Southern Bldg. & Loan Ass'n v. Miller

• Decision Date: 06 July 1901
• Docket Number: 400.
• Citation: 110 F. 35
• Parties: SOUTHERN BUILDING & LOAN ASS'N OF KNOX COUNTY, TENN., v. MILLER et al.
• Court: U.S. Court of Appeals — Fourth Circuit

110 F. 35

SOUTHERN BUILDING & LOAN ASS'N OF KNOX COUNTY, TENN., v. MILLER et al.

No. 400.

United States Court of Appeals, Fourth Circuit.

July 6, 1901

R. M Page (Jerome Templeton, on the brief), for appellant.

I. H Larew, for appellees.

This case comes up on appeal from the circuit court of the United States for the Western district of Virginia. On 27th January 1897, Linda H. Johnson filed her bill against the Southern Building & Loan Association of Knox county, Tenn., in behalf of herself and all other stockholders in, and creditors of the said building and loan association. This bill averred the insolvency of the association, and prayed the appointment of a receiver to collect and administer its assets in the Western district of Virginia. The bill was intended as ancillary to a bill filed or to be filed for a similar purpose in one of the courts of Tennessee. Upon filing the bill, the circuit court for the Western district of Virginia appointed J. R. Miller temporary receiver, and by a subsequent order made his appointment permanent. Answer having been filed, the court proceeded to an examination of the several claims against the defendant association and to the ascertainment and realization of its assets. Among other assets of the association was a bond executed by J. R. Miller and J. K. Warden, who had been conducting business under the name of Miller & Warden, in the town of Pulaski, Va. The bond was dated 1st February, 1892, and was secured by a conveyance by both of them of a lot in Pulaski in the nature of a mortgage of same date to J. E. Moore, trustee for the Southern Building & Loan Association of Knoxville, Tenn. The bond was for $10,000, and was given to secure a loan of that amount on 100 shares of the said association standing in the name of J. R. Miller. Miller had been the agent of the association in Pulaski. It seems that on 1st January, 1892, the co-partnership between Miller and J. K. Warden was dissolved, and A. J. Miller and Clyde Miller, sons of J. R. Miller, took his place in the firm, which was thereafter conducted under the same firm name of Miller & Warden. On 21st January, 1892, J. R. Miller and wife conveyed in fee unto A. J. Miller and Clyde Miller the one-half interest in this same lot mentioned in the deed of trust to J. E. Moore, trustee, in consideration of the payment by them of Miller's share of unpaid purchase money, and of one-half the loan to be made to Miller & Warden by the Southern Building & Loan Association. This arrangement seems to have been known to and acquiesced in by agents of the building and loan association. The bond of Miller, however, was not canceled or released. The lot of land embraced in the deed of trust was on Commerce street, in the town of Pulaski, and the loan was effected in order to erect a building upon it. That building was in course of erection, but was not finished until some time late in March, 1893. It was damaged by fire on 6th August, 1893, to the extent of over $6,000. An effort having been made to recover on the bond as a part of the assets of the association, the circuit court appointed G. E. Cassel as special receiver to prosecute the claim, because of the connection therewith of J. R. Miller, the permanent receiver, Miller & Warden denying any responsibility on this bond for the reasons stated hereafter.

The deed of trust by Miller & Warden to J. E. Moore, trustee, given to secure this bond, had, among other covenants by the makers of the deed, these: '(2) That they will keep the buildings on said real estate insured in some solvent company, in such sum as said association shall require, not to exceed $5,000, for the benefit of this trust, and that they will assign the policy or policies of insurance to said trustee as further security in the premises. (3) That they will promptly pay all premiums of insurance on said property, as well as all taxes and assessments upon the same, and should they fail to insure the said property, or to pay any premiums of such insurance, or taxes and assessments, as the same may become due, then the said trustee or said association may take out such insurance, and pay any premiums of such insurance or taxes and assessments, as the same may become due, and any sum so paid shall, with interest from the day of such payment, become a part of the debt secured in this deed, and be due and payable with the next and ensuing monthly payment.'

No insurance was put on the building by Miller & Warden up to February 13, 1893. The excuse given for this is that, the building being incomplete, a builder's policy was not contemplated in the deed, and, besides this, that John P. Heap, agent for the building and loan association, had agreed early in 1893 that Miller & Warden might have time to complete the building before placing insurance thereon. On the 13th February, 1893, the Southern Building & Loan Association caused the building to be insured in the Wytheville Insurance & Banking Company in the sum of $5,000. This policy was made out in the name of Miller & Warden, loss, if any, payable to the association. The association paid the premium, and then at once demanded its repayment by Miller & Warden. After several applications to this end, Miller & Warden paid the premium to the association on 11th July, 1893. Miller & Warden had been making arrangements to insure the building when completed in a company of their own selection, for $10,000. When they were notified that the association had effected insurance they abandoned this purpose. They deny all knowledge of the name of the insurance company in which insurance had been effected by the building and loan association, the premium upon which they had reimbursed to the association. The fire having taken place, proofs of loss were made and application sent in to the Wytheville Banking & Insurance Company for the loss. After negotiating and waiting, the insurance company proved insolvent and the loss was not paid. The contention is that the Southern Building & Loan Association was bound by covenant to insure the property in a solvent company, if Miller & Warden had not fulfilled their covenant to do so; that, having insured in a company not solvent, they must incur the loss, and thus Miller & Warden are exonerated. This view was taken by the special master, and was confirmed by the court. To this the appeal is directed.

Before SIMONTON, Circuit Judge, and MORRIS and BOYD, District Judges.

SIMONTON Circuit Judge (after stating the facts as above).

When a case comes by appeal into this court, in which there are questions of law depending, more or less, on questions of fact, we examine into the findings of fact made by the master in which the court below has concurred, and give them great weight in reaching our conclusion. We regret to say that in this case we get no assistance whatever from the findings of the master. His whole report of his actions shows a marked bias in favor of Miller & Warden,--a bias...