Farmers' Mut. Fire & Lightning Ins. Co. of Andrew County v. Crowley

• Decision Date: 05 November 1945
• Docket Number: 39606
• Parties: Farmers' Mutual Fire and Lightning Insurance Company of Andrew County, Missouri, v. J. O. Crowley (Interpleader) and Dale Harvey, Sarah Miner, Beatrice Harvey Beeler, Raymond A. Harvey, Geneva Harvey Slade, Dorothy Harvey, Catherine Smith, Rachel Schenk, Forest W. Harvey (Interpleaders), Appellants
• Court: Missouri Supreme Court

190 S.W.2d 250

354 Mo. 649

Farmers' Mutual Fire and Lightning Insurance Company of Andrew County, Missouri, v. J. O. Crowley (Interpleader) and Dale Harvey, Sarah Miner, Beatrice Harvey Beeler, Raymond A. Harvey, Geneva Harvey Slade, Dorothy Harvey, Catherine Smith, Rachel Schenk, Forest W. Harvey (Interpleaders), Appellants

No. 39606

Supreme Court of Missouri

November 5, 1945

Appeal from Andrew Circuit Court; Hon. R. B. Bridgeman Judge.

Affirmed.

J Harry Latham and Breit & Roberts for appellants.

(1) Respondent has an estate limited to the term of his life, or so long as he remains unmarried, in the insured property, and the appellants own a vested remainder in fee therein. Last Will and Testament of Mary H. Crowley, deceased. (2) The rider attached to the policy after the death of the insured at the instance of the respondent, did not constitute a new contract. Millard v. Beaumont, 194 Mo.App. 69, 185 S.W. 547. (3) Respondent did not insure his interest in the building by procuring the rider attached to the original policy. Fitterling v. Johnson County Mut. Ins. Co., 112 S.W.2d 347. (4) The insurance involved herein was taken out on the building by the devisor, Mary H. Crowley, now deceased, and the loss occurred after her death. Since the insurance was taken out prior to the creation of the limited estate of respondent, he is entitled only to the income from the proceeds of the insurance policy, for the duration of his limited estate, and the remaindermen appellants are entitled to the proceeds after the termination of the respondent's limited estate. Millard v. Beaumont, 194 Mo.App. 69, 185 S.W. 547; Fitterling v. Johnson County Mut. Ins. Co., 112 S.W.2d 347, 232 Mo.App. 805; 17 R.C.L., p. 642, sec. 32; 21 C.J. 955, sec 92; 126 A.L.R., p. 354, sec. 3; Graham v. Roberts, 43 N.C. 99; Haxall's Exrs. v. Shippen, 10 Leight, 536, 34 Am. Dec. 745; Cope v. Ricketts, 130 Kan 823, 288 P. 591. (5) The respondent, having but a limited estate in the insured building was not entitled to the whole proceeds of the insurance policy, but only to the income therefrom during the duration of his limited estate therein, and at the expiration of his estate, the appellants, as owners of the remainder in fee will be entitled to the immediate possession of said proceeds. Fitterling v. Johnson County Mut. Fire Ins. Co., 112 S.W.2d 347; Millard v. Beaumont, 194 Mo.App. 69, 185 S.W. 547; Farmers Mut. Fire & Lightning Ins. Co. v. Crowley, 187 S.W.2d 346; Clark v. Leverett, 159 Ga. 387, 126 S.E. 258; Clyburn v. Reynolds, 31 S.C. 91, 9 S.E. 973; Green v. Green, 50 S.C. 514, 27 S.E. 952; Sampson v. Grogan, 21 R.I. 174, 44 L.R.A. 711; 26 C.J. 436.

Lloyd W. Booher for respondent.

(1) This contract of insurance is not against public policy. Underwood v. Fortune, 9 S.W.2d 845; Spalding v. Miller, 45 S.W. 462. (2) One having only a life interest in property but insuring that interest in his own right and at his own expense is entitled to the proceeds, and remaindermen have no claim on proceeds. 26 C.J. p. 436, sec. 584, and cases cited; Saunders v. Armstrong, 61 S.W. 700. (3) An insurance contract is one personal to the party who makes it, and inures to the benefit only of those who are embraced in its provisions. Bennett v. Featherstone, 71 S.W. 589; Underwood v. Fortune, 9 S.W.2d 845; Millard v. Beaumont, 194 Mo.App. 69, 185 S.W. 845; Spalding v. Miller, 45 S.W. 462; Grant v. Buchanan, 81 S.W. 820.

Van Osdol, C. Bradley and Dalton, CC., concur.

OPINION

VAN OSDOL

This case has been transferred to this court by the Kansas City Court of Appeals (187 S.W. 2d 346), that court deeming its decision in conflict with that of the Springfield Court of Appeals in the case of Underwood v. Fortune, Mo. App., 9 S.W. 2d 845.

A fire insurance policy was issued to Mary H. Crowley insuring a dwelling on her land. Insured died during the term of the policy, having devised a life estate to her husband, respondent; remainder to appellants, her nieces and nephews. After insured's death, the insurer at respondent's request attached a "rider" to the policy recognizing that the insurable interest of Mary H. Crowley "ceases, and the title of the property insured . . . is now vested in the name of J. O. Crowley (respondent) and the insurance subject to all conditions of the said policy to continue in force . . ." During Mary H. Crowley's lifetime, assessments were paid by respondent from a "common fund" derived from income on lands owned by Mary H. Crowley and other lands owned by respondent which were operated as one enterprise. After the death of Mary H. Crowley, the assessments were paid by respondent.

Plaintiff insurance company filed and sustained its bill of interpleader and the trial court, examining the claims of the adversary claimants, respondent and appellants, found and adjudged respondent to be entitled to receive the entire proceeds of the policy.

Should respondent (a life tenant) be entitled to receive and use as his own the entire proceeds of the policy?

If a building has been insured prior to the creation of a life tenancy and is afterwards destroyed, the property is in effect converted into personalty and the life tenant is entitled only to a life estate in the proceeds of the insurance contract. Millard v. Beaumont, 194 Mo.App. 69, 185 S.W. 547; 17 R.C.L., sec. 32, pp. 642-3; 21 C.J., Estates, sec. 92, p. 954 at page 955. But it must be clear that the respondent in the instant case, by the procurance of the plaintiff insurance company's "rider," after the life estate became vested, effectuated a new contract of insurance, the company recognizing that the insurance (Mary H. Crowley as insured) was no longer in effect; and undertaking to continue to insure the property on the same terms and conditions, respondent as the insured. The case is not like the case of Millard v. Beaumont, supra, where the insurer and the life tenant seem to have recognized that the insurance originally issued to the creator of the life tenancy continued in force after the life estate became vested, and the life tenant merely procured a loss payable clause to himself "as his interest may appear."

It is the general rule that, in the "absence of any stipulation therefor in the instrument creating the life estate, or of any agreement by the life tenant to do so, he is not bound to keep the premises insured for the remainderman's benefit. Each can insure his own interest but failing such stipulation or agreement, neither has any claim to the proceeds of the other's policy. Consequently, where no such agreement is shown, insurance procured on the property by the life tenant will be treated as a contract for his indemnity and he will be entitled to the proceeds to the exclusion of the remainderman." Vol. I, Tiffany, Law of Real Property, sec. 65, p. 96. And the rule has been stated in somewhat different scope, ". . . where a legal life tenant insures the property in his own name and for his own benefit and pays the premiums from his own funds, he is, at least in the absence of a fiduciary relationship between him and the remainderman existing apart from the nature and incidents of the tenancy itself, or of an agreement between him and the remainderman as to which of them shall procure and maintain insurance, entitled to the proceeds of the insurance upon a loss; and the fact that the insurance was for the whole value of the fee is not generally regarded as affecting the right of the life tenant to the whole amount of the proceeds." 33 Am. Jur., Life Estates, Remainders, and Reversions, sec. 332, p. 838; Underwood v. Fortune, supra; Harrison v. Pepper, 166 Mass. 288, 44 N.E. 222; Spalding v. Miller, 103 Ky. 405, 45 S.W. 462; Gorman's Estate, 321 Pa. 292, 184 A. 86 (in Pennsylvania, "a life tenant is not a trustee of the premises for the remaindermen"); Blanchard v. Kingston, 222 Mich. 631, 193 N.W. 241 (note divergence of the view of Fellows, J., from that of Wiest, C.J.); Bennett v. Featherstone et al., 110 Tenn. 27, 71 S.W. 589 (here the court observed that the life tenant is a trustee "in a certain sense"); Thompson v. Gearheart, 137 Va. 427, 119 S.E. 67. The general rule is not considered by some courts (whose views are the bases of a so-called minority rule) as being based upon the soundest reasoning. Clyburn v. Reynolds, 31 S.C. 91, 9 S.E. 973; Green v. Green, 50 S.C. 514, 27 S.E. 952; Crook v. Hartford Fire Ins. Co., 175 S.C. 42, 178 S.E. 254 [here the court -- while nothing that the rule announced in Clyburn v. Reynolds and Green v. Green, supra, is at variance with the universally accepted doctrine that a contract of insurance is a personal contract and inures to the benefit of the party with whom it is made -- states that the (minority) rule so announced is the well-settled law of South Carolina]; Crisp County Lumber Co. v. Bridges, 187 Ga. 484, 200 S.E. 777; opinion of Fellows, J., in Blanchard v. Kingston, supra. It is said, "A life tenant . . . is a trustee for the remainderman, and is certainly liable for loss by fire caused by his negligence. He ought not to be allowed to put himself in a position in which he would have no motive for proper care of the estate by having a policy of fire insurance by which, in case of loss, he could substitute the full fee simple value of the buildings in place of his interest for life. We therefore think that a sound public policy requires that any money collected by a life tenant on a total loss by fire should be used in rebuilding, or should go to the remainderman, reserving the interest for life for the life tenant." ...