Opinion
May 3, 1954 —
June 8, 1954.
APPEAL from a judgment of the circuit court for Milwaukee county: ROLAND J. STEINLE, Circuit Judge. Affirmed.
For the appellant there was a brief and oral argument by Joseph F. Studnicka of Milwaukee.
For the respondent there was a brief and oral argument by Michael J. Dunn and James J. Bonifas, both of Milwaukee.
Action instituted in the civil court of Milwaukee county by the plaintiff Henry Kolehouse against the defendant the Connecticut Fire Insurance Company (hereinafter referred to as the "Insurance Company") to recover upon a policy of automobile collision insurance, and a separate action instituted in the same court by the plaintiff Universal C. I. T. Credit Corporation (hereinafter referred to as "Universal C. I. T.") against the same defendant Insurance Company to recover for the same collision loss upon the same policy as alleged in the action begun by Kolehouse. The two actions were consolidated for purposes of trial.
At a pretrial conference both plaintiffs were agreeable to accept the offer of the defendant Insurance Company to have the latter pay $2,500 into court and be discharged in both actions, the actions to continue for the purpose of determining the distribution of the $2,500. No testimony was taken but certain exhibits offered in behalf of Kolehouse were received into evidence pursuant to an understanding reached at the pretrial conference that no question was raised as to the same except as to their relevancy. Included in such exhibits were the pleadings, findings of fact, conclusions of law, and judgment in a prior action which had been instituted in the circuit court for Winnebago county in which Universal C. I. T. was plaintiff, one C. H. Deniger was defendant, and Kolehouse was the impleaded defendant.
Under date of October 29, 1948, Kolehouse purchased under a written conditional sales contract a Mack truck-tractor from said C. H. Deniger for a purchase price of $6,300, paying $1,600 down and agreeing to pay the balance of $4,700, together with $564 finance charges, in 24 consecutive monthly payments. Deniger then assigned the conditional sales contract to Universal C. I. T., which continued to be the owner and holder thereof at all times material to the within actions.
Finding of fact VII of the findings of fact in the Winnebago county circuit court action stated that the testimony disclosed that before Deniger would release the Mack tractor to Kolehouse a verbal agreement was entered into between Deniger, one Redick (a representative of Universal C. I. T.), and Kolehouse whereby it was agreed that long-haul collision insurance was to be kept in force on said tractor during the life of the conditional sales contract to be obtained that day (October 29, 1948) before Deniger would release the tractor to Kolehouse. Kolehouse in his verified answer filed in that action alleged that, in addition to the payments Kolehouse agreed to make under the conditional sales contract, he had paid the premium for collision and upset insurance for the Mack tractor which had been "arranged for and procured" by Universal C. I. T. and which original policy had been renewed by Universal C. I. T. at the expense of Kolehouse, and that the policies for such insurance "were made and delivered to" Universal C. I. T. Said verified answer of Kolehouse also alleged that Universal C. I. T. "owed to this answering impleaded defendant [Kolehouse] the duty of availing itself of and prosecuting its rights under the said policy of insurance so as to mitigate its loss by reason of the alleged damage [from the collision of January 1, 1950] and default [such default being Kolehouse's failure to make payments on the contract]."
The renewal policy of insurance referred to in the above-quoted extract from Kolehouse's answer in the Winnebago county circuit court action was issued by the defendant Insurance Company under date of December 1, 1949, the policy period being from November 27, 1949, to November 27, 1950, and provided that any loss thereunder was payable it as interest may appear" to Kolehouse and Universal C. I. T.
On January 1, 1950, the Mack truck-tractor was involved in a collision in the state of Illinois and badly damaged; and at the time of such collision Kolehouse was in default in making his monthly instalment payments under the terms of the conditional sales contract. Universal C. I. T. repossessed the tractor on January 24, 1950, and held a public sale of the same on March 14, 1950, at which sale it bid in the tractor. One of the findings of fact in the Winnebago county circuit court action stated that the testimony was in dispute as to the price at which Universal C. I. T. bid in the tractor, one witness testifying it to have been $725 and another that it was for the full amount then owing by Kolehouse. However, the notices of such sale which had been posted and published by Universal C. I. T. failed to comply with the requirements of sec. 122.19, Stats., and such section of the statutes was also violated in that the sale was not held within thirty days after the taking. Subsequently, Universal C. I. T. resold the tractor to the Winnebago Auto Supply Company for $700.
At the time Deniger had assigned the conditional sales contract to Universal C. I. T. he had executed a guaranty. Universal C. I. T. instituted the aforesaid action in the Winnebago county circuit court against Deniger on such guaranty, and, upon the application of Deniger, Kolehouse was impleaded as a defendant and Deniger served and filed a cross complaint against Kolehouse. Such action was tried to the court without a jury on December 7 and 8, 1951. The court in that action then determined that Deniger's guaranty was one of collection and not of payment, and, inasmuch as Universal C. I. T. had failed to comply with the requirements of sec. 122.19, Stats., in noticing and holding its sale of March 14, 1950, Kolehouse was discharged and released from all liability for any deficiency due and owing under the conditional sales contract. Judgment was entered accordingly holding that both Deniger and Kolehouse had been released from liability to Universal C. I. T.
The two within actions were then tried in the civil court of Milwaukee county before Judge MYRON L. GORDON and thereafter Judge GORDON filed a memorandum opinion bearing date of November 12, 1952, in which he determined that the $2,500 insurance proceeds paid into court by the defendant Insurance Company should be allocated on the basis of $1,932 being paid to Universal C. I. T. and the remaining $568 payable to Kolehouse, inasmuch as $2,632 was the balance owing by Kolehouse to Universal C. I. T. on January 1, 1950 (the date of the collision), which determined Universal C. I. T.'s interest in the insurance proceeds at the time of loss, and Universal C. I. T. conceded that the $700 it had received from the recent sale of the damaged tractor should be credited on such amount, thus reducing it to $1,932. Findings of fact, conclusions of law, and judgment were duly entered in accordance with such memorandum opinion, the judgment being entered December 3, 1952.
Kolehouse then appealed to the circuit court for Milwaukee county from such judgment of the civil court and the appeal was heard before Judge ROLAND J. STEINLE upon the record had in the civil court, there being no trial de novo. Under date of October 27, 1953, judgment was entered in the circuit court affirming the judgment of the civil court. From such judgment of the circuit court Kolehouse has appealed to this court.
The principal issue on this appeal is whether the holder of a conditional sales contract covering a motor vehicle has any rights to the proceeds of a policy of collision insurance payable as the result of a collision sustained by the vehicle, where, after the collision occurred, such holder improperly foreclosed the conditional sales contract against the vehicle.
The failure of Universal C. I. T., the holder of the conditional sales contract, to comply with the provisions of sec. 122.19, Stats., in holding a sale of the damaged tractor on March 14, 1950, rendered such sale void, and Universal C. I. T. stands in the same position that it would if it had repossessed the tractor and had not conducted any resale proceedings. Sec. 122.23 provides that "where there is no resale, . . . the buyer shall be discharged of all obligation."
Counsel for the defendant Kolehouse contend that inasmuch as Kolehouse was discharged from any liability to Universal C. I. T. as a result of the failure to comply with the requirements of sec. 122.19, Stats., in conducting said sale of March 14, 1950, this bars Universal C. I. T. from recovering on the policy of collision insurance even though it was named as a loss payee thereunder. On the other hand, counsel for Universal C. I. T. point out that such theory overlooks the distinction between Universal C. I. T.'s property right in the tractor, which is what was insured under the policy, and its right to proceed against Kolehouse personally, which latter right is what was waived under the provisions of ch. 122, Stats., by failing to properly advertise and resell said tractor after repossessing the same.
The loss under which claim is made for the insurance proceeds occurred on January 1, 1950. Universal C. I. T.'s repossession and attempted resale of the damaged tractor took place subsequent to the date of loss. The general rule is that the right of the insured to recover under a policy of insurance for a loss covered by the policy is determined as of the date of loss. 5 Appleman, Insurance Law and Practice, p. 469, sec. 3335.
Universal C. I. T., at the time of the loss, was the holder of legal title to the tractor. Its rights were closely akin to those of a chattel mortgagee. The rights of a mortgagee to enforce an insurance policy which is made payable to it, as its interests may appear, are discussed in 8 Couch, Cyclopedia of Insurance Law, p. 6442, sec. 1936, as follows:
"If the mortgage requires the mortgagor to insure for the mortgagee's benefit, and the policy makes the loss payable to the mortgagee as his interest may appear, he is entitled to recover thereon in his own name to the extent of his interest, and where the loss is so payable to the mortgagee, he may, in case of loss, recover the whole amount thereof, in his own name, if the mortgage debt exceeds the loss."
In Fageol T. C. Co. v. Pacific Indemnity Co. (1941), 18 Cal.2d 731, 117 P.2d 661, Fageol sold a truck chassis to one Thomas on a conditional sales contract. Policies of collision and upset insurance were issued by two insurance companies with loss payable to Fageol for damage to the chassis. The truck was damaged as the result of collision in the state of Washington. Fageol thereafter repossessed the damaged truck in the state of Washington and by so doing under Washington statutes lost any right to hold Thomas for the balance owing on the conditional sales contract. The insurance companies contended that the repossession of the truck and the termination of Thomas' liability under his contract of purchase released the insurance companies from the obligation to pay either Thomas or Fageol the amount of loss suffered. The trial court entered judgment in behalf of Fageol and against the two insurance companies for the loss claimed, and one of the two insurance companies appealed. The California court, in its opinion, stated ( 18 Cal.2d 738, 745, 117 P.2d 664, 668):
"Inasmuch as the policy and its indorsement made it payable to Fageol in case of loss, the latter's rights were fixed at the time of the loss. (Harrington v. Fitchburg Insurance Co. 124 Mass. 126, 131) . . . .
"Under our view of the language of the conditional sale contract, the Detroit insurance was to stand in lieu of the property lost by virtue of the collision and, therefore, Fageol's repossession of the truck did not defeat its right to be indemnified for the damage to the property."
We also consider the case of Gattavara v. General Ins. Co. (1932), 166 Wn. 691, 8 P.2d 421, very much in point on the issue presented in the case at bar, although it involved a chattel mortgage instead of a conditional sales contract. The mortgaged truck was destroyed in a collision with a railroad engine and the mortgagee brought action to recover for the loss under the policy of insurance covering the vehicle. Subsequent to the loss the mortgagee sought to foreclose the chattel mortgage by court action, which action was dismissed "with prejudice," thus discharging the chattel mortgagor from any further liability. The Washington supreme court, in rejecting the defendant insurance company's contention that the subsequent discharge of liability of the mortgagor defeated the mortgagee's right to recover on the policy, stated ( 166 Wn. 699, 8 P.2d 423):
"If the mortgage debt had become extinguished before the loss occurred, a different question would be presented. But the authorities generally hold that the insurer's liability is fixed as of the date when the loss occurs.
"`Nor is there merit in the contention that the policy was terminated by the suit to foreclose the real-estate mortgage. The breach of the policy, if any, had occurred long before such suit, and the rights of plaintiff thereunder had vested.' Pennsylvania Fire Ins. Co. v. Johnson, 28 Ariz. 448, 237 P. 634." (Emphasis supplied.)
On the authority of Fageol T. C. Co. v. Pacific Indemnity Co., supra, and Gattavara v. General Ins. Co., supra, we conclude that Universal C. I. T.'s right to recover upon the collision policy was determinable as of the date of the collision loss unaffected by any of the subsequent events which occurred. Although such insurable interest of Universal C. I. T. in the tractor is measured by the indebtedness owing on the purchase price by the buyer Kolehouse, it is something distinct and apart from the indebtedness itself. The fact that subsequent to loss the indebtedness disappeared did not destroy such insurable interest. As of the date of the collision loss on January 1, 1950, Universal C. I. T.'s insurable interest in the Mack tractor, as so measured by the indebtedness then owing by Kolehouse to it under the conditional sales contract, was $2,632. As the collision loss amounted to but $2,500, Universal C. I. T. was entitled to recover the entire $2,500 from the defendant Insurance Company.
However, as between Kolehouse and Universal C. I. T., Kolehouse might have a cause of action over against Universal C. I. T. for part of the insurance proceeds collected by the latter. Universal C. I. T. would be unjustly enriched if the amount collected by it from the defendant Insurance Company, together with the reasonable value of the damaged tractor which it repossessed, exceeded its actual insurable interest in the tractor as of the date of the collision loss. It is undisputed that Universal C. I. T. made a bona fide resale of the damaged tractor, after it repossessed the same, to a third party for $700, and there is no evidence in the record that the reasonable value of the damaged tractor exceeded such sum of $700. Therefore, as between Kolehouse and Universal C. I. T., the latter's insurable interest in the property as of the date of loss should be reduced by such $700 realized from the resale of the tractor, thus reducing the amount of insurance proceeds which Universal C. I. T. should be permitted to retain as against Kolehouse to $1,932. This is the amount that was properly awarded to it by the judgment of the civil court, as affirmed by the circuit court.
The brief submitted in behalf of Kolehouse contends that several of the findings of fact made by the civil court are not supported by the evidence in the record. No useful purpose would be served by an extended consideration of these points in this opinion. Suffice it to say that this court has given careful consideration to these contentions, and it is our conclusion that they are without merit. The evidence to sustain the disputed findings is contained in the admissions and allegations set forth in Kolehouse's answer in the Winnebago county circuit court action and in the court's findings of fact therein. Whether or not such findings of fact are res adjudicata is immaterial, because if not res adjudicata, nevertheless, such findings were offered in evidence by Kolehouse's counsel, and, therefore, constitute evidence upon which the civil court could base its findings in the within actions.
The reason why we went into considerable detail in our statement of facts herein, and in particular with respect to setting forth what transpired in the Winnebago county circuit court action, was in order to demonstrate that the findings of fact of the civil court were supported by the great weight and clear preponderance of the evidence. The real issue presented on this appeal is essentially one of law and not of fact.
By the Court. — Judgment affirmed.
STEINLE, J., took no part.