Pike v. American Alliance Insurance ( 1925 )

Beck, P. J.

Questions involving most of the material facts in this case have been previously submitted to this court and answered in a decision in the case of Pike v. Insurance Co., 158 Ga. 686 (124 S. E. 161). The enumeration of facts' in the questions dealt with, in that case will show the similarity of the questions. The opinion there rendered differentiates the case from that of Scottish Union &c. Ins. Co. v. Colvard, 135 Ga. 188 (68 S. E. 1097). With the statement of additional facts, which will appear from a comparison of the questions submitted in the case in 158 Ga., just referred to, with the questions in the instant case, the court submits additional questions; and those questions are, (a) Did P., after the several transactions stated in the question, retain an insurable interest in the building so insured; and (b) did he retain any interest as assured in the policy, the same not having expired; and (c) in other words, under all the facts stated above, and the absence of any others, did P. continue to have an insurable interest in the property; and if so, did he also have insurance thereon ? In the former decision in this case it was held: “It follows, that, under the former rulings of this court, if an owner of land on which there is a building obtains a loan and executes his notes for the amount and a deed to the property as security for the debt, and procures a contract of insurance in his own favor insuring the building against loss by fire, and causes the insurer to attach to the policy a New York mortgage clause in substance as stated in the question propounded by the Court of Appeals, and if after being so insured the building is destroyed and a loss ensues for which the insurer is liable to the person as whose property the building was insured, and in such circumstances the insurer pays the amount of the loss to the lender, asserting and claiming at the time of such payment that there is no liability to the person as whose property the building was insured, such payment will operate in favor of the borrower as a pro tanto discharge of the debt as against the lender, and the. insurer will not acquire any equitable right of subrogation, or right by transfer of the notes and the security to maintain a suit against the borrower or the property for the amount so paid to the lender.” But the court did not in that opinion directly adjudicate the question as to whether, after the several transactions stated in the question, P. continued to have an insurable interest in the property. We are of the opinion that he did have such insurable interest. It will be observed that from the question it appears that when, on October 16, 1919, P. by a deed of conveyance sold and conveyed to H. S. all of his interest in the real estate, it was done “subject to the loan and security deed in favor of” S.; and he thereupon notified the insurer that “the property in question had been sold, and that the insurance under the policy would be payable in case of loss, first, to” S., and that, the interest of P., with the exception of the above-quoted loss-payable clause to S., had been transferred to H. S. We think that the stipulation that the property was sold and conveyed by P. to H. S., subject to the loan and security deed in favor of S., and the statement in the notification to the insurer that the property had been so sold, subject to the security deed, shows'that the original owner of the property, P., would necessarily be benefited from the property’s continuing to exist, and would suffer loss-by its destruction. For if it continued to exist, though it had been sold and conveyed to a third party, it was there subject,to the security deed executed to S., and if sold and the proceeds applied to the payment of the. note secured by the deed to S., P. would-be relieved to the extent that the proceeds would satisfy that note, and if it was equal-to the amount of the note, principal and interest, it would entirely discharge the debt; and in case of the loss of the property 'insured by fire, he would suffer a corresponding loss.

In the case of Hanover Fire Ins. Co. v. Bohn, 48 Neb. 743, 750 (67 N. W. 774, 58 Am. St. R. 719), the Supreme Court of Nebraska said: “This contention [the contention of the insurer] involves the assumption that the Bohns at the date of the issuance of the policy in suit had no insurable interest in the insured property. Is this contention correct? What is an insurable interest? In German Ins. Co. of Freeport, Ill. v. Hyman, 34 Neb. 704 [52 N. W. 401], Post, J., speaking to this question, said: ‘An interest, to be insurable, does not depend necessarily upon the ownership of the property. It may be a special or limited interest disconnected from any title, lien, or possession. If the holder of an interest in property will suffer loss by its destruction, he may indemnify himself therefrom by a contract of insurance. If, by the loss, the holder of the interest is deprived of the possession, enjoyment, or profit of the property, or a security or lien arising thereon, or other certain benefits growing out of or depending upon it, he has an insurable interest/ ” In the ease of Williams v. Insurance Co., 107 Mass. 377 [9 Am. R. 41], it was said: “It is now well established that even one who has no title, legal or equitable, in the property, and no present possession or right of possession thereof, yet has an insurable interest therein, if he will derive benefit from its continuing to exist, or will suffer loss by its destruction.” In Waring v. Loder, 53 N. Y. 580, it1 was held that where one had mortgaged real estate and secured his debt and afterwards conveyed the real estate, he still had an insurable interest in the property. From the statement of facts in the Waring case it appears that the defendant executed a mortgage providing that in case of his failure to keep the buildings insured the mortgagee might insure the same as further security, and add the premiums to the principal. The mortgagee took an insurance, charging the premiums to the defendant. Defendant sold and conveyed the premises. Plaintiff, as assignee of the mortgage, commenced foreclosure, claiming the premiums paid. Before judgment the buildings were burned. Upon sale there was a deficiency, and judgment therefor was entered against defendant. The insurers paid the deficiency upon assignment of the judgment, refusing to pay without such assignment. It was in that case held that the receipt of the amount of the deficiency from the insurer extinguished the judgment, and the latter took nothing by the assignment; and in the course of the opinion it was said: “The mortgagor had an insurable interest. When the mortgage was given he had the legal title to the land on which the insured building stood. When he sold the land, he had still an interest in the preservation of the property, in order that his debt might be paid out of it, the land as between- him and his grantee being primarily charged with its payment. And this was, we think, an insurable interest within the cases. Crawford v. Hunter, 2 B. & P. N. R. 269; Herkimer v. Rice, 27 N. Y. 163 (a).” We are aware that decisions seeming to hold contrary to what we have held above are to be found, but we think the better view is to hold that the insured, P., under the circumstances set forth, continued to have an insurable interest in the property. See Yale Law Journal, Feb., 1925, p. 444.

' We are of the opinion that it follows from what was ruled in the case of Pike v. Insurance Co., supra, and what we have ruled above as to the insurable interest of P. in the property after he sold the same to II. S., that the payment by the insurer to S. operated as an extinguishment' of the note and coupons as to P., and 'that the payment by the insurer to S. was a payment upon the policy as to P., and thát P. was entitled to assert the same as a payment and'discharge of the' notes and coupons when sued thereon.

’ All the Justices concur, except Gilbert, J., absent for providential cause.