Title: National SEC. Fire & Cas. Co. v. MID-STATE
Citation: 370 So. 2d 1351
Docket Number: 51056
State: Mississippi
Issuer: Mississippi Supreme Court
Date: May 16, 1979

370 So. 2d 1351 (1979) NATIONAL SECURITY FIRE &amp; CASUALTY COMPANY v. MID-STATE HOMES, INC. No. 51056. Supreme Court of Mississippi. May 16, 1979. *1352 Watkins &amp; Eager, Thomas M. Murphree, Jr., Jackson, for appellant. Guy, Dowdy &amp; Whittington, Ronald L. Whittington, McComb, for appellee. Before ROBERTSON, SUGG and COFER, JJ. SUGG, Justice, for the Court: On May 15, 1973, National Security Fire &amp; Casualty Company issued a fire insurance policy in the amount of $7,000 to Autrey Hardin which included a mortgagee clause in favor of Mid-State Homes, Inc. The policy was delivered to Mid-State and retained by it in its files. The first annual premium of $107.50 was paid but the renewal premium due May 16, 1974 was not paid. In December, 1974 the insured dwelling burned and Mid-State demanded payment of $4,030.75 from National Security, the amount of its mortgage. Payment was denied, and following a jury trial, Mid-State obtained judgment against National Security for $4,030.75 plus attorneys' fees in the amount of $1,007.68.[1] National Security contends that the policy lapsed by its own terms because the premium due on May 16, 1974 was not paid. The resolution of this contention requires consideration of section 83-13-9 Mississippi Code Annotated (1972) which follows: We held in Bacot v. Phoenix Insurance Co., 96 Miss. 223, 50 So. 729 (1909) that the statute is automatically written into every fire insurance policy on buildings taken out by a mortgagor or grantor in a deed of trust. We also held in Bacot that the statute has the effect of making an independent contract in favor of the mortgagee which is not impaired by any act or neglect of the mortgagor or owner of the property. In Barry &amp; Brewer v. Wright, 168 Miss. 216, 150 So. 186 (1933) the statute was construed and, in a special concurring opinion, Justice Ethridge stated: We approve and adopt the construction of the statute quoted above and reaffirm the principle that the statute announces a public policy applicable to every fire insurance policy issued on buildings taken out by a mortgagor or grantor in a deed of trust. We held, in Hennessey v. Helgason, 168 Miss. 834, 151 So. 724 (1934), that the statute makes both the mortgagor and the mortgagee liable to the insurance company for payment of premiums, with the obligation of the mortgagor being primary, and that of the mortgagee being in the nature of a surety or guarantor. The statute also authorizes an insurance company to cancel a policy and the mortgage clause agreement at any time as provided by the terms of the policy, but provides that the policy shall continue in force for the benefit of the mortgagee or trustee for ten days after notice to the mortgagee or trustee of such cancellation. The fire insurance policy involved in this case is a continuous policy subject to the payment of the premium specified and contains the following provision: Under the terms of the quoted provision the policy is automatically cancelled for nonpayment of each annual premium; however, the provision conflicts with the ten day notice requirement of the statute and is ineffective to a mortgagee, but is effective to a mortgagor or owner of the property. National Security contends it sent a notice to Mid-State and the mortgagor about two weeks before May 16, 1974 that the renewal premium would be due May 16, 1974, and this notice satisfied the requirement of the statute. Assuming the notice was sent by National Security, the notice did not constitute notice to the mortgagee, Mid-State, that the policy was cancelled for nonpayment of the premium due. Mid-State was entitled, under the statute, to ten days notice of cancellation for nonpayment of premium. As a compensation for this benefit to the mortgagee, the statute has imposed on the mortgagee the duty of paying the premium if the mortgagor fails to pay the premium on a demand for such payment by the insurance company. After the premium was not paid by the mortgagor on May 16, 1974, National Security should have demanded payment of the premium by the mortgagee, Mid-State, or if it desired to cancel the policy for nonpayment of the premium, ten days notice of such intent should have been given to Mid-State *1355 who could have paid the premium within the ten day period. AFFIRMED. PATTERSON, C.J., and SMITH and ROBERTSON, P. JJ., and WALKER, BROOM, LEE, BOWLING and COFER, JJ., concur. [1] National Security is not licensed to do business in Mississippi; therefore, attorneys' fees were properly awarded under the provisions of section 83-21-51 Mississippi Code Annotated (1972).