Court Opinion

ID: 9619252
Source: CourtListenerOpinion
Date Created: 2023-08-22 05:24:53.518377+00
Date Added: 2024-06-11T08:28:29.537311
License: Public Domain

Brailsford, Justice
(dissenting).
Affirmance of the judgment below rests, as it must, upon the view that the Atlantic Casualty fire insurance policy, procured by Shell Homes, Inc., the mortgagee, on a shell type dwelling constructed by it for Robert L. Johnson, the mortgagor, in which policy Johnson was named insured and for which he paid the premiums by inclusion in the mortgage, covered exclusively the interest of the mortgagee corporation. Otherwise, this insurance policy and the policy on which Johnson has been awarded judgment in this action, which was issued to Johnson on the identical property by Fidelity and Guaranty, the appellant, constitute concurrent insurance, and one or the other of the defenses based upon the existence of the former policy should be sustained. The conclusion that the Atlantic policy insured the mortgagee’s interest exclusively is contrary to the terms of the writing, which clearly evidences a conventional contract of insurance, procured in an entirely conventional manner, promising indemnity to Johnson against loss by fire to the covered property. The mortgagee corporation is identified only in the standard mortgagee clause, by which it became a beneficiary of the contract but not a party to it. Walker v. Queen Insurance Company, 136 S. C. 144, 134 S. E. 263, 52 A. L. R. 259. I find nothing *213in the record to justify holding that the Atlantic policy is not a contract to indemnify Johnson in case of loss by fire. Therefore, I respectfully dissent.
The trial court’s determination that the Atlantic policy insured the mortgagee’s interest exclusively cannot soundly be viewed as a finding of fact in a law case, as has been put forward. There, simply, is no evidence in the record bearing upon the intention of the parties in contracting for this insurance except the terms of the unambiguous policy. Hence, the usual rule that the construction of such an instrument is a matter of law for the cqurt applies. Furthermore, the parties have stipulated that the judgment below turned on issues of law rather than of fact; quoting from the statement of the case: “At the conclusion of the evidence, Judge Baker ruled that the issues presented were solely legal ones for the decision of the Court.”
If any other reasqn has been urged as justifying our refusal to construe the Atlantic policy, as to parties and subject matter, according to its terms, I have failed to grasp it. Certainly the universally accepted principle that a mortgagor and mortgagee have distinct insurable interests in the lien property which they may insure separately does not require or allow the assumption that this fire policy procured by the mortgagee, in the mortgagor’s name and at his expense, insures the mortgagee’s interest exclusively.
Upon the occurrence of a covered loss, the rights of the parties under a fire policy insuring mortgaged property as that qf the owner, with loss payable to a mortgagee as his interest may appear, are markedly different from those which attach when the insurance is exclusively on the mortgagee’s interest. In the former case, the owner is the insured and is entitled to indemnity for his loss, either by payment to him of the proceeds of insurance or by credit on the secured debt of such amount as may be paid to his creditor under the mortgagee clause. In the latter, the owner has no interest in the insurance proceeds and is not entitled to indemnity, regardless of whether the amount of insurance *214exceeds the balance due on the mortgage at the time of loss, or whether the debt has then been paid in full. No.r is the owner entitled to credit on the mortgage debt for the amount paid to the mortgagee under such a policy. Indeed, the mortgagee and insurance company may contract that upon paying a covered loss, the insurance company will be subrogated to the mortgagee’s rights against the mortgagor. See 36 Am. Jur., Mortgages, Section 332; 29A Am. Jur., Insurance, Section 1730 ; annotation, 11 A. L. R. 1295, 1299; 59 C. J. S. Mortgages § 328d(2) p.»453; 46 C. J. S., Insurance, § 1213.
The Atlantic policy was issued on October 3, 1960, and the premiums were paid at Johnson’s expense fo.r a year and a day before the Fidelity policy was issued. Yet, under the construction adopted, which, in all candor, must have been applicable from October 3, 1960, the effective date of the Atlantic policy, rather than from October 4, 1961, when the Fidelity policy was issued Johnson had no insurance protection during this year. This is a palpably erroneous view of the rights of the named insured under the Atlantic policy which, I confidently suggest, this court would not have countenanced for a moment had the loss occurred prior to October 4, 1961.
In my judgment, the decisions of this court which are relied upon to sustain the judgment appealed from are clearly distinguishable. Murdaugh v. Traders & Mechanics Ins. Co., 218 S. C. 299, 62 S. E. (2d) 723; Laurens Federal Savings and Loan Association v. Home Ins. Co., 242 S. C. 226, 130 5. E. (2d) 558; and Thomas v. Penn Mutual Fire Insurance Company, S. C., 137 S. E. (2d) 856; each, involved two policies of fire insurance, one procured by the mortgagee and the other by the mortgagor, or by parties in similar relationship to each other, and in each case the defenses of the insurance company based upon the existence of concurrent insurance policies were overruled. The decisions in Murdaugh and in Thomas, that the policies involved insured the separate and distinct interests of the mortgagor and mortgagee, were *215based on evidence that such was the intention of the parties. (No question of competency was raised.) In Murdaugh, the testimony indicated that “(t)he binder was requested solely for the purpose of the protection of the Association.” In Thomas, the testimony was not included in the record on appeal and affirmance was based upon the assumption “that sufficient evidence was presented to support the concurrent finding that Thomas and the Chamberses intended to procure insurance on their separate interests.” In Laurens, the same result followed a stipulation of the parties that one policy covered the interest of the mortgagee and the other that of the mortgagor, it thus appearing that one “policy was purchased to protect the interest of the Association and the other policy was purchased to protect the interest of Adams.”
In this case, unlike those referred to above, the written instrument stands alone as evidence of the intention of the parties and should be construed according to the clear import of the language employed.