Wrausmann v. Kansas City Fire & Marine Ins. Co., 33913
| Decision Date | 22 February 1972 |
| Docket Number | No. 33913,33913 |
| Parties | Margaret WRAUSMANN, Plaintiff-Respondent, v. KANSAS CITY FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellant. . Louis District |
| Court | Missouri Court of Appeals |
Klamen, Summers, Wattenberg & Compton, by Robert F. Summers, Clayton, for plaintiff-respondent.
Willson, Cunningham & McClellan, by J. H. Cunningham, Jr., St. Louis, for defendant-appellant.
CLEMENS, Commissioner.
This action on a fire insurance policy presents two briefed issues. First, does a straw party insurer have an insurable interest in insured property? Second, does an obligor on a promissory note, secured by a deed of trust on property, have an insurable interest in that property? We say yes and therefore need not consider the straw party issue.
Plaintiff Margaret Wrausmann had a $5,200 verdict and judgment against the defendant insurer and it appeals, contending for judgment on the ground plaintiff had no insurable interest in the damaged property.
This train of events led to plaintiff's judgment: (1) Early in 1964 Louis A. Mitleider bought a house and lot, taking title in the name of his secretary, plaintiff Margaret Wrausmann. (2) On February 13, 1964 Margaret Wrausmann, probably on behalf of Mr. Mitleider, borrowed $7,500 from the Jefferson Savings and Loan Association, giving a conventional deed of trust on the house and lot to secure her negotiable promissory note. By endorsement Mr. Mitleider guaranteed payment of the note. The lender knew Margaret Wrausmann was a straw party and considered Mr. Mitleider as primarily liable on the note. (3) On December 15, 1965 plaintiff executed and delivered a deed whereby she conveyed the property to Mr. Mitleider. (4) On October 10, 1966 while the note was still unpaid, the defendant insurer issued its one-year $10,000 fire insurance policy naming Margaret Wrausmann as the insured. (5) On January 25, 1967 fire caused $5,200 damage to the house.
For reasons following we reject defendant's contention that plaintiff had no insurable interest.
It is well settled that a valid contract of insurance must be based on 'insurable interest.' The question for decision is whether a person liable on a debtor's note, secured by a deed of trust upon property, has an insurable interest in that property. The issue does not appear to have been squarely decided in Missouri.
Missouri courts have defined 'insurable interest,' by adopting the language of 44 C.J.S. Insurance § 175: 'In general a person has an insurable interest in the subject matter insured where he has such a relation or connection with, or concern in, such subject matter that he will derive pecuniary benefit or advantage from its preservation, or will suffer pecuniary loss or damage from its destruction, termination or injury by the happening of the event insured against.' American Central Insurance Company v. Kirby, Mo.App., 294 S.W.2d 556(3). See also Bernhardt v. Boeuf & Burger Mutual Insurance Company, Mo.App., 319 S.W.2d 672. Assume Miss Wrausmann's liability was contingent and that she would suffer a loss only if (1) Mr. Mitleider did not pay the note and (2) the insured property was damaged to the extent that its value became less than the amount of the note. The question then before us is whether her 'concern in the subject matter'...
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