Court Opinion

ID: 9665356
Source: CourtListenerOpinion
Date Created: 2023-08-24 00:45:52.85214+00
Date Added: 2024-06-11T18:15:15.033502
License: Public Domain

John I. Purtle, Justice, dissenting. I would reverse this case. The Dalrymples were named beneficiaries in the policy written by Royal-Globe. It was the insurance company that instituted this action against the Dalrymples but it did so in the name of its named insured, Gary Ross. This was a subterfuge whereby the insurance company sought to recover from the additional insureds (the Dalrymples) under the Ross policy, which had been taken out (at least in part) at the request of Dalrymple. In Arkansas a mortgagee or lienholder acquires a vested right under the standard loss payee clause of an insurance policy procured by the mortgagor. Insurance Underwriters’ Agency v. Pride, 173 Ark. 1016, 294 S.W. 19 (1927). The mortgagee’s interest cannot be destroyed by a settlement between the carrier and the mortgagor. Insurance Underwriters’ Agency v. Pride. To allow the appellee insurance company to recover by subrogation against its own insured is but to encourage all insurers to look for negligence on the part of their insureds and, if found, refuse to pay a claim otherwise covered by the contract. We have previously held that a loss payee clause in favor of a mortgagee creates an insurer-insured status. Even the appellee in this case admits that an insurer cannot claim subrogation against its own insured (p. 23, appellee’s brief). Appellee then proceeds to create an exception to the rule when the mortgagee is also the builder. Neither the appellee nor the majority opinion cite any case where the Supreme Court of Arkansas has allowed an insurer to collect damages from its additional insured, the mortgagee. In my opinion public policy alone would prevent the insurer from recovering its loss from an insured after it had paid the insured (as Royal-Globe did with Dalrymple). Payment was made to Ross and Dalrymple in accordance with the terms of the policy. Needless to say an insurance company is not going to pay a property loss to an uninsured. So far as I am concerned the case of Federal Insurance Co. v. Tamiami Trail Tours, Inc., 117 F.2d 794 (5th Cir. 1941), clearly states the correct answer in cases where an insurer tried to collect from its insured. We have many times held that a loss payee mortgagee has the right to sue and collect on the policy of insurance issued to the mortgagor. Insurance Underwriters’ Agency v. Pride, supra; Boon v. Arkansas Farmers Mutual Fire Insurance Co., 224 Ark. 618, 275 S.W.2d 436 (1955). I agree with the majority opinion holding that the appellant was not covered for liability insurance under Ross’ policy. However, I do believe the insurer should be liable to Dalrymple for the expenses incurred by him as a result of the filing of the subrogation claim. I feel the majority opinion is a grievous error which will prove to be a great hardship on people who have insurance to protect their property. Adkisson, C.J., joins in this dissent.