Commercial Union Fire Ins. Co. of New York v. Parvin, 6 Div. 54

CourtSupreme Court of Alabama
Citation189 So.2d 330,279 Ala. 645
Docket Number6 Div. 54
Decision Date30 June 1966

Mead, Norman & Fitzpatrick, Birmingham, for appellant.

Tweedy & Beech, Jasper, for appellee.

LAWSON, Justice.

This is an action by John Parvin against Commercial Union Fire Insurance Company of New York, a corporation, on a fire insurance policy covering a dwelling house in Parrish, Walker County, Alabama.

The complaint consists of a single count which is substantially in Code form. Under a plea of the general issue in short by consent in the usual form, the defendant insurance company relied primarily upon the defense that the plaintiff, Parvin, had no insurable interest in the dwelling house at the time it was completely destroyed by fire.

There was a verdict in favor of Parvin in the sum of $3,050. Judgment followed the verdict. After its motion for new trial was overruled, the insurance company appealed to this court.

On September 10 or 11, 1958, Sumiton Land Company, Inc., hereinafter referred to as the Land Company, entered into a lease-sale contract with John Parvin, leasing to him a house and lot in the town of Parrish for a term of 144 months for a recited consideration of $1,900, payable in monthly installments of $22.28 on the first day of each month. The monthly payments included principal, interest and the cost of insurance, the contract providing: 'The Company shall keep the improvements on said real estate insured against loss or damage by fire, lightning and tornado in an amount equal at least to the balance of the consideration due hereunder, * * *.' But the premium on the insurance to be provided by the Land Company was to be paid by Parvin. Parvin was required to pay the taxes.

The contract contains a condition subsequent that if at the end of the term Parvin had paid all of the installment payments and taxes, and had complied with all the conditions of the contract, then the transaction should be treated as a sale, that is to say, the Land Company would treat the rent paid under the lease as a payment for the property and would execute a deed thereto to Parvin.

The contract provided for a forfeiture of the lease upon failure of Parvin to pay the rents as they became due, the right of the Land Company to reenter the premises and terminate the lease being reserved without the necessity of giving notice to or making demand upon Parvin for payment of rents due.

It was further provided in the contract that if Parvin became in arrears as much as thirty days or should fail to pay the taxes or to comply with any other condition of the contract:

'* * * then on the happening of any such event, the Lessee (Parvin) forfeits his rights to a conveyance of said property, and all money paid by the Lessee (Parvin) under this contract shall be taken and held as payment of rent for said property, and the Lessee (Parvin) shall be liable to the Company (Lessor) as a tenant for the full term of said lease, and the provisions herein 'that the sums paid under this contract shall be considered as payment in full for said property, and the Company (Lessor) shall deliver a warranty deed, subject to the exceptions noted above, conveying said property to the Lessee (Parvin)' shall be a nullity and of no force and effect; and the failure of the Lessee (Parvin) to comply with any of the conditions of this instrument, without any other or further notice, shall ipso facto render the said provision a nullity, without any rights whatever except the rights of a lessee, without any notice or action whatever upon the part of the Company.'

Parvin went into possession shortly after the execution of the contract.

On April 18, 1959, the appellant insurance company, through its agent, the Jim Millican Insurance Agency of Cordova, issued to Parvin the insurance policy sued upon in this case in the amount of $5,000. The agent who sold the policy was advised by Parvin that the latter was purchasing the insured property from the Land Company under a lease-sale contract.

The policy sued on provided coverage only 'to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace with material of like kind and quality within a reasonable time after such loss * * * Nor in any event for more than the interest of the insured, * * *.' (Emphasis supplied.)

That insurance policy was in force when, on or about June 27, 1959, the dwelling house was completely destroyed by fire. The appellant insurance company refused payment to Parvin in any amount, hence this suit.

A purchaser under a lease-sale contract under the terms of which the title is not to pass until payment of the purchase price has an insurable interest. Murray v. Webster, 256 Ala. 248, 54 So.2d 505; Robinson v. Wade, 220 Ala. 693, 127 So. 170; Bowden v. Bank of America Nat. Trust & Savings Ass'n, 36 Cal.2d 406, 224 P.2d 713; Stallings v. Fidelity-Phenix Fire Ins. Co. of New York, 306 Ill.App. 235, 28 N.E.2d 322; Moline Timber Co. v. Schaad, 181 Ark. 854, 28 S.W.2d 336; North River Ins. Co. v. Sanguinetti, 38 Ariz. 221, 298 P. 922; McCoy v. Continental Ins. Co.,326 Mich. 261, 40 N.W.2d 146. See Continental Fire Insurance Co. v. Brooks,131 Ala. 614, 30 So. 876; Union Insurance Society of Clanton v. Sudduth,212 Ala. 649, 103 So. 845; Alabama Farm Bureau Mut. Ins. Co. v. Nixon, 268 Ala. 271, 105 So.2d 643; Pacific National Fire Ins. Co. v. Watts, 266 Ala. 606, 97 So.2d 797.

But an insured must have an insurable interest in the insured property at the time of the loss. Girard Fire & Marine Ins. Co. v. Gunn, 221 Ala. 654, 130 So. 180, and cases cited.

The appellant insurance company contends that the trial court erred to a reversal in refusing to give its affirmative instructions duly requested in writing because under the evidence Parvin had no insurable interest in the subject property in that his rights as a lessee had been ended and his rights under the purchase provisions of the lease-sale contract had been terminated.

In considering this contention, we must review the tendencies of the evidence in the light most favorable to Parvin without regard to any view we may have as to the weight of the evidence; and must allow such reasonable inferences as the jury was free to draw, not inferences which we think the more probable. Fowler Rental Equipment Co. v. Skipper, 276 Ala. 593, 165 So.2d 375, and cases cited; Mobile Cab & Baggage Co. v. Busby, 277 Ala. 292, 169 So.2d 314; South Highlands Infirmary v. Camp (Ala.) 180 So.2d 904.

The appellant's evidence showed that Parvin had made only five payments prior to the fire, the last being made on or about March 28, 1959, for the month of January, 1959. Hence, according to the appellant's evidence, Parvin was five months in arrears when the fire occurred on June 27, 1959, and four months in arrears when he was served on or about May 25, 1959, with an instrument which reads, in pertinent parts, as follows:



'John Parvin and other Occupants

TO House Number 158

Parrish, Alabama.

'You are hereby notified that in consequence of your default in making payments on the premises now occupied by you at the present address, towit: House Number 158 Parrish Alabama, we have elected to terminate your tenancy/or lease and you are hereby notified to quit and deliver up possession of the same to us within ten days after the date of service of this notice.

'You are in arrears with your payments for the following period of time:

                4 months house payments     82.28
                4 months insurance           6.84
                4 months water               8.00
                Total               $97.12

Sumiton Land Company, Inc.

J. E. Simmons (signed)

'Served this 25 day of May 1959'

If the appellant's evidence stood alone, it would be clear that under the terms of the lease-sale contract Parvin's lease had been terminated and his right to purchase had been forfeited long prior to the fire, unless there had been a waiver by the Land Company.

But Parvin's testimony must be considered in connection with that of Simmons to determine if a jury question was presented as to whether Parvin's lease had been terminated and his rights to purchase had been forfeited at the time of the fire.

On direct examination Parvin gave no testimony in regard to the number of payments he had made prior to the fire.

On cross-examination, he testified that he made a payment on the day the lease-sale contract was executed, which was on either September 10 or September 11, 1958. The uncertainty as to the date of execution results from the fact that the contract on its face shows both days as the date of execution. This discrepancy is, however, immaterial and is pointed out solely for the purpose of accuracy. On further cross-examination, Parvin was asked the following question and gave the following answer:

'Q. How many payments do you recall having made to them Mr. Parvin?

'A. I don't know. I think I made eight or ten payments. I don't know for sure. I have got receipts for about five or six.'

Parvin produced only five receipts dated as follows: September 10, 1958; November 4, 1958; November 19, 1958; February 28, 1959; and March 28, 1959. He stated that these were all the receipts he had; that it had been so long he might have lost some; that the receipts he produced 'may be all of them. * * * I don't recall just how many payments I did make.' The receipts produced by Parvin were in accord with the records of the Land Company.

On further cross-examination, Parvin was asked the following questions and gave the following answers:

'Q. This last one (receipt) is dated March 28. Do I understand your testimony to be you had made, you think, some eight or ten payments on the property?

'A. I thought I had. I may be wrong; I don't know. Anyway that is all the receipts I have. I may have more and I may...

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