King v. National Union Fire Insurance Company

128 S.E.2d 849 (1963) 258 N.C. 432

Charles R. KING
v.
NATIONAL UNION FIRE INSURANCE COMPANY.

No. 598.

Supreme Court of North Carolina.

January 11, 1963.

Kirby Sullivan, Southport, for defendant-appellant.

S. B. Frink, Southport, for plaintiff-appellee.

PARKER, Justice.

Defendant in its answer made the following admissions: One. "On or about September 7, 1958, the defendant, through its duly appointed and constituted agent, Floyd Barkley Agency, Whiteville, North Carolina, made, executed and delivered to the plaintiff that certain policy of fire insurance, being Policy Number 2218996, wherein and whereby said defendant insured the plaintiff's interest in a dwelling house and household and kitchen furniture * * * from all direct loss or damage by fire * * * in an amount not exceeding actual cash value of the property at the time of loss, and not in excess of $4,000.00 on the dwelling, and $1,500.00 on the household and kitchen furniture therein, nor in any event for more than the interest of the insured therein, for a period of three years from September 7, 1958 to September 7, 1961." Two. "On December 30, 1960, a dwelling house located on land substantially as described in paragraph 6 of the complaint, and the household and kitchen furniture therein, were destroyed and rendered worthless by fire. * * * The dwelling house * * * at the time of the loss and destruction thereof was valued at approximately $5,000.00, and that the household and kitchen furniture in said dwelling at the time of the loss and destruction thereof was valued at approximately $1,500.00. * * * The defendant has not paid any sum to the plaintiff."

In general, it is well-settled law that a person has an insurable interest in the subject matter insured where he has such a relation or connection with, or concern in, such subject matter that he will derive pecuniary benefit or advantage from its preservation, or will suffer pecuniary loss or damage from its destruction, termination, or injury by the happening of the event insured against. Grabbs v. Farmers Mut. Fire Insurance Co., 125 N.C. 389, 34 S.E. 503; Gerringer v. North Carolina Home Insurance Co., 133 N.C. 407, 45 S.E. 773; Batts v. Sullivan, 182 N.C. 129, 108 S.E. 511; Shores v. Rabon, 251 N.C. 790, 794, 112 S.E.2d 556, 559; Harrison v. Fortlage, 161 U.S. 57, 16 S. Ct. 488, 40 L. Ed. 616; 44 C.J.S. Insurance § 175b p. 870.

This Court said in Houck v. American Eagle Fire Insurance Co., 198 N.C. 303, 151 S.E. 628: "It has been held by this court that a person owning only an equitable interest in property has an interest therein which is insurable against loss or damage by fire. Gerringer v. [North Carolina] Home Ins. Co., 133 N.C. 407, 45 S.E. 773." In the Gerringer case the agent of the company knew that it was an equitable interest.

We do not have before us fire insurance policy Number 2218996 issued by defendant to plaintiff, and which was in force on the day the property insured therein was destroyed by fire. The parties stipulated it is a Standard Fire Insurance Policy for North Carolina, as set forth in G.S. § 58-176, and such a policy, according to G.S. § 58-176, provides, "this Company * * * does insure—blank space for name of insured— * * * to the extent of the actual cash value of the property at the time of loss * * *, nor in any event for more than the interest of the insured against all direct loss by fire * * *."

Plaintiff offered evidence: defendant did not. Defendant assigns as error the denial by the court of its motion for judgment of compulsory nonsuit made at the close of plaintiff's evidence.

Plaintiff testified: "My father died in 1956. Elroy King left surviving him heirs at law. He left a widow, Smithy King. He left six children. I am the oldest. * * I have three brothers and sisters under 21 years of age."

Defendant contends its motion for judgment of nonsuit should have been allowed for the reason that plaintiff wilfully misrepresented to it that he was the sole owner of the dwelling house, or concealed from it that he owned merely a one-sixth interest therein, subject to the widow's dower. This contention is untenable. First, defendant has not pleaded fraud as a defense to the action upon the policy, 29A Am.Jur., Insurance, sec. 1831, and second, there is no evidence of fraud. The court properly overruled the defendant's motion for judgment of nonsuit.

Based on the facts found by the trial court, and the admissions in defendant's answer, it is manifest that plaintiff is entitled to recover from defendant on his policy of fire insurance the sum of $1,500.00 for the complete destruction of his household and kitchen furniture by fire on 30 December 1960.

W. F. Floyd, a witness for plaintiff, testified: "On September 7, 1958, I issued a renewal insurance policy on the property in question. I have a copy of that policy with me. That policy is No. 2218996 of the National Union Fire Insurance Company. I was their duly constituted and appointed agent at that time." He was then asked: "What information did you have of the ownership of this property before you insured it?" A. "I was notified sometime prior to September 17, 1956, by the owner at that time, Elroy King." Defendant objected, the objection was overruled, and defendant excepted. Then the witness continued: "I was notified by Elroy King to transfer the policy over to his son Charles King; he said, `I am giving that place to him.'" Defendant assigns the admission of this evidence over its objection as error, contending it is hearsay and irrelevant.

Immediately thereafter, W. F. Floyd testified without objection: "I transferred the policy at that time, from Elroy King to the plaintiff. I did not make any further inquiry to ascertain whether or not that had been done when I issued the policy on September 7, 1958. In other words, I issued this policy on September 7, 1958, according to information from Elroy King that he was giving him the property. I made no investigation or anything to determine whether or not this had been done. I knew that Mr. King was living there and I knew that he paid the premiums to me after 1956. After I issued the policy, Mr. King paid the premiums."

Plaintiff testified: "I purchased this insurance from Mr. Bill Floyd and have paid the premium."

The challenged testimony of W. F. Floyd explains why the name of the insured in the fire insurance policy then in force was changed in 1956 from Elroy King to plaintiff and why plaintiff was named as the sole insured in the policy upon which this suit is brought. There is no allegation in the answer that there was any fraud or collusion between the insured or Elroy King and defendant's agent, W. F. Floyd, nor is there any evidence of such in the record. Such being the case, the knowledge of W. F. Floyd of the state of plaintiff's interest in the insured dwelling house, acting within the scope of the powers entrusted to him by defendant, is imputed to the company. National Life Insurance Co. v. Grady, 185 N.C. 348, 117 S.E. 289. G.S. § 8-51 does not prohibit the admission of this evidence. Peek v. Shook, 233 N.C. 259, 63 S.E.2d 542. It is our opinion this challenged evidence is relevant and competent, and the court properly admitted it.

In Home Ins. Co. of New York v. Mendenhall, 164 Ill. 458, 45 N.E. 1078, 36 L.R.A. 374, the Court held that a son placed in possession of land, on which was situate two dwelling houses, by his father who bought it for him, and who tells him he has made a will devising it to him, has an insurable interest in the two dwelling houses, although the father bought the land at a master's sale in partition, and the master's deed has not yet been issued to him because the time for confirmation of the report has not elapsed.

When the fire insurance policy here was issued, and prior thereto, and at the time the dwelling house was destroyed by fire, plaintiff was in the use and enjoyment of this dwelling house under claim of right. There is nothing in the record to show an assertion of title to the dwelling house by another or others. Plaintiff derived pecuniary benefit or advantage while it existed, and suffered pecuniary loss or damage by its destruction by fire. It is manifest he had an insurable interest in the dwelling house. In issuing the policy sued on, defendant has not been misled, and it assumed the risk it intended when it issued this policy.

In Grabbs v. Farmers Mut. Fire Insurance Co., supra, the court said:

"In the well-considered case of Berry v. [American Cent.] Insurance Co., 132 N.Y. 49, 30 N.E. 254, the Court says: `The rule is well settled that it is not necessary, to support an insurance, that the assured should have an interest, legal or equitable, in the property destroyed. It is enough if he is so situated with reference to it that he would be liable to loss if it is destroyed or injured by the peril insured against.' In this case the legal title to the property was in the son of the assured, with whom the assured had a verbal agreement whereby he was to occupy the premises during his life, and in consideration thereof to keep the building insured and in repair, and to pay the taxes. It was held that the insured could recover even if his verbal agreement with his son were void."

This Court said in Roberts v. American Alliance Insurance Company, 212 N.C. 1. 192 S.E. 873, 113 A.L.R. 310:

"It is held by courts of recognized authority, and our own decisions point in the same direction, that, where one is in the exclusive use and enjoyment of the entire estate, under claim of right, without assertion of adverse title by another, his interest is properly described as sole and unconditional ownership, within the meaning of a policy of insurance containing such provision, although his title may be defective in some particular. Modlin v. Ins. Co., supra [151 N.C. 35, 65 S.E. 605]; Jordan v. [Hanover Fire] Ins. Co., 151 N.C. 341, 66 S.E. 206; Lancaster v. [Southern] Ins. Co., 153 N.C. 285, 69 S.E. 214; Western Assur. Co. v. Hughes, 179 Okl. 254, 66 P.(2d) 1056; 14 R.C.L. 1052, et seq. See annotation, L.R.A., 1918E, 375.

"In Hankins v. Williamsburg City Fire Ins. Co., 96 Kan. 706, 153 P. 491, L.R.A. 1918E, 373, Ann.Cas. 1918C, 135, it was held (as stated in syllabus which accurately digests opinion): `A fire insurance policy upon a building, containing a stipulation that the policy "shall be void * * * if the interest of the insured be other than unconditional and sole ownership," is not invalidated because of an outstanding naked legal title in another where the insured has the equitable title, the entire beneficial ownership of the property, and is in undisputed possession of the same.'

"Again, in American Basket Co. v. Farmville Ins. Co., 1 Fed.Cas.No.290, p. 618, 619, it appeared that the beneficial title was in the insured, a foreign corporation, but that the legal title was carried in the name of one of its officers because of a statute forbidding the ownership of realty by a foreign corporation. Held the requirement of `entire, unqualified, and sole' ownership for insured's `own use and benefit' satisfied, notwithstanding naked legal title in another."

The Roberts case was decided at the Fall Term 1937. At that time the Standard Fire Insurance Policy for North Carolina as prescribed by C.S. 6437 required on the part of the insured "unconditional and sole ownership." The General Assembly at its 1945 Session, Chapter 378, amended the form of the Standard Fire Insurance Policy for North Carolina by extinguishing the requirement of "unconditional and sole ownership" and such a policy now requires only that the insurance shall be not "in any event for more than the interest of the insured." G.S. § 58-176, as amended.

There is nothing in the record to show what was done with Elroy King's estate after his death in 1956, prior to the issuance of the policy here sued upon, or since. Based upon the crucial facts found by Judge McKinnon, as against defendant, it seems proper to say plaintiff was the sole, beneficial and equitable owner of the dwelling house when the policy was issued and when it was destroyed by fire. Such, it seems, was plaintiff's understanding when he took out the insurance and paid the premium, and he alone, so far as the record shows, has suffered loss by its destruction, and defendant has not been deceived.

Houck v. American Eagle Fire Insurance Co., supra, is distinguishable. Evidence offered by the plaintiffs tended to show that at the time the policy was issued to N. F. Houck and at the time it was subsequently transferred from him to M. V. Houck, the said N. F. Houck informed the agent of the defendant company of the true conditions of the title to said land and house, and requested said agent to issue a policy which would protect all persons who were interested in said house, in the event the same should be destroyed or damaged by fire.

Ingold v. Phoenix Assurance Co., 230 N. C. 142, 52 S.E.2d 366, 8 A.L.R. 2d 1439, is also distinguishable. In that case the lessor and lessee were jointly insured in a fire policy.

Defendant assigns as error that the finding of fact to the effect that while plaintiff was in possession he made extensive repairs and improvements to the dwelling house is not supported by the evidence. This assignment of error is good, but it is not prejudicial, because the recovery for the destruction of the dwelling house by fire was $4,000.00, and defendant admits in its answer "the dwelling house * * * at the time of the loss and destruction thereof was valued at approximately $5,000.00."

Defendant assigns as error the judge's finding to the effect that plaintiff used the property adversely to all others, for the reason it is not supported by the evidence. This is not a finding of fact, but a conclusion. This conclusion does not seem prejudicial, for plaintiff to recover here is not required to show legal title absolutely good against the world. Houck v. American Eagle Fire Insurance Co., supra; Roberts v. American Alliance Insurance Co., supra.

Defendant's assignments of error are overruled. Based upon the crucial findings of fact, which are supported by competent evidence, and upon the admissions in defendant's answer, Judge McKinnon properly entered judgment that plaintiff should recover from defendant on his fire insurance policy for the complete destruction of the dwelling house by fire the sum of $4,000.00.

The judgment below is

Affirmed.

RODMAN, J., concurs in result.

MOORE, J., dissents.