Louis Girard Et Ux. v. Vermont Mutual Fire Insurance Co.

• Decision Date: 05 May 1931
• Parties: LOUIS GIRARD ET UX. v. VERMONT MUTUAL FIRE INSURANCE COMPANY
• Court: Vermont Supreme Court

154 A. 666

103 Vt. 330

LOUIS GIRARD ET UX. v. VERMONT MUTUAL FIRE INSURANCE COMPANY

Supreme Court of Vermont

May 5, 1931

January Term, 1931.

Insurance---Mortgagee's Status under "Open Mortgage Clause" or "Loss Payable Clause"---Plaintiff in Suit on Policy Containing Such Clause---Evidence of Mortgagee's Having Guaranteed or Paid Insurance Assessments---Fraud---Rule as to Admissibility of Evidence Where Fraudulent Burning of Insured Buildings Was Issue---Circumstantial Evidence---Discretion of Trial Court---Evidence To Show Insured Was Being Pressed by Creditors When Fire Occurred---Pendency of Attachment---Failure of Attaching Officer To Locate Certain Personal Property on Insured Premises When Serving Writ Shortly Prior to Fire---Necessity of Showing Admissibility of Evidence When Offered To Render Exclusion Error---False Statements of Insured in Claiming To Have Been Away on Occasion of Fire---Harmless Error---Admissibility of Note and Mortgage in Showing Interest of Mortgagee---Opinion Evidence---Trial---Facts Irrelevant to Issue---Evidence of Conviction of Insured for Burning Buildings on Which He Seeks To Recover Insurance---Exceptions Not Briefed.

1. Under so-called "open mortgage clause," or "loss payable clause" in fire insurance policy which merely provided that any loss should be payable to mortgagee as its interest might appear, mortgagee stands as an appointee, and not as assignee.

2. Fire insurance policy containing so-called "open mortgage clause" or "loss payable clause" is contract between insurer and mortgagor, insurance being on property of mortgagor as owner, and not on interest of mortgagee.

3. Suit on policy containing so-called "open mortgage clause" or "loss payable clause" may be brought in name of mortgagor for use and benefit of mortgagee.

4. Rights of mortgagee under so-called "open mortgage clause" or "loss payable clause" of fire insurance policy in case of loss are wholly derivative and cannot exceed those of mortgagor; and, if mortgagor wilfully burns property, mortgagee cannot recover though entirely innocent of wrong.

5. In action on fire insurance policy, where loss was payable to mortgagee as its interest might appear, admission of evidence that mortgagee, long before policy in suit was written, gave insurer written guarantee covering all assessments which might accrue on any policy insuring property on which it held mortgage, and that thereunder it had paid one assessment on policy in suit, offered and received as tending to show contractual relation between company and mortgagee based upon sufficient consideration, held prejudicial error, being outside any issue raised by pleadings, and not alluded to in charge nor in any way withdrawn or warned against.

6. When fraud is issue, evidence necessarily takes wide range.

7. In action on fire insurance policy, where defense was that insured had burned buildings to defraud insurer, though fraud in its ultimate aspect was burning of buildings, any fact or circumstance, before or after that event, which in any way indicated purpose to accomplish that fraudulent result, was admissible.

8. That insured burned buildings covered by fire insurance policy to defraud insurer, might be wholly established by circumstantial evidence.

9. When circumstantial evidence is resorted to for purpose of proving fraud, objections to testimony on ground of irrelevancy are not favored, because circumstantial facts depend largely upon their relation to each other, and acts and circumstances wholly inconclusive when separately considered, may by their number and joint operation be entirely sufficient to establish factum probandum.

10. Each act and circumstance offered to prove fraudulent burning of insured buildings must contribute something to that result, and, if they are as consistent with innocence as with guilt, they should be rejected.

11. Where acts and circumstances offered to prove fraudulent burning of insured buildings are fairly susceptible of two constructions, one which frees them from imputation of fraud must be ascepted.

12. Extent to which testimony shall be allowed to go into acts and circumstances to prove fraud is left somewhat to discretion of trial court.

13. Exclusion of testimony as to what insured said after fire as to his plans and what he said when he paid his assessment held within trial court's discretion.

14. In action on fire insurance policy, where defense was that insured had burned buildings to defraud insurer, evidence that witness was at insured's farm afternoon before fire to serve writ of attachment, was admissible to show that insured was being pressed by creditors.

15. In such action, exclusion of evidence that witness went to insured's farm to serve writ of attachment afternoon before fire, held harmless, where financial condition of insured was otherwise shown.

16. In such action, evidence that at time officer went to insured's farm to serve writ of attachment afternoon before fire and made search but could not find calves there to attach, held inadmissible, when evidence then failed to show that insurance was claimed on such calves.

17. To secure reversal for exclusion of evidence, it must be shown that evidence was admissible in then present aspect of case.

18. In action on fire insurance policy, where defense was that insured had burned buildings to defraud insurer, fact that insured had falsely stated that he was away night of fire was admissible as an incriminating circumstance.

19. In action on fire insurance policy payable to bank mortgagee as its interest might appear, where suit was for its use and benefit, admission of note and mortgage held by bank was not harmful, where existence of incumbrance had already appeared, and it had been alleged in complaint and not denied in answer or at trial.

20. Where suit on fire insurance policy, payable to bank mortgagee as its interest might appear, was brought and carried on for its use and benefit, it was necessary to show bank's interest, so that it might control judgment until its claim was extinguished, and in this connection note and mortgage held by bank were admissible.

21. Where witness had testified that he saw person in insured's house within few seconds after he had seen man with lantern and circumstances were not complicated or obscure, exclusion of witness' opinion about person or persons at house held without error, since jury could say as well as witness whether it was possible two persons were there.

22. In action on fire insurance policy for benefit of mortgagee, exclusion of record of foreclosure on mortgage prior to fire, offered to get full record of parties to that proceeding in case, held proper.

23. In such action, where defense was that insured had burned buildings to defraud insurer, record of insured's conviction for burning such insured buildings was inadmissible.

24. Exception to charge which is not briefed is waived.

ACTION OF CONTRACT on a fire insurance policy, brought for benefit of bank as mortgagee, to whom policy was made payable as its interest might appear. Pleas, general denial and that insured buildings had been burned to defraud insurer. Trial by jury at the April Term, 1930, Franklin County, Sturtevant, J., presiding. Verdict for plaintiff and judgment thereon. The opinion states the case.

Judgment reversed, and cause remanded.

Fred L. Laird and George M. Hogan for the defendant.

P. L. Shangraw, F. L. Webster, and M. H. Alexander for the plaintiffs.

Present: POWERS, C. J., SLACK, MOULTON, ^[1] WILLCOX, and THOMPSON, JJ.

OPINION

POWERS

This is an action on a fire insurance policy brought by the assured for the use and benefit of a mortgagee of the property covered. It appeared that Louis Girard and his wife Cora owned and occupied a farm in Berkshire, which they had mortgaged to the Richford Savings Bank & Trust Co., for the sum of $ 8,000. The buildings on the place were insured by the defendant by a policy which contained a provision that any loss on the real estate should be payable to the Bank aforesaid, as its interest might appear. The buildings burned, the company refused to pay, and this suit was brought. The defense is based upon the claim that the Girards or one of them burned the buildings to defraud the insurer. The trial below resulted in a verdict for the plaintiff, and the defendant excepted.

The rights of the parties here contending depend largely upon the clause in the policy making the loss payable to the bank. This clause is what is called the "open mortgage clause," or the "loss payable clause." It merely provides that any loss shall be payable to the mortgagee as its interest may appear. Under such a provision, a mortgagee stands as an appointee, and not as an assignee. The contract is between the insurer and the mortgagor; the insurance is on the property of the mortgagor as owner; it is not on the interest of the mortgagee. So a suit on the policy is well brought in the name of the mortgagor for the use and benefit of the mortgagee. Powers v. New England F. Ins. Co., 69 Vt 494, 495, 38 A. 148. The rights of the latter in case of loss are wholly derivative, and cannot exceed those of the former. These propositions are well established. Home Loan & Finance Co. v. Fireman's Fund Ins. Co., 221 Ala. 529, 129 So. 470, 471; Grosvenor v. Atlantic Fire Ins. Co., 17 N.Y. 391; Warbasse v. Sussex County Mut. Ins. Co., 42 N.J.L. 203; Brunswick Sav. Inst. v. Commercial Union Ins. Co., 68 Me. 313, 315, 28 A. R. 56; Brecht v. Law Union & C. Ins. Co. (C.C.A.), 160 F. 399, 18 L.R.A. (N.S.) 197, 206; Collinsville Sav. Soc. v. Boston Ins. Co., 77 Conn. 676, 60 A. 647, 69 L.R.A. 924, 925; Fitchburg Sav. Bank v. Amazon Ins. Co., 125 Mass. 431, 434; State Sav.Bank v. Shible...