Still v. Travelers Indem. Co., 49837
| Decision Date | 09 December 1963 |
| Docket Number | No. 49837,No. 1,49837,1 |
| Parties | Bud STILL, Quentin Still and Paul Still, Plaintiffs-Respondents, v. The TRAVELERS INDEMNITY COMPANY, a Corporation, the Maryland Casualty Company, a Corporation, the Safeguard Insurance Company, a Corporation, and the Continental Insurance Company, Corporation, Defendants-Appellants |
| Court | Missouri Supreme Court |
James E. Reeves, Ward & Reeves, Caruthersville, for plaintiffs-respondents.
Veryl L. Riddle, Riddle, O'Herin & Newberry, Malden, for defendants-appellants.
WELBORN, Commissioner.
This is an action to recover on four fire insurance policies issued by the appellants, The Travelers Indemnity Company, Maryland Casualty Company, Safeguard Insurance Company and The Continental Insurance Company. Respondents claimed as assignee of the insured named as the owner of the insured property, and also as named security holders in standard union mortgage clause endorsements on each of the policies. Appellants denied liability on the grounds that the named insured was not the owner of the property insured and that respondents were not mortgagees of such property. On a trial to the court without a jury, a general judgment, without express findings of fact and conclusions of law, was entered in favor of respondents for the principal amount of the policies, $3,360 each in the case of Travelers, Maryland and Safeguard and $1,920 against Continental, interest of $258.72, penalty for vexatious delay of $361.87, and attorney's fee of $420 against each of the first three named appellants, and $147.84, $206.78, and $240 for each of these three items, respectively, against Continental. The four defendants have joined in the appeal, and, the aggregate of the judgment appealed from exceeding $15,000, we have jurisdiction.
Steele Supply Co. was incorporated under the Missouri General and Business Corporation Law on June 12, 1959. The incorporators were Paul G. Still and Quentin Still, two of the respondents here, and Howard Watkins. Of the $50,000 authorized capital, the corporation began business with 271 shares of $100 par value issued, 135 to each of the Stills and 1 to Watkins. The begnning capital was paid up by transfer of the assets of a partnership of the Stills which had previously operated under the name adopted by the corporation. The business of the corporation was operation of a lumber yard at which lumber, building supplies and hardware were sold. Paul G. Still was elected president of the corporation, Quentin Still, secretary-treasurer, and Watkins, vice-president. Watkins was also the manager of the lumber yard.
On December 12, 1959, an instrument captioned 'Bill of Sale' was executed by the Stills and Watkins. By the bill of sale, the Stills sold Watkins their 270 shares of the capital stock of the Steels Supply Co. The instrument recited: 'This stock includes all of the assets listed below.' Then followed an enumeration of two trucks, items of office furniture and equipment. 'All merchandise now in stock including building materials of every nature.' The instrument recited that the buyer assumed liability for the accounts payable at the time of the transaction and that the Stills were to retain the accounts receivable at that date. (On trial, evidence was that these items were approximately $15,000 and $20,000, respectively.) The consideration recited was $20,000, of which $4,000 was to be paid down and the remainder at the rate of $1,000 per month, with interest at 6% until fully paid. The 'sellers' agreed to rent to the 'buyer' the buildings occupied by Steele Supply Co. at a rental of $100 per month. The instrument bore the signatures of the three named parties. The name of each of the Stills was typewritten below his signature, followed by 'Pres' after Paul's name and 'Secy' after Quentin's.
The $4,000 down payment was paid to the Stills by M. T. Utley. To evidence the indebtedness for the balance due on the purchase price, Watkins executed two promissory notes, dated December 12, 1959. One, in the amount of $12,500, was payable to both Stills. The other, for $3,500, was payable to Quentin. The second note was secured by a chattel mortgage, covering two trucks and office equipment. According to Quentin, who prepared the bill of sale, the parties considered a chattel mortgage on the stock of merchandise not feasible. He also said that the understanding was that the capital stock would not be assigned to Watkins until the purchase price was paid in full. No attempt was made to make such transfer. No action was taken by the corporation as such on the sale to Watkins.
On January 20, 1960, four policies of insurance covering the merchandise in stock and office furnishings and equipment were issued, each for a one-year term. The Travelers, Maryland and Safeguard policies were for $7,000 insurance and the Continental for $4,000. The policies described the property covered as the contents of three buildings, one of which was described as a lumber shed 'locaed 2nd Rear of 307 1/2 N. Walnut Street * * * Steele, Missouri.' The insurance on the cntents of this shed was $12,000, with each of the policies covering pro rata.
The named insured in each policy was: 'Howard Watkins, Jimmy J. Watkins & Sue Watkins (as their interest may appear) D/B/A Steele Supply Company, Steele, Missouri.' (At the trial it was stipulated that Jimmy and Sue Watkins had no interest in the property.) Attached to each policy was a standard union mortgage clause, stating: 'Loss or damage, if any, under this policy, shall be payable to Mr. Bud Still, Quentin Still and Paul Still as their interest may appear mortgagee [or trustee] * * *.' (Bud Still was the father of the other two Stills and was described as their 'financier.') Premiums of $228.75 were paid on March 4, 1960.
On August 9, 1960, fire destroyed the lumber shed described as second rear of 307 1/2 North Walnut Street and its contents. On September 26, 1960, Watkins executed a sworn proof of loss, claiming $12,000 due under the policies for loss of the contents of the shed. The insurers had previously made an investigation of the loss. On December 2, 1960, at the request of the insurers, the Stills and Watkins were interrogated under oath by an attorney for the insurers. According to answers to interrogatories, they learned then for the first time that Steele Supply Co. was a corporation.
By letter of January 5, 1961, an attorney for the insurers notified Watkins that his claim for loss had been denied. No reason for the denial was given. By letter of January 20, 1961, an attorney for the Stills was informed that the insurers had no obligation to the Stills for the following reasons:
The property covered by the chattel mortgage securing the $3,500 note was not among the property for which claim of loss was made.
On February 10, 1961, Watkins assigned to Quentin Still his claim under the insurance policies. $300 was paid Watkins for the assignment. At the time, there was a balance due on the notes of Watkins of around $14,000.
The three Stills brought this action on May 2, 1961. In their petition, they claimed as assignee of Watkins and also as insureds under the policy. The appellants denied that Watkins had an insurable interest in the property lost, except as the holder of 1 share of stock of the Steele Supply Co., which they claimed had no value. They alleged that the property lost was the property of Steele Supply Co., a corporation. They denied that the respondents owned any of the property lost or held a mortgage on it or other security interest therein from the corporation.
The respondents' evidence at the trial consisted of the testimony of Quentin Still and Watkins and documentary evidence of the transactions above described. The appellants' testimony was designed to show that the operation of Steele Supply Co. was unprofitable, and that, at the time of the loss, the one share of stock held by Watkins had no value.
The appellants here contend that the trial court's judgment is erroneous for the reason that Watkins had no insurable interest in the property destroyed by fire. They contend that the bill of sale purporting to transfer the insured property to Watkins was void under Sections 351.400, 351.460, 351.465, 351.475, 351.480, 351.715, RSMo 1959, V.A.M.S. They also contend that the transaction is contrary to public policy. The statutes referred to by appellants are sections of the General and Business Corporation Law which provide procedure for the disposition of all or substantially all of the assets of a corporation (351.400) and the voluntary dissolution of a corporation (351.460-351.480). Section 351.715 reads: 'For violation of any provisions of this chapter for which no other penalty is provided, the person violating shall be deemed guilty of a misdemeanor and upon conviction punished as provided in section 351.720.'
Appellants' position is that the failure to observe the statutory procedures made the attempted transfer void; that, the attempted transfer being void, Watkins had no insurable interest in the property lost. In support of this position, appellants rely upon the decisions of the courts of this state under which a person who has attempted to procure insurance on a motor vehicle which has been transferred to him without compliance by the seller with the motor vehicle title law has been held to have no insurable interest in the automobile. The leading case in this regard is State ex rel. Connecticut Fire Ins. Co. of Hartford, Conn. v. Cox, 306 Mo. 537, 268 S.W. 87, 37 A.L.R. 1456, decided in 1924. In that case, the court stated.
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