United States v. Springfield Fire & Marine Ins. Co.

• Decision Date: 17 November 1953
• Docket Number: No. 14774.,14774.
• Citation: United States v. Springfield Fire & Marine Ins. Co., 207 F.2d 935 (8th Cir. 1953)
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: UNITED STATES v. SPRINGFIELD FIRE & MARINE INS. CO.

207 F.2d 935 (1953)

UNITED STATES v. SPRINGFIELD FIRE & MARINE INS. CO.

No. 14774.

United States Court of Appeals, Eighth Circuit.

November 17, 1953.

Morton Hollander, Atty., Dept. of Justice, Washington, D. C. (Warren E. Burger, Asst. Atty. Gen., Sam M. Wear, U. S. Atty., Hugh A. Miner, Asst. U. S. Atty., Kansas City, Mo., and Paul A. Sweeney and George F. Foley, Attys., Dept. of Justice, Washington, D. C., on the brief), for appellant.

Henry Depping, Kansas City, Mo. (William S. Hogsett, Joseph R. Hogsett, and Hogsett, Depping, Houts & James, Kansas City, Mo., on the brief), for appellee.

Before SANBORN, WOODROUGH and JOHNSEN, Circuit Judges.

JOHNSEN, Circuit Judge.

The United States sued the Springfield Fire & Marine Insurance Company to recover on a policy of fire insurance. The court, on a trial without a jury, gave judgment for the defendant, and the Government has appealed. The contract liability of the insurer is controlled by Missouri law.

The policy was one covering both real and personal property, issued to William Robbins and Virginia Robbins as insureds, and containing a union mortgage clause in favor of The First National Bank of St. Joseph, Missouri, or assigns, as mortgagee.

The recovery sought was for some corn, destroyed by fire, on which the Commodity Credit Corporation, 15 U.S. C.A. § 714 et seq., held a mortgage, under a loan made to William Robbins, pursuant to the 1948 Corn Loan and Purchase Agreement Program (13 F.R. 5417). The corn was in storage, under seal, on the insured's premises, at the time of its destruction.

Other property of the insured, including buildings, implements and animal feed, not mortgaged, also was destroyed by the fire. The insured made claim upon the policy for the amount of this loss, and it was duly paid by the insurer. He did not make claim for the destruction of the mortgaged corn, because he regarded it as not being within the coverage of the policy.

Two theories were relied upon by the Government to sustain its right to recover for the mortgaged corn. Its first contention was that Commodity Credit Corporation (CCC) was directly insured by the union mortgage clause, in that the corn loan had been made to Robbins by The First National Bank of St. Joseph, Missouri, as an approved lending agency of CCC (6 CFR § 606.3); that CCC had thereafter purchased Robbins' note and mortgage from the Bank (6 CFR § 606.22); and that CCC had thereby succeeded as "assigns" to the interest of the Bank under the mortgage-clause coverage.

The second contention of the Government was that, irrespective of the mortgage-clause coverage, it also was entitled to recover on the basis of Robbins' personal coverage, by virtue of the following regulation promulgated by CCC in connection with the 1948 Corn Loan and Purchase Agreement Program: "CCC will not require the producer to insure the corn placed under loan; however, if the producer does insure such corn such insurance shall inure to the benefit of CCC to the extent of its interest, after first satisfying the producer's equity in the corn involved in the loss." 6 CFR § 606.16. Another section of the regulations (Id., § 606.17) provided that "uninsured physical loss or damage occurring without fault, negligence, or conversion on the part of the producer, resulting solely from an external cause other than insect infestation or vermin will be assumed by CCC * * *."

The primary difficulty confronting the Government here, on both of its theories of recovery, is that one of the grounds on which the court predicated its denial of relief was a finding, in effect, that, from the contracting situation, intention and construction shown by the evidence, the mortgaged corn was entitled to be regarded as not being insured by the policy, either as a matter of mortgage-clause coverage or as a matter of personal coverage to Robbins.

In respect to the mortgage-clause coverage, the testimony both of Robbins and of an officer of The First National Bank of St. Joseph, Missouri, showed unequivocally that the mortgage-clause endorsement had been required by the Bank and attached to the policy solely in relation to a real estate loan which the Bank had made to Robbins and which Robbins had subsequently paid. The Bank held the policy as part of its collateral, while the real estate loan was in effect, and upon payment of the obligation it surrendered the policy to Robbins. All of this occurred before the corn loan was taken out and without any relationship to that loan.

The only agreement shown to have existed between Robbins and the Bank for insurance coverage in favor of the Bank was as to the real estate loan. Neither of them had intended the mortgage clause to constitute an open insurance coverage in favor of the Bank.¹ The Bank recognized the rights created in its favor by the mortgage clause as having terminated when its real estate loan was paid, as both its actions at the time and the testimony of its vice-president on the stand clearly indicated. And it made no request that Robbins provide it with insurance coverage in connection with the corn loan, not because it regarded the previous mortgage-clause endorsement as having any application thereto, but because of the lack of any need for such protection in its favor under the provisions of the CCC regulations, which have been quoted above, and under the provisions of its Lending Agency Agreement.

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