Tollett v. PHOENIX ASSURANCE COMPANY OF NEW YORK, Civ. A. No. 612.

• Decision Date: 27 December 1956
• Docket Number: Civ. A. No. 612.
• Citation: 147 F. Supp. 597
• Parties: Kelsie TOLLETT and Berthenia Tollett, Plaintiffs, v. PHOENIX ASSURANCE COMPANY OF NEW YORK, Defendant, M. M. Tollett, Cross-Defendant.
• Court: U.S. District Court — Western District of Arkansas

147 F. Supp. 597

Kelsie TOLLETT and Berthenia Tollett, Plaintiffs, v. PHOENIX ASSURANCE COMPANY OF NEW YORK, Defendant, M. M. Tollett, Cross-Defendant.

Civ. A. No. 612.

United States District Court W. D. Arkansas, Texarkana Division.

December 27, 1956.

COPYRIGHT MATERIAL OMITTED

Shaver, Tackett, Jones & Lowe, Boyd Tackett, Texarkana, Ark., for plaintiffs.

Arnold & Arnold, W. H. Arnold, III, Texarkana, Ark., for defendant.

Van Johnson and Joe Rosenbloom, Texarkana, Ark., for cross-defendant.

LEMLEY, Chief Judge.

This cause having been tried to the Court, and the Court having considered the pleadings in the case, the briefs that have been filed by the parties, and the evidence, both oral and documentary, introduced at the trial, and being well and fully advised, doth make the following findings of fact and doth state the following conclusions of law, to-wit:

Findings of Fact

1. The plaintiffs, Kelsie Tollett and Berthenia Tollett, his wife, alleged to be citizens of Arkansas and actually citizens of Broken Bow, Oklahoma, brought this action in this court against the defendant, Phoenix Assurance Company of New York, a New York corporation, authorized to do business in Arkansas and doing business in this State, to recover upon a policy of fire insurance issued by the defendant's agent, DeQueen Abstract Company, Inc. of DeQueen, Sevier County, Arkansas, to the plaintiffs, insuring them against loss by fire to a dwelling house and contents located in Sevier County four miles north of the town of Lockesburg. In their complaint the plaintiffs alleged that they were entitled to recover under this policy the sum of $6,000, representing the full value of the dwelling above mentioned, which was totally destroyed by fire on February 22, 1956, and $3,000 representing the alleged value of the personal property inside the house which was also destroyed. In addition to demanding the sum of $9,000 as compensation for their alleged loss, the plaintiffs alleged that after demand made upon it, the defendant had failed and refused to pay the loss, and was, therefore, liable in addition for a statutory penalty of 12% and for a reasonable attorney's fee by virtue of the provisions of Ark.Stats., Section 66-514.

2. After the filing of the suit the defendant filed an answer and a counter-claim for interpleader. In its pleadings it admitted that it was liable to someone under the policy to the extent of $9,000, but denied that it was liable for any statutory penalty or attorney's fee. It further alleged that M. M. Tollett, a citizen of Texas, and the father of the plaintiff, Kelsie Tollett, was making a claim to all or part of the proceeds of the policy by virtue of his ownership of the land upon which the insured dwelling had been located; that it was a disinterested stakeholder, willing to pay the $9,000 to whomsoever the court might adjudge entitled thereto; that M. M. Tollett should be brought into the case as a cross-defendant, and that he and Kelsie Tollett and Berthenia Tollett should be required to litigate in these proceedings their conflicting claims to the fund; that M. M. Tollett should be restrained from instituting any action against the defendant based on the policy, and that plaintiffs should be restrained from pursuing their action against the defendant further; and that the defendant should be discharged from all liability with respect to the proceeds of the policy and should be awarded its costs and a reasonable attorney's fee. In connection with its counterclaim for interpleader, the defendant paid into the registry of the court the sum of $9,000, plus an additional $100 to cover any interest or costs that might be awarded against it.

3. After the defendant's answer and counterclaim were filed, an order was made bringing M. M. Tollett into the case, and he appeared herein after service of summons upon him and asserted a claim to $3,000 of the $9,000 on deposit in the registry of the court on the theory that he owned the land on which the insured dwelling was built, that he had made certain contributions of money to the building of the house, and that certain materials from an old house formerly occupying the premises had been used in building the insured dwelling. It was his theory that under the circumstances the plaintiffs were constructive trustees for his benefit of the policy proceeds to the extent of $3,000. M. M. Tollett asserted no claim to that portion of the proceeds of the policy ($3,000) representing the value of the destroyed personal property.

4. By subsequent pleadings the plaintiffs controverted the claim of M. M. Tollett to any portion of the money in the registry of the Court, and also took the position that the defendant's counterclaim for interpleader was improper, and that the defendant was not entitled to costs or attorney's fee; and they reiterated their original contention that they were entitled to the full $9,000, plus the statutory penalty and attorney's fee.

5. From the foregoing abstract of the pleadings it will be seen that the Court is here concerned with three controversies, namely: the controversy between the plaintiffs, on the one hand, and M. M. Tollett, on the other hand, relating to the ownership of the fund in court; that between the plaintiffs and the defendant with respect to whether or not the defendant is liable for the penalty and attorney's fee; and that between the plaintiffs and the defendant as to whether or not the latter is entitled to an award of costs and a reasonable attorney's fee as an interpleader.

6. Taking up first the controversy between the plaintiffs and M. M. Tollett, the Court finds that the insured dwelling was constructed by Kelsie Tollett on lands belonging to M. M. Tollett pursuant to an agreement between the plaintiffs and M. M. Tollett that he should occupy a room in the dwelling for the balance of his life, and that he would make a will devising the land and dwelling to the plaintiffs at his death, and further finds that M. M. Tollett did in fact make such a will. Prior to the time that the insured dwelling was built, the site thereof was occupied by a four-room frame dwelling belonging to M. M. Tollett; this old building was demolished to make way for the new dwelling, and part of the lumber and materials in the old building were incorporated into the new, but the Court is unable to say from the evidence with any degree of accuracy how much the old building was worth at the time it was dismantled, or how much of the material in the old building went into the new, or what was the value of the material so utilized. While there is some evidence that Kelsie Tollett cut and sold some pine timber off of the land on which the insured dwelling was built and used the proceeds of the sale in constructing the new house, the Court is again unable to say how much, if any, of such timber was cut, or what the proceeds of the sale of such timber amounted to, or how much of such proceeds, if any, went into the construction of the insured dwelling.

After the completion of the insured dwelling, it was occupied by the plaintiffs and M. M. Tollett pursuant to the terms of their agreement until a disagreement arose as a result of which M. M. Tollett revoked his will, left the premises and went to Texas, where he has since resided. The insurance here involved was procured in January, 1956, by Kelsie Tollett and his wife, some months after the disagreement that has been mentioned and M. M. Tollett had gone to Texas, and the premium on the policy was paid by Kelsie Tollett. The policy insured the dwelling itself to the extent of $6,000, and insured the contents of said dwelling to the extent of $4,000, making a total coverage of $10,000.

On the trial of the case the Court called M. M. Tollett to the stand on its own motion, and he testified that the subject of insurance was never discussed with him either before or after the policy was obtained, and that he did not know of the existence of such insurance until after the fire. The Court credits that testimony, which was strictly against Mr. Tollett's interest, and finds that in view of the fact that the subject of insurance was not discussed with M. M. Tollett either before or after the policy was obtained, and in view of the existing estrangement between M. M. Tollett and his son and daughter-in-law when the policy was issued, the latter in procuring the insurance were simply insuring their own interests and not that of M. M. Tollett.

7. Passing to the question of whether or not the defendant is liable for a statutory penalty and attorney's fee, the Court finds that prior to the filing of this suit, the plaintiffs never made any demand upon the defendant or any of the latter's agents for the payment of $9,000 or any other sum; that at no time prior to the filing of this suit did the defendant either admit or deny liability under the policy; that when the action was commenced, the defendant admitted liability for the full amount sued for, namely, $9,000, but alleged in good faith that there were conflicting claims to the proceeds and that it did not know whom to pay; and that it paid the money into the registry of the court and made M. M. Tollett a party to this action so that the controversy between him and the plaintiffs could be litigated.

While the plaintiffs do not contend that they ever filed any formal proof of loss, Mrs. Tollett testified that she visited the office of the DeQueen Abstract Company on a number of occasions prior to April 10, 1956, and that on March 20, 1956, she told Mr. George Allison the head of the Abstract Company, that she would take $6,000 for the house and $3,000 for the personal property in the house; Kelsie Tollett was not with her on those occasions. She and Kelsie Tollett both testified that they employed counsel in the case on April 10, namely, Mr. Boyd Tackett of Texarkana, Arkansas; that Mr. Tackett instructed them to go to DeQueen and make demand on Mr. Allison...