Walker v. Queen Insurance Co. , 136 S.C. 144 ( 1926 )

This case arose by reason of the alleged destruction by fire of property of the plaintiff, Mrs. Lula A. Walker, on March 12, 1923, completely destroying house insured under Queen Insurance Company policy No. 2722, issued on July 20, 1921 in favor of T.J. Walker. Suit was then instituted in the name of Lula A. Walker, complaint being filed May 13, 1924, and was duly answered. Motion was thereafter made, upon notice duly served, to transfer the case to Calendar II for a hearing on the equitable issues before the trial of such legal issues as might exist in the case, which motion was refused, by order of the trial Judge, dated June 24, 1924. Notice of appeal from this order was duly served on July 3, 1924, within the time allowed by law, and on August 1, 1924, defendant served notice upon the plaintiff's attorney, excepting to the order hereinabove mentioned, reserving the right of appeal therefrom upon final judgment. This notice, with notice of appeal before served, was relied upon to save this point in case the defendant should suffer an adverse verdict. The case came on to be heard before his Honor, Judge M.S. Whaley, and a jury, on September 10, 1924. At the close of the defendant's testimony, defendant made a motion for a direction of verdict, upon grounds hereinafter set out in the record, which motion was refused, and the Judge directed a verdict in favor of the plaintiff in the full amount of the policy upon which the suit was brought. From this verdict the defendant duly appealed, upon notice served on September 20, 1924, within the time prescribed by law, and the case now comes on for hearing under such appeal.

"(1) That the Presiding Judge erred in refusing defendant's motion to have this case transferred to Calendar II and the equitable issue tried on the equity side of the Court previous to the trial of the legal issues, in that the same deprived the defendant of a distinct legal right and tended to prejudice the orderly consideration of its defenses, by trying both the legal and equitable issues by the jury at the same time.

"(2) That the Presiding Judge erred in refusing to grant the defendant's motion for direction of verdict upon the first ground, in that the uncontradicted testimony showed that Mrs. Habenicht, to whose rights the Court attempted to subrogate Mrs. Walker, had no interest whatsoever in the property, her mortgage having been paid off in full before the institution of the suit, and in that the uncontradicted testimony showed that both the plaintiff and her agent, T.J. Walker, who is named in the policy as the assured, took out an additional sum of $2,000 on the property here in question, without notice to or permission of the defendant, in violation of the terms of the policy; it being provided by the terms of the policy that the same would be forfeited if such additional insurance, without notice to them, should be taken out.

"(3) That the Presiding Judge erred in refusing to grant the defendant's motion for a direction of verdict on the ground, in that there could be no subrogation of the plaintiff to the rights of the said Mrs. Habenicht, for the reason that the obligation paid by the plaintiff and her agent, T.J. Walker, was the plaintiff's own primary obligation, and the agreement of the insurance company was merely to turn over to the said Mrs. Habenicht any funds which might accrue by reason of the said policy, as her interest might appear.

"(4) In that the Presiding Judge erred in finding that the plaintiff should be subrogated to any rights which Mrs. Habenicht might have against this defendant, and, if she was so subrogated, in not requiring the delivery to this defendant of the securities which the said Mrs. Habenicht held, in accordance with the contract of insurance, which was the subject-matter of this action.

"(5) In that the Presiding Judge erred in finding that the said Mrs. Walker was not bound by the clause in the policy which provided for the forfeiture of the same in case of additional insurance being taken out without notice to this company.

"(6) In that the Presiding Judge erred, if he found that the policy was not totally voided by the taking out of the additional insurance, admitted in the testimony, then he should have found that the additional insurance rendered the defendant liable for only its proportionate part of the loss, based on the value of the property as set out in the policy herein, which would have been $1,400, with interest at 7 per cent. from 60 days after the institution of the suit.

"(7) In that the Presiding Judge erred in finding that interest should be allowed from 120 days after the fire when he should have found that the same could not be allowed except from 60 days after the institution of the suit herein."

Respondent asks to sustain the judgment on the additional grounds:

"Because the undisputed and uncontradicted testimony shows that neither the plaintiff, Mrs. Walker, nor her agent, T.J. Walker, ever saw the policy of insurance until after the fire, but said policy was delivered to Mrs. Habenicht by the defendant's agent, and no provision in said policy could be binding on the plaintiff herein unless she had seen said policy and was aware of said provision.

"Because neither the plaintiff nor her agent having ever seen said policy until after the fire, no provision or provisions in said policy could be binding upon her, and no defense set up by the defendant could be available as against this plaintiff, and she was clearly entitled to a directed verdict without having the doctorine of subrogation applied in her favor."

Exception 1 should be overruled under the cases of Brattonv. Catawba Power Co., 80 S.C. 260; 60 S.E., 673.Alston v. Limehouse, 61 S.C. 1; 39 S.E., 192. Auten v.Catawba Power Co., 84 S.C. 399; 65 S.E., 274; 66 S.E., 180; and Beal v. Divine, 93 S.C. 352; 76 S.E., 987.

The testimony shows that the primary object in taking out the insurance was to protect the mortgage held by Mrs. Habenicht over the property. It was taken out in the name of T.J. Walker, the husband, although the title was in the wife, Lula A. Walker, and premiums paid on it for 12 years. The policies were turned over to Mrs. Habenicht and were in her possession when the loss occurred. Mrs. Habenicht refused to bring suit against the insurance company, and, in order to get the policy, Mrs. Walker had to pay Mrs. Habenicht the debt as her debt. She had taken out the policy in order to protect the debt of Mrs. Habenicht. When the loss occurred Mrs. Habenicht refused to proceed against the insurance company, and the very object of taking the insurance would have been defeated, unless Mrs. Walker did as she was compelled to do, pay the mortgage to get possession of the policy. By doing so she became in every respect subrogated to the rights of Mrs. Habenicht in the insurance policy.

She did not pay off the mortgage as a primary obligation, but as a secondary obligation, to get possession of the policy in order that she might collect from the insurance company that protection against fire that she had paid the premiums for for 12 years. By doing as she did, she became subrogated to all rights in the policy of Mrs. Habenicht. MobileInsurance Co. v. Columbia Greenville Railroad Co., 41 S.C. 408;19 S.E., 858; 44 Am. St. Rep., 725.

The contract of the insurance company with Mrs. Habenicht as holder of the mortgage is a wholly independent contract from that with the original owner or mortgagor. Mrs. Habenicht had an independent contract with the insurance company whereby the insurance company insured her individual interest in the property. Phenix Ins. Co. v.Omaha Loan Trust Co., 41 Neb. 834; 60 N.W., 133; 25 L.R.A., 679. Syndicate Ins. Co. v. Bohn, 65 F., 165; 12 C.C.A., 531; 27 L.R.A., 614. Eliot v. CommercialAssur. Co., 142 Mass. 142; 7 N.E., 550.

There is no question but that when Mrs. Walker paid the mortgage the rights of Mrs. Habenicht were transferred to her. Prudential Investment Co. v. Connor, 120 S.C. 42;12 S.E., 539.

Mrs. Walker paid the debt; she was not a volunteer, but had a direct interest in the discharge of the debt or lien. She was secondarily liable for the debt and discharge of the lien. The insurance company was primarily liable to pay off the mortgage debt, for it was a contractual liability on their part to pay the mortgage to Mrs. Habenicht. No injustice will be done to the insurance company. Whether it paid to Mrs. Habenicht or Mrs. Walker cannot make any difference to the insurance company.

Every act necessary to make the doctrine of subrogation apply we have in this case.

I see no merit in any of the exceptions of the appellant.

All exceptions of the appellant should be overruled, and judgment affirmed.

MR. CHIEF JUSTICE GARY concurs.