Loewenstein v. Queen Ins. Co.

• Decision Date: 21 December 1909
• Citation: 227 Mo. 100,127 S.W. 72
• Parties: LOEWENSTEIN v. QUEEN INS. CO. et al.
• Court: Missouri Supreme Court

127 S.W. 72

227 Mo. 100

LOEWENSTEIN v. QUEEN INS. CO. et al.

Supreme Court of Missouri.

December 21, 1909.

Rehearing Denied February 2, 1910.

On Motion to Transfer, March 30, 1910.

1. INSURANCE (§ 563) — PROOF OF LOSS — INVESTIGATION BY INSURER — RIGHT.

The insurer may investigate as to the extent of the loss, even though the policy requires insured to furnish proof of loss.

2. INSURANCE (§ 558) — WAIVER OR PROVISIONS FOR FORFEITURE — PROOF OF LOSS.

An insurance company may waive its right to proof of loss; and, if it knowingly induces insured to believe that it will waive formal proof, it is liable on the policy, if insured, acting on such belief, fails to make proof.

3. INSURANCE (§ 665) — ACTIONS ON POLICY — SUFFICIENCY OF EVIDENCE — WAIVER — PROOF OF LOSS.

Evidence held to show a waiver by an insurance company's adjuster of proof of loss by the owner of the property.

4. INSURANCE (§ 115) — INSURABLE INTEREST — MORTGAGEE.

A mortgagee has an insurable interest in the mortgaged property.

5. INSURANCE (§ 607) — ASSIGNMENT — ASSIGNMENT TO MORTGAGEE — VALIDITY OF CONTRACT — CONSIDERATION.

A policy, taken out by a mortgagee on his own account on the mortgaged property, may provide for an assignment of the mortgage debt, together with the security to the insurance company upon payment of any loss; the contract of insurance being a sufficient consideration for the assignment.

6. SUBROGATION (§§ 1, 31) — NATURE OF RIGHT.

One who, being secondarily liable, pays the debt is entitled, in the absence of any contract, to be subrogated to the creditor's rights against the debtor, including the right to security held by the former; the right of subrogation being an equity arising out of the facts, and not depending on contract, as does an assignment (citing Words and Phrases, vol. 7, p. 6723).

7. INSURANCE (§ 607) — SUBROGATION OF INSURER — CONSTRUCTION OF POLICY.

A provision of an insurance policy taken out by a mortgagee that, if the company pays the mortgagee, and shall claim as to the mortgagor that no liability existed, it shall be subrogated to all of the rights of the mortgagee, who shall transfer to it the notes and the trust deed, in order to be valid, must be construed as requiring proof that the policy is void as to the mortgagor; the company's mere claim that it is void not entitling it to subrogation.

8. INSURANCE (§ 536) — CONSTRUCTION OF POLICY — PROOF OF LOSS — EFFECT OF FAILURE.

A policy taken out for the benefit of the mortgagee on the mortgaged property provided that, if certain acts were done or omitted, such as taking out other insurance without the company's consent, etc., the policy should become void, but the mortgage clause provided that the policy should not become void as to the mortgagee by any act or omission of the mortgagor, or by any foreclosure, change in title or ownership, or increase in hazard, etc.; and, if the company paid the mortgagee, and claimed as to the mortgagor that no liability existed, it should be subrogated to all the rights of the mortgagee, who should transfer to it the notes and trust deed, and the policy also provided that it should become payable within six months after satisfactory proof of loss, and no action should be sustained on the policy until after full compliance by insured with such provision. Held, that the clause relative to proof of loss did not make the policy void for failure to furnish proof of loss, but was merely a time limitation upon the right of action; the provision in terms making it void for certain causes, except as to the mortgagee, relating to acts rendering

it void before the destruction of the property.

9. INSURANCE (§ 607) — SUBROGATION.

The insurance company was not entitled to be subrogated to the mortgagee's original rights under the mortgage upon paying him the amount of the mortgage debt after loss, and taking an assignment of the trust deed and secured notes, even though no formal proof of loss was made, as required by the policy; it not having been made void thereby, and the company having in fact received proof of the loss as to the mortgaged property by proof of loss made under another policy on personalty in the insured property, and having examined the mortgagor on the question of the loss resulting from the fire.

10. LIMITATION OF ACTIONS (§ 165) — OPERATION OF STATUTE.

The statute of limitations extinguishes the subject of the action only in the single instance of where plaintiff's title to realty is extinguished by adverse possession; the statute in all other cases only barring the right of action.

11. LIMITATION OF ACTIONS (§ 163) — OPERATION OF STATUTE — OPERATION AFTER PAYMENT.

The legal effect of payment of an obligation after it has been barred by limitations is the same as if it were paid before being barred.

12. CANCELLATION OF INSTRUMENTS (§ 6) — RIGHT OF ACTION — RIGHT TO CANCEL — DISCHARGE OF OBLIGATIONS.

Where an insurance company was not entitled to be subrogated to any of the mortgagee's rights under the mortgage, upon paying him the amount of the mortgage after loss, and taking an assignment of the trust deed and secured notes, the mortgagor could maintain an action against the company to compel the cancellation of a trust deed, on the ground that the debt was paid.

13. COURTS (§ 231) — JURISDICTION — SUPREME COURT — TITLE TO REALTY.

In an action by a mortgagor to cancel a trust deed held by defendant insurance company, to which it was assigned by the mortgagee, upon the latter being paid the amount of the mortgage debt after the loss, on the ground that the debt was paid by defendant's payment to the mortgagee, in which defendants prayed a foreclosure of the mortgage, title to realty was involved, so as to give the Supreme Court jurisdiction of an appeal dismissing the complaint, and rendering a money judgment for defendants on their cross-bill.

14. COURTS (§ 231) — JURISDICTION — SUPREME COURT — GROUNDS OF JURISDICTION — TITLE TO REALTY.

In order to give the Supreme Court jurisdiction of an appeal on the ground that title to realty is involved, the judgment itself must directly affect the title.

In Banc. Appeal from Circuit Court, St. Louis County; John W. McElhinney, Judge.

Action by Samuel M. Loewenstein against the Queen Insurance Company and others, in which defendants filed a cross-bill to foreclose a mortgage. From a judgment dismissing the bill, and for defendants on the cross-bill, plaintiff appeals. Reversed and remanded, with directions to enter judgment for plaintiff and to dismiss the cross-bill.

Lee Sale, for appellant. Barclay & Fauntleroy, for respondents.

VALLIANT, C. J.

This is a suit in equity, wherein the plaintiff seeks to cancel a mortgage or deed of trust held by the defendants, the insurance companies, on the ground that the debt secured thereby has been paid. The defendants by their answer and cross-bill deny that the debt has been paid, and assert that they purchased the same; that they are the owners thereof, and they pray a foreclosure. The trial resulted in a decree dismissing the plaintiff's bill and foreclosing the mortgage as prayed in defendants' cross-bill. From that judgment the plaintiff has brought this appeal.

The following facts of the case are undisputed: The title to the property is traced back to one Hopple, who in 1901 executed a deed conveying the land to one B. G. Farrar, trustee, to secure a principal promissory note for $2,800, due three years after date, and 12 interest notes. That is the deed of trust in dispute in this case. After executing that deed of trust Hopple, on the same day, sold the property to one Choisel, and Choisel afterwards sold it to Williams and wife; both the last-named conveyances were made expressly subject to that deed of trust, and the grantee in each conveyance assumed to pay those notes. The deed of trust required the owner of the property to insure the buildings to the amount of the mortgage debt and assign the policies to the trustee. Accordingly Choisel, while he owned it, took out two policies of insurance on the building for $1,550 each, one in the defendant the Queen Insurance Company of America the other in the defendant the Phœnix Assurance Company, London; that is, $1,500 each on the dwelling house, and $50 each on the outhouses, $3,100 in all. When Choisel sold the property to the Williamses he assigned the policies to them, with the written consent of the insurance companies. These policies were delivered to Farrar, the trustee, and were held by him when the fire hereinafter mentioned occurred. In each of the policies were the following clauses:

"Loss or damage, if any, under this policy, shall be payable to Bernard G. Farrar as mortgagee (or trustee), as interest may appear, and this insurance, as to the interest to the mortgagee (or trustee) only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the within-described property, nor by any foreclosure or other proceedings or notice of sale relating to the property, nor by any change in the title or ownership of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy. Provided, that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall, on demand pay the same. * * *

"Whenever this company shall pay the mortgagee (or trustee) any sum for loss or damage under this policy and shall claim that, as to the mortgagor or owner, no liability therefor existed, this company shall, to the extent of such payment, be thereupon legally subrogated to all the rights of the party to whom such payment shall be made, under all securities held as collateral to the mortgage debt, or may at its option, pay to the mortgagee (or trustee) the whole principal due, or to grow due on the mortgage with interest, and shall thereupon receive a full assignment and transfer of the mortgage and of all such other...