Hamburg-Bremen Fire Insurance v. Ruddell ( 1904 )

Appellee, J. L. Ruddell, recovered judgment against the appellant fire insurance company upon a policy of insurance issued by it to E. D. Hokett, insuring him against loss or damage by fire in an amount not exceeding $400 on a dwelling house and $200 on certain household and kitchen furniture, which policy contained the following stipulation: "Loss, if any, payable to J. L. Ruddell, as his interest may appear, on the first named item." To the petition of appellee the appellant answered, among other things, that the fire which destroyed the building insured was caused or procured by the assured, E. D. Hokett, for the purpose of collecting the insurance upon the property; that Hokett was not the sole and unconditional owner of the property, and that no proof of loss had been made, as required by the terms of the policy.

The first question demanding our notice, and the one of controlling importance in this case, is presented by the second assignment of error, complaining of the court's action in sustaining a special exception to that part of appellant's answer alleging that the property destroyed was burned by E. D. Hokett, the insured. We are not favored with a brief by the appellee in this cause, but his contention, and the trial court's view, doubtless is that the insertion in the policy of the mortgage clause quoted constituted such privity of contract between the insurance company and the mortgagee as that the mortgagee would not be precluded from a recovery on such policy by an act of the mortgagor, in no way participated in by him. But we are inclined to the view, both upon principle and the great weight of authority, that this is not the correct view of the contract. The contract proper is between the insurance company and the owner of the property, and the effect of the clause directing that the loss, if any, shall be payable to the mortgagee, is but to name or appoint that person as the party entitled to receive payment of the fund in the event a loss becomes payable under the terms of the policy. But whether or not any loss is payable at all is dependent entirely upon the performance of the terms of the contract between the insurer and the insured. The policy in this instance expressly stipulated that the same should be void in case of any fraud upon the part of the insured; and if it did not, a sound public policy would not permit him to recover by his own criminal act, and since the appellee must claim whatever rights he has through and by virtue of the mortgagor's contract, his claim also falls to the ground. Hocking v. Insurance Co., 42 S.W. Rep., 451; Scania Ins. Co. v. Johnson, 45 Pac. Rep., 431; Franklin Ins. Co. v. Wolff, 54 N.E. Rep., 772; Keith v. Insurance Co., 94 N.W. Rep., 295; Delaware Ins. Co. v. Greer, 120 Fed. Rep., 916; 61 Law. Rep. Ann., 137, and authorities there cited. The cases authorizing a recovery by the mortgagee, notwithstanding the act or default upon the part of the insured which would preclude the latter's recovery, are usually cases in which the mortgage clause, unlike the present, contains a further stipulation specially exempting the mortgagee and those claiming under him from the effect of the acts or defaults of the mortgagor. In such case the recovery of course is still in accordance with and not contrary to the stipulations of the contract. American, etc., Ins. Co. v. Cowan, 34 S.W. Rep., 460; Hanover Fire Ins. Co. v. Bank, 34 S.W. Rep., 333; Breeyear v. Insurance Co., 52 Atl. Rep., 860.

Under the statute and decisions of this state it is immaterial in the present case that the appellee and not the insured furnished the proofs of loss. It appears that there was a total destruction of the property, and in such case it is not necessary that any proofs of loss whatever should be made. Continental Ins. Co. v. Chase, 33 S.W. Rep., 602. It can hardly be said that the appellee is in a worse position for having furnished the proofs than if none at all had been supplied. From this it of course follows that the court committed no error in admitting in evidence the proofs of loss made by appellee, and in refusing to instruct the jury to return a verdict for the appellant because of the failure of Hokett to make such proofs.

Neither do we find any error in the following charge of the court with reference to the ownership of the property within the terms of the insurance contract: "If you find and believe from the evidence that John L. Ruddell, the plaintiff, had sold and conveyed to E. D. Hokett the house and lot in controversy in this suit and taken the notes of Hokett, containing a vendor's lien on the property to secure the payment of the purchase money, and gave to Hokett his bond for title, to be executed upon payment of the purchase money, and delivered to the possession of said Hokett the house and lot, then you are instructed that Hokett would be the sole and unconditional owner of the property covered by the insurance policy." We think the facts, if found as indicated in the charge, would constitute Hokett the sole and unconditional owner of the property within the meaning of the policy. East Texas, etc., Ins. Co. v. Dyches, 56 Tex. 572; Queen Ins. Co. v. May, 35 S.W. Rep., 831; Liverpool, etc., Ins. Co. v. Ricker, 10 Texas Civ. App. 264[10 Tex. Civ. App. 264]; 31 S.W. Rep., 248; Merchants' Ins. Co. v. Nowlin, 56 S.W. Rep., 198; Fire Association of Philadelphia v. Calhoun, 28 Texas Civ. App. 409[28 Tex. Civ. App. 409]; 67 S.W. Rep., 153.

For the error of the court above discussed, the judgment is reversed and the cause remanded.

Reversed and remanded.