Yoshida v. Security Ins. Co. of New Haven, Conn.

• Decision Date: 21 November 1933
• Parties: YOSHIDA et al. v. SECURITY INS. CO. OF NEW HAVEN, CONN., et al. [*]
• Court: Oregon Supreme Court

26 P.2d 1082

145 Or. 325

YOSHIDA et al. v. SECURITY INS. CO. OF NEW HAVEN, CONN., et al. ^[*]

Supreme Court of Oregon

November 21, 1933

Department 1.

Appeal from Circuit Court, Multnomah County; Louis P. Hewitt, Judge.

Suit by S. Yoshida and another against the Security Insurance Company of New Haven, Connecticut, and others, wherein Mary E. Hase and others filed cross-complaint. From a decree, Mary E. Hase and others appeal.

Affirmed.

This is an appeal by three of the four defendants from a decree of the circuit court which held that the plaintiffs who, while in possession under a lease of the real property owned by the three defendants aforementioned, procured the policy of fire insurance involved in this suit, which names them as the insured, are entitled to enforce payment of the same against the fourth defendant, which is the insurer, and which also held that the three defendants aforementioned have no interest in the policy of insurance. The decree also awarded the insurance company an attorney fee of $200 to reimburse it for sums expended for legal services in this suit.

Edward J. Clark, of Portland (George S. Shepherd, of Portland, on the brief), for appellants.

L. A Recken and W. E. Cameron, both of Portland, for respondent.

ROSSMAN Justice.

A brief statement of the facts will facilitate an understanding of the disposition which we are about to make of the assignments of error. April 11, 1923, when one Mrs. L. M. Kandle was the owner of a tract of land comprising 2,726 acres in Multnomah county, she as lessor, and one W. Loy as lessee executed a lease whereby she granted to Loy possession of the major part of the land for a term of ten years in consideration of his covenants recited in the lease. Among those covenants were the following: "All buildings now on said premises and all buildings to be built on said premises during the term of this lease are to remain on the place and belong to the said L. M. Kandle. *** The lessee is permitted to sublet to T. Yoshida who is now operating a hog-feeding plant on this place for the term of this lease such portion of the premises as may be agreed upon between them, and it is understood that said lessee or said T. Yoshida may maintain a hog-feeding plant according to the laws governing the same for at least three hundred hogs; all buildings to be maintained on the premises in good order and condition and in accordance with the laws governing the same; said buildings to remain on the premises during this lease and at the termination thereof. *** It is understood that the title to the buildings now on said premises and to be erected by the lessee shall vest in the lessor; said buildings to be kept in good condition and state of repair during the term of this lease." The lease contained a further provision by which the lessor, at the end of the first three-year period, could cancel it, being required, however, to give the lessee thirty days' notice of intention so to do. April 21, 1923, Loy and the aforementioned T. Yoshida entered into a lease whereby Yoshida was given possession of two portions of the aforementioned property for the term beginning April 1, 1923 and ending April 1, 1933. One of these tracts was 100 by 110 feet in area and the other approximately 80 by 150 feet. This lease required Yoshida to pay $15 per month rent for the period ending April 1, 1926, and $25 per month for the balance of the ten-year term. This instrument contained the following provisions: "All buildings now on said premises and all buildings to be built on said premises during the term of this lease are to remain on the place and to belong to the owner of the premises, L. M. Kandle, her heirs and assigns. *** It is understood and agreed that the title to the buildings now on said premises or to be erected by the lessee shall vest in L. M. Kandle, her heirs and assigns; said buildings to be kept in good condition and state of repair during the term of this lease by said T. Yoshida." September 16, 1926, Loy assigned all of his interest in the Kandle-Loy lease to G. Lee and Jack G. Luey, subject to the rights of T. Yoshida. In the assignment instrument Lee and Luey assumed the obligations of Loy and agreed to obtain for the latter a release from Mrs. Kandle. Upon the same day Lee and Luey, as lessors, and T. Yoshida, as lessee, effected an agreement which bound Lee and Luey to obtain a modification of the Kandle-Loy lease whereby the lessor would surrender her right to terminate that lease upon thirty days' notice, and T. Yoshida bound himself to pay on consideration thereof $30 a month rent instead of $25. Upon the same day, that is, September 16, 1926, Lee and Luey and the three appellants, Mary E. Hase, E. Louise Copeland, and Fay Kandle, who had succeeded to the title of Mrs. Kandle, and whom we shall hereafter refer to as the defendants, executed an instrument which released Loy from the obligations of his lease and substituted Lee and Luey in his place. It also modified the original lease so that it could no longer be terminated at the option of the lessors. A further provision of this instrument when it left the draftsman's hand, which required the lessees "to keep the buildings insured on said premises in a sum not less than $2,000.00 loss payable to the lessors as their interest may appear," was stricken out before the document was signed. December 28, 1927, Lee and Luey assigned their rights to Joe Bussone, and on March 18, 1929, Bussone assigned his interest in the lease to Mike Ratoza.

The evidence indicates that T. Yoshida, on April 21, 1923, was already in possession of the land. During his occupancy he constructed upon the premises three structures which he used in his business of operating a hog-feeding plant. This business consisted of purchasing small pigs and fattening them with swill collected from hotels and restaurants in Portland. Assisting T. Yoshida in the conduct of this business was his nephew, S. Yoshida, one of the two plaintiffs. December 10, 1926, T. Yoshida, upon leaving for Japan, sold the hogs, trucks, and other assets which comprised his hog-feeding plant to the plaintiffs for $4,250, and they thereupon continued to operate that business. The uncontradicted testimony of S. Yoshida shows that upon acquiring ownership the two plaintiffs paid $35 a month rental as compensation for the use of the premises. It will be observed that this amount is $5 a month more than any of the aforementioned leases required. The same witness testified that this rent was paid, at the beginning, to Luey, next to Bussone, and finally to Ratoza. November 1, 1930, the defendant Security Insurance Company, pursuant to the plaintiffs' request, issued a policy of insurance wherein it promised to pay to the plaintiffs the sum of $2,000 in the event of the destruction by fire of the three buildings used by the plaintiffs in their hog-feeding business. The plaintiffs at that time paid the premium exacted by the insurance company. August 26, 1931, the buildings were destroyed by fire, and thereupon the plaintiffs vacated the premises. Since that time they have paid no further rent and have declined to rebuild any of the aforementioned three structures.

Besides those formal allegations that generally appear in the pleadings in suits of this character, the complaint alleges the issuance of a policy of insurance (a copy accompanies the complaint) upon the request of the plaintiffs; the destruction of the buildings by fire; plaintiffs' submission to the insurance company of "their proof of loss covering their loss on said buildings"; the assertion, without justification, by the defendants Hase, Copeland, and Fay Kandle, of an interest in the insurance "after the submission of their (plaintiffs') proof of loss"; and that thereupon the insurance company declined to pay the insurance money to any of the claimants. The complaint does not aver that the plaintiffs possessed any interest in the insured structures, unless such interest can be inferred from the above-quoted language, from the fact that the insurance company issued the policy of insurance, or from the leased ground clause contained in the policy which reads as follows: "It is understood and agreed that the property insured hereunder stands on leased ground, lease expiring 1933. It is hereby made a warranty on the part of the insured, and a condition precedent to the right of recovery, that this company shall be notified in writing, within ten days, of any notice to vacate premises or refusal of the lessor to renew or grant a new lease."

The insurance company filed neither motion nor demurrer, but submitted an answer which admitted all the averments of the complaint and prayed for the allowance of an attorney fee of $250.

The defendants Hase, Copeland, and Kandle, after their demurrer which challenged the sufficiency of the complaint as the averment of a cause of suit had been overruled, filed an answer which admitted all of the averments of the complaint except the one which alleged that the defendants' claim to the money was fictitious. By way of cross-complaint, the defendants alleged the execution of the various leases to which we have already referred, and then averred: "The said T. Yoshida further covenanted and agreed, and it was contemplated as a further inducement to the making of said lease described in paragraph one hereof and of this sub-lease that T. Yoshida should construct a hog-feeding plant on said demised premises according to the laws governing same for at least 300 hogs; all said buildings to be maintained by the said sub-lessee on said premises in good order, repair and condition, and in accordance with the laws governing the same; said buildings to remain on the premises during the said...