Title: Beatty v. USAA Cas. Ins. Co.

State: arkansas

Issuer: Arkansas Supreme Court

Document:

Barbara J. BEATTY, Individually and as
Natural Guardian of Kristi Beatty, 
and Kristi Beatty v. 
USAA CASUALTY INSURANCE CO.

97-349                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered October 30, 1997


1.   Judgment -- summary judgment -- when granted. -- The remedy of summary
     judgment should only be granted when there exists no genuine
     issue of material fact, and the party moving for summary
     judgment is entitled to judgment as a matter of law; the issue
     is to be viewed in the light most favorable to the party
     opposing summary judgment, and all inferences and doubts
     should be resolved against the moving party.

2.   Judgment -- summary judgment -- when affirmed. -- If the party moving
     for summary judgment makes a prima facie showing that no
     issues of fact exist and the nonmoving party fails to show
     that such issues do exist, then the appellate court must
     affirm a trial courtþs granting of summary judgment.

3.   Insurance -- insurable interest in property discussed. -- A person must
     have an þinsurable interestþ in property in order to have an
     enforceable insurance contract; an "insurable interest" is
     defined as any actual, lawful, and substantive economic
     interest in the safety or preservation of the subject of the
     insurance free from loss, destruction, or pecuniary damage or
     impairment. 

4.   Property -- ownership -- established by all evidence regarding property. -
     - Although title establishes a prima facie case of ownership,
     ultimate ownership is to be established by all evidence
     regarding property.

5.   Insurance -- two parties may have independent insurable interests in one
     piece of property. -- The trial court erroneously concluded that,
     by virtue of holding title, one partyþs insurable interest in
     an automobile precluded another party from also having an
     insurable interest; it is not inconsistent that two parties
     can have independent insurable interests in one piece of
     property; in such a situation, both parties are free to insure
     their respective interests in the property.

6.   Gifts -- inter vivos gift -- requirements. -- A valid inter vivos
     gift is effective when the following requirements are proven
     by clear and convincing evidence: (1) the donor was of sound
     mind; (2) an actual delivery of the property took place; (3)
     the donor clearly intended to make an immediate, present, and
     final gift; (4) the donor unconditionally released all future
     dominion and control over the property; and (5) the donee
     accepted the gift.   

7.   Gifts -- transfer of title not necessary -- intent of donor governs. --
     For a gift to be valid, transfer of title is not necessary;
     the intent of the donor can negate the fact that actual title
     was not transferred.

8.   Judgment -- summary judgment erroneous -- valid inter vivos gift possible.
     -- Based upon the evidence, the supreme court determined that
     there could have been a valid inter vivos gift of the
     automobile to appellant minor, thus giving her an insurable
     interest in the automobile; thus, summary judgment in favor of
     appellee insurance company was erroneous. 

9.   Insurance -- insurable interest not dependent upon ownership. -- An
     insurable interest in property is not dependent upon
     ownership; the fact that one has an insurable interest is not
     probative of ownership but only goes to prove that the
     interest is among those considered insurable as opposed to
     those which are not; generally speaking, a person has an
     insurable interest in property whenever he would profit by or
     gain some advantage by its continued existence and suffer some
     loss or disadvantage by its destruction; if he would sustain
     such loss, it is immaterial whether he has, or has not, any
     title in, or lien upon, or possession of, the property itself.

10.  Insurance -- insurable interest -- legal bases required. -- To have an
     insurable interest, a party need not have legal title to the
     property insured, but some legal basis for the assertion of
     interest; this legal interest can be based upon (a) a factual
     expectation of damages, (b) property interests, (c) legal
     liability, (d) and contract right.

11.  Insurance -- insurable interest -- any interest is insurable. -- Any
     interest in property, legal or equitable, conditional,
     contingent, or absolute is insurable; even the mere right to
     use property is insurable.

12.  Insurance -- appellant minor had insurable interest in automobile. --
     Where, if her father effectuated a gift to her, appellant
     minor had a property interest in the automobile by right of a
     legal property interest; where appellant minor had an
     insurable interest through the expectation of economic
     disadvantage resulting from damage to the insured property;
     and where appellant minor was placed in economic disadvantage
     when the automobile was destroyed, the supreme court held that
     appellant minor had an insurable interest in the automobile.

13.  Insurance -- appellant guardian had insurable interest in automobile on
     behalf of minor daughter. -- Where, as the natural guardian of
     appellant minor, appellant guardian was statutorily required
     to have the care and management of the estate of her daughter,
     and where, under case law, a guardian can be held liable for
     failures to exercise prudence and due care in managing the
     estate of a minor, the supreme court held that this legal
     obligation gave appellant guardian an insurable interest in
     the automobile on behalf of her minor daughter.

14.  Insurance -- unjust-enrichment argument rejected. -- The supreme court
     rejected appellee insurance company's argument that to allow
     appellants to recover insurance proceeds would constitute
     unjust enrichment because they had no legal obligation to pay
     for the automobile where more than one party can have an
     insurable interest in a piece of property, and appellant
     minor's father, who was free to purchase property insurance to
     insure against his indebtedness in the car, simply chose not
     to do so.  

15.  Judgment -- summary judgment based on lack of insurable interest erroneous.
     -- Based upon its findings of insurable interests, the supreme
     court held that the trial court erroneously determined that
     appellants did not have an insurable interest in the
     automobile based upon the fact that appellant minor's father
     held the certificate of title; therefore, the trial court was
     in error in granting summary judgment to appellee; the matter
     was reversed and remanded.


     Appeal from Pulaski Circuit Court; John Plegge, Judge;
reversed and remanded.
     Pike & Bliss, by: George E. Pike, Jr., and Deborah Pike Bliss;
and Clifton H. Hoofman, for appellants.
     Wright, Lindsey & Jennings, by:  Patrick J. Goss, for
appellee.

     W.H. "Dub" Arnold, Chief Justice.
     This case involves an interpretation of the term insurable
interest found in Ark. Code Ann.  23-79-104 (b) (Repl. 1992). 
Appellants claim that they have an insurable interest in an
automobile and are entitled to the policy proceeds of an insurance
contract covering property damage to the automobile.  The trial
court granted summary judgment for the insurer based upon the
finding that appellants did not have an insurable interest. 
Appellants claim error in this ruling; we agree and reverse and
remand. 
     On June 24, 1993, Douglas Beatty had a Toyota Celica delivered
to his daughter Kristi for her sixteenth birthday.   Mr. Beatty
lived outside of the State of Arkansas, visited Arkansas, selected
a car to purchase for his daughter, and made arrangements for its
delivery on her birthday.  Barbara Beatty, as natural guardian of
Kristi, added the car to her existing insurance policy with USAA
Casualty Insurance Company (hereinafter, þUSAAþ).  The policy
included coverage for liability as well as property damage.  The
policyþs loss clause read as follows: þLoss or damage under this
policy shall be paid, as interest may appear, to you and the loss
payee shown in the Declarations.þ  No loss payee was listed in the
declarations.
     On November 20, 1994, Kristi was involved in an automobile
accident that resulted in the total loss of the car.  USAA
determined that the net loss was $13,924.75.  Before acting on the
claim, USAA discovered that Douglas Beatty held certificate of
title for the automobile and additionally found a lien on the car
securing a promissory note executed by Douglas Beatty on behalf of
the Arkansas Federal Credit Union (hereinafter, þCredit Unionþ). 
USAA paid $11,772.50 to the Credit Union in satisfaction of the
lien and accepted title of the car to sell for salvage value.  The
lien by the Credit Union was unbeknownst to Barbara and Kristi
Beatty, and the Credit Union was not noted as a loss payee on the
policy.  USAA tendered payment to Barbara Beatty for the remaining
$2,152.25 as payment in full for the claim.  Ms. Beatty refused
payment based upon the contention that she was entitled to the
entire $13,924.75.
     Barbara Beatty brought suit against USAA, individually and in
her capacity as natural guardian of Kristi Beatty.  Ms. Beatty
claimed that full payment should have been made to her by USAA
because she was the policy holder and there was no loss payee named
in the policy.  Ms. Beatty contends that USAA was not authorized to
pay the proceeds of the insurance contract to a third party with
whom she had no contractual obligation.  USAA contends that neither
Barbara Beatty nor Kristi Beatty had an insurable interest in the
automobile and that its payment to the Credit Union was proper. 
The trial court granted USAAþs motion for summary judgment ruling
that neither Barbara Beatty nor Kristi Beatty had an insurable
interest.  This ruling was based solely upon the fact that Douglas
Beatty held the title to the automobile, and thus, neither Barbara
or Kristi Beatty could have an insurable interest.
     Barbara and Kristi Beatty appeal this ruling.  Appellants
contend that Douglas Beattyþs holding title does not preclude
another party from also having an insurable interest.  Appellants
contend that Kristi had an insurable interest in the automobile
upon receiving it as a gift from her father, Douglas Beatty. 
Appellants also contend that Barbara Beatty had an insurable
interest in the automobile through her duty as natural guardian of
Kristi to protect her minor daughter's property.  Additionally,
appellants argue that Arkansas statutes imposing liability on
Barbara Beatty as the natural guardian of Kristi Beatty by
requiring her to assume joint and several liability in order for
Kristi to obtain a driverþs license creates an insurable interest
in the automobile.  In addition to the insurable interest issue,
appellants also contend that USAA is not authorized to pay a third
party who is not designated as a loss payee under the original
insurance contract and who is not in privity with the insured.
     We agree with appellants that the trial court erroneously
ruled on the issue of insurable interest and reverse and remand
this case on that basis.  The issue of whether USAA was authorized
to make a payment to a third party not named as a loss payee and
not in privity with the insured was not directly ruled upon by the
trial court, so we will not address that issue.
     The remedy of summary judgment should only be granted when
there exists no genuine issue of material fact, and the party
moving for summary judgment is entitled to judgment as a matter of
law.  Ark. R. Civ. P. 56; Smothers v.  Clouette, 326 Ark.  1017,
1020, 934 S.W.2d 923 (1996).  The issue is to be viewed in the
light most favorable to the party opposing summary judgment, and
all inferences and doubts should be resolved against the moving
party.  Id.  If the party moving for summary judgment makes a prima
facie showing that no issues of fact exist and the nonmoving party
fails to show that such issues do exist, then this court must
affirm a trial courtþs granting of summary judgment.  Pyle v. 
Robertson, 313 Ark.  692, 694,