St. Paul Surplus Lines Ins. Co. v. Bishops Gate Ins. Co.
| Decision Date | 07 October 1986 |
| Docket Number | No. C,C |
| Citation | 725 S.W.2d 948 |
| Parties | ST. PAUL SURPLUS LINES INSURANCE COMPANY, Plaintiff, v. BISHOPS GATE INSURANCE COMPANY, John Michael Poland VFW Post 7974, Appellee, Herman Rush and wife Beverly Rush, Appellants, and Benton Banking Company. A. 14 |
| Court | Tennessee Court of Appeals |
Alvin Y. Bell, Chattanooga, for appellants.
M. Randall Sellers, Cleveland, for appellee.
Although this suit was commenced by an insurance company seeking a declaratory judgment as to coverage and spawned a somewhat complicated maze of claims, cross-claims, and counter-claims, this appeal involves only a dispute between the lessors and the lessee of real property over the proceeds of fire insurance policies on the leased premises. To detail the precise course of the litigation will only serve to complicate the rather simple factual situation, so we will handle the case as though the litigation was simply between Herman Rush and wife, Beverly Rush, plaintiffs-lessors, and VFW Post 7974, defendant-lessee.
The Rushes owned a commercial building which they leased to VFW for a period of two years by instrument dated August 11, 1982. The agreement recited that "the parties desire to enter into a lease agreement defining their rights, duties and liabilities relating to the premises," and further provided in part pertinent to this appeal:
* * *
* * *
V.
a. Subject to the limitation that no substantial portion of the building in the demised premises shall be demolished or removed by lessee without the prior written consent of lessor, lessee may at any time during the lease term, subject to the conditions set forth below and at its own expense, make any alterations, additions, or improvements in and to the demised premises and the building. Alterations shall be performed in a workmanlike manner and shall not weaken or impair the structural strength or lessen the value, of the building on the premises.
b. Conditions with respect to alterations, additions, or improvements are as follows:
1. All work shall be done in accordance with requirements of local and state regulations pertaining to safety, including but not limited to fire regulations.
2. Prior to commencement of any work lessee shall pay the amount of any increase in premiums on insurance policies provided for herein because of endorsements to be made governing the risk during the course of work.
3. All alterations, additions, and improvements on or in the demised premises at the commencement of the term, and that may be erected or installed during the term, shall become part of the demised premises and the sole property of lessors, except that all moveable items and fixtures installed by lessee shall be and remain the property of lessee.
4. Lessee will be and remain liable for all indebtedness incurred as a result of remodeling the premises for lessee's purposes.
* * *
* * *
VI.
Lessee shall, at all times during the lease and at its own cost and expense, repair, replace, and maintain in good, safe, and substantial condition, all buildings and any improvements, additions, and alterations thereto, on the demised premises, and shall use all reasonable precaution to prevent waste, damage, or injury to the demised premises.
* * *
* * *
VII.
During the term of the lease and for any further time that lessee shall hold the demised premises, lessee shall obtain and maintain at its expense the following types of insurance:
1. Fire Insurance. Lessee shall keep all buildings, improvements, and equipment on the demised premises, including all alterations, additions, and improvements, insured against loss or damage by fire.
* * *
* * *
XX.
Lessors grant to lessee an option to renew this lease for a reasonable number of years and at a reasonable rental fee after the expiration of the term of this lease. Lessors further grant to lessee the first option to purchase the premises described herein at a reasonable purchase price should lessors decide to sell said premises at the expiration of the term of this lease.
After the lease was executed, the VFW made extensive improvements to the building in order to use it as a VFW club. On or about August 13, 1982, the VFW obtained policies of fire insurance totaling $60,000 on the building and was listed in the policy as the insured. When the Rushes learned that they were not named as insureds in the policies and that the holder of the mortgage on the property was not listed as the mortgagee, they contacted the agent that issued the policies and were successful in adding the mortgagee as loss payee. The VFW did not agree with this change and ordered the agent to remove the mortgage as a loss payee from the policies. After the building was totally destroyed by fire on August 18, 1983, the controversy arose as to who was entitled to the proceeds of the insurance policies. VFW contended that it was entitled to the entire proceeds, and the Rushes contended that they were entitled to the entire proceeds. The trial court found the value of the destroyed building was $70,000 and held that the proceeds of the two policies ($60,000 less $500 deductible) should be prorated between the Rushes and VFW with $31,500 awarded to the Rushes and $28,000 awarded to VFW. The insurance companies involved have not appealed the judgment concerning their liability, and the only issue is that presented by the Rushes which is "whether the trial court erred in prorating the insurance proceeds instead of awarding the entire amount to them."
The lease agreement between the Rushes and VFW establishes their respective rights, duties, and obligations. The Rushes contend that the proper construction of the lease agreement requires that the entire insurance proceeds be paid to them because the value of the destroyed property exceeds the amount of the proceeds. On the other hand, VFW contends that since it had made various improvements to the property it had an insurable interest which the trial court properly protected by its prorata award of insurance proceeds. The whole question boils down to what the lease agreement provides in this regard. Although both parties in their briefs espouse rules of construction concerning ambiguous instruments, we do not find from our reading of the lease that it is ambiguous. While it is somewhat lacking in content as compared to what one normally sees in leases of commercial property, there is no ambiguity.
The cardinal rule of construction of written instruments is that the intention of the parties as ascertained from the language of the instrument controls. First American National Bank v. Chicken System of America, Inc., 510 S.W.2d 906, 908 (Tenn.1974). In construing contracts, the words expressing the parties' intention should be given...
To continue reading
Request your trial
-
Tate v. Trialco Scrap, Inc.
...System of America, Inc., 510 S.W.2d 906 (Tenn.1974); Chazen v. Trail-mobile, 384 S.W.2d 1 (Tenn.1964); St. Paul Surplus Lines v. Bishops Gate Insurance Co., 725 S.W.2d 948 (Tenn.App.1986); National Garage Co. v. George H. McFadden & Bro., Inc., 542 S.W.2d 371 (Tenn.App. 1975); In re Memphis......
-
Harriet & Henderson Yarns, Inc. v. Castle
...usual, natural, and ordinary meaning, and neither party should be favored in the construction. St. Paul Surplus Lines Ins. Co. v. Bishops Gate Ins. Co., 725 S.W.2d 948 (Tenn. Ct. App.1986). The contract which Plaintiffs allege was breached was the Indenture Agreement, which by its terms inc......
-
Seessel Holdings, Inc. v. Fleming Companies, Inc.
... ... Delta Air Lines, Inc., 842 F.Supp. 999 (M.D.Tenn.1993), aff'd ... St. Paul Surplus Lines Ins. Co. v. Bishops Gate Ins. Co., ... ...
-
In re Pyramid Operating Authority, Inc., Bankruptcy No. 91-27959-D
...law unequivocally gives effect to agreements, including leases, as written. Id. at 804; see e.g., St. Paul Surplus Lines v. Bishops Gate Ins. Co., 725 S.W.2d 948, 951 (Tenn.App.1986); Tenn.Code Ann. ? 47-50-112(a)18. In construing contracts, the intention of the parties as ascertained from ......