Forbes v. American Intern. Ins. Co., 74

• Decision Date: 16 December 1970
• Docket Number: No. 74,74
• Citation: 260 Md. 181,271 A.2d 684
• Parties: Robert L. FORBES, Sr. v. AMERICAN INTERNATIONAL INSURANCE COMPANY.
• Court: Maryland Court of Appeals

Page 181

260 Md. 181

271 A.2d 684

Robert L. FORBES, Sr. v. AMERICAN INTERNATIONAL INSURANCE COMPANY.

No. 74.

Court of Appeals of Maryland.

Dec. 16, 1970.

Thomas P. Smith, Hyattsville (Feissner, Kaplan & Smith, Karl G. Feissner, William L. Kaplan, Frederick R. Joseph and Andrew E. Greenwald, Hyattsville, on the brief), for appellant.

F. Wainwright Barnes, Rockville, for appellee.

Argued before BARNES, McWILLIAMS, FINAN, SINGLEY and SMITH, JJ.

FINAN, Judge.

We are here presented with the question of whether the appellant, a succeeding life tenant, is entitled to the proceeds of a fire insurance policy where the destroyed improvement had been insured by the preceding life tenant who died prior to the fire, the loss having occurred before the expiration date of the prepaid policy.

One Clarence A. Hall died testate, and his will was probated in the Circuit Court for Prince George's County, Maryland, on April 15, 1957. The second clause of his will contained the following:

'I hereby give, devise and bequeath to my beloved wife, Alice H. Hall, for her lifetime, my farm located in Charles County, Maryland. Upon the death of my said wife, I hereby give, devise and bequeath said farm to my cousin, Robert Forbes, for his lifetime. Upon the death of said Robert Forbes, I hereby give, devise and bequeath said farm to his son, Clarence S. Hall Forbes, in fee simple.'

During the course of her life tenancy, Alice H. Hall on January 20, 1964, executed an insurance contract with the Fidelity Phoenix Insurance Company of New York whose successor in interest is the American International Insurance Company, appellee, to cover certain building and outbuildings on the farm in Charles County. The policy of insurance was to run for a period of five years and the premium charge for the five years was paid in advance. On November 4, 1968, she died and by virtue of her husband's will, Robert Forbes succeeded her as life tenant. On December 18, 1968, approximately one month before the insurance policy would terminate, and 44 days after Forbes became life tenant, the frame metal roof dwelling insured for the sum of six thousand dollars burned to the ground and was a total loss.

At the time the insurance policy was executed, and also at the time of the fire, the dwelling was rented to one Christine E. Queen. The appellee insurer was never informed of the change in interest of the property prior to the fire. Forbes, the appellant and present life tenant, brought an action to collect the proceeds of the insurance. The lower court granted the defendant insurer's motion for summary judgment from which this appeal was taken.

The insurance policy on the subject property contained the following pertinent clauses:

'This company * * * does insure the insured named above (ALICE H. HALL) and legal representatives, to the extent of the actual cash value of the property at the time of the loss * * * nor in any event for more than the interest of the insured * * *.'

'Assignment of this policy shall not be valid except with the written consent of this company.'

There had been no assignment of this policy by Alice H. Hall during her lifetime.

Alice H. Hall was vested with only a life estate in the insured property which interest expired by operation of law at the moment of her death. The appellant Forbes took a succeeding life estate which was a new and different interest than that held by Alice H. Hall. A contract of insurance is a personal contract. We know of no principle of law, nor have we been favored with any persuasive authority, which would support the proposition that the insurance contract in question should be so broadly construed as to cover the interest of the succeeding life tenant Forbes or vest him with a right to the proceeds of the policy.

The crunch of the appellant's argument is that the preceding life tenant, Alice H. Hall, had an obligation to insure the property to protect both her interest and the interest of the succeeding remaindermen ergo, the succeeding life tenant. In support of this contention the appellant cites several text writers, somewhat out of context, and relies on the case of Clyburn v. Reynolds, 31 S.C. 91, 9 S.E. 973 (1889), a case which represents what is recognized by authorities as being distinctly the minority view in this country. ¹

We perceive the majority view to be that expressed by the Virginia Supreme Court of Appeals in the case of Thompson v. Gearheart, 137 Va. 427, 119 S.E. 67 (1923), which is the subject of an annotation in 35 A.L.R. 36, and in which the court with simple clarity recognized the rule that:

'The life tenant was under no obligation to insure the property for the benefit of the remaindermen. Each of them had an insurable interest in the property, but a policy in the name of one could not cover the interest of the other. The nature and effect of an insurance contract is to indemnify the insured against loss or damage, and not someone else who is not a party to the contract; nor has such other party any lawful claim on the amount realized by the assured under the policy.' 119 S.E. at 68.

The Court in Gearheart also summarily dismissed Clyburn v. Reynolds, supra, relied upon by the appellant, with the following comment:

'* * * Under these circumstances (the insured in Clyburn had taken out the policy in his own name as life tenant but shortly before his death had the policy taken out in his own name as executor of his father's estate), the court reaches the conclusion that the life tenant is a trustee for the remainderman, and that a sound public policy requires that any money collected by a life tenant as a total loss by fire should be used in rebuilding or should go to the remainderman. This holding 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, and indemnifies him against loss; and that the amount paid by the company 'is in no proper or just sense the proceeds of the property.' 119 S.E. at 69.

See also Blanchard v. Kingston, 222 Mich. 631, 193 N.W. 241 (1923); Spalding v. Miller, 103 Ky, 405, 45 S.W. 462 (1898); Zehring's Estate, 4 Pa.Super. 243 (1897); Harrison v. Pepper, 166 Mass. 288, 44 N.E. 222 (1896); Addis v. Addis, 60 Hun 581, 14 N.Y.S. 657 (1891). There is also to be found a supplemental annotation in 126 A.L.R. 345 which expresses the same general rule in the following language:

'It is clearly the general rule that where a life tenant insures the property in his own name and for his own benefit and pays the premium 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 of 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, although a contrary view has occasionally been taken.' 126 A.L.R. 345.

Counsel for both parties to this appeal state in their briefs that the issue presented by this case is one of first impression in Maryland; however, we think the dictum found in Legge v. Canty, 176 Md. 283, 289, 4 A.2d 465 (1939), shows rather clearly that this Court some years ago manifested a deisposition to follow the general rule were the issue to be presented to it. In that case Judge Offutt, writing for the Court, stated:

'* * * Ordinarily, in the case of a life tenancy the life tenant would insure his interest, and the remaindermen would insure their interest * * *.' 176 Md. at 289, 4 A.2d at 468.

The apparent harshness of the result which we reach in this case should be tempered by the consideration that if Mrs. Hall, as life tenant, had neglected to insure the property and the succeeding life tenant Forbes or the remainderman had insured his interest and the property had been destroyed during her lifetime, she would have had no claim against them for the proceeds or any part of it. See Addis v. Addis, supra, 14 N.Y.S. at 658.

The appellant would also infer that the term 'legal representatives,' as used in the policy wherein it states 'This company * * * does insure the insured named above and legal representatives, * * *' is sufficiently broad in concept as to include a succeeding life tenant. We think the ascribing of such a broad scope of meaning to the term 'legal representatives' results in a distorted and tortured use of the term. Historically, the term 'legal representative' has usually carried the connotation of 'executors and administrators.' Black's Law Dictionary, 4th Ed. defines the term 'legal representative' as:

'The term in its broadest sense, means one who stands in place of, and represents the interest of another. * * *

'Primarily and usually the term connotes executors and administrators. * * *'

The definition in Black's Law Dictionary...