Summary
In Rock County Savings Trust Co. v. London Assurance Co. (1962), 17 Wis.2d 618, 117 N.W.2d 676, the two unrelated joint tenants had purchased insurance coverage on their dwelling.
Summary of this case from In re Estate of McGeeOpinion
October 3, 1962 —
October 30, 1962.
APPEAL from judgments of the circuit court for Rock county: ARTHUR L. LUEBKE, Circuit Judge. Reversed.
For the appellant there was a brief and oral argument by Robert D. Junig of Beloit.
For the respondent there was a brief and oral argument by Howard H. Moss of Janesville.
This is an appeal by Mattie Tyler, the interpleaded defendant and a claimant of the $5,000 proceeds of a fire insurance policy, from an interlocutory judgment and a final judgment adjudging the plaintiff was entitled to one half of the proceeds. The plaintiff Rock County Savings Trust Company as special administrator of Mary Curry's estate commenced this action against London Assurance Company for one half of the proceeds. The Insurance Company paid the amount of the policy into court, interpleaded Mattie Tyler as a defendant and claimant of the proceeds, and was relieved of further liability.
For some years Mary Curry and Mattie Tyler lived together in a small dwelling owned by Mary Curry in the city of Beloit. On February 23, 1950, Mary Curry conveyed a one-half interest in the property to Mattie Tyler intending to create a joint tenancy. Mattie Tyler had the dwelling insured by the London Assurance Company against fire and other risks including explosion in the amount of $5,000 in the name of "Mary Curry and Mattie Tyler" without any further designation as to their rights. On February 24, 1958, an explosion destroyed the dwelling and seriously injured Mary Curry who died the following day. The complaint set out two causes of action: One on the theory the deed created a tenancy in common, and the other that it created a joint tenancy but in either event the estate of Mary Curry was entitled to one half of the insurance proceeds. The answer alleged the deed created a joint tenancy and contained a counterclaim praying for reformation in accordance with the intention of the parties and claiming the entire proceeds. The plaintiff moved for summary judgment. In the affidavit of Mattie Tyler in opposition, it is stated Mattie Tyler purchased the insurance and paid all the premiums therefor and Mary Curry had agreed that if Mattie Tyler would care for and support her she would, in return, receive all of her property upon her death and that in reliance upon the agreement Mattie Tyler had cared for and supported Mary Curry.
By an interlocutory judgment, the court granted the plaintiffs motion for summary judgment and adjudged one half of the proceeds belonged to the estate of Mary Curry. Subsequently, the court entered a final judgment which reformed the deed to create a joint tenancy and reaffirmed the provisions of the interlocutory judgment. From these two judgments, Mattie Tyler appeals.
The proceeds of the policy having been paid into court by the insurer, the question for decision is to whom do these proceeds belong as between Mattie Tyler and the estate of Mary Curry? A fire insurance contract is a personal indemnity agreement for the insureds, the proceeds of which will indemnify them for the loss they might suffer from the risks covered by the policy. The rights of the insureds as against the insurer are determined as of the date of loss. Kolehouse v. Connecticut Fire Ins. Co. (1954), 267 Wis. 120, 65 N.W.2d 28; Evans v. Crawford County Farmers' Mut. Fire Ins. Co. (1906), 130 Wis. 189, 109 N.W. 952; 5 Appleman, Insurance Law and Practice, p. 469, sec. 3335. On this basis the trial court granted one half of the proceeds to the estate of Mary Curry because at the time of the explosion Mary Curry was living and had a cause of action against the insurance company. However, such a rule of law does not necessarily determine the rights the insureds between each other when the insurer has paid the fund into court.
The defendant Tyler argues she is entitled to the entire proceeds as the surviving joint tenant of a chose in action, relying on cases dealing with mortgages securing joint notes and cases involving bank deposits. However interesting this question might be, we do not find it necessary to decide whether a fire policy naming two persons insureds without designation of their rights either in the property or the contract created a legal interest which would ripen in case of loss into a joint cause of action with right of survivorship.
We believe the proper disposition of this case rests upon equitable principles. The house and land were owned by Mary Curry and Mattie Tyler as joint tenants with right of survivorship. Mattie Tyler took out fire insurance naming Mary Curry and herself as insureds and paid the premiums thereon. By the nature of this insurance contract the proceeds were to be indemnity for the loss which might be suffered if the house were destroyed or damaged by any of the perils insured against. The proceeds were to stand in lieu of the dwelling if damaged and this would be true regardless of which insured died first. If either insured died prior to the loss, the survivor by virtue of the joint tenancy of the dwelling would be entitled to the full proceeds of the insurance. Should the fact the explosion antedated the death of Mary Curry by a day require that the law of descent of personal property must apply and preclude carrying out the intention of the parties? We think not. The proceeds of the insurance policy should in equity be treated as if they were the dwelling under the doctrine of equitable conversion and the law of joint tenancy applied. In treating the insurance proceeds as a substitute for the damaged property, we do not intimate Mary Curry did not have a legal right to her share of the insurance funds after the loss and prior to her death. She had the same interests and the same legal rights she had prior to her death in the real estate which included the right to sever the joint tenancy by her own voluntary act of severance. If Mary Curry had lived and had received her share of the insurance proceeds she could have voluntarily used her share and terminated the joint tenancy. It must be pointed out under a standard fire insurance policy that while an insured may have a cause of action for money against the insurer for his damage, this is subject to the option of the insurer not to indemnify in terms of money but to specifically indemnify by repairing, rebuilding, or replacing the property destroyed or damaged with other or like kind and equality within a reasonable time. Sec. 203.01, Stats., Standard Fire Policy, lines 141 to 147. The fact the insurer did not exercise this option and paid the money into court after the death of Mary Curry is of some significance in applying equitable principles to these facts.
In determining the rights of the parties as between themselves to insurance funds, this court has determined such rights on equitable principles. Kolehouse v. Connecticut Fire Ins. Co., supra; Estate of Johnson (1921), 175 Wis. 248, 185 N.W. 180. See Estate of Massouras (1962), 16 Wis.2d 304, 114 N.W.2d 449. In a somewhat-analogous case of Estate of Elliott (1953), 174 Kan. 252, 255 P.2d 645, the court held the insurance proceeds received upon the destruction of property were to be treated as if they were the real estate on the theory of equitable conversion and passed to those entitled to receive the real estate under the will of the deceased who survived the destruction of the dwelling by a tornado by one day.
The doctrine of equitable conversion is an ancient one and applied generally in cases of devises under wills and in cases of uncompleted sales of real estate in order to carry out the intention of the parties which otherwise would have been prevented by death and the laws of descent or by the destruction of the property. We see no reason why the doctrine should not be applied to indemnity proceeds related to real estate held in joint tenancy. In equity a joint tenancy should not be severed in part by an involuntary conversion of such property into personally by accidental means. The fact it is by the application of legal principles requires the application of the doctrine of equitable conversion. This result is just and gives effect to the intention of the parties and requires a reversal. The defendant not having moved for summary judgment, this court cannot order the granting of a judgment in her favor for the proceeds. This must be done in the trial court.
By the Court. — The interlocutory judgment and that part of the final judgment adjudging the plaintiff entitled to $2,500 are reversed, with directions to deny the plaintiff's motion for summary judgment.