Cox v. Hartford Fire Ins. Co.

• Decision Date: 15 April 1935
• Docket Number: 31659
• Citation: 172 Miss. 841,160 So. 741
• Court: Mississippi Supreme Court
• Parties: COX v. HARTFORD FIRE INS. CO. et al

160 So. 741

172 Miss. 841

COX v. HARTFORD FIRE INS. CO. et al

No. 31659

Supreme Court of Mississippi

April 15, 1935

Division A

Suggestion Of Error Overruled May 27, 1935.

APPEAL from the chancery court of Copiah county HON. V. J. STRICKER Chancellor.

Interpleader suit by the Hartford Fire Insurance Company against O. A. Cox and J. W. Heap, receiver of the People's Bank of Crystal Springs. From a decree for the receiver, defendant Cox appeals. Reversed and rendered.

Reversed, and decree here for appellant.

M. S. McNeil, of Hazlehurst, and J. Morgan Stevens and J. M. Stevens, Jr., both of Jackson, for appellant.

The intent of the contracting parties is controlling notwithstanding their mistake.

Restatement of the Law of Contracts, secs. 504 and 507.

The court should have given effect to the uncontradicted intent of the parties and should have awarded the appellant a decree for the recovery of the loss.

Continental Casualty Co. v. Crook, 157 Miss. 518, 128 So. 574; Whitney Central National Bank v. First National Bank of Hattiesburg, 150 Miss. 93, 130 So. 99; Restatement of the Law of Contracts, sec. 507; 66 A.L.R., pages 763, 772 and 773; Queen Ins. Co. of America v. Citro, 58 F.2d 107; Fordson Coal Co. v. Bowling, 244 Ky. 220, 50 S.W.2d 501; Litto v. Public Fire Ins. Co. of Newark, 109 Pa. S.Ct. 195, 167 A. 603.

The failure of the appellant Cox to read and notice the error in the policy does not estop him from asserting his claim of mistake.

U. S. F. & G. Co. v. Parsons, 147 Miss. 335, 112 So. 469, 154 Miss. 587, 122 So. 544; 76 A.L.R. 1218; 23 R. C. L. 351; Home Ins. Co. of New York v. Sullivan Machinery Co., 64 F.2d 765; Payne v. California Union Fire Ins. Co., 72 Cal.App. Dec. 771, 19 P.2d 40; Northeastern Surety Corp. v. International Ins. Co., 240 A.D. 80, 209 N.Y.S. 351; Central Ice Cream & Candy Co. v. Home Ins. Co., 171 S.E. 797.

The maxim that he who seeks equity must do equity is not applicable to this case.

Pomeroy's Equity Jurisprudence (4 Ed.), secs. 386 and 307; Burton v. John Hancock Mutual Life Ins. Co., 150 So. 474; Griffith's Chancery Practice, sec. 43.

In the light of the evidence in this case and under the circumstances, the "loss payable clause" should be given that construction which will give effect to the intention of the parties.

Couches Cyc. of Ins. Law, sections 1450-N, 1450-O, and 1215-A; Sias v. Roger Williams Ins. Co., 8 F. 187.

W. S. Henley, of Hazlehurst, for appellee.

Appellant did not seek reformation in lower court.

The appellant having failed to seek and obtain a reformation of the contract in the lower court cannot assign this as error in the Supreme Court.

The evidence does not justify reformation.

Because of the strong presumption that the terms of a written instrument correctly express the intention of the parties to it, mistake or fraud, when urged as a ground for reformation of an instrument, must be established by evidence that is clear, convincing, and satisfactory.

53 C. J. 1026 and 1031; Dochterman v. Marshall, 92 Miss. 747, 46 So. 542; Jones v. Jones, 88 Miss. 784, 41 So. 373; Crofton v. New South Bldg., etc., Assoc., 77 Miss. 166, 26 So. 362; Norton v. Coley, 45 Miss. 125; Mosby v. Wall, 23 Miss. 81, 55 Am. Dec. 71; Bowers v. Field, 148 So. 358; Mallory v. Walton, 81 So. 113.

There was no evidence of mutual mistake.

53 C. J. 943.

Reformation must not be granted because alleged mistake is matter of law.

53 C. J. 934; Travelers Ins. Co. v. Henderson, 16 C. C. A. 390.

Appellant is estopped to seek reformation.

Iglehart v. Carr, 178 N.E. 685; Denny v. Fishter, 36 S.W. 864; 53 C. J. 924.

The insurance policy covers three buildings, two of which were located on a one hundred twenty acre tract of land, subject to a mortgage to the People's Bank, and a third building, located upon an eighty acre tract of land, which was not covered by a mortgage.

The question involved is whether or not the loss payable clause covers the buildings upon that tract of land, which was not subject to mortgage.

Atlas Reduction Co. v. New Zealand Ins. Co., 138 F. 497, 71 C. C. A. 21; Sun Insurance Office v. Scott, 76 L.Ed. 229.

It appears that there can be no question about the meaning of the loss payable clause, and the terms, "as his interest may appear." These terms are broad and embracive, and include any and all interest, unless the same is limited to the interest of the mortgagee.

Colby v. Parkersburg Ins. Co., 17 S.E. 303; Bentley v. Standard Fire Ins. Co., 23 S.E. 584; Ritchie County Bank v. Fireman's Ins. Co., 47 S.E. 94; Parks et al. v. Connecticut Fire Ins. Co., 26 Mo.App. 511.

Attention is called to the fact that there are two forms of clauses, which are attached to insurance policies, to determine a creditor's rights, as what is known as a "mortgagee clause" in which the rights of a creditor are limited to his insurable interest as a lien holder. There is also what is known as (a) "loss payable clause." The latter clause is a mere appointment some times called an equitable assignment of the proceeds of the policy. It is not required in the loss payable clause that the creditor had any insurable interest in the policy.

Woods v. Insurance Company of the State of Pennsylvania, 144 P. 650.

In the present case, if the loss payable clause had referred to the payee, the People's Bank, as a mortgagee, there would be more basis for appellant's argument, as to the construction of this clause. However, the terms of the loss payable clause are broad and comprehensive, and the rights of the payee, the People's Bank, are no where limited or restricted to its mortgage interest, but covers its entire interest, or in other words, its interest as a creditor, and not merely its interest as a mortgagee.

Argued orally by J. Morgan Stevens and J. M. Stevens, Jr., for appellant, and by W. S. Henley, for appellee.

OPINION

McGowen, J.

The Hartford Fire Insurance Company filed a bill of interpleader in the chancery court of Copiah county, paid into court seven hundred fifty dollars, the proceeds of a policy on a certain house which had been destroyed by fire, alleged that it had no interest in the contest between the claimants, and had O. A. Cox and J. W. Heap, receiver, summoned into court as defendants. Answers were filed by both defendants making claim to the fund. A trial was had and a decree of the court was entered in favor of J. W. Heap, receiver, and Cox appeals here.

In 1924 Cox became indebted to the People's Bank of Crystal Springs, Mississippi, in the sum of about one thousand two hundred dollars, and to secure the loan he executed a deed of trust in favor of the bank upon a described one hundred twenty acres of land owned by him, on which there were some houses. This note and deed of trust was renewed annually until 1930. Prior to 1929 Cox had carried insurance on the insurable houses located on the land with loss payable clause in favor of the bank. In 1929 he procured from the agent at Crystal Springs a five-year term farm policy of insurance not only on the houses described in the bank's deed of trust, but also on a house described as No. 1, located on eighty acres of land owned by him, and on which land the bank had no claim or deed of trust. The house on this eighty acres of land was destroyed by fire in 1934, while the policy was in force.

The policy contained a loss payable clause in the following language: "It is agreed that any loss or damage on buildings only that may be ascertained and proven to be due the assured under this policy shall be held payable to the People's Bank, Crystal Springs, Mississippi, as its interest may appear, subject, nevertheless, to all conditions of the policy."

The answer of the insured, Cox, alleged, in substance, that he applied to Lotterhos for insurance on the dwellings on both pieces of property, and advised said agent that the bank held a mortgage on the one hundred twenty acres of land, but did not have any claim on the eighty acres of land, and alleged "that by inadvertence or mistake the agent of said insurance company wrote said loss payable clause so as to cover all of the buildings on both of said pieces of property payable to the People's Bank of Crystal Springs, as its interest might appear." Cox charges that it was never agreed between himself and the agent of said company, and there never was any agreement or understanding between himself and the People's Bank of Crystal Springs to make the loss payable clause on the dwelling situated on the eighty acres of land payable to said bank; that the said People's Bank never at any time owned any interest in said eighty acres of land; never held a lien against the same of any description, but as charged aforesaid, the agent in preparing said policy made the error, "which he now pre-acknowledges."

The answer of Heap, who became the receiver of the bank in liquidation about two or three years before this litigation arose, denied in effect the above allegations. That was the only issue of fact submitted to the court for decision.

The only evidence was that of Cox, the insured, and McCluney, the president, officer and agent of the bank, who made the contract with Cox for the renewal of the loan and for the security therefor. Their evidence is not in dispute; they fully agree that neither the mortgagor nor the mortgagee intended to secure any insurance, so far as the bank was concerned, on any property except that which was insurable and located on the land on which the bank had a deed of trust. The insurance company had admitted its liability for the loss and paid the amount thereof into court and was discharged. Cox testified that he received the policy from the agent, took it for granted that it had been written as...