The State ex rel. American Central Insurance Company v. Reynolds

• Decision Date: 19 July 1921
• Citation: 232 S.W. 683,289 Mo. 382
• Parties: THE STATE ex rel. AMERICAN CENTRAL INSURANCE COMPANY v. GEORGE D. REYNOLDS et al., Judges of St. Louis Court of Appeals
• Court: Missouri Supreme Court

232 S.W. 683

289 Mo. 382

THE STATE ex rel. AMERICAN CENTRAL INSURANCE COMPANY v. GEORGE D. REYNOLDS et al., Judges of St. Louis Court of Appeals

Supreme Court of Missouri, Second Division

July 19, 1921

Writ quashed.

Leahy & Saunders and David W. Voyles for relator.

(1) With reference to whether the opinion predicates waiver upon alleged knowledge of Brown, we quote from the opinion of the respondents, as follows: "It (appellant) knew of the claim or change of ownership certainly a few weeks after issue of the policy." Since the status of the parties as of the date of the fire must have been in contemplation, and the adjuster learned nothing, according to the opinion of the respondents, until after the fire, this ruling in the opinion could only have referred to the knowledge, if any, acquired by Brown. (2) The right of an insurance company to subrogation is one of equitable cognizance, and a court of equity, having jurisdiction of the subject-matter, has power to determine all incidental questions effecting the right claimed. Traders Ins. Co. v. Agricultural Ins. Co., 142 Ill. 338, 346. (3) The power of a court of equity is not limited to settle the rights of parties upon what has been done in the past, but it reaches forth and declares their rights and duties for the future and in the exercise of this power it will decree that when sureties have paid the debt of their principal they shall be subrogated to the rights of the creditor. City of Keokuk v. Love, 31 Iowa 119. (4) The doctrine requiring payment as a condition to the right of subrogation can only be invoked by the creditor for his own protection; and is never applied to defeat contract obligations, in the interest of the debtor alone. Skinkle v. Huffman, 52 Neb. 20; Keokuk v. Love, 31 Iowa 124; Motley v. Harris, 1 Lea (Tenn.) 577, 583; Sheldon on Subrogation (2 Ed.) sec. 128. See also, Comins v. Pottle, 35 N.J.Eq. 94. (5) The contract in this case by which, alone, the mortgagee could acquire rights in the insurance fund if the policy was void as to the mortgagor specifically provided for subrogation. (6) Payment of the demand of a creditor without agreement that the securities be assigned or kept on foot for the benefit of the payor extinguishes the debt absolutely. Sandford v. McLean, 3 Paige (N.Y.) 117, 23 Am. Dec. 773. And subrogation will never be decreed in favor of a mere volunteer. 25 R. C. L sec. 11, Article "Subrogation." Nor in favor of one who fails to assert his rights until rights of others intervene. Id., sec. 76. Hence, there is no equity in the contention that it was the duty of appellant to pay the policy without an assignment with the certainty that the mortgage would be surrendered and released, compelling appellant to take the chance that rights of third parties might intervene. Especially is this true, in view of the fact that an assignment pro tanto would in no manner have been detrimental to the mortgagee. (7) Where a contract of insurance provides for an assignment, the mortgagee is not entitled to payment without assigning the whole, or so much of, the security as would cover the amount due under the policy. Fire & Marine Ins. Co. v. Wetmore, 32 Ill 221; Kip v. Ins. Co., 4 Edw. Ch. (N.Y.) 86; Attleborough v. Security Ins. Co., 168 Mass. 148; Fire Ins. Co. v. Fidelity Trust Co., 123 Pa. St. 516. (8) No demurrer was filed, or any other objection made by any of the parties to the sufficiency of the cross-bill; the contention that it did not present a case in equity because the insurance company had not paid the policy, could not have availed Krupnick; yet he was made a party and failed to make the contention below; the point could only have been raised by the mortgagee, who, a party, failed to make it. Such contention could only have been made by the mortgagee, coupled with a showing that some detriment flowed to him from an enforcement of the contract providing for subrogation.

George B. Webster and Elliott W. Major for respondents.

(1) It was not error on the part of the circuit court to try the issues between Hayden and Meininger, as plaintiffs, and the relator, as defendant, by a jury, nor on the part of the Court of Appeals to affirm the judgment. R. S. 1909, sec. 1989; Rand-McNally Co. v. Wickham, 60 Mo.App. 44; Barnard Co. v. Monett Mfg. Co., 79 Mo.App. 153. The amended answer and cross-bill of the relator did not convert their action at law into a proceeding in equity, since it prayed no equitable relief against them. Lincoln Trust Co. v. Nathan, 175 Mo. 32; Thompson v. Bank, 132 Mo.App. 225. Subrogation is a species of relief which falls within the concurrent rather than the exclusive jurisdiction of equity. 4 Pomeroy on Eq. Jurisprudence (3 Ed.) sec. 1416. There is no conflict between anything in the opinion of the Court of Appeals in this case and the rule of the Lowenstein Case, 227 Mo. 100. (2) The opinion of the Court of Appeals in this case does not conflict with the decisions of this court in such cases as Myers v. Schuchmann, 182 Mo. 159, or Wendover v. Baker, 121 Mo. 273, because in those cases there was in the answer a prayer for affirmative equitable relief against the plaintiff, while here there is none. (3) There is no conflict with the opinion in Carter v. Metropolitan Life Ins. Co., 275 Mo. 84, which case involved the fraudulent alteration of a policy, and was in effect a proceeding to reform, and rested wholly upon fraud or mistake. (4) The Court of Appeals did not come into conflict with the opinion of this court in the case of James v. Mutual Life Ins. Co., 148 Mo. 1, or any other opinion of this court, in its holding that the relator had knowledge of the true condition of the title, and waived its right to avoid the policy by retaining the premium and failing to act within reasonable time. Laying aside the evidence of Krupnick's alleged conversation with Brown, the inspector, there was still ample ground and reason for the holding of the Court of Appeals in the testimony of Olsen, the relator's adjuster, in which he admitted having acquired knowledge of Krupnick's ownership of the property insured while adjusting another loss arising out of the same fire.

RAILEY, C. Mozley and White, CC., concur.

OPINION

Certiorari.

RAILEY C.

Petition for certiorari, by the State, on the relation of American Central Insurance Company, a corporation, against George D. Reynolds et al., judges of the St. Louis Court of Appeals, to have this court quash the record of the Court of Appeals in the case of C. E. Hayden, Trustee, and others, against the American Central Insurance Company, 221 S.W. 437, and following. It is contended by the relator here that the opinion of the Court of Appeals contravenes certain rulings of this court.

The facts, as set out in the above opinion, read as follows:

"This is an action on an insurance policy for $ 3,100, for a term of three years from January 21, 1914, at an annual premium of $ 46.50, the policy issued in favor of George F. Martin, as owner. By rider attached, in case of loss, the amount of insurance is payable to C. E. Hayden, trustee for Arthur O Meininger. The suit was instituted by Arthur O. Meininger, mortgagee under the two deeds of trust, herein after referred to, and C. E. Hayden, trustee in those deeds of trust, against appellant, to recover, under the mortgage clause attached to the policy, the amount of insurance covered, total loss of the property insured, a frame dwelling, known as 1725 Princeton Avenue, being averred. Judgment was demanded for $ 3,100 under the policy, with interest from March 6, 1915, at six per cent per annum, and for $ 310 as damages for alleged vexatious delay, and for a reasonable attorneys' fee. The suit was filed May 7, 1915. Entry of appearance made by appellant, defendant below.

"On February 9, 1916, appellant filed its amended answer, and what is designated by appellant as a cross-bill, setting up in the answer that the policy was issued in the name of George F. Martin, as insured, but that the property insured was in fact owned by one Adolph Krupnick at the time the policy was issued, and it prayed that Martin and Krupnick be made parties defendant. Appellant averred that said policy was void, because of the concealment from it of lack of title of Martin and of the interest of Krupnick. By way of its cross-bill, as it is called by appellant, it set up the same facts, averred that by reason thereof the policy was void, and sets out the subrogation clause as follows:

"'It is also agreed that whenever this company shall pay to the mortgagee or trustee any sum for loss under this policy, and shall claim that as to the mortgagor or owner, no liability therefor existed, it shall at once and to the extent of such payment be legally subrogated to all the rights of the party to whom such payment shall be made, under any and all securities held by such party for the payment of said debt. But such subrogation shall be in subrogation to the claims of said party for the balance of the debt so secured. Or this company may, at its option, pay the said mortgagee or trustee the whole debt so secured, with all the interest which may have accrued thereon to the date of such payment, and shall thereupon receive from the party to whom such payment shall be made an assignment and transfer of said debt, with all securities held by said party for the payment thereof.'

"Appellant then avers that if plaintiff, as trustee or mortgagee, had any interest in or title to the property, or any right to the insurance under the policy, it (defendant insurance company), as insurer under the policy, claims its right to be subrogated to the rights of the mortgagee under the mortgage securities. The defendant further avers that Martin and Krupnick are necessary parties,...