Court Opinion

ID: 9445837
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:38:52.676602+00
Date Added: 2024-06-11T17:30:25.262417
License: Public Domain

*246JONES, Circuit Judge
(dissenting).
The insurance policy was for a five-year term commencing October 3, 1949. The insured was Jay. The coverage was $4,000. The policy contained an endorsement providing that any loss due the insured would be payable to Feibelman who held a mortgage on the property. On March 22, 1952, Jay conveyed to Wood who assumed payment of the mortgage debt. By endorsement Wood became the insured under the policy. By deed dated September 22, 1953, Wood conveyed the premises to Curb who assumed and agreed to pay the mortgage debt. Wood remained the insured named in the policy. Curb did not become an insured. On the same day, September 22, 1953, a fire occurred resulting in a loss exceeding the amount of the policy. On March 11, 1955, Curb gave a deed of the premises to John C. Barnes, Jr., and Margaret Cole Barnes, his mother. They assumed the indebtedness of the Feibelman mortgage. John C. Barnes, Jr., his wife Martha Barnes, the plaintiff-appellse, and Margaret Cole Barnes gave Curb a purchase money mortgage for $6,500. This mortgage recited that all three of the mortgagors were indebted to and had given their promissory notes to Curb. On the same day, March 11, 1955, Martha gave to Curb an instrument in which it was recited that she was in the process of purchasing the Feibelman mortgage and by which it was provided that she subordinated the Feibelman mortgage to the mortgage given by the Barneses to Curb and releasing Curb from liability on the Feibelman mortgage. Feibelman died. His executors, by an instrument dated February 24, 1953, reciting the direction of a decree of the Circuit Court of Marengo County, Alabama, transferred the mortgage of Jay to Feibelman, with other mortgages, to Feibelman’s testamentary trustees. On April 18, 1955, the trustees of Feibelman executed a transfer of the Feibelman mortgage to Martha Barnes. It was stated that a principal balance of $4,420 was unpaid. On May 10, 1955, the trustees of Feibelman released, quit-claimed, transferred, assigned and conveyed to Martha Barnes all of their right, title, interest and claim in and to the insurance policy. If they had what they purported to assign the record does not show it.
After Wood parted with title to the insured premises he had, the majority hold, an insurable interest by reason of his liability on the mortgage debt. But as between Wood, the insured, and Curb, his grantee, the liability of the latter was primary, and that of Curb was secondary and contingent. When Martha Barnes subordinated the Feibelman mortgage to the mortgage which she, with her husband and his mother, gave to Curb, and released Curb from the obligation which he had undertaken when he purchased from Wood, Wood was also released and upon becoming released his insurable interest was gone. Martha Barnes as assignee of the Feibelman interest in the policy could have no greater rights than Wood and the Wood interest was extinguished along with the liability upon which the interest was dependent.
The majority would not hold that Wood could have collected the insurance without applying it to the mortgage debt. But they would and do hold that the proceeds become payable after the mortgage-debt has, as to Wood, become extinguished.
Insurance is an agreement to indemnify against loss. Feibelman sustained no loss, Wood sustained no loss and yet Martha Barnes recovers. Regretfully and deferentially I dissent.
Rehearing denied: JONES, Circuit Judge, dissenting.