Kilpatrick v. Hartford Fire Ins. Co., Inc.
| Decision Date | 26 November 1985 |
| Docket Number | No. WD,WD |
| Citation | 701 S.W.2d 755 |
| Parties | Clyde H. KILPATRICK, et al., Plaintiff-Respondent-Appellant, v. The HARTFORD FIRE INSURANCE COMPANY, INC., Defendant-Appellant-Respondent. 36189. |
| Court | Missouri Court of Appeals |
Karl J. Madden, Jr., Moberly, for plaintiff-respondent-appellant.
Jeffrey O. Parshall, Knight, Ford, Wright, Atwill & Parshall, Columbia, for defendant-appellant-respondent.
Before SHANGLER, P.J., and TURNAGE and BERREY, JJ.
Clyde H. Kilpatrick brought suit against The Hartford Fire Insurance Company, Inc., on a fire insurance policy. Hartford denied liability on the ground that Kilpatrick was not the owner of the property at the time of the fire. Hartford also filed a counterclaim on three notes which Kilpatrick had given to a bank and which Hartford had purchased. The court directed a verdict in favor of Hartford on two of the notes and submitted Kilpatrick's claim under the fire insurance policy to the jury. The jury returned a verdict in favor of Kilpatrick in the face amount of the policy of $25,000.
Both parties have appealed. Kilpatrick contends he made a submissible case for damages and attorney fees for vexatious refusal to pay his claim and that Hartford had no right to purchase his notes. Hartford contends the court erred in giving an instruction. The judgment entered is affirmed with cause remanded on the issue of vexatious refusal to pay.
Kilpatrick owned a tract of land near Moberly on which was located a fireworks warehouse. Kilpatrick had purchased the real estate and warehouse in 1967. Sometime prior to 1975 and until the fire in 1977 Kilpatrick had carried insurance with Hartford and had paid the premiums.
The policy in question was issued to Kilpatrick on October 18, 1977, for a term of one year. A fire totally destroyed the building on September 4, 1978. Kilpatrick completed a proof of loss for Hartford in which he claimed to be the owner of the property and claimed the loss and damage to the property to be $45,000.
On receipt of the proof of loss Hartford searched the records and discovered a deed dated September 23, 1975 from Kilpatrick to Harry Bowman. Hartford thereupon denied the claim for the stated reason that Kilpatrick was not the owner of the property and therefore did not have an insurable interest.
The policy listed City Bank and Trust Company of Moberly as a mortgagee on the property. There is no evidence that Hartford made any further investigation to determine the ownership question beyond looking at the real estate records.
Kilpatrick testified that he gave his stepson, Bowman, a deed to the property as security for a loan of $5,000. He stated that he considered himself the owner after he gave the deed because he paid both the insurance premiums and the taxes and continued to occupy the property. Kilpatrick stated he had paid the loan but that Bowman did not deed the property back to him although Bowman would have done so at any time.
In August of 1972, Kilpatrick had given the bank a deed of trust on the property to secure a note. That note remained unpaid at the time of the fire. In addition, Kilpatrick gave the bank a note in May of 1978 which was also unpaid at the time of the fire. Kilpatrick gave the bank a third note which was foreclosed by Hartford after it had purchased the note from the bank. Thus, at the time of trial the property had been sold to satisfy one note but Hartford held two other notes that were not paid with a total balance of $19,461.70.
At trial Kilpatrick admitted that he owed the two notes held by Hartford and no issue was made as to Kilpatrick's liability on these. Accordingly, the court directed a verdict in favor of Hartford for the sum of $19,461.70.
Kilpatrick filed suit on the policy in July of 1980. Although Hartford filed an answer denying liability it did not tender the premium paid by Kilpatrick. It was not until October of 1980 that Hartford requested leave to amend its counterclaim to allege that Kilpatrick was due a credit on one of the two notes in the amount of $1,283 for the premium paid on the policy.
Kilpatrick contends that the court erred in directing a verdict on Hartford's counterclaim on the notes because Hartford did not have any right to purchase the notes from the bank and seek payment from Kilpatrick. The policy provides:
If this Company shall claim that no liability existed as to the mortgagor or owner, it shall, to the extent of payment of loss to the mortgagee, be subrogated to all the mortgagee's rights of recovery, but without impairing mortgagee's right to sue; or it may pay off the mortgage debt and require an assignment thereof and of the mortgage.
The court in Mosby v. Aetna Insurance Co., 285 Mo. 242, 225 S.W. 715 (1920) was faced with a policy provision virtually identical to the policy provision now in question. The court stated that the parties were free to enter into such an agreement and that the authorities who had considered the question had uniformly upheld and enforced such an agreement. 225 S.W. at 717. In Mosby, as in this case, the insurer had purchased the note. Kilpatrick cites no authority for his challenge to the right of Hartford to purchase the notes and under Mosby the right to do so must be upheld.
When Hartford purchased the notes from the bank and sought payment of them from Kilpatrick, it had not paid any amount on the fire claim. The purchase of the notes by Hartford did not constitute payment of the fire insurance claim. Rather, by purchasing the notes and seeking payment from Kilpatrick, Hartford stood in the same position as any party who had purchased the notes and then sought to enforce payment. Since the claim had not been paid by the purchase of the notes, the court correctly entertained Kilpatrick's action on the policy.
Kilpatrick further contends that the court erred in directing a verdict in favor of Hartford on his claim for damages and attorneys fees for vexatious refusal to pay the claim. Hartford refused to pay solely on the ground that Kilpatrick had conveyed the title to the property in 1975 and was therefore not the owner at the time of the fire in 1978. There is no doubt that Hartford failed to make an investigation beyond the record in...
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