Case Name: Robert L. JOHNSON, Respondent, v. FIDELITY & GUARANTY COMPANY, Appellant
Court: Supreme Court of South Carolina
Jurisdiction: South Carolina
Decision Date: 1965-01-12
Citations: 245 S.C. 205
Docket Number: 18291
Parties: Robert L. JOHNSON, Respondent, v. FIDELITY & GUARANTY COMPANY, Appellant
Judges: Taylor, C. J., and Lewis, J., concur.
Reporter: South Carolina Reports
Volume: 245
Pages: 205–215

Head Matter:
18291
Robert L. JOHNSON, Respondent, v. FIDELITY & GUARANTY COMPANY, Appellant
(140 S. E. (2d) 153)
Messrs. Joseph L. Nettles, of Columbia, and Norton & Norton, of Marion, for Appellant,
Messrs. Gasque <& Seals, of Marion, for Respondent,
January 12, 1965.

Opinion:
Moss, Justice.
This is an action by Robert L. Johnson, the respondent herein, against the Fidelity & Guaranty Insurance Company, the appellant herein, on a fire insurance policy.
The cause came on for trial before the Honorable G. Badger Baker, Presiding Judge of the Twelfth Circuit, and a jury, at the 1963 May term of the Court of Common Pleas for Marion County. At the conclusion of the evidence, the trial Judge ruled that the issues presented were solely legal ones for the decision of the Court. Thereupon, the jury was excused and the matter was taken under advisement. Thereafter, by order dated October 16, 1963, the trial Judge found for the respondent. .The case is before this Court upon timely exceptions to the order of the trial Judge.
It appears from the record that in September, 1960, the respondent entered into an agreement with Shell,. Homes, Inc. for the purchase and erection of a "hulled" in or shell type home. This type of home has furnished exterior walls, roof and underpinnings, but the interior, plumbing, flooring and other essentials have to be furnished and installed by the owner. This shell type home was delivered and constructed by Shell Homes, Inc. upon the premises of the respondent for a contract price of $3,270.00. The respondent did not make a down payment but executed a note and mortgage to Shell Homes, Inc. which provided for the retirement of the contract price by the payment of seventy-two monthly installments of $82.75 each.
It appears from the record that on October 3, 1960, a policy of fire insurance, covering the house in question, was procured by Shell Homes, Inc., mortgagee, from the Atlantic Casualty & Fire Insurance Company, naming the respondent as the insured with the loss payable clause to the said mortgagee. Presumably the premium for this said policy was added to the mortgage indebtedness of the respondent to Shell Homes, Inc. The value, fixed in this policy was $3,500-.00 covering the home in its "hulled" in or shell condition. This value was agreed upon by the mortgagee and the insurer. The respondent, at the time of the execution of the note and mortgage heretofore referred to,, had no equity in the dwelling because he had not invested any money therein.
After Shell Homes, Inc. had erected the "hulled" in dwelling upon the premises of the respondent, he completed the dwelling at a cost of $4,000.00. The respondent testified that he spent $3,500.00 of his own money and borrowed $500.00 from Anderson Brothers Bank. On October 4, 1961, the appellant, at the request of the respondent, issued its contract of fire insurance to the respondent with the loss payable clause to Anderson Brothers Bank. This policy of fire insurance provided coverage in the amount of $4,000.00 on the said dwelling, and $1,000.00' insurance upon the contents thereof.
It is admitted that on December 26, 1961, that the aforesaid dwelling and its contents were destroyed by fire. At the time that the ho,use was destroyed by fire, the two aforesaid policies were in force and effect. Respondent's claim for the loss of the dwelling was denied by the appellant and this action was brought. The answer of the appellant denied liability and asserted that by its contract of insurance the total amount of insurance on the dwelling should not exceed $4,000.00 and that in violation thereof there was at the time of the fire a total of $7,500.00 insurance on said dwelling. It further asserted as a defense that in no event would it be liable for more than the proportionate amount of its coverage, which said coverage bore to the tqtal amount of insurance existing upon said dwelling at the time of said loss by fire.
The trial Judge held that the contract of insurance issued on October 3, 1960, by the Atlantic Casualty & Fire Insurance Company, although in the name of the respondent, was for the protection of the interest o,f Shell Homes, Inc., the mortgagee.
The trial Judge also held that the contract of insurance issued on October 4, 1961, by the appellant, was for the protection of the respondent's interest, which is separate and distinct from the interest of the mortgagee. He further held that there was a reasonable inference from the evidence that although the respondent knew the mortgagee had procured insurance, he did not know or realize that he was the named insured until after the fire on December 26, 1961.
The appellant poses two questions for determination by this Court and asserts that the two aforesaid fire insurance policies were concurrent insofar as such concerns the interest of the respondent in the insured dwelling.
This Court has held that a mortgagor and mortgagee have separate and distinct interests in the same property which they may insure. Laurens Federal Savings & Loan Association v. Home Insurance Company, 242 S. C. 226, 130 S. E. (2d) 558; Brant v. Dixie Fire Ins. Co., 179 S. C. 55, 183 S. E. 587; Murdaugh v. Traders & Mechanics Ins. Co., 218 S. C. 299, 62 S. E. (2d) 723. In the last case it was stated that the owner's interest in insured property and the mortgagee's interest therein are separate and distinct for insurance purposes.
The trial Judge has found, and there is evidence to support such, that the respective policies were intended to insure the separate interests of the owner and the mortgagee. Since this is a law case, we are bound by this finding of fact. Bruce v. Blalock, 241 S. C. 155, 127 S. E. (2d) 439.
The evidence in this case is conclusive that after this shell home was erected that the respondent completed the structure at a cost to him of $4,000.00. This was the exact amount of fire insurance that he purchased from the appellant for the protection of his interest in said dwelling. On the date that Shell Homes, Inc. purchased the Atlantic policy for the protection of its interest as mortgagee, there was due it the purchase price of $3,270.00 with interest to accumulate, and other charges. The trial Judge found that the value fixed in the Atlantic policy of $3,500.00 represents the approximate value of the mortgagee's interest and was a value agreed upon by the mortgagee and the insurance company. We think it is conclusive that the appellant's policy insured the owner's interest and the Atlantic policy insured the mortgagee's interest.
The appellant argues that each of the aforesaid policies named the respondent as the insured therein and asserts that both contracts of insurance were between him and the respective insurers and insuring the dwelling against loss or damage by fire. The fact that the policy procured by the mortgagee was in the respondent's name is of no consequence because it covered only the mortgagee's interest. In Mulkey v. United States Fidelity & Guaranty Co., 243 S. C. 121, 132 S. E. (2d) 278, we said: "Also, of no consequence is the fact that the policy procured by the mortgagee was in plaintiff's name as the policy covered only the mortgagee's interest."
A provision in a fire insurance policy limiting the amount of additional insurance to be carried is valid and the policy is avoided if the insured takes out additional insurance in excess of such amount. However, to constitute a breach of condition against additional insurance it must appear that the same property and the same interest are therein covered, and persons having distinct insurable interests in property may each have it insured witho.ut breaching such a clause. Mulkey v. United States Fidelity & Guaranty Co., 243 S. C. 121, 132 S. E. (2d) 278. Here, there was no breach of said clause because the owner and mortgagee had separate and distinct insurable interests which each could protect by insurance.
As a further defense, the appellant contends that the two insurance policies constitute contributive or concurrent insurance, that the loss should be borne by both insurers and prorated between them on the basis of the amount of insurance written by each. Section 37-154 of the Code. The cited Code section provides that two or more policies, "written upon the same property", shall be deemed and held contributive insurance, and if the aggregate sum thereof exceeds the agreed insurable value, each company in the event of loss "shall be liable for its prorata share of insurance." In Murdaugh v. Traders & Mechanics Ins. Co., 218 S. C. 299, 62 S. E. (2d) 723, we said: "But it will be observed that the policies must be 'written upon the same property'; and evidently the word 'property' connotes the same interest."
In Laurens Federal Savings & Loan case we quoted with approval from Lucas v. Garrett, 209 S. C. 521, 41 S. E. (2d) 212, 214, 169 A. L. R. 660, the following:
" ' "Without undertaking to give an all inclusive definition of concurrent insurance, all the authorities agree that as a prerequisite to enforcing contribution between insurers, it is essential that both policies insure the same interest against the same casualty. 46 C. J. S., Insurance, p. 150, § 1207; 29 Am. Jur., Section 1334, page 998."
" 'The rule as stated in 29 Am. Jur., page 998, Section 1334, is also, we believe, directly applicable here: Contribution between insurers cannot be enforced unless their policies coyer the same interest. Accordingly, if an owner and a mortgagee of the same property have procured insurance on their separate interests therein, and the owner seeks to recover on his policy, the defendant insurer is not entitled to contribution against the insurer of the mortgagee's interest.' "
Since, as a prerequisite to enforcing co.ntribution between insurers, it is essential that both parties insure the same interest against the same casualty and, having found that the owner and the mortgagee procured insurance on their separate interests, the appellant was not entitled to contribution against the insurer of the mortgagee's interest.
The trial Judge held that if the respondent here receives any difference between the amount of his mortgage indebtedness to Shell Homes, Inc. and the face amount of the policy held by said mortgagee, such amount should be prorated and taken into account in ascertaining the amount of the appellant's liability to the respondent. The appellant argues that such a holding was inconsistent with his previous holding to the effect that the Atlantic policy insured the interest of the mortgagee alone. This holding was favorable to the appellant and unfavorable to the respondent, and neither of them has filed any exception thereto. Assuming that the aforesaid holding is incorrect, such has become the law of the case because there is no appeal therefrom.
The judgment of the lower Court is affirmed.
Taylor, C. J., and Lewis, J., concur.
Bussey, J., concurs in result.