Hahn v. Nat. Am. Fire Ins. Co., 19366.

• Decision Date: 03 April 1939
• Docket Number: No. 19366.,19366.
• Citation: 127 S.W.2d 94
• Court: Missouri Court of Appeals
• Parties: OTTO HAHN ET AL., RESPONDENTS, v. NATIONAL AMERICAN FIRE INS. CO., APPELLANT.

127 S.W.2d 94

OTTO HAHN ET AL., RESPONDENTS, v. NATIONAL AMERICAN FIRE INS. CO., APPELLANT.

No. 19366.

Kansas City Court of Appeals. Missouri.

April 3, 1939.

Appeal from the Circuit Court of Linn County. — Hon. Paul Van Osdol, Judge.

AFFIRMED.

G. Derk Green for respondents.

The policy of insurance sued upon contained a mere "open mortgage," as distinguished from a "union mortgage" clause. Under such clause the rights of the mortgagee are dependent in their entirety upon the rights of the mortgagor, and a release executed by the former is binding upon the latter. Berry v. Equitable Fire & Marine Ins. Co. (Mo.), 298 S.W. 63; Allen v. Fidelity-Phenix Insurance Co. (Mo. App.), 285 S.W. 761; Prudential Insurance Co. v. German Mutual Fire Insurance Assn. (Mo. App.), 60 S.W. (2d) 1008; Prudential Insurance Co. v. German Mutual Fire Insurance Assn. (Mo. App.), 105 S.W. (2d) 1001; Everhart v. Atlantic Fire Insurance Co. (N.C.), 140 S.E. 78; Girard v. Vermont Mutual Fire Ins. Co. (Vt.), 154 Atl. 666.

Price, Shoemaker, Brown, Douglas & Brown for appellant.

(1) The payment of $5.78 to Harold Brown did not release defendant from liability for the reason that the payment of a less sum than was admitted to be due does not operate as a satisfaction and release. Corpus Juris, Fire Insurance, sec. 614, 26 C.J. 453; Biddlecom v. General Accident Assur. Corp., 152 S.W. 103, 167 Mo. App. 581; Stricker v. Metropolitan Life Ins. Co., 237 S.W. 894; Dodt v. Prudential Ins. Co., 171 S.W. 655, 186 Mo. App. 168; Cassville Roller Mill Co. v. Aetna Ins. Co., 79 S.W. 720, 105 Mo. App. 146. (2) Where assignee or assignor acting alone adjusted his own loss only, which was less than the total loss, the other may maintain an action for the residue. Summers v. Home Insurance Company, 53 Mo. App. 521. (3) The policy provides for payment to the mortgagee as interest may appear and provides for notice before cancellation, and there is an enforceable contract by mortgagee. Prudential Ins. Co. v. German Mutual Fire Ins. Assn., 105 S.W. (2d) 1001. (4) Mortgagee has a vested interest at the time of the loss and this cannot be defeated by any subsequent act of the mortgagor or by any release executed by him. 26 Corpus Juris, Fire Insurance, sec. 460; Berthold v. Clay Fire Ins. Co., 2 Mo. App. 311; 26 Corpus Juris, Fire Insurance, sec. 81; 26 Corpus Juris, Fire Insurance, secs. 531, 588, 612; R.C.L., Col. 14, Insurance, sec. 565; 19 L.R.A. 321; Hathaway v. Orient Ins. Co., 134 N.Y. 409, 32 N.E. 40, 17 L.R.A. 514; Ebensburg Assoc. v. Westchester Fire Ins. Co., 28 Pa. Sup. 341; Bergman v. Commercial Union Ins. Co., 12 Ky. 942.

SHAIN, P.J.

In this action plaintiffs (partners) seek to recover from defendant for loss by fire of an automobile covered by a policy issued by defendant wherein one Harold Brown was designated as assured and wherein it is stated that said automobile was at the time subject to a mortgage lien to plaintiffs in the sum of $446.

Language of the policy, as to payment of loss, contains the following: "Subject to all the provisions, exclusions, conditions and warranties contained in this policy, loss, if any, payable, as interest may appear, to Assured and Hahn Motor Company."

The trial in this cause was by the court, jury being waived. Cause was submitted on an agreed statement of facts as follows:

"STIPULATION AS TO FACTS"

"And thereupon, the parties to this cause, plaintiffs and defendant, by counsel, submit this cause to the court upon the pleadings and a stipulation as to facts, which said stipulation as to facts is in words and figures as follows, to-wit (omitting caption):

"`Come now the parties hereto, plaintiffs and defendant, and agree and stipulate that the facts in this case are as follows:

"It is agreed that the defendant made and executed its policy No. CA — 19772 on the 8th day of September, 1936, which policy is hereto attached as Exhibit A and made a part of this agreed statement of facts. That the premium therefor of Twelve Dollars and Ninety Cents ($12.90) was paid to defendant on the date of the issuance of said policy that the car described in said policy was sold and delivered prior to the issuance of said policy to the assured, Harold Brown, and at the time and at all times since the issuance of this policy said Harold Brown has been the owner of said automobile, subject to a chattel mortgage thereon dated August 15th, 1936, in favor of these plaintiffs, which chattel mortgage and note is hereto attached as Exhibits B and C and made a part of this agreement. That said chattel mortgage was on the 31st day of August, 1936, duly filed for record in the office of the Recorder of Deeds of Linn County, Missouri. That there remained due to plaintiffs on said chattel mortgage at the time of the fire hereinafter mentioned and now there is due the sum of Three Hundred Forty-seven Dollars and Ten Cents ($347.10). That after the execution of said policy and on the 3d day of August, 1937, said automobile was of the reasonable and fair market value of Three Hundred and Seventy-five Dollars ($375.00). That on said day said automobile was destroyed by fire while in the possession of persons unknown to the parties to this suit. That said automobile was totally destroyed, with the exception of the possible salvage of not to exceed a value of Twenty-five Dollars ($25.00). That due notice was given to the defendant of said loss, and proof of loss waived. That plaintiffs thereafter asserted their said claim under said policy to defendant, and made such claim during the month of October of 1936, and made claim of the defendant for the amount of the balance due on said chattel mortgage. That no part of said policy or the claim made by the plaintiffs has been paid to the plaintiffs, or to anyone for them. That on the 9th day of December, 1937, the assured, Harold Brown, in consideration of the sum of Five Dollars and Seventy-eight Cents ($5.78) paid to him executed the release which is marked Exhibit D and made a part hereof. That said release was signed and all transactions thereto were had without the knowledge or consent of these plaintiffs, and plaintiffs had no knowledge thereof until the filing of the answer in this suit.

                  "`(Signed) G. Derk Green
                            "`Attorney for Plaintiffs
                            "`Price, Shoemaker, Brown
                                Douglas & Brown
                            "`Attorneys for Defendant.'"
                

The policy, the chattel mortgage, the note of Brown to plaintiffs, and the release made by Brown are all fully set out in the record. The finding and judgment of the trial court were for plaintiff. The judgment was for $340 and costs. From the judgment, the defendant appealed. We will continue to refer to respondents as plaintiffs and to appellant as defendant.

The defendant presents but one point, to-wit:

"The policy of insurance sued upon contained a mere `open mortgage,' as distinguished from a `union mortgage' clause. Under such clause the rights of the mortgagee are dependent in their entirety upon the rights of the mortgagor, and a release executed by the former is binding upon the latter."

The plaintiffs present three points, as follows, to-wit:

"I.

"The payment of $5.78 to Harold Brown did not release defendant from liability for the reason that the payment of a less sum than was admitted to be due does not operate as a satisfaction and release.

"II.

"Where assignee or assignor acting alone adjusted his own loss only, which was less than the total loss, the other may maintain an action for the residue.

"III.

"The policy provides for payment to the mortgagee as interest may appear and provides for notice before cancellation, and there is an enforceable contract by mortgagee."

OPINION.

The one question upon which the issue in this case must be determined involves the effect of the release made by Brown to the assured, after the loss by fire had occurred. The release is in words and figures as follows:

"KNOW ALL MEN BY THESE PRESENTS, That I Harold Brown for the sole consideration of ($5.78) Five & 78/100 Dollars, to me in hand paid by the National American Fire Insurance Company of Omaha, Nebraska, the receipt whereof is hereby acknowledged, have released & discharged & by these presents do for myself, my heirs & assigns release & forever discharge the National American Fire Insurance from any & all claims of whatsoever kind or character or which in any wise arises out of, or in any way connected with a certain policy of Insurance, No. CA-19772 issued by the aforesaid insurance company on a Plymouth automobile bearing motor No. PD-79500.

"In Witness Hereof, I have hereunto set my hand & seal after reading the above & knowing its contents this 9th day of December, 1937.

                                        "Harold Brown."
                

The defendant admits in its brief that a "union clause" creates a separate agreement between the insurance company and the mortgagee, and that under such a clause that breach or other action taken by the mortgagor cannot affect the rights of the mortgagee. On the other hand, defendant contends that such rule does not apply if the policy but contains a mere open mortgage clause....