United States v. Farmers Mut. Ins. Ass'n of Kiron, Iowa

• Decision Date: 03 April 1961
• Docket Number: No. 16594.,16594.
• Citation: 288 F.2d 560
• Parties: UNITED STATES of America, Appellant, v. FARMERS MUTUAL INSURANCE ASSOCIATION OF KIRON, IOWA, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

288 F.2d 560 (1961)

UNITED STATES of America, Appellant, v. FARMERS MUTUAL INSURANCE ASSOCIATION OF KIRON, IOWA, Appellee.

No. 16594.

United States Court of Appeals Eighth Circuit.

April 3, 1961.

William R. Crary, Asst. U. S. Atty., Sioux City, Iowa, for appellant. F. E. Van Alstine, U. S. Atty., Sioux City, Iowa, on the brief.

Harry H. Miller, Sioux City, Iowa, and Sterling Alexander, Des Moines, Iowa, for appellee.

Before SANBORN, VAN OOSTERHOUT and MATTHES, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge.

The issue presented by this appeal is whether the trial court committed error in sustaining defendant's motion to dismiss the Government's complaint and in treating such motion as a motion for summary judgment and in entering final judgment dismissing the complaint.

This action is brought by the United States of America based upon a claim of the Commodity Credit Corporation (CCC), its agency and instrumentality. Jurisdiction is based on § 4(c) of the CCC Charter Act (62 Stat. 1070), as amended (63 Stat. 154 and 64 Stat. 291) 15 U.S. C.A. § 714b(c).

The defendant is a mutual insurance association incorporated and operating under Chapter 518 I.C.A.

The Government in its complaint alleges that the defendant on December 23, 1957, issued to Tracy North its insurance policy effective for a period of five years commencing January 24, 1958, providing fire and other insurance coverage upon Mr. North's buildings and personal property in a total amount of $31,925 including insurance upon corn in crib in the amount of $3,000. That on November 20, 1958, CCC made corn loans totalling $7,062 secured by chattel mortgages on 7,062 bushels of Mr. North's corn stored on his farm; that CCC is the holder and owner of the notes evidencing such loans; that on February 7, 1959, while North's policy of insurance was still in full force and effect a fire totally destroyed 6184 bushels of the corn mortgaged to CCC as well as other corn covered by the insurance but not included in the mortgage; that all conditions precedent of said policy and all terms thereof to be performed by North have been performed or have occurred.

The complaint further alleges that defendant paid North $1,250 for fire loss on unmortgaged corn but that the remaining insurance coverage of $1,750 on said corn has not been paid. That on January 18, 1960, North assigned in writing to CCC all rights of action to him accrued under the insurance policy issued by the defendant with respect to the loss by fire of corn owned by him and mortgaged to CCC.

A complete copy of the policy and endorsements, including defendant's articles of incorporation and bylaws is attached to and made a part of the complaint.

Defendant filed a motion to dismiss the complaint, which reads:

"The Defendant in the above-entitled action moves the Court as follows:

1. To dismiss the action because the complaint fails to state a claim against defendant upon which relief can be granted."

The record before us consists of the complaint, the motion to dismiss, memorandum decision of the trial court, final judgment of dismissal and notice of appeal. The trial court in its memorandum opinion, 184 F.Supp. 708, states that the motion to dismiss "is predicated on the theory that the insured's giving of a chattel mortgage on the insured property, without the insurer's consent, constituted a violation of the policy terms which specified: `if any change * * * take place in the interest, title, possession or use of the subject matter of insurance', and that such a breach bars recovery under the insurance contract."

The court states the Government's contentions, which are substantially the same as the contentions raised on this appeal, as follows:

"The Government in its resistance to the defendant\'s motion contends: (1) That the by-law provisions in the policy, voiding it, `If any change * * * takes place in the interest, title, possession or use of the subject matter of insurance\', are not among those permitted or prescribed by the Code of Iowa and therefor against its public policies and void; (2) that Iowa case law compels rejection of the defendant\'s viewpoint, on this motion, that a chattel mortgage on the subject matter of the insurance, without the insurer\'s consent, constitutes a breach of the insurance contract which bars recovery and (3) that the defendant\'s payment of the fire loss to the extent of $1,250, operated as a waiver of any defense it may have had under that provision of the insurance contract."

Rule 12(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A., provides for motions to dismiss and authorizes dismissals for "(6) failure to state a claim upon which relief can be granted." Said rule further provides:

"If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56."

The trial court in its opinion filed June 17, 1960, directed that the motion to dismiss be sustained. Thereafter on June 28, 1960, final order of dismissal was filed which states in part:

"The court on the hearing of the motion to dismiss in this action having had matters presented which were outside of the pleadings and those matters not having been excluded, and the parties having treated said motion as one for summary judgment and the court having regarded and treated the motion as such as it heretofore rendered its Memorandum Decision in favor of the defendant and against the plaintiff, and it appearing from said decision that there is no genuine issue as to any material fact, and that the moving party is entitled to a judgment for dismissal of the plaintiff\'s complaint as a matter of law, * *."

The Government contends that it had no notice or information that the court was treating the motion to dismiss as one for summary judgment and that it was thus deprived of the opportunity to present material pertinent to such motion as authorized by Rule 56. The record lends some support to such contention, but since we are of the view that the judgment must be reversed whether the motion is one to dismiss or one for summary judgment, we deem it unnecessary to pass upon this contention.

A motion to dismiss a complaint should not be granted unless "it appears to a certainty that the plaintiff would be entitled to no relief under any state of facts which could be proved in support of his claim." Thomason v. Hospital T. V. Rentals, Inc., 8 Cir., 272 F.2d 263, 264; Conley v. Gibson, 355 U.S. 41, 45, 78 S.Ct. 99, 2 L.Ed.2d 80; Lada v. Wilkie, 8 Cir., 250 F.2d 211.

In a summary judgment situation, the court may consider admissions and facts conclusively established but all reasonable doubts touching the existence of a genuine issue as to material fact must be resolved against the movant.

The rule to be applied is thus stated in Traylor v. Black, Sivalls & Bryson, Inc., 8 Cir., 189 F.2d 213, 216:

"A summary judgment upon motion therefor by a defendant in an action should never be entered except where the defendant is entitled to its allowance beyond all doubt. To warrant its entry the facts conceded by the plaintiff, or demonstrated beyond reasonable question to exist, should show the right of the defendant to a judgment with such clarity as to leave no room for controversy, and they should show affirmatively that the plaintiff would not be entitled to recover under any discernible circumstances. * * * A summary judgment is an extreme remedy, and, under the rule, should be awarded only when the truth is quite clear. * * * And all reasonable doubts touching the existence of a genuine issue as to a material fact must be resolved against the party moving for summary judgment."

To like effect see Warner v. First National Bank of Minneapolis, 8 Cir., 236 F.2d 853, 857; Caylor v. Virden, 8 Cir., 217 F.2d 739, 741-742.

Thus if under the pleadings or the pleadings as supplemented by any record made before the trial court, the defendant has demonstrated that no material disputed issue of fact is presented and that the Government would not be entitled to recover under any discernible circumstances, the judgment of dismissal would be entitled to be affirmed.

We shall first consider defendant's contention that the policy authorizes the forfeiture in event that the insured property is mortgaged without the insurer's consent.

Defendant's bylaws, made part of the policy, contained the following provisions:

"Section 18 — Change of Title and Removal of Property.

"Unless otherwise provided by written agreement of this Association, this policy shall be void: If any change other than by death of the insured, whether by legal proceedings, judgment, voluntary act of the insured or otherwise take place in the interest, title possession or use of the subject of insurance.

* * * * * *

"Section 20 — Incumbrance.

"Incumbered property may be insured and a mortgage or loss payable clause issued and attached when the policy is written, or afterwards if the policy is returned to the Secretary for that purpose."

The trial court upheld the defendant's contention that the giving of the mortgage to CCC after the issuance of the policy violated the condition contained in Section 18, rendering the policy void upon any "change in interest" of the insured. The Government urges that the court erred in such determination. The issue presented is whether it may conclusively be said as a matter of law that the giving of a chattel mortgage upon the part of the insured property without first obtaining insurer's consent thereto is a violation of the condition of the policy relating to a change of interest. This problem is thoroughly considered in an annotation in 126 A.L.R....