Sander v. Mid-Continent Ins. Co.

• Decision Date: 18 June 1974
• Docket Number: MID-CONTINENT,No. 35373,35373
• Citation: 514 S.W.2d 634
• Parties: Harry SANDER, Plaintiff-Appellant, v.INSURANCE CO., a corporation, Defendant-Respondent. . Louis District, Division Two
• Court: Missouri Court of Appeals

Page 634

514 S.W.2d 634

Harry SANDER, Plaintiff-Appellant, v. MID-CONTINENT INSURANCE CO., a corporation, Defendant-Respondent.

No. 35373.

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

June 18, 1974.

Rehearing Denied Oct. 15, 1974.

William R. Hirsch, Clayton, for plaintiff-appellant.

Frank E. Strzelec, Joseph M. Kortenhof, Kortenhof & Ely, St. Louis, for defendant-respondent.

GUNN, Judge.

Plaintiff-appellant appeals from a judgment in a court tried case denying his claim for proceeds under a fire insurance policy issued by defendant-respondent. Our decision turns on the issue of whether plaintiff, as assignee of a trustee under a deed of trust, had an insurable interest under the insurance policy. We find that plaintiff did have an insurable interest and is entitled to proceeds of the policy.

The case was tried on a stipulation of facts, the essentials of which follow. On May 7, 1970, Mr. and Mrs. Wilson Brown, Jr. entered into a contract for the purchase of a house in St. Louis from Linda Heiss. The Heiss property was subject to a deed of trust securing a loan of $11,500.00 with William R. Hirsch as trustee under the deed of trust. The sales contract was contingent upon the Browns' securing an FHA loan for $8,050.00, and conditional loan approval was obtained subject to certain work and repairs being performed on the house. The closing date of sale, as extended, was set for July 10, 1970. On July 10, some, but not all, of the necessary repairs had been made. Prior to the July 10, date, Gershman Investment Corp., who was to be the beneficiary of the deed of trust executed by the Browns, held the following documents: the general warranty deed from Miss Heiss to the Browns, a deed of trust executed by the Browns to Solon Gershman, as trustee for Gershman Investment Corp., the deed of trust note executed by the Browns in favor of Gershman Investment Corp., and real estate closing statements also executed by the Browns.

The loan from Gershman Investment Corp. to the Browns was never paid out nor were the loan or sale closing documents ever recorded, for on July 12, 1970, before the Browns moved into the house, the house was destroyed by fire.

Plaintiff predicates his cause of action on a fire insurance binder for $8,050.00 issued by defendant on July 10, 1970 designating the Browns as insureds. The insurance policy referred to in and made a part of the binder named William R. Hirsch, as trustee under the Heiss deed of trust, and Gershman Investment Corp., and their assigns, as loss payees under the policy. Plaintiff is the assignee of both Gershman Investment Corp. and William R. Hirsch.

Defendant beses its denial of plaintiff's claim for fire insurance proceeds on the fact that the loan proceeds had not been fully consummated and that plaintiff was not a mortgagee of the Browns who were named insureds in the insurance binder. The thrust of defendant's argument is that there was no mortgage in existence between Gershman Investment Corp. and the Browns, and, as a result, there was no debtor-creditor relationship established. Therefore, according to defendant, plaintiff as assignee of Gershman Investment Corp. cannot recover through any interest of Gershman Investment Corp. because there was no mortgage in existence involving the Browns.

But it is not through Gershman Investment Corp. that plaintiff is entitled to recover. The insurance binder also named William R. Hirsch, and his assigns, and the defendant's policy of insurance to be issued by virtue of the binder and specifically made a part of the binder named William R. Hirsch, along with Gershman Investment Corp., and the assigns of each, as loss payees under the policy. William R. Hirsch was the trustee under the Heiss deed of trust and a designated loss payee under the insurance policy. The question, then, is whether plaintiff, as assignee of Hirsch, has an insurable interest by reason of the grantor's deed of trust existing on the property at the time of the loss so as to allow his recovery of the insurance proceeds. We believe he does.

As assignee of Hirsch, plaintiff takes the place of Hirsch and assumes all his rights and limitations and stands as the real party in interest. Kroeker v. State Farm Mutual Insurance Co., 466 S.W.2d 105 (Mo.App.1971); St. Louis Union Trust Co. v. Hunt, 169 S.W.2d 433 (Mo.App.1943); Stewart v. Kane, 111 S.W.2d 971 (Mo.App.1938). Therefore, if Hirsch is entitled to recover the fire insurance proceeds, the plaintiff may stand in his stead and recover the proceeds in Hirsch's place. It is not enough, however, that Hirsch merely be named as a beneficiary under the policy. It is essential that the assignor have an insurable interest in the property as opposed to wagering through insurance that property in which he has no interest will be destroyed. The latter situation would be against public policy. Galati v. New Amsterdam Casualty Co., 381 S.W.2d 5 (Mo.App.1964); American Central Insurance Co. v. Kirby, 294 S.W.2d 556 (Mo.App.1956).

We find in Wrausmann v. Kansas City Fire and Marine Insurance Co., 477 S.W.2d 741 (Mo.App.1972) the definition of 'insurable interest' as adopted by the Missouri courts. There, quoting from 44 C.J.S. Insurance § 175, Judge Clemens said, l.c. 742:

'In general a person has an insurable interest in the subject matter insured where he has such a relation 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.'

William R. Hirsch, plaintiff's assignor, did stand to derive pecuniary benefit from the preservation of the Heiss-Brown house and did suffer pecuniary loss by reason of its destruction. There was an $11,500.00 deed of trust on the property with William Hirsch as trustee under the deed of trust. We find that with that deed of trust outstanding and not paid, William Hirsch, as trustee, had an interest in the preservation of the property; that such interest was an insurable interest within the meaning of Wrausmann v. Kansas City Fire and Marine Insurance Co., supra, and plaintiff, as Hirsch's assignee,...