Opinion
Hearing Granted July 3, 1962.
Opinion vacated 24 Cal.Rptr. 859, 374 P.2d 827.
Johnson, Thorne, Speed & Bamford, and Arthur L. Johnson, San Jose, for appellant.
Alden Reid, San Bernardino, for respondent.
COUGHLIN, Justice.
The issue on this appeal is whether a surviving joint tenant may recover from the estate of a deceased joint tenant the proceeds of a fire insurance policy covering improvements on their joint tenancy property, the policy being issued to and paid for by the joint tenant who now is deceased, and the loss occurring prior to his death.
This case was decided upon a stipulation of facts that: Dorothy Mouser, now Dorothy Russell, the plaintiff and appellant herein, and John Mouser, now deceased, whose estate is being administered by the defendant and respondent herein, while husband and wife, owned the subject property as joint tenants; in October, 1957, Mrs. Mouser separated from Mr. Mouser and went to Nevada where she obtained a divorce on November 13th of that year; the divorce decree so obtained made no provision respecting any property rights of the parties and they did not enter into any property settlement agreement; the title to the subject property continued in joint tenancy and Mr. Mouser continued to live thereon until his death on June 3, 1958; in the interim, i. e., on November 29, 1957, he obtained a policy of fire insurance covering the improvements on that property, which was issued to him as the sole insured, the premiums being paid from his separate funds; no agreement existed between Mr. and Mrs. Mouser respecting the placing of any fire insurance upon the premises nor concerning the disposition of the proceeds of any such policy, and the subject policy was issued without her knowledge; about six weeks prior to Mr. Mouser's death, the improvements in question were destroyed by fire, and thereafter the proceeds of the policy, representing the Mrs. Mouser became sole owner of the property and brought this action to recover the proceeds in question, alleging that the defendant estate became 'indebted to plaintiff for moneys had and received for the use and benefit of plaintiff.'
Primarily, the plaintiff's claim is based on the contention that the moneys paid by the insurance company under the subject policy constituted proceeds of the property that was destroyed and retains the character of that property. This is a false premise.
It is a principle of long standing that a policy of fire insurance does not insure the property covered thereby, but is a personal contract indemnifying the insured against loss resulting from the destruction of or damage to his interest in that property. (Alexander v. Security-First Nat. Bank, 7 Cal.2d 718, 722-723, 62 P.2d 735; Corder v. McDougall, 216 Cal. 773, 774, 16 P.2d 740; Davis v. Phoenix Ins. Co., 111 Cal. 409, 414-415, 43 P. 1115; Fred A. Chapin Lumber Co. v. Lumber Bargains, Inc., 189 Cal.App.2d 613, 617, 11 Cal.Rptr. 634; cf. Sievers v. Union Assur. Soc. of London, 20 Cal.App. 250, 251, 128 P. 771; Murray v. Webster, 256 Ala. 248, 54 So.2d 505, 508.) This principle gives rise to the supplemental rule that, in the absence of special contract, the proceeds of a fire insurance policy are not a substitute for the property the loss of which is the subject of indemnity. (Alexander v. Security-First Nat. Bank, supra, 7 Cal.2d 718, 722, 62 P.2d 735; Corder v. McDougall, supra, 216 Cal. 773, 774, 16 P.2d 740; Walsh v. Tadlock, 9 Cir., 104 F.2d 131, 132; Montgomery v. Hart, 225 Ala. 471, 144 So. 101, 102; Langford v. Searcy College, 73 Ark. 211, 83 S.W. 944, 946; Ketcham v. Ketcham, 269 Ill. 584, 109 N.E. 1025; Crook v. Hartford Fire Ins. Co., 175 S.C. 42, 178 S.E. 254, 257; Steinmeyer v. Steinmeyer, 64 S.C. 413, 42 S.E. 184, 186, 59 L.R.A. 319; Graham v. American Fire Ins. Co., 48 S.C. 195, 26 S.E. 323, 332.) In Spalding v. Miller, 103 Ky. 405, 45 S.W. 462, 464, the court said, with respect to the payments made under such a policy: 'The sum paid 'is in no proper or just sense the proceeds of the property.'' As a consequence, the plaintiff has no claim to the proceeds of the insurance paid to Mr. Mouser's estate upon the ground that they are proceeds of the joint tenancy property of which she now is sole owner.
There are instances where, because of contractual provisions or equitable considerations, the insured holds the proceeds of a fire insurance policy in trust for or otherwise subject to the claim of others who have an interest in the property covered by the subject policy. (Alexander v. Security-First Nat. Bank, supra, 7 Cal.2d 718, 726, 62 P.2d 735; Hawer v. Lathrop, 38 Cal. 493; Fred A. Chapin Lumber Co. v. Lumber Bargains, Inc., supra, 189 Cal.App.2d 613, 617, 11 Cal.Rptr. 634; Rogge v. Menard County Mutual Fire Insurance Co., D.C., 184 F.Supp. 289, 295; Crook v. Hartford Fire Ins. Co., supra, 175 S.C. 42, 178 S.E. 254, 258; Gibbes Machinery Co. v. Niagara Fire Ins. Co., 119 S.C. 1, 111 S.E. 805, 21 A.L.R. 1460.) However, unless the insured has an obligation to insure, or equitable considerations are present, the proceeds of a policy issued to and paid for by the named insured on his separate insurable interest are not subject to the claims of others who also have an interest in the property covered by the policy. (Alexander v. Security-First Nat. Bank, supra, 7 Cal.2d 718, 726, 62 P.2d 735; Corder v. McDougall, supra, 216 Cal. 773, 16 P.2d 740; Board of Education v. Winding Gulf Colieries, 4 Cir., 152 F.2d 382, 384; Montgomery v. Hart, supra, 225 Ala. 471, 144 So. 101, 102; Farmers' Mut. Fire & Lightning Ins. Co. v. Crowley, 354 Mo. 649, 190 S.W.2d 250, 252; Underwood v. Fortune (Mo.App.), 9 S.W.2d 845, 846.)
There is no obligation upon the part of one cotenant to insure the other cotenant against loss of the latter's interest in their jointly owned property. (Oglesby Murray v. Webster,
Bell v. Barefield, In re Cochran's Real Estate, Schilbach v. Schilbach, Corder v. McDougall, Harrison v. Pepper, Geddes v. Congdon, Farmers' Mut. Fire & Lightning Ins. Co. v. Crowley,Following the rules heretofore stated, the right of one cotenant to recover the proceeds of a policy of insurance issued to another cotenant has been denied. (Bell v. Barefield, supra, 219 Ala. 319, 122 So. 318, 319; Herrington v. Herrington, 40 Ga.App. 652, 151 S.E. 114; Crabtree v. Maupin Seed Co. (Mo.App.), 294 S.W. 433, 435; Annely v. De Saussure, 26 S.C. 497, 2 S.E. 490, 494; Newsome v. St. Paul Mercury Ins. Co. (Tex.Civ.App.), 331 S.W.2d 497; cf. Conley v. Fidelity-Phoenix Fire Ins. Co. of New York, D.C. 102 F.Supp. 474; Murray v. Webster, supra, 256 Ala. 248, 54 So.2d 505, 508; Ritson v. Atlas Assur. Co., 272 Mass. 73, 171 N.E. 448.) The same ruling has been applied as between a life tenant and a remainderman (Corder v. McDougall, supra, 216 Cal. 773, 16 P.2d 740; Board of Education v. Winding Gulf Collieries, supra, Cir., 152 F.2d 382, 384; Harrison v. Pepper, supra, 166 Mass. 288, 44 N.E. 222, 33 L.R.A. 239); lessor and lessee (Alexander v. Security-First Nat. Bank, supra, 7 Cal.2d 718, 723, 62 P.2d 735); mortgagor and mortgagee (see Alexander v. Security-First Nat. Bank, supra, 7 Cal.2d 718, 723, 62 P.2d 735; Eagle Star & British Dominions v. Tadlock, D.C., 22 F.Supp. 545, 547; White v. Gilman, 138 Cal. 375, 71 P. 436); partners (American Cent. Ins. Co. v. Harrison, [Tex.Civ.App.] 205 S.W.2d 417, 421); builder and owner (Anderson v. Quick, 163 Cal. 658, 662, 126 P. 871); and vendor and vendee (White v. Gilman, supra, 138 Cal. 375, 71 P. 436), subject to certain equitable considerations. (See Alexander v. Security-First Nat. Bank, supra, 7 Cal.2d 718, 723, 62 P.2d 735; In re Future Manufacturing Cooperative, D.C., 165 F.Supp. 111, 116.)
It has been held that where the policy of insurance purports to cover the interest of all cotenants, the question of the right of the non-insuring cotenant to a part of the proceeds, upon occurrence of a loss, is dependent upon equitable circumstances. (Miles v. Miles, 211 Ala. 26, 99 So. 187, 190; Currier v. North British etc. Co., 98 N.H. 366, 101 A.2d 266, 267; Farmers' Mut. Fire & Lightning Ins. Co. v. Crowley, 354 Mo. 649, 190 S.W.2d 250, 253.) On the other hand, it also has been held that the mere fact that the proceeds of a fire insurance policy equal the full value of the property destroyed does not entitle the owners of non-insured interests in that property to recover a part of those proceeds. (Board of Education v. Winding Gulf Collieries, supra, 4 Cir., 152 F.2d 382, 384; Rogge v. Menard County Mutual Fire Insurance Co., supra, D.C., 184 F.Supp. 289, 294; Murray v. Webster, supra, 256 Ala. 248, 54 So.2d 505, 508; Farmers' Mut. Fire & Lightning Ins. Co., v. Crowley, supra, 354 Mo. 649, 190 S.W.2d 250, 252; Underwood v. Fortune, supra (Mo.App.), 9 S.W.2d 845, 846; Gorman's Estate, 321 Pa. 292, 184 A. 86, 87.) In the instant case, even though the amount of the proceeds obtained from the policy of insurance represented the full value of the property destroyed, no equitable considerations exist which require a determination, as a matter of law, that the plaintiff was entitled to any portion thereof. She separated from Mr. Mouser and left him in full possession of the property; he obtained a policy which insured his interest therein and paid the premium thereon; and she had In support of her position, plaintiff cites the decisions in Hawes v. Lathrop, supra, 38 Cal. 493 and Estate of MacDonald, 133 Cal.App.2d 43, 283 P.2d 271. In the former, i. E., Hawes v. Lathrop, supra, 38 Cal. 493, property was transferred in trust for school purposes with a remainder reserved to the grantor; the trustees caused a policy of fire insurance covering the same to be issued to them; a fire and consequent loss resulted; the trustees decided to terminate the trust and return the property to the grantor; and the court determined that the trustees held the insurance proceeds 'in their fiduciary and not their private capacity', were not entitled thereto, and the disposition thereof should be governed by the terms of the trust which required a return of the trust corpus to the grantor upon termination. In the latter case, i. e., Estate of MacDonald, supra, 133 Cal.App.2d 43, 283 P.2d 271, the policy of insurance, which covered an automobile, provided that in the event of damage thereto, the insurance company might either repair the damage or purchase the automobile and pay the insured its value prior to loss; the insured was killed in an accident which resulted in damage to the subject automobile; it had been bequeathed by a will previously executed; the insurance company exercised its option to purchase the automobile and pay the value thereof rather than repair the same; and the court held that the legatee to whom the automobile had been bequeathed was entitled to the insurance proceeds in question upon the ground that she would have received the damaged automobile if the insurance company had not exericised its option to purchase, that the automobile so bequeathed was subject to the insurance contract which contained this option, and that the legatee should receive the benefits of that contract upon the exercise of that option. The decision in the cited cases are not in conflict with the views heretofore expressed in this opinion.
The judgment is affirmed.
GRIFFIN, P.J., and SHEPARD, J., concur.