Steffen v. Obyle, 7979

• Decision Date: 04 May 1962
• Docket Number: No. 7979,7979
• Parties: Leola STEFFEN, Plaintiff and Appellant, v. Paul OBYLE, J. Wesley Reed, and Implement Dealers Mutual Insurance Company, a corporation, Defendants and Respondents.
• Court: North Dakota Supreme Court

Page 8

115 N.W.2d 8

Leola STEFFEN, Plaintiff and Appellant, v. Paul OBYLE, J. Wesley Reed, and Implement Dealers Mutual Insurance Company, a corporation, Defendants and Respondents.

No. 7979.

Supreme Court of North Dakota.

May 4, 1962.

Syllabus by the Court

1. Where an issue not raised by the complaint is tried, without objection, failure to amend the complaint does not affect the results of the trial, and the issue will be considered by this court in a trial de novo.

2. A loss-payable clause in favor of insured's unsecured creditor, attached by the insurer or its agent to insured's fire policy without the consent or knowledge of insured, is void.

3. In an action for damages for failure to have protected the interests of a creditor of insured, by failure to have attached a loss-payable clause in favor of the creditor to the fire insurance policy covering debtor's property, the whole record is reviewed and it is held, for the reasons stated in the opinion, that the trial court did not err in finding that the plaintiff had failed to sustain the burden of proof.

Q. R. Schulte, Stanley, for plaintiff and appellant.

Palda, Palda, Peterson & Anderson, Minot, for respondent Paul Boyle.

Joseph P. Stevens, Minot, for respondent J. Wesley Reed.

Day, Stokes, Vaaler & Gillig, Grand Forks, for respondent Implement Dealers Mut. Ins. Co.

TEIGEN, Judge.

For several years prior to 1953, Leola Steffen and her husband owned and operated in partnership Steffen Motors at Mohall, North Dakota. Her husband died in April of 1953 and Leola Steffen was appointed administratrix of his estate. Fire insurance was carried on the business property with Implement Dealers Mutual Insurance Company, a corporation. Steffens held an agency contract with the Ford Motor Company and dealt in automobiles and farm equipment in the area of sales, service and repair. In June of 1953 Leola Steffen, individually and as administratrix of her husband's estate, sold the business to J. Wesley Reed for an agreed price of $26,000. The Steffens were indebted to one R. J. Borstad in the amount f $13,000. The purchaser assumed and paid the indebtedness due Borstad and agreed to pay the balance of $13,000 on a delayed payment plan. In addition, the purchaser agreed to pay $3,000 rental for the premises occupied by the business which had been prepaid by the Steffens. Two promissory notes were executed and delivered as evidence of the indebtedness. One note was in the amount of $13,000 dated June 1, 1953, payable five years from November 1954. The second note was dated October 12, 1953, in the amount of $3,000 payable one year after date. The purchaser also became indebted to the seller for an additional amount of $2,000 which was not evidenced by a note but is undisputed. Possession of the property was delivered to the purchaser about June 1, 1953. The purchaser paid only the sum of $2,500 on his indebtedness. On January 18, 1957, the property was destroyed by fire and the Implement Dealers Mutual Insurance Company paid the purchaser, Reed, as their insured, the sum of $35,216.83 to cover his loss. This payment was made in March of 1957. Reed failed to pay his indebtedness to Leola Steffen.

This action was brought in September of 1960 by the seller Leola Steffen against the purchaser Reed, the insurer Implement Dealers Mutual Insurance Company and its agent Paul Boyle, alleging negligence and fraud. Plaintiff alleged:

'That after said sale the said defendant, Paul Boyle, together with J. Wesley Reed, did negligently and fraudulently change the beneficiary of said policy, hereinbefore mentioned, to J. Wesley Reed without notifying, consent or knowledge of the said plaintiff, and in effect cancelled said policy without notice, consent or knowledge to this plaintiff.'

She alleges she suffered damages on account thereof in the sum of $17,558.84 which should have been paid to her our of the proceeds of the insurance, had it not been for the negligence and fraud of the defendant Paul Boyle which was imputable to his principal, the Implement Dealers Mutual Insurance Company. The case was tried to the court without a jury. The lower court found for all defendants dismissing plaintiff's action. Plaintiff has appealed from the judgments and has demanded trial de novo in this court.

There was no detailed description of the insurance policy in the plaintiff's amended complaint, although it alleges the insurer was the Implement Dealers Mutual Insurance Company of America, the correct name of which is stated in this defendant's answer as Implement Dealers Mutual Insurance Company. The complaint states the business was 'fully insured' through the agent of the insurer, the defendant Paul Boyle, and that it covered the property which the plaintiff sold to the defendant Reed.

The record, however, is entirely devoid of proof that the insurance policy referred to was in any manner changed by the defendants or any of them after the sale. The plaintiff introduced in evidence the 'daily copy' of the policy. It was a one-year policy effective September 15, 1952. The policyholders were 'William A. Steffen and Leola H. Steffen, as joint tenants and not as tenants in common with right of survivorship DBA Steffen Motors Mohall, North Dakota.' This policy was permitted to expire at the end of the insuring period which was September 15, 1953, about three and one-half months after the alleged date of sale.

The next insurance policy, according to the record and also introduced by the plaintiff, became effective September...