Page v. Scott

• Decision Date: 19 June 1978
• Docket Number: No. 77-411,77-411
• Citation: 567 S.W.2d 101,263 Ark. 684
• Parties: Bert PAGE, Appellant, v. David S. SCOTT, Appellee.
• Court: Arkansas Supreme Court

Page 101

567 S.W.2d 101

263 Ark. 684

Bert PAGE, Appellant, v. David S. SCOTT, Appellee.

No. 77-411.

Supreme Court of Arkansas,In Banc.

June 19, 1978.

Friday, Eldredge & Clark by John Dewey Watson, Little Rock, for appellant.

Laser, Sharp, Haley, Young & Huckabay, Little Rock, for appellee.

FOGLEMAN, Justice.

Appellant Page owned a residence which he rented to appellee Scott by an oral lease. The residence was damaged by a fire caused by the negligence of Scott. Total damages amounted to $8,050. Page carried a fire insurance policy with Hartford Insurance Company. It covered damages in excess of $50, which was the amount deductible under the policy terms. The company paid Page $8,000. Page paid the remaining $50. Page sued Scott for the entire amount of the damages. Scott defended on the ground that the insurance company was the real party in interest and that its subrogation claim was barred as a matter of law. The real basis of this defense, as stated in the trial court by appellee's attorney, was the contention that the policy was procured for the mutual benefit of the lessor and the lessee with the implied agreement that Page would look solely to the insurance policy in case of loss by fire and not to the lessee. On this basis, the trial court held that no subrogation right existed, because the insurance company's rights were no greater than those of its insured. Judgment for $50 was rendered in favor of Page. The complaint for damages in excess of that amount was dismissed. Appellant asserts that the trial court erred in failing to enter judgment for the full amount of the stipulated damages. We agree, reverse the judgment of the trial court and remand the case for entry of a judgment in favor of the appellant for $8,050, the full amount of the damages.

There are certain pertinent matters which are not subject to serious dispute. Although appellee contended that the insurance company was the real party in interest, his attorney expressly stated that he was not requesting that the company be made a party plaintiff. Actually, where the insured has a deductible interest, he is the real party in interest in whose name an action such as this must be brought. Dowell, Inc. v. Patton, 221 Ark. 947, 257 S.W.2d 364; McGeorge Contracting Co. v. Mizell, 216 Ark. 509, 226 S.W.2d 566. See also, Erwin, Inc. v. Arkansas Louisiana Gas Co., 261 Ark. 537, 550 S.W.2d 174. The amount collected on a fire insurance policy by an insured does not, in any sense, constitute proceeds of the property and the coverage is personal to the insured and is for his benefit only. Whitley v. Irwin, 250 Ark. 543, 465 S.W.2d 906; McDonald v. Rankin, 92 Ark. 173, 122 S.W. 88; Langford v. Searcy College, 73 Ark. 211, 83 S.W. 944. The lessor and the lessee each had an insurable interest in the property, independent of the other; and either, or both, may separately insure his interest for his own benefit. Hale v. Simmons, 200 Ark. 556, 139 S.W.2d 696; Roesch v. Johnson, 69 Ark. 30, 62 S.W. 416. A landlord may recover from his tenant for fire damage caused by the negligence of the tenant. See Kirkpatrick v. Reese, 219 Ark. 124, 240 S.W.2d 1; 49 Am.Jur.2d 911, Landlord & Tenant, § 934. If there had been no insurance involved, Page's right to recover would have been beyond question and his right to recover the $50 deductible is not questioned. He was entitled to file the action in his own name, the insurer not being a necessary party, and the single cause of action could not be split. Washington Fire & Marine Ins. Co. v. Hammett, 237 Ark. 954, 377 S.W.2d 811. Appellee had no interest in any of the rights or interests of appellant in his insurance policy with Hartford. Dowell, Inc. v. Patton, supra; McGeorge Contracting Co. v. Mizzell, supra; Motors Ins. Corp. v. Coker, 218 Ark. 653, 238 S.W.2d 491. The only issue then, is whether the insurance taken by the lessor was for the benefit of both parties. There is no evidence that it was.

Appellee contends, however, that a lessor's insurer has no subrogation to the lessor's claim against the lessee. This undoubtedly would be true if the parties had agreed as a part of the transaction that insurance would be provided for the mutual protection of the parties. U. S. Fidelity & Guaranty Co. v. Aetna Casualty & Surety Ins. Co., 418 F.2d 953 (8 Cir., 1969). It would also be true if such an agreement could be implied from the terms of the agreement between the parties. Such an agreement has been implied when the terms of the lease require the landlord to carry insurance at the expense of the tenant, when the tenant's contractual obligation to return the leased property in good condition excepts loss by fire and when the agreement requires the lessor to carry insurance and use the proceeds for restoration of the property insured. Liberty Mutual Fire Ins. Co. v. Auto Spring Supply Co., 59 Cal.App.3d 860, 131 Cal.Rptr. 211 (1976); New Hampshire Ins. Co. v. Fox Midwest Theatres, 203 Kan. 720, 457 P.2d 133 (1969); Rock Springs Realty, Inc. v. Waid, 392 S.W.2d 270, 15 A.L.R.3d 774 (Mo.1965); General Mills v. Goldman, 184 F.2d 359 (8 Cir., 1950); Cerny Pickas & Co. v. C. R. Jahn Co., 7 Ill.2d 393, 131 N.E.2d 100 (1955). See also, 49 Am.Jur.2d 912, Landlord & Tenant, § 935; Annot., 15 A.L.R.3d 786. ¹

This is not the case here, because there is not even a suggestion that the agreement included any terms from which such an agreement could be implied. Appellee's statement that Page...