Meyer v. MFA Mut. Ins. Co., 37413

• Decision Date: 16 November 1976
• Docket Number: No. 37413,37413
• Citation: 543 S.W.2d 822
• Parties: Magalena MEYER, Plaintiff-Respondent, v. MFA MUTUAL INSURANCE COMPANY, Defendant-Appellant. . Louis District, Division Four
• Court: Missouri Court of Appeals

Page 822

543 S.W.2d 822

Magalena MEYER, Plaintiff-Respondent, v. MFA MUTUAL INSURANCE COMPANY, Defendant-Appellant.

No. 37413.

Missouri Court of Appeals, St. Louis District, Division Four.

Nov. 16, 1976.

Richeson, Roberts, Wegmann, Gasaway, Stewart & Schneider, John A. Schneider, Hillsboro, for defendant-appellant.

Don V. Nangle, St. Louis, for plaintiff-respondent.

NORWIN D. HOUSER, Special Judge.

Action by Magalena ¹ Meyer, a named insured in a policy insuring premises located in Jefferson County against the hazard of fire, against MFA Mutual Insurance Company, to recover on the policy. Tried to the court without a jury judgment was rendered for Magalena and against MFA for $15,000, the policy limit, $1,500 for vexatious refusal to pay, $2,500 attorney's fees and costs. MFA has appealed.

The insured premises were totally destroyed by fire on February 6, 1971 during the term of the policy, which was issued in the names of Vernon Meyer and Magalena Meyer. The insureds were husband and wife when the policy issued but divorced when the fire occurred. At both these times the premises were subject to a note and deed of trust in favor of Federal Housing Administration. The policy contained a loss-payable-to-mortgagee clause. Vernon Meyer filed for bankruptcy on October 26, 1970, listing his obligation to FHA as one of his liabilities. He was discharged in bankruptcy on March 1, 1971. The FHA loan was current on the date of the fire but later became delinquent. FHA made no claim under the insurance policy and made no effort to collect the note. Instead it foreclosed on the deed of trust. At the foreclosure sale on November 11, 1972 FHA bid in the amount of principal and interest due on the debt ($16,150), leaving no deficiency.

MFA's first point: 'The trial court erred in overruling defendant's motion to dismiss, in granting judgment for plaintiff and in overruling defendant's motion for new trial because plaintiff had no insurable interest in the property since plaintiff did not own it and plaintiff had no standing or right to bring suit under the circumstances.'

"In general a person has an insurable interest in the subject matter insured where he has such a relation or connection with, or concern in, such subject matter that he will derive pecuniary benefit or advantage from its preservation, or will suffer pecuniary loss or damage from its destruction, termination, or injury by the happening of the event insured against." American Central Insurance Co. v. Kirby, 294 S.W.2d 556, 561 (Mo.App.1956); Sander v. Mid-Continent Insurance Co., 514 S.W.2d 634, 637 (Mo.App.1974); Wrausmann v. Kansas City Fire and Marine Ins. Co., 477 S.W.2d 741, 742 (Mo.App.1972).

MFA asserts that on the date of the fire Magalena had no insurable interest in the property and suffered no loss as a result of the fire because she had previously disposed of the property; tht she conveyed her interest to Nicholas Watz and wife by warranty deed dated December 5, 1969, executed by Vernon and Magalena Meyer before Stanley A. Veronecki, a notary public of the City of St. Louis, and filed for record November 23, 1970. The trial court declared the deed null and void. On this review, under the case of West v. Witschner, 482 S.W.2d 733, 737(4) (Mo.1972), we reach the same result. There is convincing evidence of record to support a finding, and we find, that on or about December 5, 1969 Vernon Meyer, then being indebted to Magalena's brother Nicholas Watz in the sum of $1,500, and having applied to Watz for additional funds, with which to pay the upcoming instalment of $1,065 due FHA on January 1, procured the signature of Magalena Meyer on a blank general warranty deed from; that he carried the blank form bearing her signature, and a separate paper on which the legal description of the property was written, to City Hall, where Watz worked, and together the two had the legal description written into the deed form and the other blanks filled in, whereupon it was signed by Vernon Meyer before a notary public who acknowledged the execution of the deed by both Vernon Meyer and Magalena Meyer, notwithstanding the latter was not present and did not acknowledge the instrument, and neither knew of nor authorized the act of the notary. There was ample evidence to support the trial court's finding that Magalena Meyer lacked mental capability, was unable to grasp basic business essentials, had no intention of conveying her interest in the property, was not aware that she had signed a general warranty deed conveying her interest, and that up to the time of the fire she believed, and thereafter continued to believe, that she had an ownership interest in the property. On this review we further find, as did the trial court, that when Vernon Meyer approached Watz for further financial help (at a time when Watz knew the marriage was deteriorating) Watz insisted upon Vernon Meyer deeding his interest in the property to Watz as some kind of an assurance or pledge in an effort to make Vernon Meyer recognize his responsibilities to his family, and for the protection of Watz' sister Magalena; that the nother, sister, and the two brothers of Magalena took a continuing interest in her welfare, 'chipping in' from time to time over the years to the extent of hundreds of dollars, contributing to make payments due on the mortgage as well as to provided basic needs of food, etc. for Magalena and her children; that Watz had no intention of profiting personally from the conveyance; that Watz placed the deed which he did not record and had no intention of recording, in a folder with other papers and bills concerning the property; that later Watz moved out of the state; that before leaving Missouri he turned over to his brother Joseph Watz all of the papers relating to this property, including the unrecorded deed, together with the responsibility of looking after their sister Magalena; that the deed was filed for record by Joseph Watz, who was advised to do so by the FHA representative, to whom Joseph imparted the information that the deed was in existence.

The invalidity of the deed undercuts MFA's argument that payment of the policy proceeds to FHA would not have protected Magalena's equity of redemption because she had conveyed the property before the loss occurred. Magalena had an insurable interest in the property not only by virtue of her title interest but also by reason of the fact that she was obligated to FHA on the note and deed of trust she executed.

But, says, MFA, the policy was voided in its entirety as against everyone, including the insured, Magalena, because of the violation of a policy provision by mortgagee FHA requiring the mortgagee to notify the insurer of any change in ownership which shall come to the knowledge of the mortgagee, 'otherwise this policy shall be null and void.' While FHA's representative, who had been informed of the existence of the deed, did not report the apparent change of ownership to MFA, no forfeiture ensued for the reason that in fact and in law there was no change of ownership. There was a warranty deed of record which pretended or purported to indicate a change of ownership but as we have seen that deed was inoperative, null and void. In the case of policy provisions against alienation or change of interest or title a change in the evidence of title which is merely nominal or which is not of such a nature as to diminish the motives of insured to guard the property from loss, and where the real ownership remains the same, does not violate the policy. 43 Am.Jur.2d Insurance §§ 856, 857. On analogy, a forfeiture does not occur for failure of a mortgagee to notify the insurer of a change of ownership where there is a void conveyance.

Next, MFA confidently asserts that Magalena is not the real party in interest and has no right or standing to maintain this action; that the real party in interest is the mortgagee, citing Klamen v. American Automobile Ins. Co., 492 S.W.2d...