Zeiger v. Farmers' & Laborers' Co-op. Ins. Ass'n of Monroe County, Mo.

• Decision Date: 08 November 1948
• Docket Number: 40524
• Parties: Henry R. Zeiger and Elizabeth I. Zeiger, Appellants, v. The Farmers' & Laborers' Cooperative Insurance Association of Monroe County, Missouri, a Corp., the Federal Land Bank of St. Louis, a Corp., Shelby-Monroe National Farm Loan Association, a Corp., Fred B. Byrd and Lailah Byrd, His Wife, Federal Farm Mortgage Corp., Respondents
• Court: Missouri Supreme Court

214 S.W.2d 426

358 Mo. 353

Henry R. Zeiger and Elizabeth I. Zeiger, Appellants, v. The Farmers' & Laborers' Cooperative Insurance Association of Monroe County, Missouri, a Corp., the Federal Land Bank of St. Louis, a Corp., Shelby-Monroe National Farm Loan Association, a Corp., Fred B. Byrd and Lailah Byrd, His Wife, Federal Farm Mortgage Corp., Respondents

No. 40524

Supreme Court of Missouri

November 8, 1948

Appeal from Shelby Circuit Court; Hon. Harry J. Libby Judge.

Affirmed.

Roy Hamlin, Waldo Edwards and Gaylord Wilkins for appellants.

(1) In an equity case, the court is not bound by the findings of facts made by the court below, but must and should review the whole record and while giving just and proper consideration to the opinion of the chancellor who heard the evidence in the first instance, must decide all questions of face anew and for itself. Punch v. Hipolite Co., 100 S.W.2d 878, 340 Mo. 53; Krug v. Brammer, 316 Mo. 891, 292 S.W. 702; Brightwell v. McAfee, 249 Mo. 562, 155 S.W. 820. (2) The debt of plaintiffs to the Land Bank, as evidenced by their notes and two mortgages was approximately $ 2000, and the payment by the insurance company of said $ 2000, under said insurance policy, to the Federal Land Bank of St. Louis paid off and extinguished the debts of plaintiffs, and any foreclosure thereafter was unauthorized unlawful, null and void and did not convey any title by virtue of said foreclosure to the Byrds to the farm and lands of plaintiffs. 26 C.J., p. 438, sec. 588; Hartford Fire Ins. Co. v. Bleedorn, 132 S.W.2d 1066. (3) The mortgage clause attached to the insurance policy in this case is a standard union mortgage clause, and no act or omission of the mortgagors can affect the rights of the mortgagee therein and the mortgagee had first claim to the proceeds of the insurance money up to the amount of the debt secured -- in the instant case, at least two thousand dollars. Gordon v. Northwestern Natl. Ins. Co., 77 S.W.2d 512, 228 Mo.App. 1008. (4) Under the laws of Missouri, and the facts in this case, the obligation of the insurance company to pay the Land Bank under the policy of insurance and the mortgage clause affixed thereto became fixed, either at the date of the fire, or, at most, upon the receipt of the proof of loss, or the waiver of them; that the insurance company was not entitled to attach conditions to its payments under the mortgage clause of the amount due under the policy. Loewenstein v. Queen Ins. Co., 227 Mo. 100, 127 S.W. 72; Equitable Fire & Marine Ins. Co. v. Holland Banking Co., 262 S.W. 444, 214 Mo.App. 560. (5) The insurance company admitted that it violated its mortgage clause attached to the policy of insurance by not notifying the Land Bank of any default in the payment of assessments, but even though said company admitted a violation of the contract on its part, at the same time, the insurance company asked the court to let it profit thereby and asked for its money back from the Land Bank. Loewenstein v. Queen Ins. Co., 277 Mo. 100, 127 S.W. 72; Miller v. Union Assur. Soc., Ltd., of London, 39 F.2d 25. (6) The secretary of the association showed that the purported and alleged assessments were illegal and void. Farmers' Mutual Fire Ins. Co. v. Meyer, 49 S.W.2d 270. (7) The court erred, on the date of the trial, in refusing to permit plaintiffs, appellants herein, to file an amended petition in two counts. Secs. 37, 38, General Code for Civil Procedure, Laws of 1943.

Lane B. Henderson for respondents Byrd.

Where a safe way is open to a party to protect himself from financial loss at a normal expense and he speculates unsuccessfully on a line of action that leads to financial disaster, he can not call on a court of equity for relief. Phoenix v. Holt, 312 Mo. 563, 279 S.W. 714; Betzler v. James, 227 Mo. 375, 126 S.W. 1007; B.F. Goodrich Rubber Co. v. Bennett, 281 S.W. 75.

Ralph Nolen and Olliver W. Nolen for respondent Farmers' & Laborers' Cooperative Insurance Association of Monroe County.

(1) The insurance policy contained a union or standard mortgage clause. This created in effect, two contracts, one with appellants (mortgagors) and the other with respondent, The Federal Land Bank et al. (mortgagees). Trust Co. v. Insurance Co., 201 Mo.App. 223, 210 S.W. 98; Gordon v. National Ins. Co., 228 Mo.App. 1008, 77 S.W.2d 512; 5 Appleman's Ins. Law and Practice, pp. 554-557. (2) The secretary of the insurance company produced documentary evidence of the mailing of the notices and of plaintiff's failure to pay assessments. Hill v. Conn. Mutual Life Ins. Co., 235 Mo.App. 752; Girvin v. Metropolitan Life Ins. Co., 84 S.W.2d 664; Williams v. Mutual Ins. Assn., 72 S.W.2d 166; Anderson v. Merchants Mutual Aid Soc., 46 S.W.2d 938; Hannum v. Waddell, 135 Mo. 153. (3) Appellants' failure to pay the assessments when due nullified their interest in the insurance as a result of the fire. Dierks v. German Ins. Co., 34 Mo.App. 31; Easter v. Brotherhood of American Yeoman, 154 Mo.App. 456; O'Donnell v. Kansas City Life Ins. Co., 222 S.W. 920; Haseltine v. Farmers Mutual Ins. Co., 263 S.W. 810. (4) Appellants forfeited all their interest and rights in the policy of insurance by failing to pay the assessments. Day v. Woodman Circle, 174 Mo.App. 1. c. 269; Girvin v. Metropolitan Life Ins. Co., 84 S.W.2d 644; Williams v. Mutual Ins. Assn., 72 S.W.2d 166. (5) The subrogation receipt was valid and entitled the insurance company to the balance of the money. Dick v. Franklin Ins. Co., 10 Mo. 376; Mosby v. Aetna Ins. Co., 285 Mo. 242, 225 S.W. 715; Dick v. Franklin Ins. Co., 81 Mo. 103. (6) Plaintiffs did not plead an invalid assessment but pleaded that all assessments were paid. The assessments were valid. Sec. 6177, R.S. 1939; Anderson v. Merchants & Mechanics Mutual Aid, 46 S.W.2d 938; American Guaranty Co. v. Mattson, 100 Mo.App. 316.

G. V. Head for respondents The Federal Land Bank of St. Louis, Federal Farm Mortgage Corporation and Shelby-Monroe National Farm Loan Association.

(1) The court did not commit error in declining to permit the filing of the proposed second amended petition. Sec. 81, Civil Code. (2) The assessments were regularly and legally levied. Farmers' Mutual Fire Ins. Co. v. Meyer, 226 Mo.App. 1223, 49 S.W.2d 270. (3) Appellants failed to pay the assessments effective December 17, 1938, and October 7, 1939. Borgraefe v. Knights of Honor, 22 Mo.App. 127. (4) Default in payment of the assessments terminated appellants' rights under the policy. Constitution and bylaws are part of policy. Haseltine v. Farmers' Mutual Fire Ins. Co., 263 S.W. 810; Sovereign Camp W.O.W. v. Newsom, 142 Ark. 132, 219 S.W. 759. (5) Constitution and by-law provisions terminating policy on default in payment of assessments are valid and binding. Dircks v. German Ins. Co., 34 Mo.App. 31; Easter v. Brotherhood of American Yeoman, 154 Mo.App. 456, 135 S.W. 964; O'Donnell v. Kansas City Life Ins Co., 222 S.W. 920; Hart v. Farmers' Mutual Fire & Lightning Assn., 208 Iowa 1020, 226 N.W. 777. (6) Even if note is given for full premium. Travelers Ins. Co. v. Springfield Fire & Marine Ins. Co., 89 F.2d 757; Hartford Fire Ins. Co. v. Jones, 215 Ala. 107, 110 So 30; McCullough v. Home Ins. Co., 118 Tenn. 263, 100 S.W. 104. (7) Failure to pay assessment automatically terminates rights under policy. Scheele v. State Home Lodge, 63 Mo.App. 277; Knode v. M.W.A., 171 Mo.App. 377, 157 S.W. 818; Day v. Woodmen Circle, 174 Mo.App. 260, 156 S.W. 721; Brittenham v. W.O.W., 180 Mo.App. 523, 167 S.W. 587; Anderson v. Merchants' & Meechanics' Mutual Aid Society, 46 S.W.2d 938; Hamilton v. Northeast Mutual Ins. Assn., 116 S.W.2d 159. (8) The trustee's sale was regular and valid. The insurance company is subrogated to the rights of the mortgagee. If policy and rider are in conflict, the rider controls. Wagner Electric Corp. v. Ocean Acc. & Guarantee Corp., 36 F.2d 186; Aetna Ins. Co. v. Sacramento-Stockton S.S. Co., 273 F. 55; Barnett v. Prudential Ins. Co., 194 S.W.2d 317. (9) Standard mortgage clause creates separate contract with mortgagee. 5 Appleman, Ins. Law & Practice, pp. 554, 557; Trust Co. v. Ins. Co., 201 Mo.App. 223, 210 S.W. 98; Gordon v. National Ins. Co., 228 Mo.App. 1008, 77 S.W.2d 512; Tarleton v. De Veuve, 113 F.2d 290; Labonte v. St. Paul Fire & Marine Ins. Co., 88 N.H. 219, 186 A. 6; Goldstein v. National Liberty Ins. Co., 256 N.Y. 26, 175 N.E. 359; Federal and Bank v. Atlas Assur. Co., 188 N.C. 747, 125 S.E. 631. (10) A policy with standard mortgage clause constitutes two separate contracts. Abbottsford Building & Loan Assn. v. William Penn Fire Ins. Co., 130 Pa.Super. 422, 197 A. 504; Union Assurance Society v. Equitable Trust Co., 63 S.W.2d 869. (11) The company's separate contract with the mortgagee covers the interest of the mortgagee only. Syndicate Ins. Co. v. Bohn, 65 F. 165; Savings Bank v. Schancupp, 108 Conn. 588, 144 A. 36; Citizens State Bank v. State Mut. Rodded Fire Ins. Co., 276 Mich. 62, 267 N.W. 785; Reed v. Firemen's Ins. Co., 81 N.J.L. 523, 80 A. 462; Fidelity-Phenix Fire Ins. Co. v. Cleveland, 57 Okla. 237, 156 P. 638. (12) If mortgagor's rights against company are terminated, mortgagee's contract with company becomes the sole contract. Willits v. Camden Fire Ins. Assn., 124 Pa.Super. 563, 189 A. 559; Savings Bank v. Schancupp, 108 Conn. 588, 144 A. 36. (13) On mortgagor's default, situation is the same as though the policy from the beginning covered only the mortgagee's interest. Shelby County Trust & Banking Co. v. Security Ins. Co., 66 F.2d 120. (14) If insurance covered only interest of mortgagee, company, upon payment to mortgagee, would be subrogated to mortgagee's rights under note and mortgage. Dick v. Franklin Fire Ins. Co., 10 Mo.App. 376; Dick v. Franklin Fire Ins. Co., 81 Mo. 103. (15) The...