Court Opinion

ID: 9681419
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:49:56.89274+00
Date Added: 2024-06-11T18:17:33.859175
License: Public Domain

GRIFFIN, JUSTICE,
dissenting.
I do not agree that all of the loss from the destruction of the improvements by fire should fall on Aetna. I believe the law (requires that the loss be prorated between Aetna and Paramount as decreed by the Court of Civil Appeals.
The majority opinion recognizes that Paramount’s insured had an insurable interest in the property at the time of the issuance of that policy. The majority reasons that the liability of Paramount to the insured is to be determined by events happening after the loss by fire has occurred. The majority say “we note that in the vendors’ own policy there is a provision that Paramount’s liability should not exceed ‘the interest of the insured’. After the contract of sale, the interest of Paramount’s insured became the amount of the unpaid purchase price and, as to that interest, they suffered no loss.” This statement is based *258upon the theory that the vendors’ debt was paid by the purchaser after the fire.
Such a holding is in direct violation of and contrary to the language of the policy. The policy provides: “Loss on building items shall be payable to ASSURED address__________________________ as Mortgagee or Trustee, as their interest may appear at time of loss, subject to Mortgage Clause (without contribution) printed elsewhere in this policy.” (Emphasis mine.) Clearly the loss of the building and the time of the fire are contemporary and simultaneous. The mortgage clause referred to above has no application to our cause. Further, the policy also contained a provision that the liability of the company “shall not exceed the actual cash value of the property at the time of Zoss”. (Emphasis mine.) Thus again this clearly fixes the date of the fire as the date on which liability is to be determined.
Let us apply the majority reasoning that Paramount only insured the vendor for the unpaid balance of his purchase price to the fact situation in this cause. Take the date fixed by the policy for determining this interest — which is the “time of loss” —we find that on the date of the loss, which is the date of the fire, the purchaser owed the vendor $12,675.00, plus the contract interest. This figure is computed by subtracting from the total contract price of $15,250.00 the sum of $1,200.00 paid at the time the contract was signed, less eleven monthly payments of $125.00 each totalling $1,375.00. By the terms of the policy contract between the vendor and Paramount, Paramount’s liability became fixed to vendor for this sum of $12,675.00. Purchasers hold an assignment from vendor of all his rights against Paramount. Paramount has never paid this liability. Therefore, I maintain that Paramount is still liable on its policy to the assignees of vendor, and its liability is to be prorated in accordance with the terms of the policy.
No public policy is violated; no statute is offended by the parties to the insurance contract making the contract which they did make. Suppose the vendor and purchaser had entered into a contract providing for $5,000.00 cash payment, the balance to be paid in monthly instalments of $125.00 each due on the 10th day of each successive succeeding month. This would require 82 months, or approximately seven years, to pay the deferred payments. Vendor could not be forced to take his balance in one lump sum. He could insist on the monthly payments as set out in the contract in order to earn the interest. Under the majority holding Paramount’s liability would not be known until the last *259payment had been made. This example illustrates very clearly the fallacy of the reasoning of the majority opinion.
The interests of the vendors and the purchasers were separate and distinct interests. Appleman, Insurance Law and Practice, Vol. 5, Sec. 3057 at p. 180, et seq. The assignee of a claim under the policy after a loss stands in the same position as the assignor, Id., Sec. 3462 at p. 643; Id., Vol. 4, Sec. 2181 at p. 53. The vendor, under the contract of sale herein, had an insurable interest in the property destroyed. 24B Texas Jur. 234, Sec. 95. Vendor retained the legal title to the property until the purchase price was paid. 43A Texas Jur. 290, Sec. 253, and authorities there cited.
There is an exhaustive annotation entitled “Rights of vendor and purchaser, as between themselves, in insurance proceeds” in 64 A.L.R. 2d., pp. 1402-1420. Section 4 therein states the general rule to be that “where the purchaser as equitable owner will bear the loss occasioned by a destruction of the property pending completion of the sale, and the contract of sale is silent as to insurance (as our contract here is), * * * the proceeds of the vendor’s insurance policies, even though the purchaser did not contribute to their maintenance, constitute a trust fund for the benefit of the purchaser to be credited on the purchase price of the destroyed property, the theory being that the vendor -is a trustee of the property for the purchaser.” Supporting this rule cases are cited from Alabama, California, Georgia, Iowa, Kentucky, Maryland, Missouri, Nebraska, New Jersey, New York, North Dakota, Ohio, Pennsylvania, South Dakota, Washington and Canada. For this result to be reached, the vendor’s policy must be valid as of the date of the fire. We have been cited to no Texas cases in point, nor have we found any in our research.
I would affirm the judgment of the Court of Civil Appeals.
ASSOCIATE JUSTICES WALKER and NORVELL join in this dissent.
Opinion delivered January 31, 1962.