Dysart v. Colonial Fire Underwriters of Nat. Fire Ins. Co.

• Decision Date: 10 March 1927
• Docket Number: 20358.
• Citation: 142 Wash. 601,254 P. 240
• Parties: DYSART v. COLONIAL FIRE UNDERWRITERS OF NAT. FIRE INS. CO. et al.
• Court: Washington Supreme Court

254 P. 240

142 Wash. 601

DYSART v. COLONIAL FIRE UNDERWRITERS OF NAT. FIRE INS. CO. et al.

No. 20358.

Supreme Court of Washington

March 10, 1927

Department 2.

Appeal from Superior Court, Thurston County; Nelson, Judge.

Action by Lloyd B. Dysart, trustee in bankruptcy for the J. L Jackson Lumber Company, against the Colonial Fire Underwriters of National Fire Insurance Company, Maytown Mill Company, and others. From the judgment rendered, plaintiff appeals, and defendant Maytown Mill Company and certain other defendants cross-appeal. Affirmed on defendants' cross-appeals, and reversed, with directions, on plaintiff's appeal.

John C Hogan, of Aberdeen, for appellants.

Frank C. Owings and Vance & Christensen, all of Olympia, and W. H Abel, of Montesano, for respondents.

TOLMAN J.

This action comes here as a consolidation of 18 actions at law brought by the plaintiff, based upon 26 policies of insurance issued by 18 different insurance companies, to recover an aggregate of $72,500, claimed to be due for loss under the policies. The facts are long, very much involved, and, singularly, but little in dispute. We shall give a general outline of what we consider the controlling facts necessary for an understanding of the case, and in doing so shall refer to the appellant Dysart as the plaintiff, the cross-appellant Maytown Mill Company as the mill company, George Simpson and Mark E. Reed, as the administrator of his estate with the will annexed, as Simpson, and the J. L. Jackson Lumber Company as the bankrupt.

It appears that on and prior to September 22, 1924, the mill company was in possession of and had a contract for the purchase of the property which was afterwards insured. On that day the mill company, as vendor, entered into a conditional sales contract with Barker & Jackson, a copartnership, as vendees, for the sale and purchase of the real estate, buildings, mill, and personal property afterwards insured and destroyed. The contract is very much in the usual form of such contracts, except the following:

'There being certain litigation now pending between the mill company and George Simpson (Maytown Lumber Company being a party thereto with said Simpson), now if and when the mentioned litigation shall have been finally determined, including any and all appeals, if the said George Simpson (Maytown Lumber Company being a party thereto with said Simpson) shall have obtained any money judgment against the mill company, the mentioned bank as trustee shall pay to the said Simpson (Maytown Lumber Company being a party thereto with said Simpson) the full amount of said judgment out of the trust funds in its hands, and shall hold the remainder of the said trust fund, if any there be, to the credit and subject to the order of the mill company. * * * The partners agree to pay as a condition herein insurance premiums on policies of insurance on said premises during the life of this contract, said insurance to be equal at least to the amount of the unmatured purchase price hereof with indorsements on said policy, loss, if any, payable to the company as its interest may appear.'

The policies, or most of them, were written in accordance with both of these quoted provisions, and that probably explains why the mill company and Simpson were made parties. This contract was not filed for record until some nine months after it was executed and but a few days before the fire occurred. The partnership of Barker & Jackson duly organized a corporation to take over and operate under the contract. This corporation was first called the Maytown Lumber & Manufacturing Company, but the name was later changed to J. L. Jackson Lumber company, and the contract was assigned, with the consent of the mill company, to the J. L. Jackson Lumber Company, which took possession of the property and operated it until the summer of the following year, when, its insolvency being apparent, it was declared a bankrupt. The bankrupt, while in possession of the property, made substantial improvements, and gave evidence to the effect that these were of the value of some $15,000. The bankrupt also, while in possession of the property, paid all of the maturing installments under the contract, so that up to July 21, 1925, it had paid $11,500, besides interest, upon a purchase price of $25,000. On or about July 21, 1925, the bankrupt had become very much involved financially, was no longer able to continue in business, and it at that time transferred to Simpson, who was a creditor to the extent of nearly $25,000, all of its assets here involved, including, perhaps, the insurance policies. Simpson took possession, and between that time and July 28, 1925, when the fire occurred, he made a further payment of $1,500 as an installment then due to the mill company upon the conditional sales contract, so that when the fire occurred there remained unpaid to the mill company only $12,000 of the purchase price of the property. On July 31, 1925, an involuntary petition in bankruptcy was filed against the J. L. Jackson Lumber Company, and on August 5, 1925, it was adjudged a bankrupt, and thereafter the plaintiff was duly elected and qualified as its trustee. After these actions were instituted against the insurance companies and before trial, a settlement was arranged with the insurance companies under and by which they paid into court $57,600 in full settlement of their liability, and thereupon they were dismissed from the action. The parties remaining, to wit, the plaintiff, the mill company, and Simpson, then entered into a stipulation, as follows:

'Whereas, all of the parties to this cause and in causes Nos. 10480, 10481, 10482, 10483, 14834, 10787, 10488, 10489, 10490, 10491, 10492, 10493, 10494, 10495, 10499, have this day entered into a compromise in writing, which is of record herein, in so far as the liability of the insurance companies is concerned, now, therefore, it is stipulated between the plaintiff and defendants George Simpson and/or Maytown Lumber Company and Maytown Mill Company, that when the sum of $57,600 is paid into the registry of the court pursuant to such compromise, the clerk of said court shall retain $48,000 thereof until the rights of the parties signing this stipulation are adjudicated, and he shall pay to Gould & Gould, Inc., the sum of $600 thereof, and to George Simpson and/or Maytown Lumber Company the sum of $1,500 thereof, and that the remainder of said sum, to wit, the sum of $7,500, shall remain in the registry of the court in cases Nos. 10485 and 10486.'

(The last two policies mentioned covered manufactured lumber; hence the distinction.)

The issues as between the parties to this stipulation were tried to the court sitting without a jury, and long and exhaustive findings of fact were made, setting up in detail the court's findings upon all of the matters which we have hereinbefore referred to, and, in addition, findings that the mill company acquired title to the property described in the conditional sales contract shortly after that instrument was executed and that it (the mill company) was the owner of all of such property at the time of the fire, and that long after the fire, on the 18th day of December, 1925, the mill company gave a 20-day notice of forfeiture under the terms of the contract because of the nonpayment of installments of the purchase price falling due after the date of the fire. The court also found that the value of the property subject to the contract not destroyed was $2,500, and that:

'On May 19, 1925, the J. L. Jackson Lumber Company was indebted to Geo. Simpson on an unsecured open account in the sum of $24,968 or thereabouts, and that on that date the J. L. Jackson Lumber Company entered into a contract with Geo. Simpson, whereby the J. L. Jackson Lumber Company undertook to assign certain insurance policies or interest in insurance policies to Geo. Simpson as security for this debt, and agreed that, in the event of financial disaster overtaking the J. L. Jackson Lumber Company, the latter company would assign to Geo. Simpson the conditional sale contract of September 22, 1924, and other property, and that afterwards and on July 21, 1925, the J. L. Jackson Lumber Company did make an assignment and bill of sale covering the conditional sale contract of September 22, 1924, and all of its interest in the property covered thereby, including all of its assets to the said Geo. Simpson; that at the time of making each of these contracts,

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