Gillis v. Sun Ins. Office, Limited

• Decision Date: 26 November 1965
• Citation: 238 Cal.App.2d 408,47 Cal.Rptr. 868
• Court: California Court of Appeals Court of Appeals
• Parties: , 25 A.L.R.3d 564 Nancy J. GILLIS, Plaintiff and Respondent, v. SUN INSURANCE OFFICE, LTD., Defendant and Appellant. Civ. 22482.

Page 868

47 Cal.Rptr. 868

238 Cal.App.2d 408, 25 A.L.R.3d 564

Nancy J. GILLIS, Plaintiff and Respondent, v. SUN INSURANCE OFFICE, LTD., Defendant and Appellant.

Civ. 22482.

District Court of Appeal, First District, Division 1, California.

Nov. 26, 1965.

Thornton & Taylor, San Francisco, for appellant.

Sidney Rudy, Richard N. Rapoport, Wayne H. White, San Francisco, for respondent.

SIMS, Justice.

Defendant insurer has appealed from a judgment, following trial by the court, which awarded plaintiff, as assignee of the alleged insured under its policy, the sum of $3,365.03, together with interest from April 18, 1963, on account of a loss which the trial court found came within the provisions of the policy.

Appellant contends that the owner of the property, which is one of plaintiff's assignors, was not a party to the contract of insurance; that the loss was one which is excluded by the terms of the policy; and that the damages are erroneously computed. The foregoing contentions are accompanied by specific assignments of alleged errors of the lower court in making its findings of fact and conclusions of law, and in failing to find as requested by appellant.

An examination of the record reflects that the findings of fact made by the trial court, and its conclusions of law and the judgment which are predicated thereon are, with the exception of a minor adjustment to the amount of damages, sustained by the evidence and the applicable law.

The pertinent facts, as set forth in the findings and where disputed, as reflected by the evidence, are as follows:

During the period from May 3, 1961 to and including May 7, 1962, Trident, Inc., was a corporation duly organized and existing under the laws of this state. On May 7, 1962, Kingston Trio, Inc., a similar corporation, became the successor in interest to Trident, Inc., by means of a merger carried out pursuant to section 4124 of the Corporations Code of the State of California. First, Trident, Inc., and then Kingston Trio, Inc., as its successor, owned and operated the Trident Restaurant in Sausalito.

In July 1962 docking facilities were constructed on the waterside of the restaurant. These facilities, about 96 feet long, consisted of three fibre glass float sections. They were each reinforced with two by ten and two by six timbers and bolted together with the use of steel plates. The whole thing was designed so that if there was a failure the failure would be complete. A gangway was attached to the existing dock by a hinge which was fabricated out of a 1 1/4 inch pipe inside sections of 1 1/2 inch pipe that were respectively attached to the fixed deck off the restaurant and the gangway. The pipes were held together by pipe caps on the ends of the inner pipe. The other end of the gangway had steel wheels with rubber tires which rested on the float. Subject to the terms of a conditional sales contract, Kingston Trio, Inc. was the owner of these facilities at all times from their construction to their loss.

On July 12, 1962, defendant issued its policy of fire insurance. 'On Docks and Piers Situate: Bridgway, Sausalito, California' covering the foregoing docking facilities for a term of three years from July 12, 1962. The policy named 'Trident, Inc.' as the insured and contained a loss payable clause to 'United States Leasing Corporation' as mortgagee. The court's findings and conclusions and the express terms of the policy may be set forth more appropriately under the points to which they relate.

On or about January 30, 1963, a violent windstorm arose and caused the gangway to be lifted up and to fall violently upon the docking facility, and as a result thereof the facility was caused to subside into the water. Appellant does not question the last mentioned finding of fact, but does complain of the court's failure to find that the damage to the facility was contributed to and aggravated by water and waves. Evidence on this point is hereinafter set forth.

The court found cost of repairs in the sum of $3,365.03. The parties stipulated at oral argument that $50 of this sum should be remitted. Appellant further urges that all, or, in any event, an appreciable portion of the remaining cost is not attributable to the risks covered by the policy, and that the court erred in fixing the date from which interest would run.

Kingston Trio, Inc. filed claim and proof of loss with defendant on April 18, 1963. Defendant refused to pay. Kingston Trio, Inc. and United States Leasing Corporation thereafter assigned their claims to plaintiff, who was granted judgment as such assignee.

Respondent was entitled to sue on the claim as assignee of Kingston Trio, Inc.

The complaint alleged that the policy upon which the action is predicated was issued to and insured Trident, Inc. against direct loss to the insured property by windstorm. The answer admitted the foregoing, and in denying liability contains a recital that 'it is admitted that said policy insured docks and piers at Bridgway, Sausalito, California.' As a separate defense the defendant alleged: 'That in and by said policy of insurance it was and is provided that said policy cannot be assigned without consent to [sic] this defendant and that it would be void if the insured concealed material facts; that defendant never consented to assignment of said insurance to the existing corporation of Kingston Trio, Inc. or to plaintiff GILLIS and that said changes of name, merger and legal assignment were never disclosed to defendant by its insured, Trident, Inc.'

The trial court found that the policy was issued in the name of Trident, Inc., as a result of mistake; and that it insured the docking facility. It concluded as a matter of law that on the date in question a valid contract of insurance was in full force and effect between appellant, as insurer, and Kingston Trio, Inc., as insured, covering the docking facility. Appellant attacks the foregoing findings and conclusions and those related thereto which refer to compliance with terms of the policy by Kingston Trio, Inc., and its assignment to respondent. It also complains of the failure of the court to expressly find that the policy provisions required the consent of the insurer to an assignment of the policy, and that appellant had not consented to any such transfer; and the court's failure to render conclusions of law that Trident, Inc., as the named insured, had no insurable interest in the property, and that Kingston Trio, Inc. and respondent, as its assignee, had no greater rights.

Neither lack of insurable interest in Trident, Inc., nor lack of consent to assignment is determinative of the rights of respondent and her assignor in this case. It is true that the contract is void if the insured has no insurable interest; that such interest must exist when the insurance takes effect and when the loss occurs; and that any stipulation to the contrary is void. (Ins.Code, §§ 280, 286 and 287.) Nevertheless the interest of Trident, Inc., cannot be in issue here. The complaint alleged (and thereby created an ambiguity with the allegations, first referred to herein, which state that a policy was 'issued to' and 'insured' Trident, Inc.) that Trident, Inc., ceased to exist more than two months before the policy was issued. It, therefore, not only had no interest in the property the policy purported to insure, but could not even be a party to that contract. (See J. C. Peacock, Inc. v. Hasko (1960) 184 Cal.App.2d 142, 149-152, 7 Cal.Rptr. 490; and cf. J. C. Peacock, Inc. v. Hasko (1961) 196 Cal.App.2d 363, 364-370, 16 Cal.Rptr. 525.)

Similarly it is futile to speculate on whether or not Trident, Inc. could or did assign the policy to Kingston Trio, Inc. (see Ins.Code, §§ 2071, 2078; Bergson v. Builders' Ins. Co. (1869) 38 Cal. 541, 542-545; and Greco v. Oregon Mut. Fire Ins. Co. (1961) 191 Cal.App.2d 674, 682, 12 Cal.Rptr. 802); or whether or not the insurance would follow a transfer of the property from the insured to another (Ins.Code, § 305; and see Pacific Indem. Co. v. Industrial Acc. Com. (1934) 136 Cal.App. 158, 161-162, 28 P.2d 397; and cf. Capital Glenn Min. Co. v. Indus. Acc. Com. (1932) 124 Cal.App. 79, 83, 12 P.2d 122). At the time the insurance policy was issued Trident, Inc. was defunct, the property was owned by Kingston Trio, Inc. and there was never any attempt to transfer the insurance or the property after it was issued.

Further inquiry must be directed to a determination of whether or not appellant contracted with anyone, and if so whether or not that party had an insurable interest. Both parties have referred to Strauss v. Dubuque Fire & Marine Ins. Co. (1933) 132 Cal.App. 283, 22 P.2d 582. In that case a policy was issued in the name of three individuals followed by the phrase 'a corporation.' No such corporation existed, but there was a corporation named 'Allied Box & Excelsior Company' which owned the property which was the subject of the insurance. The court denied recovery to the plaintiffs whose names appeared in the policy on several grounds, to wit: they were not the owners of the property; they suppressed the true name of the owner which if revealed would have resulted in rejection of the application for insurance; they failed to pay the premiums; and swore falsely in regard to the proofs of loss. The case fails to illuminate the instant problem. Since in that case suit was brought by the nonexistent corporation to recover for loss to property, which was owned by another at the time the policy was issued and at the time of loss, it may demonstrate that suit would not lie on the claim herein involved in the name of the nonexistent Trident, Inc. The court particularly pointed out: 'There was no allegation of mistake and there is no finding of such an issue.' (132 Cal.App. at p. 291, 22 P.2d at p. 586.)

Capital Glenn Min. Co. v. Indus. Acc. Com., supra, 124 Cal.App. 79, 12 P.2d 122, which is cited and distinguished in Pacific Indemnity Co., s...