WACHOVIA BANK & TRUST COMPANY v. Currin , 244 N.C. 102 ( 1956 )

92 S.E.2d 658 (1956) 244 N.C. 102

WACHOVIA BANK & TRUST COMPANY
v.
W. J. CURRIN, Original Defendant, and Great American Insurance Company, Additional Defendant.

No. 460.

Supreme Court of North Carolina.

May 9, 1956.

Dupree, Weaver & Montgomery, John R. Montgomery, Jr., Nancy Fields Fadum, Raleigh, for defendant, appellant.

Mordecai, Mills & Parker, Raleigh, for Great American Ins. Co., defendant, appellee.

HIGGINS, Justice.

A motion to strike allegations from a pleading for irrelevancy admits, for the purposes of the motion, the truth of all facts well pleaded as well as all inferences which legitimately may be drawn from the facts alleged. The motion, however, does not admit conclusions of the pleader. Bank of French Broad, Ins., v. Bryan, 240 N.C. 610, 83 S.E.2d 485; Penn Dixie Lines v. Grannick, 238 N.C. 552, 78 S.E.2d 410.

In the further defense, the defendant Currin alleged he arranged for the purchase of the truck from Northam Motor Company for $2,258.85; that he paid $712.21 in cash and arranged with the plaintiff for a loan of $1,547.46 to finance the balance due, for which he executed a note payable in 12 equal monthly installments of $128.97; that the note was made payable to Northam Motor Company and endorsed by it to the plaintiff on the day executed and without recourse; that in reality the transaction was a loan by the plaintiff to the defendant Currin rather than the purchase of the note from the Motor Company. As security for the loan the plaintiff required (1) a chattel mortgage on the truck, and (2) insurance against its accidental loss or damage (among other things) on account of flood and high water. Accordingly, the defendant Currin executed the chattel mortgage and paid to the plaintiff the premium for the insurance which the plaintiff took out in Great American Insurance Company for which it was agent. Both the plaintiff and defendant Currin were named insureds and beneficiaries in the insurance policy—the former to the extent of any balance due on the note, and the latter to the extent of any additional liability on the part of the insurance company.

While the policy of insurance was in force the truck was damaged by flood waters to the amount of at least $1,750, so that by reason of said damage Great American Insurance Company became liable to the plaintiff in the amount necessary to discharge the note, and to Currin for the remainder of the coverage. Currin gave due notice of loss to Great American Insurance Company and to its agent, the plaintiff, Wachovia Bank & Trust Company. "Great American Insurance Company wrongfully denied liability * * * and the plaintiff, Wachovia Bank, its agent, in violation of its agreement with the defendant, has wrongfully failed and refused to require payment of the proceeds of the policy by its employer, Great American Insurance Company, for application on defendant's note. That instead, Wachovia Bank & Trust Company has seized said truck, * * * with intent to sell the same and apply the proceeds to said note, leaving defendant without remedy under said insurance policy."

It may be reasonably inferred that to the plaintiff was left the selection of the insurance carrier and that it selected its principal, Great American Insurance Company, after requiring the defendant to pay to the plaintiff the amount of the premium. The allegations stricken permit the inference the purchase of the truck, the loan from the bank, the execution of the note and chattel mortgage, the assignment of the same to the plaintiff, and the procurement of the insurance were not separate transactions but were in fact integral parts of the loan transaction. Bank of French Broad, Inc., v. Bryan, supra; Crouse v. Vernon, 232 N.C. 24, 59 S.E.2d 185; Batts v. Sullivan, 182 N.C. 129, 108 S.E. 511; Stuyvesant Insurance Co. v. Reid, 171 N.C. 513, 88 S.E. 779.

Assuming, as we are required to do for the purposes of the motion, that the facts alleged are true, the plaintiff is not a holder of the note in due course and the defendant Currin is not precluded from asserting the equities set up in his further defense. It follows that the trial court committed error in allowing the motion to strike.

Left for consideration is the question of misjoinder of parties and causes of action raised by the demurrer. According to the allegations in the further defense and cross action, the additional defendant, Great American Insurance Company, is obligated to pay $1,750 on account of damage to the truck. Both the plaintiff and the original defendant are named beneficiaries—the plaintiff for the amount due on the note, and the defendant for the remainder. Unquestionably the Wachovia Bank & Trust Company and Currin can maintain a joint action against Great American Insurance Company for the amount due them as named insureds under the policy.

It is argued for the insurance company that it is in no way concerned with the controversy between Wachovia and the defendant Currin and that to bring it into the case would be a misjoinder of parties and causes of action. The argument overlooks the allegations in the cross action "that Wachovia Bank and Trust Company is an agent for Great American Insurance Company and as such is authorized and licensed to write policies in said Insurance Company upon property located in the State of North Carolina"; and "acting in its capacity as duly authorized agent for Great American Insurance Company (Wachovia) issued a policy of insurance," etc.; and "that Great American Insurance Company wrongfully denied liability under said insurance policy."

The above quotations are from the further defense which was stricken in toto. In essence, the charge is that Wachovia is the agent of and is authorized by Great American to issue the insurance policy involved, and that Wachovia issued the policy purporting to bind Great American and that Great American denies liability on the policy; that Wachovia has refused to make demand for payment. These allegations tie both the insurance company and the bank together in denying defendant the benefit of the insurance for which he paid. The defendant Currin by his cross action asked that he have before the court at one and the same time the agent who acted for the principal and the principal who denies liability on the policy issued by the agent. The issues raised by the cross action require the presence of both Great American and Wachovia before the court in one action rather than in two. If the defendant Currin is required to bring two actions, the jury in one case might say the bank is not bound because it was only acting as agent for its principal. And in another action the jury might say the principal is not bound because of lack of authority on the part of the agent. Such an eventuality would defeat the defendant's claim altogether.

The case of Atlantic Joint Stock Land Bank v. Foster, 217 N.C. 415, 8 S.E.2d 235, 238, 130 A.L.R. 592, presented questions not unlike those now before us. In both cases the defendant was sued by the plaintiff bank for default in the payment of a note. In both, the bank held title to the property conveyed as security for the note. In both, the maker of the note paid for insurance on the property payable to the bank and to himself as beneficiaries according as their interests might appear. In the Foster case, this Court said: "It is not unreasonable to assume that it was the duty of the Land Bank to carry out that part of the contract * * * the collection of the proceeds and the performance of those things which were necessary and incident thereto. * * * We think, and so hold, that the question of reasonable diligence in the collection of the item (insurance) should have been left to the jury * * * upon * * * appropriate issues, * * * and the failure to do so was error." In the Foster case, the insurance carrier was made a party by cross action just as the defendant Currin seeks to do in this case.

The insurance was a part of the security for the note sued on in this case. The presence before the court of all interested parties (the bank, the insurance company, and Currin) is necessary to a final termination of the matters in controversy. There is neither misjoinder of parties nor of causes of action. The judgment of the Superior Court of Wake County, therefore, is

Reversed.

BOBBITT, Justice (dissenting).

The insurance company's liability, if any, is to pay the loss within the coverage of its policy. It is immaterial to it whether it pays the amount thereof to plaintiff or to defendant or both. Whether defendant is or is not indebted to plaintiff will not enlarge or reduce its liability. Hence, it is in no sense a party to the cause of action alleged in the complaint.

If plaintiff has failed or neglected to perform any duty owed by it to defendant in relation to the insurance policy and resulting in loss to defendant, defendant can so allege by way of counterclaim to plaintiff's action. Present allegations do not state facts sufficient to constitute such counterclaim. The purport thereof is that plaintiff may not recover herein without first proceeding against the insurance company. In my opinion, the law does not require that plaintiff's action on the note and chattel mortgage be so postponed.

Whether defendant's allegations are sufficient to constitute a counterclaim to plaintiff's action, the insurance company would not be affected thereby. Its liability, if any, is solely under the terms of its policy.

In my view, if plaintiff had joined in this action (1) the action against defendant to recover the debt, and (2) an action against the insurance company, for its own benefit or for the joint benefit of plaintiff and defendant, there would have been a misjoinder of parties and causes of action. It is equally so if defendant is permitted to join the insurance company and sue it in this cause for the loss recoverable under the terms of the policy. At least, it seems so to me.

Hence, I vote to affirm.