Detroit Fire & Marine Insurance Co. v. Helms

• Decision Date: 05 October 1931
• Docket Number: 132
• Parties: DETROIT FIRE & MARINE INSURANCE COMPANY v. HELMS
• Court: Arkansas Supreme Court

42 S.W.2d 394

184 Ark. 308

DETROIT FIRE & MARINE INSURANCE COMPANY v. HELMS

No. 132

Supreme Court of Arkansas

October 5, 1931

Appeal from Pulaski Chancery Court; Frank H. Dodge, Chancellor affirmed.

Judgment affirmed.

Horace Chamberlin, for appellant.

D D. Terry, for appellee.

OPINION

MCHANEY, J.

Appellant brought this action in the chancery court to cancel a policy of fire insurance issued by it to appellee, Scull, which had a standard mortgage clause attached making the loss, if any, payable to appellee, Commonwealth Building & Loan Association, hereinafter called the association, as its interest might appear, after the property covered by said policy had been destroyed by fire and liability, if any, had accrued. The facts, briefly stated, are as follows: The property is located in El Dorado and was left to Mrs. Helms by her husband. It was mortgaged to a bank in El Dorado by her and insured in appellant with mortgage clause attached. This mortgage was foreclosed, the bank acquiring the property, and the insurance was transferred to it. Mrs. Helms desired to repurchase the property from the bank, which it was willing to sell for its debt, and sought to borrow the money from the Association for this purpose, but it was decided by all parties that she had better not apply for the loan on account of her financial irresponsibility. The Arkansas Finance Company, a corporation of El Dorado, of which Major O. L. Bodenhamer was chairman of the board, was the agent of the Association and also of appellant, and represented all parties to this lawsuit. It was decided that the son of Mrs. Helms apply for a loan of $ 1,750 to the Association, which he did on August 5, 1929, representing himself to be the owner, intending that the bank should convey to him and he, in turn, execute the mortgage if the loan was granted. This loan was refused by the Association because of an unsatisfied judgment against him. Thereafter, appellee Scull, a responsible business man of El Dorado made application to the Association for a loan, the application being similar to that of Mr. Helms, which was granted September 6, 1929. The bank conveyed to Mrs. Helms, who conveyed to Scull, and he executed the mortgage to the Association, and the deal was closed on September 10, by paying the proceeds of the loan to the bank and all deeds of conveyance being delivered and recorded. Thereupon the Arkansas Finance Company issued the policy in question to Scull with mortgage clause attached to the Association. Scull, Mrs. Helms and her son, thereafter, on the same day, entered into a written agreement that, if the Helms would pay all expenses incident to the transfers and all installments to the Association, Scull would convey the property to Mrs. Helms or her son as she should direct. This agreement, together with other papers, were left with the Arkansas Finance Company, some of whose officers were cognizant of all the foregoing facts. The September installment to the Association was deducted from the loan. When the October installment became due, default was made, and the Association demanded payment of Scull, who, in turn, demanded same from Mrs. Helms and her son. Not being made, Scull executed a deed to the property back to Mrs. Scull, caused it to be placed of record and delivered it to Arkansas Finance Company, assuming, no doubt, by so doing, he would relieve himself of the embarrassment. On November 13, 1929, the property was totally destroyed by fire, which was reported to appellant, and it, after investigation, decided that fraud had been practiced upon it, that Scull had no title at the time of the fire, that Mrs. Helms had no contract relation with it, and that its policy should be canceled. It thereafter instituted this action for...