Herrin v. National Fire Ins. Co. of Hartford, Conn

• Decision Date: 14 November 1933
• Docket Number: 1816
• Citation: 26 P.2d 637,46 Wyo. 330
• Parties: HERRIN v. NATIONAL FIRE INS. CO. OF HARTFORD, CONN
• Court: Wyoming Supreme Court

26 P.2d 637

46 Wyo. 330

HERRIN v. NATIONAL FIRE INS. CO. OF HARTFORD, CONN

No. 1816

Supreme Court of Wyoming

November 14, 1933

APPEAL from District Court, Laramie County; SAM M. THOMPSON, Judge.

Action by Dan Herrin against the National Fire Insurance Company of Hartford, Connecticut. Judgment for plaintiff, and defendant appeals.

Reversed.

For the defendant and appellant there was a brief by Lindsay &amp Larwill, of Denver, Colorado, and Edward T. Lazear, of Cheyenne, Wyoming, and oral argument by Mr. D. K. Wolfe, Jr. of Lindsay & Larwill, and Mr. Lazear.

Assured had knowledge of foreclosure proceedings prior to the fire and made no effort to inform the company or obtain its consent. There was a change of the interest of the assured in the property in question without notice to the company and without its consent. The policy of insurance became void by reason of the above facts, because of an express stipulation in the contract. Terminal Ice & Power Co. v. Insurance Co., 196 Mo.App. 241, 194 S.W. 722; Bawden Ins. Co v. American Insurance Co., 153 Va. 416, 157 S.E. 257; Insurance Company v. Hollis, 58 Fla. 268, 50 So. 985; Medley v. Insurance Company, 55 W.Va. 342, 47 S.E. 101; Neil Bros. Grain Company v. Hartford Fire Ins. Co., 1 F.2d 904; Jones & Pickett v. Michigan Insurance Co. 132 La. 847, 61 So. 846; Merchants Insurance Co. v. Brown, 77 Maryland 79, 25 A. 992. Knowledge of assured of foreclosure proceedings at any time prior to the fire, voided the policy. Delaware Co. v. Greer, 120 F. 917; Schroeder v. Insurance Co. 132 Cal. 18; 63 P. 1074; Peterson v. Ins. Co., 15 P.2d 249; Norris v. Insurance Company (S. C.) 33 S.E. 566. Change in interest of the assured prior to the fire, voided the policy. Excelsior v. Assurance Company (Mich.) 98 N.W. 9; Gibb v. Insurance Co. (Minn.) 61 N.W. 137; Bemis v. Ins. Co. (Penna.) 49 A. 769; Planter's Insurance Company v. Loyd (Ark.) 56 S.W. 44; Cook's Administrator v. Insurance Co. (Ky.) 6 S.W.2d 477.

For respondent there was a brief and oral argument by Mr. Ewing T. Kerr, of Cheyenne, Wyoming.

The agreed statement of facts, Record 27-29, was that assured had no actual knowledge of the foreclosure proceedings until after the foreclosure. There was no evidence that assured had knowledge of the foreclosure proceedings before that time. 26 C. J. 239. Brown v. Ins. Co., 195 S.W. 62. Mere hearsay is not sufficient to charge an assured with knowledge in such cases. Funk v. Anchor Fire Insurance Co., 153 N.W. 1048; Dodge v. Insurance Company 157 N.W. 955; Bellevue Co. v. Ins. Co., 39 P. 196; Sharp v. Insurance Company, 69 P. 253; Lancashire Ins. Co. v. Boardman, 49 P. 92; Dodge v. Insurance Co. 46 P. 25; Continental Insurance Company v. Ward, 31 P. 1079; Michigan Insurance Co. v. Lewis, 39 Mich. 41; Insurance Co. v. Norton, 96 U.S. 234. Forfeitures are not favored in the law. May on Insurance, 174-175. No foreclosure deed was issued prior to the fire, hence there was no change of interest or title, such as would defeat the right of recovery. Jones on Mortgages, Vol. 3, p. 1653; Mackintosh v. Insurance Company, 89 P. 102; Bank v. Insurance Co., 16 P. 1125; Wood v. Insurance Company, 44 N.E. 80; Insurance Company v. Brown (Md.) 25 A. 989; Hartford Insurance Company v. Kahn, 34 P. 895. The assured was without knowledge of the foreclosure and could not give notice of something not within his knowledge. Plaintiff had an insurable interest on the day the property was destroyed. In the cases cited by appellant, we believe the facts show that the fire occurred during the pendency of the foreclosure in which assured had been served with process, thus placing him upon his guard.

Lindsey & Larwill, D. K. Wolfe, Jr., and Edward T. Lazear in reply.

The knowledge of respondent was not constructive but actual. Funk v. Insurance Company, 153 N.W. 1048; Brown v. Connecticut Fire Insurance Company, 195 S.W. 62; Dodge v. Grain Shippers Mutual, 157 N.W. 955. Respondent acknowledged notice of foreclosure proceedings before the fire and failed to communicate the fact to the insurer. Such failure nullified the policy. Penn. Ins. Co. v. Malone, 115 So. 156. The rights of a mortgagor are not those of a mortgagee. Sharp v. Ins. Co., 69 P. 253; Dolliver v. Insurance Company, 89 A. 8. There had been a change of interest. The citations of respondent's counsel on this feaure of the case fail to sustain his position. The judgment should be reversed with instructions to enter judgment for appellant.

RINER, Justice. KIMBALL, Ch. J., and BLUME, J., concur.

OPINION

RINER, Justice.

This cause is here by direct appeal from a judgment of the District Court of Laramie County, the action being one to recover a fire loss, under an insurance policy. The trial below was to the court upon the pleadings and agreed statement of facts. From these, it appears as follows:

On September 3, 1927, plaintiff and respondent Herrin was the owner of certain property, located in Goshen County, Wyoming, consisting of a one story, shingle roof, frame dwelling house, a frame bunk house, and a barn and sheds attached. At that time, there was a mortgage on the aforesaid property and the real estate whereon it was situated, given by Herrin and his wife to J. H. Griffin and Brother, copartners, to secure the repayment of the sum of $ 2,000, said mortgage having theretofore been placed of record in the county last above mentioned. On September 3, aforesaid, the defendant and appellant, National Fire Insurance Company of Hartford, Connecticut, delivered to Herrin its fire insurance policy, whereby it insured said property for the sum of $ 800 for the period of five years from the date last mentioned, viz., until the 3rd day of September, 1932, which contained, among other provisions, the following:

"This entire policy shall be void, unless otherwise provided by agreement in writing added hereto, * * * (c) if, with the knowledge of the insured, foreclosure proceedings be commenced or notice given of sale of any property insured hereunder by reason of any mortgage or trust deed; or (d) if any change, other than by the death of an insured, take place in the interest, title or possession of the subject of insurance (except change of occupants without increase of hazard)."

On December 27, 1925, this mortgage was assigned to one Amanda Gerrett by an instrument, also, in due course, placed on the records of Goshen County. Two days later, or on December 29, she instituted foreclosure proceedings by advertisement, with the result that said property was sold to her by the sheriff of that county, on February 11, 1928, and she received a certificate of sale on that date, which was, likewise, promptly recorded.

On June 14, 1928, a written contract, signed by both Amanda Gerrett and Daniel Herrin, was entered into, whereby she agreed to sell to him the property covered by the fire insurance policy, and the land above mentioned, for the sum of $ 2,504.87, $ 300 of the purchase price to be paid on or before November 1, 1928, and the balance on or before July 1, 1929. This agreement provided that, when the purchase price was fully paid by him to her, she should "make to" him, "his heirs or assigns, a valid title, in fee simple, to said land and for that purpose shall execute and deliver to him a good and sufficient warranty deed for the same," subject to the 1928 taxes. There also appeared, in the contract, the following clause: "It is understood and agreed that in the event that Daniel Herrin shall sell his equity in the land or in this contract, the entire unpaid principal shall become due and payable at once."

Thereafter, and until the time of the trial of the case in the district court, Herrin remained in continuous possession of the premises, although he never redeemed the property from the sale under the mortgage. It seems, also, that no sheriff's deed was ever issued to Amanda Gerrett at any time prior to the commencement of this action on August 4, 1932.

The insured property was destroyed by fire on April 15, 1932, about four and one-half months prior to the expiration of the five year policy.

It was agreed by the parties hereto, on the trial, as part of the stipulated facts in the case, that "the plaintiff received no actual notice of the foreclosure proceedings until Amanda Gerrett communicated with him on or about the 14th day of June, 1928, and advised him that she had foreclosed the mortgage she held on said property and had received a certificate of sale from the sheriff, and that she then offered to sell the property back to him under a contract of sale."

The court below found, among other things, that the plaintiff "had no notice, whatever, of said foreclosure proceedings until he, the said plaintiff, received the contract for purchase, as aforesaid," and entered judgment in his favor for the amount of the policy and costs.

In urging that the district court erred in its disposition of the case, two contentions are presented by the appellant. First, it is said that foreclosure proceedings were commenced on the property covered by the policy, and, although these proceedings became known to plaintiff before the loss occurred, the insurer was never notified, and no written agreement relative to the matter was added to the policy. Second, it is insisted that there was a change in interest of the insured in the property in question without notice to the insurer and without its consent. It will be observed that these claims arise under the specific terms of the policy quoted above.

The clause providing that the policy should be void, unless otherwise agreed in writing, "if, with the knowledge of the insured, foreclosure proceedings be commenced or notice given of sale of any property insured hereunder by reason of any mortgage or trust...