Deruy Motor Co. v. Insurance Co. of North America
| Decision Date | 10 July 1937 |
| Docket Number | 33317. |
| Citation | 146 Kan. 233,69 P.2d 677 |
| Parties | DERUY MOTOR CO. v. INSURANCE CO. OF NORTH AMERICA. |
| Court | Kansas Supreme Court |
Syllabus by the Court.
Where automobile fire policy provided that amount of loss should be ascertained by insured and insurer by mutual agreement and that loss should be paid to insured and to mortgagee mortgagee of insured automobile was bound by terms thereof and could not maintain action against insurer which had tendered payment of amount of loss ascertained by agreement with insured.
Where the specific terms of a fire insurance policy provide that in case of loss, the insured and the insurer may ascertain the amount of the loss by mutual agreement, and that the amount so ascertained shall be paid to the insured and to the mortgagee, the mortgagee is bound by the terms of the policy and has no cause of action against the insurer who has tendered payment in accordance therewith.
Appeal from District Court, Crawford County; Leland M. Resler Judge.
Action by the Deruy Motor Company against the Insurance Company of North America. From an adverse judgment, defendant appeals.
Reversed and remanded with instructions.
P. E Nulton and R. L. Letton, both of Pittsburg, for appellant.
Robert S. Lemon, of Pittsburg, for appellee.
This was an action to recover on a policy of insurance issued to Robert Begando to protect him against the loss of his automobile by fire.
Begando had given plaintiff, the Deruy Motor Company, a chattel mortgage on the automobile to secure an indebtedness of $675.52.
The significant features of the insurance policy of present concern may be summarized thus:
Name of Insurer: Insurance Company of North America.
Name of Insured: Robert Begando.
Kind of Contract: Automobile Policy No. N5W 7112.
Date of Policy: March 12, 1935, to run one year.
Perils Insured Against: Fire, etc.
Description of Property Insured: Dodge Coach, 6 cylinders, Model 1934 Serial Number 3695661, cost $873; Mortgage lien $237.20.
On August 30(?), 1935, Begando's automobile was destroyed by fire. On May 19, 1936, pursuant to an agreement with Begando touching the amount of the loss and defendant's liability thereunder, defendant executed its bank draft for $400 payable to Robert Begando and Deruy Motor Company. The draft recited that it was "In full settlement of all claims for loss and damage which occurred on the 20th day of August, 1935, to property insured under Policy No. N5W 7112."
Begando indorsed this draft and tendered it to the plaintiff motor company, which declined it, and it was deposited with the clerk of the district court of Crawford county in which this lawsuit later originated.
The Deruy Motor Company brought this action against the insurance company for $597, being the alleged amount due it on Begando's note secured by the chattel mortgage on the insured automobile. It set up a copy of the insurance policy as an exhibit attached to its petition. It ignored the obvious discrepancy between the amount of the mortgage, $237.20, as stated in the insurance policy and the amount due as alleged in its petition; and did not ask that the error as to the amount named therein, if it was an error, be corrected by amendment. The petition stated at length the facts we have summarized above and prayed for judgment for the alleged amount of its chattel mortgage, $597.
Defendant's demurrer to this petition was overruled and it appeals, contending that in strict accordance with the plain and specific terms of the insurance policy it has settled and paid its obligation in full and that the trial court's ruling on the demurrer was erroneous.
As the soundness of this contention is rather apparent, we turn to appellee's brief to discover, if we may, some logical basis on which the judgment can be sustained.
Appellee's brief opens with an observation that on the legal question of present concern there is a minority view which supports the contention of appellant, but that the weight of authority supports the ruling of the trial court. Many citations are given, including that of Lervold v. Republic Mutual Fire Ins. Co., 142 Kan. 43, at pages 46, 47, 45 P.2d 839, 842, 106 A.L.R. 673, where this court said:
Paraphrasing this language and applying it to the case at bar, the provisions of the mortgage clause in this fire insurance policy constitute a contract between this defendant and this plaintiff. What are those provisions which constitute this contract? The pertinent ones are those we have already quoted in this opinion. The loss is not payable to the mortgagee singly but to the insured and Deruy Motor Company, the plaintiff herein.
Again, what is the provision of this insurance policy which "the weight of authority" declares to constitute a contract between the defendant insurance company and the plaintiff mortgagee whereby the amount of the loss is to be ascertained? This policy (which constitutes a contract between plaintiff and defendant--according to the majority view) provides that the amount of the loss is to be ascertained "by the insured [Begando] and this [defendant] company." In the Stamey Case cited in the quotation from our recent Lervold Case, the policy contained a provision, "Loss, if any, is first payable to the [mortgagee] as their interest may appear." It needs no multiplicity of words to demonstrate that the Stamey Case supplies no rule of law to be followed in the case at bar. The case of Hill-Howard Motor Co. v. Indemnity Co., 116 Kan. 109, 225 P. 1056, 38 A.L.R. 362, is instructive, but it tends to support the appellant's position in this case, particularly where it declares that in the absence of some provision in the policy or mortgage clause creating a different relation, the mortgagee's rights depend upon the rights of the insured.
Looking into some of the cases from other jurisdictions cited by appellee, it was held in Hall v. Fire Association, 64 N.H. 405, 13 A. 648, that "A mortgagee to whom a policy of fire insurance is made payable in case of loss is not bound by an adjustment of a loss made without his knowledge or consent by the mortgagor with the insurance company."
The same ruling was made in Harrington v. Fitchburg Insurance Co., 124 Mass. 126; also in Hathaway v. Orient Ins Co., 134 N.Y. 409, 32 N.E. 40, 17 L.R.A. 514; but in none of those cases was there a provision that the loss was to be ascertained by the insured and the...
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