Wilmurth v. National Liberty Ins. Co. of America

• Decision Date: 05 December 1947
• Citation: 206 S.W.2d 730,239 Mo.App. 1177
• Parties: W. B. Wilmurth, Appellant, v. National Liberty Insurance Company of America, a Corporation; the Metropolitan Life Insurance Company of New York, a Corporation; and Jack Hesselbein, Respondent
• Court: Missouri Court of Appeals

206 S.W.2d 730

239 Mo.App. 1177

W. B. Wilmurth, Appellant, v. National Liberty Insurance Company of America, a Corporation; the Metropolitan Life Insurance Company of New York, a Corporation; and Jack Hesselbein, Respondent

Court of Appeals of Missouri, Springfield District

December 5, 1947

Appeal from the Circuit Court of Mississippi County; Hon. J. C McDowell, Judge.

Affirmed.

W Clifton Banta, Charleston, Missouri, attorney for appellant.

The trial court erred in holding that the policy of insurance herein sued on is null and void, because (1) It is generally accepted rule in the State of Missouri that forfeiture of insurance policies is frowned upon by the law, and our Courts universally require that insurance policies be strictly construed against the insurer. Terminal Ice & Power Co v. American Fire Ins. Co., 187 S.W. 564, l. c. 567; Garvin v. Mutual Life Ins. Co., 79 S.W.2d 496; National Fire Insurance Co. v. Munger, 106 S.W.2d 10. (2) The "Contract to Purchase" entered into on October 20, 1944, between appellant and Jack M. Hesselbein, being merely an agreement to assign a contract of purchase at a later date, without any change of possession or control over the premises, did not constitute any change in the title or interest in the insured property, sufficient to forfeit the policy of insurance. Mackintosh v. Agricultural Fire Insurance Company, 89 P. 102, 104, 150 Cal. 440, 119 Am. St. Rep. 234; Ayers v. Home Ins. Co., 21 Iowa 185, 188. (3) A contract for the sale of land held under a contract is not an assignment and does not pass any interest, either legal or equitable. Smith v. Snodgrass 246 S.W. 968. (4) A subcontract by a purchaser will not operate as an assignment 5 Corpus Juris, page 841, sec. 6; 66 Corpus Juris, page 1079, sec 870. (5) The respondent National Liberty Insurance Company of America was and is estopped from claiming that change of interest voided policy, because of failure to tender unearned premium to appellant after fire or to show that unearned premium had been returned to appellant after the fire. Luthy v. Northwestern Nat. Ins. Co. of Milwaukee, Wis., 20 S.W.2d 299, 224 Mo.App. 371; State ex rel. Northwestern Nat. Ins. Co. v. Trimble, 20 S.W.2d 46, 323 Mo. 458; Malo v. Niagara Fire Ins. Co. of New York 282 S.W. 78. The Court erred in excluding testimony that appellant W. B. Wilmurth agreed at the time of the assignment of "Real Estate Sales Contract" on Dec. 20, 1944 to Jack M. Hesselbein, the proceeds of the insurance policy should be collected by the Metropolitan Life Insurance Company and applied on the balance due to them.

Finch and Finch, Cape Girardeau, Missouri, attorneys for respondent.

The provision in the fire policy in question that it should be void if any change takes place in title, interest or possession of the insured property is valid and enforceable, though only equitable interest passes under the insured's contract to sell the property even if he may be said to have retained some interest therein. National Fire Insurance Company of Hartford, Connecticut v. Munger et al. 106 S.W.2d 17 l. c.; Manning et al. v. North British and Mercantile Insurance Company 99 S.W. 1095. The term "interest" as used in the change of title, interest, or possession clause of the fire policy, means some right in the property less than title. Hubbard v. The Home Insurance Company 22 S.W. 886; Avery v. Mechanics Insurance Company of Philadelphia 295 S.W. 509; Brighton Beach Racing Association v. Home Insurance Company of New York, 113 A.D. 728, 99 N.Y.S. 219 i. d. 180 N.Y. 526, 82 N.E. 1124; Grunauer v. Westchester Fire Insurance Company, 72 N. J. Law 289, 62 A. 418, 3 L. R. A. (n.s.) 107; Gibbs v. Insurance Company 59 Minn. 267, 61 N.W. 137, 50 Am. St. Rep. 405; Brickwell v. Atlas Assurance Company, 10 Cal.App. 17, 101 P. 16; Garner v. Milwaukee Mechanics Insurance Company, 73 Kan. 127, 84 P. 717, 4 L. R. A. (n. s.) 654; Royal Insurance Company v. Drury 150 Md. 211, 132 A. 635; William Skinner and Sons Shipbuilding and Dry Dock Company v. Houghton 92 Mo. 68, 48 A. 85. It is the rule in Missouri respecting insured real property that if the insured, without consent of the insurer, makes a contract to convey, as was done here, this vests the equitable title in the purchaser and the purchaser acquires such an interest as constitutes a breach of an insurance contract containing a change of interest clause. Manning et al. v. North British and Mercantile Insurance Company 99 S.W. 1095; Hubbard v. The Home Insurance Company 222 S.W. 886. The fact that possession of the insured property has not been delivered to the purchaser at the time of the fire is of no consequence. Manning v. North British and Mercantile Insurance Company 123 Mo. Appeals 456, 99 S.W. 1095. Appellant has suffered no loss. Since the loss occurred following the execution of the contract to purchase and appellant subsequently received the whole of the purchase price prior to suit, he sustained no loss and is not entitled to be indemnified. Manning v. North British and Mercantile Insurance Company, 123 Mo.App. 456, 99 S.W. 1095; Ransdell v. Insurance Company of North America, 197 Wis. 136, 221 N.W. 654; Beaman v. Springfield Fire and Marine Insurance Company 303 Ill.App. 554, 25 N.E.2d 603. It is well settled that a mortgage clause in a fire policy is a separate and distinct contract with the mortgagee. Gordon v. Northwestern National Ins. Co., 77 S.W.2d 520 l. c. And a provision in a mortgage clause, that an insurer paying loss to mortgagee, while claiming no liability existed as to mortgagor, should be subrogated to mortgagee's rights, is enforceable. Mosby v. Aetna Ins. Co., 225 S.W. 717 l. c. ESTOPPEL. Where a fire policy, as here, contains a loss payable clause, and the insurer tenders and stands ready to pay loss to mortgagee, the insurer does not have to tender unearned premium to claim a forfeiture as to the insured. Doerr v. National Fire Insurance Company 315 Mo. 266, 285 S.W. 961, 54 A. L. R. 1336. Contract Subsequent to Loss. The Court did not err in excluding testimony that appellant and Hesselbein, on December 20, 1944 and following the fire, had agreed the proceeds of the insurance policy, when collected by respondent, The Metropolitan Life Insurance Company, were to be applied on the balance due to the from Hesselbein, because no such agreement could bind respondent, National Liberty Insurance Company of America, and any such agreement would have been a direct violation of the condition of the policy in question against assignment thereof without consent of the Company. There could be no evidence of such an agreement between appellant and respondent Hesselbein, appellant's testimony being that there was no such agreement.

Vandeventer, J. Fulbright, P. J., not sitting. Blair, J., concurs.

OPINION

VANDEVENTER

This is a suit on a fire insurance policy written by the National Liberty Insurance Company of America (hereafter referred to as the insurer) which policy contained the following provision:

". . . it is stipulated and agreed that if . . . any change shall take place in title or interest or possession (except by succession by reason of the death of the insured) of the property herein named, or any part thereof; or if the insured shall not be the sole and unconditional owner of said property, or any part thereof; . . . then in each and every one of the above cases this entire policy shall be null and void."

The date of the policy was May 4, 1944, but it insured the plaintiff for three years from the 24th day of April, 1944. On the 20th day of October, 1944, plaintiff entered into the following contract with one of the defendants, Jack Hesselbein.

CONTRACT TO PURCHASE

IT IS AGREED and entered into by and between Ben Wilmurth of Scott County, Mo. hereinafter known as party of the first part, and S. B. Hardwick of Sikeston, Mo. representative of the owner, and Jack Hesselbein of Vallejo, Cal. hereinafter known as party of the second part, to-wit:

"WITNESSETH That, the said party of the first part hereby agrees to sell, and the party of the second part hereby agrees to purchase, the following describe property viz: (Land described.) subject to easements, if any existing, for public roads, highways, right of ways for railroads and ditches on or touching same.

"The purchase price of above described property is $ 9828.00 and the terms of payments are as follows: $ 1000.00 with the signing of this contract, as earnest money and part payment on said property, and $ 2094.00 to be paid as soon as the title to above described property is made merchantable, and deed is ready for delivery; the remainder of the purchase price to be paid as follows: Seller deducts $ 292.10 and allows same from his equity for interest on the loan against the above land for the year 1944. Purchaser to assume a loan in favor of the Metropolitan Life Ins. Co., in the amount of $ 6337.50. If there should be a slight difference either way when it is ascertained about the correct amount of loan both parties agree to an adjustment accordingly.

"The seller also agree to pay the 1944 taxes and does hereby deduct same from the amount coming to him. Said amount of taxes and interest being figured off the amount of $ 3094.00 due the seller as set out above. All deferred payments are to be evidenced by notes secured by a mortgage or deed of trust on above described property, dated same date as warranty deed, and are to draw % interest, payable annually. Instead of a deed a Real Estate Contract is to be assigned on the above property.

"Said Second Party hereby agrees that he will keep the buildings on the herein described land insured for as much as possible until all deferred payments are paid in full, and in case of loss by fire or...