Equitable Fire Ins. Co. v. Jefferson Standard Life Ins. Co.

• Decision Date: 28 January 1921
• Docket Number: 11239.
• Citation: 105 S.E. 818,26 Ga.App. 241
• Parties: EQUITABLE FIRE INS. CO. v. JEFFERSON STANDARD LIFE INS. CO.
• Court: Georgia Court of Appeals

105 S.E. 818

26 Ga.App. 241

EQUITABLE FIRE INS. CO. v. JEFFERSON STANDARD LIFE INS. CO.

No. 11239.

Court of Appeals of Georgia, First Division

January 28, 1921

Syllabus by the Court.

Where property is insured, and a mortgage given by the insured (the owner) covering the same property, and to the policy is attached a New York standard mortgagee clause, with loss, if any, payable to the mortgagee "as to the interest of the mortgagee only therein," the mortgagee cannot, under the laws of Georgia, by virtue of that clause, maintain an action at law in its own name for a total loss under the policy when the amount of its debt is less than the amount of the insurance, even though it be alleged that the suit is brought with the consent of the insured, and that the plaintiff is the appointee of the insured to collect the policy.

Error from City Court of Sylvester; C. W. Monk, Judge.

Action by the Jefferson Standard Life Insurance Company against the Equitable Fire Insurance Company. Judgment for plaintiff, and defendant brings error. Reversed.

Luke J., dissenting.

Smith Hammond & Smith, of Atlanta, and Passmore & Forehand, of Sylvester, for plaintiff in error.

G. R Nottingham, of Sylvester, and E. E. Cox, of Camilla, for defendant in error.

BLOODWORTH, J. (after stating the facts as above).

We think the court erred in overruling the demurrer to the petition. The sole question is: Was the suit brought in the name of the proper party? In other words, where property is insured, and a mortgage given by the insured and owner covering the same property, and to the policy is attached a "New York standard mortgagee clause," with loss, if any, payable to the mortgagee "as to the interest of the mortgagee only therein," can the mortgagee, under the laws of Georgia, by virtue of said clause maintain an action at law in its own name for a total loss under the policy, when the amount of its debt is less than the amount of the insurance. To this we answer: No. Section 5516 of the Civil Code of 1910 is as follows:

"As a general rule, the action on a contract, whether express or implied, or whether by parol or under seal, or of record, must be brought in the name of the party in whom the legal interest in such contract is vested, and against the party who made it in person or by agent."

An insurance contract is no exception to this general rule. In St. Paul Fire & Marine Insurance Co. v. Brunswick Grocery Co., 113 Ga. 786, 39 S.E. 483 (3), it was held: "An assignment of a policy of fire insurance must be in writing." See N.W. National Insurance Co. v. Southern States Phosphate & Fertilizer Co., 20 Ga.App. 507, 93 S.E. 157 (4-a), and cases cited. In National Fire Ins. Co. v. Grace, 106 Ga. 264, 32 S.E. 100, the Supreme Court held that--

"In order to transfer the legal title to a policy of fire insurance from the person to whom the policy was issued to another, the assignment thereof must be in writing, and one other than the person to whom it was issued cannot, in his own name, maintain an action thereon, unless the policy has been duly assigned to him in writing."

In Trader's Insurance Co. v. Mann, 118 Ga. 381, 45 S.E. 426 (1), the Supreme Court says:

"A suit on a policy of insurance must be brought in the name of the holder of the legal title."

In Hartford Fire Ins. Co. v. Davenport, 37 Mich. 609, it is held that--

"The person to whom and for whose benefit an insurance policy is issued, and in whose name it stands, is it legal owner."

In the opinion in that case on page 613 Justice Campbell said:

"We are also of opinion that the plaintiffs below showed no right to sue upon the contract. The parties to this policy were Headly [the insured] and the company. Van Buren v. St. Joseph County Village Ins. Co., 28 Mich. 404; Clay Fire & Marine Ins. Co. v. Huron Salt & Lumber Mfg. Co., 31 Mich. 346. The policy was to insure his interest and not that of the mortgagees, and any money paid to them would enure to his benefit. They hold no assignment of the policy and sue as original parties."

In Thatch v. Metropole Insurance Co. (C. C.) 3 McCrary, 387:

"O. obtained from defendant insurance on certain premises, the policy containing this provision: 'Loss, if any, payable to T., as his interest may appear'--O. being at the time indebted to T., and this indebtedness being secured by trust deed upon the premises covered by the insurance. The premises were destroyed by fire, and T. filed his complaint, demanding judgment on the policy against the insurance company which issued it. Defendant demurred."

It was held that--

"O., being the owner of the policy, is alone entitled to sue on it. T. has no right of action, and the complaint is bad on demurrer."

See the same case in 11 F. 29.

Among the many cases which hold that when a loss payable clause is attached to an insurance policy, and a loss occurs, the insured is the proper party to bring suit, are the following: Minnock v. Eureka F. & M. Ins. Co., 90 Mich. 236, 51 N.W. 367 (1); Perry v. Dwelling House Ins. Co., 67 N.H. 292, 296, 33 A. 731, 68 Am.St.Rep. 668; St. Paul Fire Ins. Co. v. Johnson, 77 Ill. 598 (1); Williamson v. Michigan Ins. Co., 86 Wis. 396, 57 N.W. 46, 39 Am.St.Rep. 906; Martin v. Franklin Fire Ins. Co., 38 N. J. Law, 140, 20 Am.Rep. 372; Kane v. Hibernia Mutual Fire Ins. Co., 38 N. J. Law, 441, 20 Am.Rep. 409.

There was no transfer in writing from the assured to the plaintiff of the policy sued on in the case sub judice. Attaching the loss payable clause thereto did not have that effect. N.W. National Ins. Co. v. Southern States Phosphate & Fertilizer Co., 20 Ga.App. 506, 93 S.E. 157 (2); Hartford Fire Ins. Co. v. Liddell, 130 Ga. 13, 60 S.E. 104, 14 L.R.A. (N. S.) 168, 124 Am.St.Rep. 157; Martin v. Franklin Fire Ins. Co., 38 N. J. Law, 140 (2), 20 Am.Rep. 372; Williamson v. Michigan Fire & Marine Ins. Co., 86 Wis. 393, 57 N.W. 46, 39 Am.St.Rep. 906. The legal title to the policy remained in the insured, and as long as this was true the Jefferson Standard Life Insurance Company could not maintain an action at law thereon in its own name, or for the use of, or for the benefit of, or as the appointee of, the insured. This is true because:

"The plaintiff, having no right of action at all, cannot recover for his own benefit or for the use of another." Wright v. Continental Insurance Co., 117 Ga. 499, 43 S.E. 700(1).

"To maintain a suit for the use of another, there must be a legal right of action in the party bringing the suit." State of Georgia v. Bank of Quitman, 117 Ga. 849, 45 S.E. 236.

See, also, Terrell v. Stevenson, 97 Ga. 570, 25 S.E. 352 (1).

The rulings in N.W. National Insurance Co. v. Southern States Phosphate & Fertilizer Co., supra, must be considered in the light of the facts of that case and the laws of the state, and, so considered, they are not authority for the position taken by counsel for the defendant in error that this suit is properly brought, because by amendment it is alleged that the suit is brought with the consent of the insured and that the plaintiff is the appointee of the insured to collect the policy. That case distinctly rules that "an assignment of such a contract must be in writing." What is said in that case in reference to a "loss payable clause" is obiter, because there was no such clause in the certificate or policy sued on. The plaintiff sued as the "legal holder" of the policy, and planted his right to recover distinctly upon the ground that the insured had "assigned and transferred by their written indorsement" the said policy.

In Hartford Fire Ins. Co. v. Amos, 98 Ga. 533, 25 S.E. 575 (1), it was held:

"Where an action was brought upon a policy of fire insurance by one other than the person to whom the policy was issued, the declaration alleging that the latter had 'for a valuable consideration transferred and assigned and delivered said policy of insurance to petitioner,' and also setting forth a copy of the policy, upon which, however, there was no copy of any assignment or transfer to the plaintiff, grounds of demurrer alleging that 'it does not appear that the alleged transfer and assignment of said contract was in writing,' and that 'said alleged transfer and assignment is not set forth and declared on,' ought, in the absence of an offer to amend by averring that the assignment was in fact in writing and by setting forth the writing itself, to have been sustained."

See 98 Ga. 534, 25 S.E. 575 (1), and cases cited.

Under the ordinary loss payable clause the...