Phoenix Federal Sav. and Loan v. Great Southwest Fire Ins. Co.

• Decision Date: 04 September 1979
• Docket Number: No. 2,No. 52129,52129,2
• Citation: 603 P.2d 356
• Parties: PHOENIX FEDERAL SAVINGS AND LOAN, Plaintiff, v. GREAT SOUTHWEST FIRE INSURANCE COMPANY, Appellee, and Union Mutual Insurance Company, Appellant
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

Page 356

603 P.2d 356

PHOENIX FEDERAL SAVINGS AND LOAN, Plaintiff, v. GREAT SOUTHWEST FIRE INSURANCE COMPANY, Appellee and Union Mutual Insurance Company, Appellant.

No. 52129.

Court of Appeals of Oklahoma, Division No. 2.

Sept. 4, 1979.

Rehearing Denied Sept. 21, 1979.

Approved for Publication by Supreme Court Nov. 8, 1979.

Appeal from the District Court of Pittsburg County; James B. Martin, Trial Judge.

Action for recovery on each of two insurance policies because of fire damage to property sustained after a foreclosure sale but before the confirmation of sale. One policy ran in favor of plaintiff mortgagee by virtue of loss payable clause in mortgagor's policy, and the other policy had been purchased by plaintiff mortgagee after mortgagee bought the property at the foreclosure sale. Plaintiff mortgagee joined the two insurers as defendants. Trial court found both policies to be in effect and prorated the loss. The court also awarded attorney fees. The mortgagor's insurer appeals.

AFFIRMED

Ray H. Wilburn and Scott T. Knowles, Tulsa, for appellee.

C. H. Spearman, Jr., and Robert M. Beck, Edmond, for appellant.

NEPTUNE, Judge.

David and Billie Carr owned a home with the mortgage held by plaintiff, Phoenix Federal Savings and Loan (Phoenix Federal). Their homeowner's insurance policy was issued by defendant, Union Mutual Insurance Company (Union Mutual) and contained a loss payable clause in favor of the mortgagee. The Carrs defaulted and Phoenix Federal initiated a foreclosure action. A foreclosure sale was eventually held on May 17, 1976, and Phoenix Federal was the high bidder. A motion to confirm the sale was filed the same day.

Phoenix Federal, in its capacity as buyer, purchased a second insurance policy from Great Southwest Fire Insurance Company (Great Southwest). On May 27, 1976, fire ravaged the house while the Carrs were still living there. On July 30, 1976, the order confirming the sale was filed.

Phoenix Federal brought suit against both insurance companies. The trial court in the amended journal entry granted judgment against the insurance companies for both the fire loss and attorney fees. The court also granted pro rata a judgment against the noncontributing insurance company if one of them should pay the full amount. Great Southwest paid the entire judgment and Union Mutual, the mortgagor's carrier, appeals.

I

Appellant contends that all contractual obligations to Phoenix Federal terminated when Phoenix Federal's interest as mortgagee merged with its ownership interest acquired as buyer of the property at the foreclosure sale. Closely connected with this argument is the proposition that under the "relation-back doctrine" the rights of the parties involved in a foreclosure sale are fixed as of the date of sale and relate back to that date.

In a companion case, Carr v. Union Mutual Insurance Co., Ct.App., 50 O.B.A.J. 579 (1979), which was released for publication by order of the Supreme Court at 50 O.B.A.J. 1304 (1979), the Carrs sought to collect for their unscheduled personal property destroyed in the same fire that damaged the dwelling. The court found that the Carrs had an insurable interest during the period after the foreclosure sale and before its confirmation. The court stated:

"In the present case the redemption period, or at least the possibility of redemption, had not expired because the foreclosure sale had not been confirmed at the time of the fire. Therefore the Carrs still had an insurable interest in both the dwelling and their unscheduled personal property. Since the policy remained in effect at the time of the loss and the Carrs had an insurable interest which was insured, they were entitled to recover as a matter of law."

The above holding is dispositive of appellant's arguments. Because the Carrs had an insured interest remaining at the time of the fire, the mortgagee also retained its interest.

As for the "relation-back doctrine" which appellant advances based upon Christy v. Springs, 11 Okl. 710, 69 P. 864 (1902), it is correct that for some purposes the confirmation of sale may relate back to the foreclosure sale. But in the instant case and circumstances, the argument is not...