Opinion
No. 3928.
February 10, 1931. Rehearing Denied February 12, 1931.
Error from District Court, Dallas County; Royal R. Watkins, Judge.
Suit by Mrs. Gladys Farmer against the Girard Fire Marine Insurance Company, wherein George S. Wright, trustee and assignee, intervened and became a party plaintiff. To review the judgment rendered, defendant brings error.
Affirmed.
April 29, 1928, one G. P. Collins owned the property known as 1708 Lenway street in the city of Dallas, on which he owed the Gaulding Mortgage Company $2,500, and interest thereon, secured by a trust deed on the property. Said deed contained a stipulation requiring the owner to keep frame buildings constituting part of the premises insured against loss by fire "to the extent insurance (quoting) can be obtained thereon, for the benefit of the holder or holders of notes," evidencing said $2,500 indebtedness. On said April 29, 1928, the Pacific Fire Insurance Company issued to said Collins a policy insuring him for one year against such loss in the sum of $500. May 19, 1928, the London Lancashire Insurance Company, Limited, issued said Collins a policy insuring him for one year against such loss in the sum of $2,000; and September 21, 1925, the Mercantile Insurance Company of America issued said Collins a policy insuring him for three years against loss in the sum of $1,000. By its terms each of said policies was payable, in the event of loss by fire, to said Gaulding Mortgage Company as its interest might appear. June 20, 1928, Collins sold the property to Mrs. Gladys Farmer. Neither of said policies nor any right under either of them was assigned to Mrs. Farmer. June 25, 1928, the Girard Fire Marine Insurance Company, not then knowing anything about the insurance procured by Collins, issued a policy to Mrs. Farmer insuring the property in the sum of $4,050 against loss by fire. By the terms of this policy it also was payable, in the event of loss, to said Gaulding Mortgage Company as its interest might appear. July 18, 1928, the buildings referred to were damaged by fire in a sum in excess of $4,050. The indebtedness to the mortgage company secured by the mortgage on the property at that time amounted to $2,500, not including interest. Not until after the fire occurred did the mortgage company know anything about the issuance of the policy by said Girard Fire Marine Insurance Company. In April, 1929, Mrs. Farmer in writing transferred to said mortgage company "any and all claims she had against the Girard Fire Marine Insurance Company" under the policy it issued to her June 25, 1928, as hereinbefore stated. June 3, 1929, "in consideration (quoting) of the amount then due upon said mortgage," the Gaulding Mortgage Company transferred to George S. Wright, as trustee for the three insurance companies which issued the Collins policies, "said deed of trust notes and mortgage securing the same and all claims that it might have against the Girard Fire Marine Insurance Company under its policy." On the same day, to wit, said June 3, 1929, Mrs. Gladys Farmer, the assured named in the Girard Fire Marine Insurance Company policy, transferred all rights or claim she might have against said Girard Fire Marine Insurance Company to said George S. Wright as trustee for said three insurance companies. The amount of money paid by said George S. Wright as trustee for said three insurance companies was not, it appeared, "made as a payment (quoting) under said policies, but as a purchase as trustee for said three insurance companies of said deed of trust notes and mortgage securing the same." This suit was by Mrs. Gladys Farmer as plaintiff on her own behalf and "on behalf (quoting) of said Geo. S. Wright, assignee of the Gaulding Mortgage Company, and for his use and benefit as well." It was to recover of said Girard Fire Marine Insurance Company the amount of the policy issued by it as hereinbefore stated. Said Wright, by intervention, as trustee aforesaid, adopted the pleadings of Mrs. Farmer as his own, and became a party plaintiff to the suit. The trial was to the court without a jury, and resulted in a Judgment in favor of Wright as trustee for $3,084, the amount, principal, interest, and attorney's fees, of the indebtedness to the Gaulding Mortgage Company, secured as stated, and in favor of Mrs. Gladys Farmer for $1,244.16 as the difference between the amount of said indebtedness and the amount of said insurance company's liability under said policy. This appeal was prosecuted by said Girard Fire Marine Insurance Company.
E. G. Senter and M. H. Baughn, both of Dallas, for plaintiff in error.
Geo. S. Wright and Coffman Hill, all of Dallas, for defendant in error.
The policies issued to Collins became void as to him when he conveyed the property they covered to Mrs. Farmer; but each of them contained a stipulation (in harmony with article 4931, R.S. 1925) that as to the mortgage it should not "be invalidated (quoting) by any act or neglect of the mortgagor or owner of the within described property * * * nor by any change in the interest, title or possession of the property," and therefore remained valid and effective in favor of the Gaulding Mortgage Company.
At the trial the Girard Fire Marine Insurance Company, while denying that the policy it issued became effective as to the mortgage company, in open court admitted same was effective as to Mrs. Farmer, and that it was liable to her for the difference between the mortgage debt and the amount of the loss to her by the fire.
There is no doubt, we think, if that policy never became effective in favor of the mortgage company, when the fire occurred the Girard Company became bound to pay the full amount of the policy to Mrs. Farmer, and the companies issuing the policies to Collins became bound to pay the full amount of the mortgage indebtedness to the mortgage company. It would follow, in that event, that Mrs. Farmer alone would be entitled, on the showing in the record, to complain because part of the sum which should have been adjudged to her was, instead, adjudged to the trustee. What recourse, if any, the trustee of the companies issuing the policies to Collins, having paid the mortgage debt and taken a transfer thereof to himself, would have as against Mrs. Farmer, need not be determined, as it is not a matter that concerns the Girard Company.
As we view the record, there is only one theory upon which it could be held that the Girard Fire Marine Insurance Company has a right to complain of the judgment, and that one is that the policy it issued to Mrs. Farmer was effective in favor of said mortgage company at the time the fire occurred. In that event, the Girard policy and the policies issued to Collins made the case one of double insurance so far as the mortgagee was concerned, and the doctrine of contribution applied as between the insurance companies, according to which the companies issuing the policies to Collins, and their trustee, would be entitled to recover of the Girard Company only a proportional part, to wit, $1,635.46, of the mortgage debt. We do not think this view of the matter is affected by the fact that the trustee of the companies issuing the policies to Collins paid the mortgage debt and took a transfer thereof to himself. The only effect of such transfer, we think, was to confer upon the trustee the right the mortgage company had to look to the Girard Company for a pro rata part of the mortgage debt. Each of the policies issued to Collins and the policy issued to Mrs. Farmer as well contained a stipulation that, if there was other insurance on the property, it should not be liable for a greater proportion of any loss "than the sum (quoting) hereby insured bears to the whole amount of insurance on said property, payable to, held by or consented to by said mortgagee (trustee)."
Contrary to the view which the Girard Company seems to entertain, we think the policy it issued did take effect in favor of the mortgage company, and therefore that the Judgment as to it is erroneous, in that it should have been in the trustee's favor against it for a pro rata part of the mortgage debt, to wit, said sum of $1,635.46, instead of for the full amount of said debt, to wit, the sum of $3,048.84. The judgment will be reformed accordingly in that respect, and, as reformed, will be affirmed.
On Motion for Rehearing.
Among contentions urged in the motions is one by the appellee George S. Wright, trustee, that this court erred when it held that he and Mrs. Farmer together were not entitled to recover of appellant the full amount of the policy it issued to her. We think the contention should be sustained.
The error was caused by the failure of this court to give the effect it was entitled to to a stipulation in each of the Collins policies as follows:
"On payment to such mortgagee (or trustee) of any sum for loss or damage hereunder, if this Company shall claim that as to the mortgagor or owner, no liability existed, it shall to the extent of such payment be subrogated to the mortgagee's (or trustee's) right of recovery and claim upon the collateral to the mortgage debt, but without impairing the mortgagee's (or trustee's) right to sue, or it may pay the mortgage debt and require an assignment thereof and of the mortgage."
It (the error of this court) was due primarily to the failure of the writer to more carefully examine the record than he did.
It appeared in the record that the companies issuing the policies to Collins were not, and claimed they were not, liable to him, and that they paid the mortgage debt and took an assignment thereof and of the mortgage. By such payment and assignment said companies became the owners of the mortgage debt, and, as such, were entitled to look to Mrs. Farmer for payment thereof. Alamo Ins. Co. v. Davis, 25 Tex. Civ. App. 342, 60 S.W. 802; Mosby v. Ins. Co., 285 Mo. 242, 225 S.W. 715; Milwaukee Mechanics' Ins. Co. v. Ramsey, 76 Or. 570, 149 P. 542, Ann.Cas. 1917B, 1132, L.R.A. 1916A, note page 562. It appeared, further, that, after the fire, Mrs. Farmer transferred to the mortgage company as security for the debt she owed it the claim she had against appellant on account of the policy it had issued to her; and it appeared, further, that thereafter, in consideration of the amount due upon the mortgage, the mortgage company transferred to appellee Wright, as trustee for the companies issuing the policies to Collins, the indebtedness of Mrs. Farmer to it and the mortgage securing same, "and all claims (quoting) that it might have against the Girard Fire Marine Insurance Company under its policy." It appears in the statement of facts that appellant in open court stated it made no claim "that its policy of insurance (quoting) was void, but that its position was that the companies carrying the policies in the name of Collins were liable to the mortgagee to the extent of the mortgage debt, and that the Girard Fire Marine Insurance Company was responsible to Mrs. Gladys Farmer only for the difference between the mortgage debt and the amount of loss and damage." So, it seems, the `real question on the appeal was not one as to liability of appellant on the policy it issued, for that was admitted, but was one as to the amount of its liability and as to who was entitled to enforce same. We do not think it appeared that appellant's liability was "secondary," or that it was for a sum less than the policy, for any of the reasons urged by it. It appeared the loss by fire amounted to a sum greater than the amount of the policy sued upon. Therefore, we think, the liability of appellant was for the full amount of the policy.
The motion of appellant will be overruled, and the motion of Mrs. Farmer and the trustee will be granted, and the judgment heretofore rendered by this court will be set aside, and the judgment of the court below will be affirmed.