Fellmer v. Gruber, 59750
| Citation | 261 N.W.2d 173 |
| Decision Date | 18 January 1978 |
| Docket Number | No. 59750,59750 |
| Parties | John E. FELLMER and Dennis L. Saak, Appellants, v. Merrill B. GRUBER, Appellee. |
| Court | Iowa Supreme Court |
Redfern, McKinley, Olsen & Mason, Cedar Falls, for appellants.
Laird & Laird, Waverly, for appellee.
Heard by MOORE, C. J., and LeGRAND, REES, UHLENHOPP and McCORMICK, JJ.
This appeal involves a dispute over the right to insurance proceeds. The case was tried as an equitable action, and the trial court entered judgment for plaintiffs in the amount of $2,750.00. Plaintiffs appeal, and we reverse.
We set out briefly the background facts upon which this dispute depends. On May 14, 1974, defendant, Merrill B. Gruber, sold approximately 14 acres of real estate to John E. Fellmer and Dennis L. Saak under contract. The total purchase price was $24,000.00, of which $3,000.00 was to be paid down. The balance was to be paid in installments over a period of years. The contract provided among other things that Gruber should maintain insurance until the possession date January 1, 1975. The contract was later orally amended to postpone the date of possession to April 1, 1975. The amendment obligated Gruber to maintain insurance on the property until possession was delivered, which he did.
On January 12, 1975, one of the buildings on the property was destroyed by fire. The building is described in the record as a goat barn. It is the amount paid for this loss which is the subject of this dispute.
At the time of the fire, Gruber owned a herd of goats. These animals were housed in the goat barn, and they, too, were destroyed. The Travelers Insurance Company, which held a policy of insurance on the property, settled Gruber's claim for loss of his goats for $15,000.00, although Gruber claims the goats were worth much more than that. This settlement for the goats is separate from the one now under consideration except for defendant's claim Travelers intended him to have some of the goat barn settlement to compensate for the underpayment on the goat loss.
In addition, the Travelers paid $8,278.26 for loss of the goat barn. Plaintiffs claim they are entitled to all the insurance proceeds. Defendant asserts the value of the goat barn was only $2,750.00 and that plaintiffs are entitled only to that amount. The trial court held for defendant and we reverse.
Under our law, a contract for the purchase of real estate works an equitable conversion. The contract vendee becomes the equitable owner; the contract vendor holds title as trustee for his purchaser. H. L. Munn Lumber Co. v. City of Ames, 176 N.W.2d 813, 816, 817 (Iowa 1970). In the absence of agreement to the contrary, loss after that date falls upon the purchaser as the holder of the ownership interest. The seller has effectively divested himself of all interest in the property except the right to collect the purchase price.
In the present case the parties agreed that defendant vendor would carry insurance on the property until an exchange of possession was effected. Under this record, Gruber carried the insurance for the benefit of the plaintiffs. Any insurance proceeds paid for loss to the real estate were held by him as trustee for them.
The peculiar circumstance in this case is that the amount paid by Travelers...
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In re Williams
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