Title: Hensley v. Farm Bureau Mutual Ins. Co. of Arkansas

State: arkansas

Issuer: Arkansas Supreme Court

Document:

420 S.W.2d 76 (1967) 243 Ark. 408 A. E. HENSLEY et ux., Appellants, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF ARKANSAS, Appellee. No. 5-4326. Supreme Court of Arkansas. November 6, 1967. *77 Lightle & Tedder, Searcy, and Catlett & Henderson, Little Rock, for appellants. Cockrill, Laser, McGehee, Sharp & Boswell, Little Rock, for appellee. JONES, Justice. Mr. and Mrs. A. E. Hensley brought suit in the White County Circuit Court against Farm Bureau Mutual Insurance Company of Arkansas to recover on a fire insurance policy issued in the face amount of $2,000.00. A jury was waived and the cause was tried before the trial court sitting as a jury. The trial court denied recovery and dismissed the complaint on the equitable theory of unjust enrichment. Mr. and Mrs. Hensley have appealed and rely upon the following points for reversal: For some time prior to 1965, appellants had carried their fire insurance in separate policies with the appellee, Farm Bureau Mutual, and one of the policies was on a rent house in the face amount of $2,000.00. This policy was renewed on January 24, 1965, with loss payable clause in favor of the Searcy Bank who held a mortgage on the property, and the annual premium for 1965 was paid by appellants. On March 2, 1965, appellants entered into a sales contract with H. D. Taylor whereby they agreed to sell the property to Taylor for $2,000.00, with $200.00 paid in cash and the balance to be paid over a period of three years in $600.00 annual installments. The contract of sale provided: Mr. Taylor did not have money for an insurance premium when the contract of sale was entered into, but subsequently, and without notice to, or knowledge of, the appellants, he did procure an insurance policy on the property from Glens Falls Insurance Company in the amount of $2,000.00 with loss payable to himself and to the Searcy Bank as mortgagee. On September 9, 1965, the house was completely destroyed by fire. Glens Falls paid the face amount of its policy to Taylor, who in turn paid appellants the balance due on the sale price. Appellants paid their indebtedness to the Searcy Bank and transferred title by appropriate deed to Taylor as provided in the contract of sale. *78 We agree with appellants on all three points relied on for reversal. As a matter of fact, appellee agrees with appellants on the first two points, but contend in their argument as follows: We do not agree with the trial court on either of these points. We find nothing in the declaration, or in the application for membership and insurance signed by appellant, that is shown to be false when signed by appellants. As a matter of fact the declaration recites that the premises were inspected by appellee's agent, Lloyd L. Brown, who personally inspected the risk, and considering utility value, recommended that appellee accept same. The property insured was a "one-story one-family tenant dwelling." Appellant testified that this property had been sold the previous year on a contract which was forfeited, and that agent Brown advised him, upon inquiry, that such contract would not affect the insurance so long as a deed had not been delivered. This is not denied by appellee. Certainly the insurable risk should be no greater on premises occupied by a prospective purchaser who had paid $200.00 toward the purchase price than it would be when occupied by a tenant. We find no merit to appellee's contention that appellants violated any of the provisions of the policy by willfully concealing or misrepresenting any material facts concerning the insurance subsequently procured by Mr. Taylor and of which the appellants knew nothing, until several days after the house burned down. The policy contains a clause providing that "other insurance may be prohibited or the amount of the insurance may be limited by endorsement attached hereto," but we find no such endorsement to the policy. The policy also contained a provision as follows: This provision in the policy avails appellee nothing in the way of defense in this case, as the insured property was a total loss. We have in Arkansas a "valued policy law" with little change since 1889. Ark. Stat.Ann. § 66-3901 (Repl. 1966) provides as follows: The Arkansas case of Mann v. Charter Oak Fire Ins. Co, D.C., 196 F. Supp. 604, was a very similar case to the one involved here. In the Mann case, Mr. Mann had a policy in force with Trinity Universal Insurance Co. for $15,000.00 with a mortgage clause to First Federal Savings and Loan. He owed First Federal $8,000.00. The Trinity policy prohibited other insurance. First Federal requested physical possession of the Trinity policy from Mann, but never did receive delivery of it, so First Federal *79 procured an additional policy from Charter Oak in the amount of $8,000.00. The house was destroyed by fire, Mann collected on the Trinity policy, paid off the First Federal mortgage and sued on the Charter Oak policy. In holding that Mann was entitled to recover, the court said: In 29 Am.Jur., Insurance § 1196, we find the following: In Couch on Insurance 2d Vol. 16, § 62:28 is found the following statement: And again in Couch §§ 62:94-95 appears the following: See United States Fire Ins. Co. v. Hodges, 275 Ala. 243, 154 So. 2d 3; American Century Ins. Co. v. Harrison, (Tex. Civ.App.) 205 S.W.2d 417. Couch at § 62:100 states: In the Wisconsin case of Ciokewicz v. Lynn Mut. Fire Ins. Co., 212 Wis. 44, 248 N.W. 778, Wisconsin had a standard value policy statute and also had statutory provisions *80 whereby an insurance company could provide by policy provisions for non liability for loss or damage occurring while the insured has another contract of insurance, etc. The owner of a barn obtained a fire insurance policy on the barn in the amount of $1,400.00 from Lynn Mutual. He later applied to Lynn Mutual for additional insurance and the application was denied. He then purchased a policy from American Insurance Company in the amount of $1,900.00 and attempted to cancel his policy with Lynn Mutual. The barn was totally destroyed by fire before the cancellation was fully accomplished and American paid the face amount of its policy. The owner sued Lynn Mutual on its policy and the facts of that case, the contentions of the parties, and decision of the court on the pertinent point involved, may be concisely quoted from the body of that opinion as follows: In the case before us there is no evidence at all of fraud in the procurement of either of the policies. Each insured had a separate insurable interest. Subrogation rights as between the two insurance carriers are not involved. Had the contract purchaser not procured his own policy, certainly appellee would have been liable on its policy and payment to appellant on that policy would not have affected the purchaser's liability under the sales contract in the least. Whether the purchaser paid his indebtedness to appellant out of funds paid to him by his own insurer or out of some other funds is no concern to appellee. The liability of Glens Falls to its own insured is not before us, but its liability could in no wise affect appellee's liability to its insured. Although appellee's policy provided "other insurance may be prohibited or the amount of insurance may be limited by endorsement attached hereto," no such endorsement was attached. Although the policy provides *81 "this company shall not be liable for a greater proportion of any loss than the amount hereby insured shall bear to the whole insurance covering the property against the peril involved, whether collectible or not," we interpret "the whole insurance covering the property" to mean the whole insurance procured by the insured on his own insurable interest and not including insurance on the insurable interest of some third party who has contracted to purchase the insured premises. Even if we should interpret this provision otherwise, it would be ineffective as in conflict with the Valued Policy Statute in this case. (Mann v. Charter Oak, Fire Ins. Co., supra.) The appellant did not breach his insurance contract by not advising appellee of matters he had no knowledge of until some thirty days after the fire. The actual value of the insurable interest of the purchaser was not necessarily confined to the amount he agreed to pay for the premises or the cost of rebuilding the house. The value of the interest he did insure was fixed at the full face amount of his policy under the statute, and what he did with the proceeds was of no concern to appellee. The insurable interest of the appellants is not questioned, and we fail to see where unjust enrichment is involved in this case. If the appellants were unduly enriched at all in this case, it was because the purchaser honored his purchase agreement and paid for the property even though the house had been destroyed by fire. As between the appellants and appellee, there was no unjust enrichment involved. Appellants paid the premium for one year on insurance in the amount of $2,000.00. The house was totally destroyed by fire within the year, so appellants should be paid the face amount of the policy in the amount of $2,000.00. The record does not show how many annual insurance premiums appellants had previously paid to appellee on this and his other property, but if he had continued to pay premiums on a $2,000.00 policy for any number of years and no fire had occurred, appellants would be entitled to no payment under the terms of their policy, neither would the appellee be unjustly enriched by the premiums paid. We conclude that the judgment of the trial court should be reversed and this cause remanded to the trial court for entry of a judgment not inconsistent with this opinion. The trial court will fix and award the penalty and attorney fee. Reversed and remanded.