Koppinger v. Implement Dealers Mut. Ins. Co., 7926

• Decision Date: 23 May 1963
• Docket Number: No. 7926,7926
• Citation: 122 N.W.2d 134
• Parties: Joe G. KOPPINGER, Plaintiff and Respondent, v. IMPLEMENT DEALERS MUTUAL INSURANCE CO., a Corporation, Defendant and Appellant.
• Court: North Dakota Supreme Court

Page 134

122 N.W.2d 134

Joe G. KOPPINGER, Plaintiff and Respondent, v. IMPLEMENT DEALERS MUTUAL INSURANCE CO., a Corporation Defendant and Appellant.

No. 7926.

Supreme Court of North Dakota.

May 23, 1963.

Rehearing Denied June 13, 1963.

Syllabus by the Court

1. A vendor of real property has a statutory vendor's lien thereon under the provisions of Section 35-20-01, N.D.C.C., for so much of the price as remains unpaid and unsecured, otherwise than by the personal obligation of the buyer.

2. Where a vendor consents to the execution of a mortgage to a third party by the vendee, he waives the priority of this vendor's lien as to the mortgage, but does not extinguish or otherwise waive his lien unless he specifically so agrees.

3. A vendor of real property, in whose favor a vendor's lien exists, has an insurable interest in the property sold, to the extent of the debt secured by the lien.

4. Where an owner of real estate insures it under a fire insurance policy that does not contain a description of or restriction on the interest insured, or a provision against sale or alienation, and where the owner sells the property and is entitled to a statutory vendor's lien for an unpaid balance of the purchase price, the interest of the vendor represented by such balance is an insurable interest under the policy; and where the premises are damaged by fire, the vendor may recover from the insurer to the extent of the unpaid balance of the purchase price if within the amount fixed by the policy.

5. Where the vendor of real property is the sole insured named in a fire insurance policy containing no restrictions on a change of interest of the insured, and the vendor has a lien for the unpaid part of the purchase price under Section 35-20-01, NDCC, and a direct loss by fire is sustained, the vendor may recover from the insurer to the extent of the unpaid purchase price not exceeding the amount of coverage provided by the policy.

6. For reasons stated in the opinion, it is held that the insurer did not make an effective election to repair or rebuild in accordance with the terms of the policy.

Mackoff, Kellogg, Muggli & Kirby, Dickinson, for plaintiff and respondent.

Zuger, Zuger & Bucklin, Bismarck, for defendant and appellant.

MORRIS, Chief Justice (on reassignment).

This opinion is written after reargument. On October 4, 1958, the plaintiff and respondent, Joe G. Koppinger was the owner of Lot Six (6), Block Four (4), Gabbert's First Addition, New England, North Dakota, on which was situated a one story family dwelling. On that date, the defendant and appellant, Implement Dealers Mutual Ins. Co., issued a policy insuring the dwelling 'against all direct loss by fire' in the sum of $4,000, beginning on October 4, 1958, and expiring on October 4, 1963. The premium for the first year was paid by Koppinger, the named insured. On March 4, 1959, Koppinger sold the premises to Douglas G. Candee and Lyla M. Candee for $3,500, and on that day issued a deed to the purchasers. The Candees paid $2,000 cash and gave to Koppinger their note for $1,500 dated March 4, 1959, due July 1, 1961, payable in monthly installments of not less than $25 each. On March 23, 1959, the Candees paid $25, which was endorsed on the note, leaving a balance due of $1,475. On March 29, 1959, the dwelling was severely damaged by fire. The defendant insurance company was notified of the fire through its agent and shortly thereafter an insurance adjustor, Robert Peske, appeared on the scene and negotiated an adjustment with Mr. Koppinger and Mr. Candee, both of whom signed a sworn statement in proof of loss on April 9, 1959. The loss was adjusted at $2,339.93, which was the amount claimed in the proof. A second proof of loss for the same amount was later made out and sent to the insurance company by an attorney. The defendant company notified Koppinger about June 10, 1959, that it rejected the claim on the ground that there was no insurance coverage on the property because of the sale to the Candees.

Koppinger brought this action in August, 1959, upon a complaint which alleged the contract and policy of insurance on the property, the loss by fire, and the amount thereof. The insurance company answered and alleged that the complaint fails to state a claim upon which relief can be granted. It also alleged the sale of the property by Koppinger; that he did not own the property at the time of the alleged loss, and had no insurable interest therein. The case was tried to the court without a jury. The court determined that Koppinger had a vendor's lien on the property for $1,475, which constituted an insurable interest. This was the amount unpaid on the note from the Candees to the Koppingers at the time of the fire. The evidence shows that, between the time of the fire and the time of trial, the Candees paid $150, which appears by endorsements on the note. The judgment provides that 'the plaintiff shall hold the sum of One Hundred Fifty Dollars ($150.00) when the above mentioned amount is received from the defendant, as trustee for the Candees; that the promissory note held by the plaintiff and evidencing the amount of unpaid purchase price of the above premises shall be deemed satisfied when the amount of One Thousand Four Hundred Seventy-Nine Dollars ($1,479.00) shall be received from said defendant; * * *' The latter figure includes four dollars interest. The insurance company appeals and demands a trial anew.

The prime issue is whether, at the time of the fire, the insurance policy was in effect. That, in turn, depends on whether Koppinger, after the sale to the Candees, had an insurable interest in the property in question.

A vendor's lien is provided by Section 35-20-01, N.D.C.C., in the following language:

'One who sells real property has a special or vendor's lien thereon, independent of possession, for so much of the price as remains unpaid and unsecured otherwise than by the personal obligation of the buyer.'

The evidence shows that the Candees, with Koppinger's consent, executed a mortgage and obtained a loan of $2,700 on the premises. It is argued that this act on the vendor's part constituted a waiver of the vendor's lien that completely extinguished it. This is clearly not the case. The effect of the consent was to waive the priority of the vendor's lien so that it became subject to the mortgage. It did not destroy the lien. In an early case, Bray v. Booker, 8 N.D. 347, 79 N.W. 293, this court distinguishes between our statutory lien and the common law lien of the vendor of real property and uses this pertinent language:

'But the cases that discuss the existence or nonexistence of a vendor's lien from the standpoint of the vendor's intentions have no application in this state. Here it is a question of the existence or nonexistence of the conditions prescribed by the statute. If those conditions exist,--and confessedly, for the purpose of this point in this case, they do exist,--then the lien exists every time, and the law knows no implied provisos. Had the legislature intended that the vendor should have a lien for unpaid and unsecured purchase price in all cases unless the vendee, to the vendor's knowledge, desired to transfer the property to a third party free from incumbrances, the statute would have so declared. But there is no such limitation. The statutory right is absolute, and no court can ingraft implied limitations without throwing us back upon the old equity doctrine of intention. Of course, since the lien is for the benefit of the vendor, he may, as we said in the original opinion, waive the same. But such waiver must be by unmistakable words or acts. The law cannot imply it without destroying itself. And certainly the act of giving the deed--the very act which perfects the right to the lien--cannot be regarded as an express waiver of the lien. It is suggested that where the vendee refuses to give a mortgage, and states that he desires to transfer the property free from encumbrances, if then the vendor is permitted to enforce a lien upon the property it works a fraud upon the vendee. But this is not correct. There can be no legal fraud. If the purchase price be not paid or secured, the statute creates the lien. It exists as certainly as if the grantee had executed a mortgage. This he is bound to know. The grantor may or may not rely upon or enforce it, but it exists. If the grantee wishes to avoid it, he must secure an unmistakable waiver.'

At the time the sale was made, there remained of the purchase price the sum of $1,500 that the buyer was obligated to pay the vendor. This sum was unsecured and evidenced by the personal note of the buyer. Under the provisions of Section 35-20-01, N.D.C.C., the vendor had a statutory lien on the property sold for that amount. The lien was not extinguished by the mortgage given by the buyer with the consent of the vendor although the priority of the lien was waived as to that mortgage. At the time of the fire, the Candees had paid $25 on the note. The debt secured by the vendor's lien was reduced by that amount, leaving a balance of $1,475 still unpaid on the purchase price.

We come now to the matter of...