that the insurance shall not be affected by the fact that the property covered may be situate on land not owned by the assured in fee simple.
It is not disputed by the Board of Education that the land conveyed to it for school purposes in 1924 has now reverted to the Collieries; but the Board of Education claims that it is entitled to the proceeds of the policies of insurance which it placed upon the building. The position of the Collieries in support of the judgment of the District Court is that it has not only acquired full title to the land by reversion, but also full title to the proceeds of the insurance policies in place of the building that was burned. Reliance is placed upon the well known rule that the owner of a reversion in land is entitled upon the expiration of the preceding estate to the permanent fixtures and improvements placed thereon during the term and at the expense of the preceding estate, and it is contended that since the school building has been destroyed, the Collieries is entitled to the insurance money in its place and stead. This contention is supported by decisions1 which hold under certain circumstances that when the whole fee in a property is insured against fire by a policy taken out in the name of a life tenant and he collects the full insurance, he is deemed to be acting for the remainderman as well as for himself and the proceeds of the insurance stand in place of the property destroyed and must be used to rebuild it or be held by the life tenant for himself for life and after his death for the remainderman.
This contention is further supported by reference to the phrase in the policy which designates the insured, as the Board of Education of the County of Raleigh, as is now or may hereafter be constituted, "for account of whom it may concern", placing special emphasis on the phrase last quoted; and it is claimed that under the decisions2 this language must be construed to mean that the property was insured for the benefit of the Board of Education and every other person holding an interest therein, and since the property has been abandoned by the Board of Education for school purposes, the whole proceeds of the policy belong and must be paid to the Collieries to which, under the deed, the land now reverts.
We do not think that the cited decisions require the conclusion for which the Collieries contend. An insurance policy is a contract of indemnity and its nature and effect is to indemnify the insured against loss and not another who is not a party to the contract. It is generally held that such other party has no lawful claim upon the amount realized by the insured under the contract. When this rule is applied to a policy covering property held and insured by a life tenant in his own name for his own benefit, who has paid the premiums thereon, it is generally held, in the absence of a fiduciary relationship or an agreement between him and the remainderman, that the life tenant is entitled to the proceeds of the insurance upon a loss; and the fact that the insurance was placed for the whole value of the fee is not generally regarded as affecting the right of the life tenant to the whole amount of the proceeds of the policy. See Ann. 126 A.L.R. 333, 345. This rule was applied in Thompson v. Gearheart, 137 Va. 427, 119 S.E. 67, 35 A.L.R. 36, by the Supreme Court of Appeals of Virginia to whose earlier decisions the appellee refers, as shown by the foregoing citations. In Thompson v. Gearheart the grantee of life tenants insured the buildings on the property conveyed which were destroyed by fire during the life of the policy but after the death of the life tenant, and the grantee collected the insurance. The remaindermen set up a claim thereto but the court in denying the claim said (137 Va. at pp. 431, 432, 119 S.E. at page 68, 35 A.L.R. 36):
* * * * * *
The doctrine of this case was reaffirmed and applied in Clements v. Clements, 167 Va. 223, 188 S.E. 154.
A good summary of the rule is also found in the following statement quoted from the decision in Gorman's Estate, 321 Pa. 292, 295, 297, 184 A. 86, 87:
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