South Carolina Ins. Co. v. White
| Decision Date | 18 January 1990 |
| Docket Number | No. 1461,1461 |
| Court | South Carolina Court of Appeals |
| Parties | SOUTH CAROLINA INSURANCE COMPANY, Appellant/Respondent, v. Jack B. WHITE, Mary J. White and Heritage Savings and Loan Association, Inc., Now known as COMFED Savings Bank, Defendants, of whom Jack B. White and Mary J. White are Respondents/Appellants, and of whom Heritage Savings and Loan Association, Inc., now known as COMFED Savings Bank is Respondent. . Heard |
Thomas C. Salane, of Turner, Padget, Graham & Laney, Columbia, for appellant/respondent.
Ruben L. Gray, Sumter, for respondents/appellants.
Charles E. Carpenter, Jr., and R. Davis Howser, of Richardson, Plowden, Grier & Howser, Columbia, for respondent.
This is an action for declaratory judgment brought by South Carolina Insurance Company ("SCIC") to determine whether it provided coverage under a homeowner's policy to Jack B. and Mary J. White and to Heritage Savings and Loan Association, now known as COMFED Savings Bank, when a fire destroyed a house occupied by the Whites and owned by Heritage on February 24, 1987. The trial court held that the policy covered Heritage, but not the Whites. SCIC and the Whites appeal. We affirm in part, reverse in part, and remand.
The dispositive questions on appeal concern whether Heritage is entitled to recover as a mortgagee under the terms of the policy, whether the Whites had an insurable interest in the dwelling, and whether the policy's personal property coverage is severable from the coverage of the dwelling so as to afford the Whites coverage on the dwelling's contents.
On March 2, 1986, SCIC renewed and reissued to the Whites a homeowner's insurance policy covering their "residence premises" in Sumter County. An endorsement, effective May 27, 1986, named Heritage as a second mortgagee under the policy. SCIC was unaware, however, that the first mortgagee, First Federal Savings & Loan Association of South Carolina, had instituted foreclosure proceedings on September 25, 1984, and that a decree on August 7, 1985, had foreclosed the mortgage held by First Federal, had barred the Whites' "equity of redemption," and had ordered the insured premises sold.
Heritage purchased the insured premises at a foreclosure sale held on July 7, 1986, and received a deed to the property on July 22, 1986.
The Whites remained in the house after the foreclosure sale despite demands from Heritage that they vacate the premises. After Heritage began eviction proceedings, the Whites entered into a contract to purchase the house from Heritage for $60,000 within 60 days from November 22, 1986. The contract, which allowed the Whites to remain in possession of the property and required them to maintain homeowner's insurance on the house, was later extended and set to expire on February 22, 1987.
When the Whites defaulted on the contract after failing to obtain funds with which to purchase the property, Heritage notified Mrs. White on February 23, 1987, that "the contract had expired" and that it intended to reinstitute eviction proceedings in the event they did not "voluntarily leave the house."
The house burned down the next day. The origin of the fire is unknown.
Neither the Whites nor Heritage ever notified SCIC before the fire of Heritage's purchase of the property at the foreclosure sale and of the Whites' occupation of the premises as tenants. SCIC learned of these matters and of First Federal's foreclosure proceedings for the first time after the fire.
The trial court held that the policy issued the Whites by SCIC protected Heritage as a mortgagee at the time the fire destroyed the insured premises. SCIC challenges this holding, contending that the New York Standard Mortgage Clause, which the trial court seemingly deemed to be the applicable mortgage clause, required Heritage to notify SCIC of the foreclosure by First Federal of its mortgage, of Heritage's purchase of the insured premises at the foreclosure sale, and of the Whites' occupation of the property as tenants and that Heritage's failure to notify it of these happenings, which were within Heritage's knowledge, voided the policy. 1 We agree.
The standard mortgage clause provides in part as follows:
Loss, if any on the property subject to this clause as specified in the Declarations shall be payable to the mortgagee ... as provided herein, as interest may appear, and this insurance as to the interest of the mortgagee ... only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the within described property nor by any foreclosure ... relating to the property, nor by any change in the title or ownership of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy; Provided That in case the mortgagor or owner shall neglect to pay any premium due under this policy the mortgagee ... shall on demand pay the same.
Provided also, That the mortgagee ... shall notify this Company of any change of ownership or occupancy or increase of hazard, which shall come to the knowledge of said mortgagee ... and, unless permitted by this policy, it shall be noted thereon, and the mortgagee ... shall, on demand, pay the premium for such increased hazard for the term of the use thereof; otherwise, this policy shall be null and void. (Emphasis added.)
This Company reserves the right to cancel this policy at any time as provided by its terms, but, in such case this policy shall continue in force for the benefit only of the mortgagee ... for ten days after notice to the mortgagee ... of such cancellation, and shall then cease and this Company shall have the right, on like notice, to cancel this agreement.
....
An insurer's obligation under a policy of fire insurance is defined by the terms of the policy and cannot be enlarged by judicial construction. McNeely v. South Carolina Farm Bureau Mutual Ins. Co., 259 S.C. 39, 190 S.E.2d 499 (1972); Helton v. St. Paul Fire and Marine Ins. Co., 286 S.C. 220, 332 S.E.2d 776 (Ct.App.1985); 45 C.J.S. Insurance § 915a at 1009-10 (1946). Since SCIC's policy contains, we assume, the standard mortgage clause just quoted, the question of whether SCIC's policy provided coverage to Heritage depends on the terms of that clause as they are applied to the facts outside the policy. 5A J. & J. APPLEMAN, INSURANCE LAW AND PRACTICE § 3402 at 297 (1970). In the absence of ambiguity, the terms of an insurance policy, including those contained in a policy of fire insurance, must be interpreted and enforced according to their plain and ordinary meaning. Columbia College v. Pennsylvania Ins. Co., 250 S.C. 237, 157 S.E.2d 416 (1967); Tobin v. Beneficial Standard Life Ins. Co., 675 F.2d 606 (4th Cir.1982).
The standard mortgage clause in question here plainly and unambiguously states that the mortgagee's interest will not be invalidated by a foreclosure of the property insured by the policy, by a change in either the property's title or ownership, or by an occupation of the premises for a more hazardous purpose than allowed by the policy; however, it also clearly and unambiguously obligates the mortgagee to notify the insurer of any change of ownership, occupancy, or increase of hazard that comes to the mortgagee's knowledge and clearly and unambiguously requires the mortgagee to pay on demand the premium for any increased hazard. An obvious purpose of the notice provision contained in the clause's second proviso is to allow the insurer, in this case SCIC, an opportunity to assess the change, determine its effect on the risk being insured, and, if need be,...
To continue reading
Request your trial
-
Pa. Nat'l Mut. Cas. Ins. Co. v. Jo A. Lewis, Roger W. Lewis, & Excel Mech., LLC
...of insurance is defined by the terms of the policy itself and cannot be enlarged by judicial construction. S.C. Ins. Co. v. White,301 S.C. 133, 390 S.E.2d 471, 474 (S.C.Ct.App.1990). A policy clause extending coverage must be liberally construed in favor of coverage, while insurance policy ......
-
Dudek v. Commonwealth Land Title Ins. Co.
...insurance is defined by the terms of the policy itself and cannot be enlarged by judicial construction. S.C. Ins. Co. v. White, 301 S.C. 133, 390 S.E.2d 471, 474 (S.C. Ct. App. 1990). A policy clause extending coverage must be liberally construed in favor of coverage, while insurance policy......
-
Episcopal Church in S.C. v. Church Ins. Co. of Vt. & the Church Ins. Co.
...of insurance is defined by the terms of the policy itself and cannot be enlarged by judicial construction. S.C. Ins. Co. v. White, 301 S.C. 133, 390 S.E.2d 471, 474 (S.C.Ct.App.1990). A policy clause extending coverage must be liberally construed in favor of coverage, while insurance policy......
-
Scottsdale Ins. Co. v. GS Thadius LLC
...an insurance policy is defined by the terms of the policy itself, and cannot be enlarged by judicial construction. S.C. Ins. Co. v. White, 301 S.C. 133, 137, 390 S.E.2d 471, 474 (Ct. App. 1990). "Insurance policies are to be liberally construed in favor of the insured," Brooklyn Bridge, Inc......
-
CHAPTER 2
...in existence both at the time the policy was issued and became effective, and at the time of the loss. South Carolina Ins. Co. v. White, 301 S.C. 133, 138, 390 S.E.2d 471, 475 (S.C. Ct. App. 1990); Powell v. Insurance Co. of N. Am., 285 S.C. 588, 590, (S.C. Ct. App. 1985). When a contract t......
-
CHAPTER 2 THE CONTRACT OF PERSONAL INDEMNITY
...in existence both at the time the policy was issued and became effective, and at the time of the loss. South Carolina Ins. Co. v. White, 301 S.C. 133, 138, 390 S.E.2d 471, 475 (S.C. Ct. App. 1990); Powell v. Ins. Co. of N. Am., 285 S.C. 588, 590, 330 S.E.2d 550, 552 (S.C. Ct. App. 1985). Wh......