Ingold v. Phoenix Assur. Co.

Decision Date23 March 1949
Docket Number109
Citation52 S.E.2d 366,230 N.C. 142
PartiesINGOLD v. PHOENIX ASSUR. CO., Limited et al.
CourtNorth Carolina Supreme Court

Civil action on fire insurance policy.

Plaintiff and his brother leased from defendant Mary Winesette the lot known as the old Gulf Oil Company property in Plymouth, N C., for a term of five years, with the right of renewal for an additional five years. Later, plaintiff became the sole owner of said lease.

The lease permits the lesses to remodel the brick walls standing on the property 'into any type of building' they may desire and also to extend the building, either at the end or on the railroad side thereof. Pursuant to this authority the lessees, 'utilizing the said brick walls as a part therof, building same higher and longer,' constructed a metal roof building on the premises for use as a place of business for the sale of tires and tubes and as a tire recapping plant.

On January 24, 1947, defendant insurance company issued its policy of insurance in the sum of $6,000 to the lessor and lessees, jointly, insuring them against the destruction of or damage to said building by fire. Later, plaintiff having acquired the interest of his brother, J. R. Ingold, the policy was amended by endorsement so as to make him the sole lessee insured. At the time the Phoenix policy was issued there was a policy in the sum of $5,000, issued by the Aetna Insurance Company, outstanding and in force, insuring defendant Winesette against loss by fire. Each policy contained a pro rata liability provision.

On July 19, 1947, said building, except the original side walls and a small portion of the additions made by plaintiff, was totally destroyed by fire. The agreed loss was $6,000.

Plaintiff filed proof of loss and demanded the payment to him of the full amount of the loss, to the exclusion of the lessor. Defendant insurance company acknowledged liability but declined to pay the full loss to plaintiff. Thereupon plaintiff instituted this action to recover said loss.

Defendant insurance company, answering, admitted the loss, pleaded the $5,000 policy issued by Aetna Insurance Company to defendant Winesette and the payment of $2,727.27, or five-elevenths of the loss thereunder, conceded liability for sixelevenths of the loss and offered to pay the same, to wit, $3,272.73, to the insured under the policy.

The answer of defendant Winesette raises certain issues in respect to rent not material to this appeal.

When the cause came on for hearing in the court below, the parties waived trial by jury and agreed that the presiding judge should find the facts and render judgment thereon.

Thereupon, after hearing the evidence, the court found the facts and concluded that (1) defendant insurance company is liable to the insured in the sum of $3,272.73, with interest from July 19, 1947 (the date of the fire) and (2) plaintiff 'is entitled to receive the present cash value of the income from $6,000' for the unexpired term of the lease and extension period, to wit, $1,762.56, with interest from July 19, 1947. It thereupon rendered judgment that plaintiff recover said sum of $1,762.56 and defendant Winesette recover $1,510.17, each with interest from July 19, 1947. Plaintiff and defendant insurance company each excepted and appealed.

Carl L. Bailey, of Plymouth, for plaintiff-appellant.

Murray Allen and R. P. Upchurch, both of Raleigh, for Phoenix Assur. Co., Limited.

Norman & Rodman, of Plymouth, for Eli Winesette and Mary Winesette.


The appeal of the plaintiff poses two questions for decision: (1) Was plaintiff the sole owner of the building destroyed by fire and as such entitled to the proceeds of the fire insurance policy sued on, and if not (2) Did the court below make proper apportionment of the recovery on said policy?

Whatever is so firmly affixed or annexed to the freehold as to become thoroughly and substantially a part of the realty cannot afterward be removed except by him who is entitled to the inheritance. And so, as a general rule, a building on land is considered a part of the realty, or at least it is so presumed. Feimster v. Johnson, 64 N.C. 259; Springs v. Atlantic Refining Co., 205 N.C. 444, 171 S.E. 635, 110 A.L.R. 474; Brown v. Ward, 221 N.C. 344, 20 S.E.2d 324; Haywood v. Briggs, 227 N.C. 108, 41 S.E.2d 289, 171 A.L.R. 480; 22 A.J. 714, 778.

At common law all buildings become a part of the freehold as soon as they are placed upon the soil. Kutter v. Smith, 2 Wall. 491, 69 U.S. 491, 17 L.Ed. 830.

'The ownership of land is not confined to its surface, but extends indefinitely, downwards and upwards. Cujus est solum, ejus est usque ad coelum. 2 Black. Com., 18. It includes not only the ground or soil, but everything which is attached to the earth, whether by the course of nature, as trees and herbage, or by the hand of man, as houses and other buildings. Co.Lit., 4a. ' Gilliam v. Bird, 30 N.C. 280, 49 Am.Dec. 379; State v. Martin, 141 N.C. 832, 53 S.E. 874.

The trend of modern decisions has tended to relax the rigidity of this common law rule so that now, subject to certain limitations, the intent of the parties as evidenced by their contract, express or implied, is controlling. Springs v. Atlantic Refining Co., supra; Feimster v. Johnson, supra; 22 A.J. 728; Annotation, 77 A.L.R. 1400. But the burden of proof is upon the party who claims a building is personal property to show that it retains that character. 22 A.J. 778.

Here there was no express agreement that the building erected by plaintiff was to retain the character of a trade fixture removable by plaintiff at the end of his term. The facts and circumstances surrounding the execution of the lease and the erection of the building refute the suggestion that it was so intended by the parties. It is expressly stipulated in the lease agreement that in the event plaintiff should discontinue business and vacate the building before the expiration of the term of the lease plus the permissible renewal term, 'the building will automatically be turned over to' the lessors. The building was composed of two brick walls standing on the land at the time the lease was executed, raised and extended by plaintiff, the extension being of wood construction. It was erected for the better enjoyment of the land and not as a trade fixture, Pemberton v. King, 13 N.C. 376; Western North Carolina R. R. Co. v. Deal, 90 N.C. 110, and it could not be removed without injury to the freehold. 22 A.J. 724; Frost v. Schinkel, 121 Neb. 784, 238 N.W. 659, 77 A.L.R. 1381. The action of plaintiff in joining with the landlord as coinsurer was an acknowledgement of her insurable interest therein.

Plaintiff could have no right to remove the brick walls standing on the premises at the time the lease was executed. To attempt to remove the additions thereto would require him substantially to destroy the very thing he claims. The court below was not required to assume the parties so intended.

What then, as between the landlord and tenant, jointly insured, was the insurable interest of the tenant?

On this question this case is one of first impression in this jurisdiction. The parties have called our attention to no case from any other jurisdiction directly in point and we have found none.

We concur in the opinion of the court below that plaintiff's insurable interest under the circumstances here disclosed was the right to use the building during the continuance of his term. He did not purport to insure as the sole owner but joined with the landlord in so doing, thereby recognizing her property interest therein. Then when the loss occurred, he signified his unwillingness to have the fund used to replace the building. Instead, he abandoned his lease altogether. To have that which represents the use of the building during the term when he has disavowed his liability under the lease would seem to be all that he can justly claim.

This conclusion is in line with the decisions of this Court in analogous cases where the rights of tenants for life and remaindermen in and to the proceeds of fire insurance policies were at issue. Graham v. Roberts, 43 N.C. 99; Campbell v. Murphy, 55 N.C. 357, at page 363; Annotation, 16 A.L.R. 313.

The recovery by the tenant may be on a different basis when he alone insures. Stockton v. Maney, 212 N.C. 231, 193 S.E. 137; Houck v. American Eagle Fire Insurance Company, 198 N.C. 303, 151 S.E. 628; Annotation, 126 A.L.R. 345.

The plaintiff tendered testimony tending to show that originally he obtained a policy in the sum of $6,000, insuring his interest alone, and defendant Winesette had a policy in the sum of $5,000, insuring her interest; that at the suggestion of the insurance agent...

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