United Farm Bureau Mut. Ins. Co. v. Blanton

• Decision Date: 27 December 1983
• Docket Number: No. 3-183A21,3-183A21
• Parties: UNITED FARM BUREAU MUTUAL INSURANCE COMPANY, d/b/a Farm Bureau Insurance, Appellant (Defendant Below), v. Randall W. BLANTON and Susan Blanton, Husband and Wife, Barrick Realty, Inc., an Indiana Corporation, and Daniel W. Barrick, Jr., Appellees (Plaintiffs Below). UNITED FARM BUREAU MUTUAL INSURANCE COMPANY, d/b/a Farm Bureau Insurance, Appellant (Counterclaimant Below), v. BARRICK REALTY, INC., and Daniel W. Barrick, Appellee (Counterdefendant Below).
• Court: Indiana Appellate Court

Page 609

457 N.E.2d 609

UNITED FARM BUREAU MUTUAL INSURANCE COMPANY, d/b/a Farm

Bureau Insurance, Appellant (Defendant Below), v. Randall W. BLANTON and Susan Blanton, Husband and Wife,

Barrick Realty, Inc., an Indiana Corporation, and

Daniel W. Barrick, Jr., Appellees

(Plaintiffs Below).

UNITED FARM BUREAU MUTUAL INSURANCE COMPANY, d/b/a Farm

Bureau Insurance, Appellant (Counterclaimant Below), v. BARRICK REALTY, INC., and Daniel W. Barrick, Appellee

(Counterdefendant Below).

No. 3-183A21.

Court of Appeals of Indiana,

Third District.

Dec. 27, 1983.

James J. Nagy, Munster, for appellant.

James T. Walker, Walker, Fleming, Corbin & Greenberg, P.C., Merrillville, for appellees Randall W. Blanton, Susan Blanton, Barrick Realty, Inc., and Daniel W. Barrick, Jr.

STATON, Judge.

Randall and Susan Blanton (Blantons), Daniel W. Barrick, Jr., and Barrick Realty, Inc. (Barrick) sued United Farm Bureau Mutual Insurance Company, d/b/a Farm Bureau Insurance (Farm Bureau), alleging that Farm Bureau had wrongfully failed to pay a claim for damage resulting from a fire. Farm Bureau brought a counterclaim, alleging that Barrick's failure to obtain an assignment of the insurance policy was negligent and increased the risk to Farm Bureau. The trial court determined that the Blantons had an insurable interest in the property to the extent of their liability on the mortgage for the property and awarded them $10,417.00. The court denied recovery to Barrick and denied recovery to Farm Bureau on its counterclaim against Barrick. Farm Bureau appeals, raising the following issues:

(1) Whether the Blantons had an insurable interest in the property despite their attempt to sell the property to Barrick;

(2) Whether Barrick's negligence in failing to notify Farm Bureau of the sale of the property increased Farm Bureau's risk in covering the property;

(3) Whether the trial court erred in ordering that payment be made to the Blantons instead of to the mortgagee to the extent of its interest, in accordance with the terms of the policy; and

(4) Whether the trial court's refusal to admit into evidence the deposition of Barrick is an error which requires reversal.

Affirmed; remanded for modification of the judgment.

The Blantons owned property at 3993 Tennessee Street in Gary, Indiana. On October 3, 1978, the Blantons sold the property to Barrick for $1,000.00 and the understanding that Barrick would assume the mortgage on the property. That mortgage was held by Waterfield Mortgage Co., Inc. (Waterfield). The Blantons gave Barrick a blank warranty deed which they had signed. Barrick planned to have the deed completed and recorded, to file the necessary papers for assuming liability on the mortgage and to seek an assignment of the Blantons' homeowner's insurance policy. However, none of these actions were taken.

Later, Barrick sold the property on contract to Kent Phillips. Phillips agreed to insure the property, but had not done so when the fire occurred on November 7, 1979. Phillips abandoned possession of the property following the fire. Barrick, as Barrick Realty, Inc., and the Blantons filed a claim with Farm Bureau in the amount of $15,000.00, the policy limit, for the damage to the property. Farm Bureau refused to pay the claim, and the Blantons and Barrick filed suit.

I. Insurable Interest

After a bench trial, the trial court, sua sponte, issued findings of fact, concluding that the Blantons retained an insurable interest in the property to the extent of their liability on the mortgage at the time of the fire, which was $10,417.00. He ordered that amount paid to the Blantons. He found that the property was subject to an executory sales contract at the time of the fire because no deed had been delivered or recorded, and concluded that Barrick was not entitled to recovery under the policy. The trial court also found that Barrick's failure to notify Farm Bureau of the sale of the property was not the cause of the damage to the premises, that Farm Bureau had presented no evidence with respect to its defense of increased risk, and concluded that Farm Bureau was not entitled to recover against Barrick on its counterclaim.

The trial court, sua sponte, stated specific findings of fact and conclusions of law, as provided for in Ind.Rules of Procedure, Trial Rule 52(A), in support of its general findings in favor of the Blantons. When the court makes specific findings, on its own motion, the general finding or judgment will control as to the issues upon which the court has not expressly found, Shrum v. Dalton (1982), Ind.App., 442 N.E.2d 366, and the special findings control only as to those issues which they cover. Hunter v. Milhous (1973), 159 Ind.App. 105, 305 N.E.2d 448. A general judgment will be affirmed if it can be sustained upon any legal theory by the evidence introduced at trial. English Coal Co., Inc. v. Durcholz (1981), Ind.App., 422 N.E.2d 302. Special findings will not be set aside on appeal unless they are clearly erroneous. TR. 52(A).

The trial court concluded that the Blantons had an insurable interest ¹ in the fire-damaged premises to the extent of their liability on the mortgage. ² A person has an insurable interest in property if he obtains a benefit from the property's existence or would suffer a loss from its destruction. It is not essential that he hold a security interest in or title to the property. All Phase Const. Corp. v. Federated Mut. Ins. Co. (1976), 168 Ind.App. 19, 340 N.E.2d 835; Ebert v. Grain Dealers Mutual Insurance Company (1973), 158 Ind.App. 379, 303 N.E.2d 693. When the Blantons transferred possession of the property to Barrick, they remained liable on the mortgage. It is undisputed that Barrick never filed the necessary document to assume the Blantons' mortgage, although he did make mortgage payments using the Blantons' payment book. Therefore, damage to the property impaired the security for the Blantons' mortgage. It is not necessary to determine whether Barrick or the Blantons or Phillips held title to the property at the time of the fire; the Blantons clearly had an insurable interest to the extent of their mortgage obligation. See 4 Appleman, Insurance Law and Practice Sec. 2245 (1969); 3 Couch on Insurance Sec. 24:71 (2d ed. 1960).

Farm Bureau argues that an insurance policy relates to the insured, rather than to the property protected by the policy; thus, the policy became void when Barrick purchased the property. Barrick failed to obtain an assignment of the policy; therefore, the trial court determined that he was not entitled to recover under it. Barrick does not appeal that determination. The judgment allows the Blantons to recover to the extent of their insurable interest under the policy which they owned. In support of its argument that the sale to Barrick rendered the policy void, Farm Bureau cites Farmers Mutual Fire Insurance Company of LaPorte County v. Olson (1920), 74 Ind.App. 449, 129 N.E. 234 and New v. German Insurance Company of Freeport (1892), 5 Ind.App. 82, 31 N.E. 475. In both of these cases, the insurance policy at issue contained a clause providing that the policy would be void if the insured's interest in the property changed or if title to the property changed. No such clause is at issue here; therefore the rules set forth in New and Farmers Mutual do not apply to the Blantons' claim. ³ We reject Farm Bureau's assertion that the Blantons had no insurable interest in the property.

II. Farm Bureau's Counterclaim

Farm Bureau's counterclaim alleged that Barrick was negligent in failing to notify Farm Bureau of the sale and seek an assignment of the policy. On the counterclaim, Farm Bureau bore the burden of proof; therefore, it is appealing from a negative judgment on the counterclaim and we will not disturb that judgment unless the evidence is without conflict and leads unerringly to a different conclusion. Plumley v. Stanelle (1974), 160 Ind.App. 271, 311 N.E.2d 626.

Farm Bureau had the burden of proving that Barrick owed a duty to Farm Bureau, that he failed to perform that duty and that Farm Bureau suffered an injury as a result of Barrick's failure to fulfill his duty. Palace Bar, Inc. v. Fearnot (1978), 269 Ind. 405, 381 N.E.2d 858. The trial court found that Farm Bureau had not shown that Barrick's failure to obtain an assignment of the policy was the proximate cause of any injury to Farm Bureau. The record contains little beyond a bare assertion that Farm Bureau's risk of loss increased when Barrick took possession of the property. The trial court's finding is not clearly erroneous and will not be disturbed on appeal. ⁴

III. Payment

Farm Bureau contends that the trial court erred in ordering that the $10,417.00 be paid to the Blantons. Farm Bureau argues that this sum is the amount owed to Waterfield Mortgage Company (Waterf...