Rowland v. Boston Ins. Co.
| Decision Date | 21 November 1932 |
| Citation | 55 S.W.2d 1011,227 Mo.App. 597 |
| Parties | W. A. ROWLAND, TRUSTEE ET AL., RESPONDENTS, v. BOSTON INSURANCE COMPANY, APPELLANT |
| Court | Kansas Court of Appeals |
Appeal from Circuit Court of Randolph County.--Hon. A. W. Walker Judge.
AFFIRMED.
Judgment affirmed.
C. F Hale, James H. Whitecotton and Harry J. Libby for respondent.
Hogsett Smith, Murray & Trippe for appellant.
This is an action upon a mortgage clause of a fire insurance policy. There was a verdict and judgment in favor of plaintiffs in the sum of $ 2500. Defendant has appealed.
The facts show that one Zelva Smith was the owner of a business building situated in the City of Macon and occupied by herself and her partner, one Burris. They operated a wholesale confectionery business in the building under the trade name of Burris & Company. On April 6, 1929, defendant issued to Miss Smith a policy of fire insurance in the sum of $ 2500 upon the building. The premium for the whole term of three years was paid in advance. On October 28, 1929, Miss Smith executed and delivered to plaintiff, C. F. Hale, her promissory note in the sum of $ 2500, due on or before five years after date, bearing six percent compound interest from date and on the same day gave Hale a deed of trust upon the property insured to secure said note. On the day that she gave Hale the note and deed of trust she caused the local agent of defendant to attach a mortgage clause, in favor of Hale, to the policy, making the loss, if any, payable "to the insured and C. F. Hale or assigns as their respective interests may appear, subject, nevertheless, to all the terms and conditions of the policy." On November 29, 1929, a fire occurred damaging the building in an amount in excess of the amount of the policy.
The evidence further shows that shortly after the policy was taken out by Miss Smith she was sued in an alienation of affection suit, which was settled and dismissed about the first of the year 1930. It was the contention of the defendant at the trial of the present suit that as soon as that suit was brought against Miss Smith she sought to convey and encumber her property so as to avoid having it levied upon in case the suit went against her; that in pursuance of this course she conveyed the property insured to her brother by warranty deed on October 10, 1929, and that, having so conveyed the property, the provisions of the policy providing that it should be void if the interest of the insured be other than unconditional and sole ownership or if any change other than that of the death of the insured, should take place in the interest, title, or possession of the subject of insurance, were violated. It was also claimed by the defendant that the encumbrance given by Miss Smith to Hale was without consideration. This is based solely on the contention that it was mortgaged to him to defeat a possible judgment creditor.
The facts surrounding the execution of the warranty deed mentioned show that Garfield Arthur Smith and Zelva Smith are brother and sister; that in February, 1927, they settled their father's estate and in pursuance of this settlement Zelva Smith executed and delivered to her brother an unsecured note for $ 2600; that after she went into the wholesale confectionery business in Macon her brother requested her to give him some security for his note and for this purpose suggested that she give him a warranty deed on the store building and a second deed of trust on the farm, which she then owned, that they had inherited from their father, it being the intent that the warranty deed, as well as the second deed of trust, be used as security or mortgages for the payment of the said $ 2600 note Miss Smith consented to the plan and on October 10, 1929, called by telephone the plaintiff, C. F. Hale of Bevier, who was her cousin, a lawyer and a notary public, and instructed him to prepare a second deed of trust on the farm in favor of her brother to secure the said $ 2600 note and, also, to prepare a warranty deed to her brother covering the store building. Hale prepared the papers and mailed them to Miss Smith at Macon. She then signed and acknowledged them and put them on the flat top desk in the office of Burris & Company. Later that day she had another telephone conversation with Hale in which she told him that the warranty deed was to be used as a mortgage to secure the payment of the $ 2600 note. Hale advised her that a warranty deed was not the proper form of security and suggested that he would prepare a quitclaim deed from her brother and his wife to Miss Smith for the purpose of removing the cloud of the warranty deed, Hale being under the impression that the warranty deed had been placed of record.
On the following day (October 14th) Miss Smith, her brother and his wife, Hale and Burris met at the office of Burris & Company, Hale bringing with him the quitclaim deed which he had prepared. Hale, in the presence and hearing of both Miss Smith and her brother, stated that the warranty deed was not the proper form of security to use and advised against its use and Miss Smith and her brother then agreed that they would not use the warranty deed for any purpose but would destroy it and that the brother would accept the second deed of trust on the farm as his sole security for the $ 2600 note. Thereupon, Garfield Arthur Smith and his wife signed and acknowledged the quitclaim deed before Hale, as notary, who was still, at that time, under the impression that the warranty deed had been recorded. Garfield Arthur Smith then delivered the quitclaim deed to Miss Smith and she delivered to him the deed of trust. These papers were then placed on the desk in the office of Burris & Company. The warranty deed which lay on the desk during all of this time was not handled by any one that day, except as hereinafter stated. It was not delivered by Miss Smith to her brother. In fact, he did not see it. However, before the parties separated the subject of recording came up and Garfield Arthur Smith directed his wife to take the second deed of trust to the Office of the Recorder of Deeds to record it. Miss Smith then requested her sister-in-law to also take the quitclaim deed and record it. The sister-in-law then picked up what she believed to be the deed of trust and the quitclaim deed and took them to the office of the Recorder of Deeds and left them with him, paying the fee for recording them.
Several days thereafter Garfield Arthur Smith received by mail from the Recorder the recorded deed of trust and the warranty deed. This was the first time that Garfield Arthur Smith had seen the latter. Realizing that a mistake had been made he, at once, mailed the warranty deed to his sister at Macon, informing her of the error in recording. Thereafter, Miss Smith had possession of the warranty deed and her brother made no claim of ownership of the building, and the property remained continuously in the possession of Burris & Company. The quitclaim deed was recorded in March, 1930. The agent of the defendant was informed before the fire as to the mistake in recording the warranty deed and stated that it would not affect the insurance in any manner.
The evidence relative to the giving of the note and mortgage in the sum of $ 2500 to Hale by Miss Smith, shows that Hale represented her as one of her attorneys in the alienation suit; that he charged a fee of $ 1000 for his services and that at the time of the execution of the note and deed of trust he loaned her the sum of $ 1500 in cash. This made a total sum of $ 2500 that she was indebted to him at the time of the execution of the mortgage which was given to secure such indebtedness.
Defendant in making its contention that there was, in fact, no consideration for the $ 2500 note and deed of trust points to Hale's testimony in which he said that he did not check out from any bank the $ 1500 that he loaned Miss Smith but that he might have had it hid in a tin can somewhere. Miss Smith testified that she did not deposit the $ 1500, upon its receipt by her, in any bank and had stated, at one time, that the loan was $ 2500 in cash. Complaint is made of the refusal of defendant's instruction D, which reads as follows:
"The court instructs the jury that if you believe and find from the evidence that the alleged deed of trust held by plaintiffs was executed by Zelva Smith for the purpose of encumbering said property so that her creditors, if any, could not take the same under execution, and that no consideration in fact existed for said deed of trust, if you so find, then you are instructed that plaintiffs have no claim under said policy of insurance and cannot recover in this suit, and your verdict shall be for defendant."
This instruction was properly refused for the reason that even though the note and deed of trust given by Miss Smith were without consideration in that they were for the purpose of encumbering her property so as to defeat her creditors, the obligation was valid as between the parties thereto and in fact as to all of the world, except her creditors or a defrauded subsequent purchaser (Reynolds v. Faust, 179 Mo. 21, 28, 77 S.W. 855; Larimore v. Tyler, 88 Mo. 661, 668; McLaughlin v. McLaughlin, 16 Mo. 242 249; Stevenson v. Edwards, 98 Mo. 622, 12 S.W. 255; 27 C. J., pp. 653, 654, 655), and even had the jury believed that the encumbrance was fraudulent and void as against creditors and purchasers they would have been required to find for plaintiff as against defendant who was a mere insurer. [Third Nat'l Bk. v. Yorkshire Ins. Co., 267 S.W. 445; Groce v. Phoenix Ins. Co., 94 Miss. 201, 207, 48 So. 298; Steinmeyer v. Steinmeyer, 64 S.C. 413, 42 S.E. 184; Home Ins. Co. v. Allen, 93 Ky. 270, 273, 19 S.W. 743; The...
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