Court Opinion

ID: 5585114
Source: CourtListenerOpinion
Date Created: 2022-01-11 01:51:12.576423+00
Date Added: 2024-06-11T08:36:12.929845
License: Public Domain

Gilbert, J.,
dissenting. The statement of facts certified by the Court of Appeals in connection with the question shows, first, that P. owned improved real estate; second, that P. insured the same; third, that he borrowed money on the property insured, and *693executed a note and a security deed to the lender; fourth, that a loss-payable clause was attached to the policy, providing that loss or damage, if any, under the policy, should be payable to the lender as his interests might appear; fifth, that the interest of the lender in the insurance should not be invalidated by any act or neglect of the mortgagor or of the owner of the property; sixth, that whenever the insurance company should pay the lender any loss or damage under the policy and claim that no liability existed as to the borrower or the owner, the insurance company, to the extent of the payment, should thereupon be legally subrogated to all the rights of the lender under the 'note and security deed; seventh, that no subrogation should impair the right of the lender to recover the full amount of the debt due; eighth, that if the insurance company should claim that the fire loss was caused by the act or neglect of any corporation private or municipal, the company, upon payment of the loss, should he subrogated, to the extent of the payment, to all right of recovery by the insured for the loss, such right to be assigned to the company by the insured; ninth, that after the issuance of the policy and the execution of the note and loan deed P., the owner of the property, by deed, sold and conveyed io H. S. all of his interest in the property, subject to the rights of the lender under the security deed; tenth, that thereafter H. S., who purchased from P., contracted to sell the property to K., and executed a bond for title under which K.' went into possession of the property; eleventh, that the insurance company duly accepted notice of all the preceding facts, and made timely and respective entries on the policy accordingly, “that the interest of P. was transferred to 'JEL S., and that the interest o£ H. S. therein was subsequently transferred to K; twelfth, that subsequently to all of the above, and while the policy was still in force, the house so insured was wilfully and criminally set on fire and destroyed by K., without the knowledge of P.; thirteenth, that the insurance company, claiming that because of the burning of the house by K., as stated above, there was no liability existing under the policy in question “to the mortgagor or owners of the property,” without the knowledge of P. paid the lender the amount due on the note of P., and took a transfer of the note and the security deed, including a conveyance of the title of the lender in the property described in the security deed; fourteenth, that *694the insurer refused to pay the amount due on the note held by the lender, without a transfer and assignment and surrender of the policy to the insurance company. The effect of the questions (a), (b), and (c) is to inquire whether the payment by the insurance company to the lender of the amount due operated for the benefit of P., the original owner of the property, who obtained the loan, executed the note and deed, and who also obtained the policy of insurance.
In order for the payment by the insurance company to the lender of any amount under the policy to operate for the benefit of P., P. must have had some interest in the policy of insurance. What interest did he have? As originally issued, P. was named as the insured and had an interest in the policy. When the loss-payable clause was attached, providing for the.payment to the lender as his interests might appear, the rights of the lender under the policy, to the extent of the amount due, became superior to the rights of P., the insured, and the only interest left to P. under the policy was a right to recover to the extent of his interest in the property whatever amount of fire loss occurred within the limits of the policy and in excess of the amount due to the lender. Subsequently, however, P., the original owner and insured, sold and conveyed his entire interest in the property to H. S., and so notified the insurance company. When that was done P. parted with the only interest he had in the property, and no longer held any insurable interest; and had a fire occurred at that time the insurance company would have been liable, if at all, first, to the lender and holder of the security deed; second, to H. S., the grantee who acquired all the interest of P. It should be noted at this point, as a matter of prime importance, that P. parted with all interest in the property, and that under no view of the case was he then an interested party to the insurance contract which he had originally secured. The insurance company owed to him no obligation, and therefore there could be no liability on the policy to P. The fire, however, did not occur at that time; but subsequently H. S. contracted to sell and executed a bond for title to one K., who went in possession of the property under the contract of purchase. The insurance company was duly notified, and accepted notice. Thereupon K. became the insured, and all obligations under the policy and all insurable interest so far as the *695question discloses, other than that which the lender continued to possess, was in K. K. burned the property and forfeited all right to recover on the policy. Save the lender, no one else had any right under the policy. A denial by the insurance company of liability to K. was a denial of liability to the only person, save' the lender, who had any right under the policy and to whom or in regard to whom the insurance company had any cause to make denial of liability. P. had no interest in the property, and there was no reason why the insurance company should specifically deny liability to him. Moreover, it does not appear from the question that P. ever asserted any interest in the policy. Parenthetically it should be stated that there is no reason to construe the question as failing to show that- the insurance company denied liability to P. except on account of the burning of the property by K. It is true that the question propounded states that liability of the mortgagor or owner on account of the burning was denied only to the person who had an insurable interest, and who was, at the time of the burning, the insured.
We are not required to look beyond the question, to ascertain the facts; but we can do so if the ends of justice require it. Accordingly reference has been made to the agreed statement of facts contained in the record. There we find, after a statement of all of the facts of the case, which included the transfer and assignment on the policy of all of his insurable interest, as well as a statement of the fact of the burning by K., that the insurance company “denied liability.” For the reasons stated above, however, it is not necessary for the insurance company to deny liability to P. Stating the facts differently, S. loaned money to P. and took a note and security deed; also a policy of insurance providing, in case of loss, for payment to the lender as his interests might appear. The lender held the note and mortgage, which he had the legal .right to sell and transfer. The insurance company had, under express provisions of its policy, under stated conditions, the right to buy and take an assignment of the note and mortgage under conditions named in the policy. It did purchase the note and took an assignment and transfer of the note, the security deed, and' all of the title to these papers and to the property possessed by the lender. The insurance company then was a creditor of P., and as evidence thereof held his note secured *696by deed. So far as shown by the question, it was a valid note and deed.. P. was bound to pay the amount due, unless he could show some valid defense, such as that the note was paid, or was for some reason void and unenforceable. Obviously it was not void and unenforceable. Has it been paid? How? By reason of the fact that -the insurance company paid to the lender, the owner of the note, the amount due thereon, under the precise terms and stipulations named in the policy. But in order for this to constitute a payment of the debt due by P., P. must have had some interest in the policy, and the insurance company must have owed some obligation or liability to P. which was enforceable; but, as we have seen above, P. had no interest in the policy, nor in the property insured at the time of the fire, and therefore there was no liability^ under the policy to P.
It may be suggested that in some indefinite way, or by reason of some undefined broad principles of right, notwithstanding K., the insured, had no claim on the insurance company, by reason of his own criminal act, yet, because he had contracted with P. to pay P.’s note and presumably had not done so, that P. ought to be able to collect under the policy what K. could not. No principle of subrogation can be applied here; in no view of the facts has subrogation any application. Even as a volunteer P. has paid out nothing for H., to protect himself in his rights. He has done nothing except to sell to H. S. all of his interest in the property. Whether he protected himself as to the payment of the note is no concern of the courts. He does not bring himself within any principle of subrogation known to the law. Subrogation must arise from contract, or' it must arise out of principles of equity. There was no contract under which P. is subrogated to the rights of K. under the policy, and it is not remotely suggested that there is any principle of equity upon which it can be based. Lastly, since K. has forfeited all rights under the policy by his criminal conduct, it would be impossible and inconceivable that P. could derive any benefit through K. by subrogation. There was nothing in K. which could descend by subrogation to P. In addition to all that has been said above, question (d) indicates not only that upon the sale of the property by P. to II. S. he notified the insurance company that the property had been sold, but that the insurance under said policy ivas payable, in case of *697loss, first to 8. the lender, and that the interest of P., with the exception of the interest of the lender, had leen transferred to H. 8., who was the vendor to K., who burned the property. This conclusively shows that P. had not only parted with all interest in the property, but had also parted with all interest under the policy of insurance prior to the time the loss occurred. For these reasons questions (a), (b), and (c) should be answered in the negative, and question (d) should be answered in the affirmative. The case of Scottish Union &c. Insurance Co. v. Colvard, 135 Ga. 188 (supra), is unlike the case with which we are now dealing, in its controlling feature. In the Colvard case the decision, in the first headnote, declared that the policy of insurance was binding and that the insurance company was liable to the insured.' An issue had been raised as to the liability, based on the contention that the insured had, by a contract of sale, become other than the unconditional owner. This court held that the insurance company was estopped, by reason of its own conduct, from setting up that defense. In the case with which we are now dealing no question of estoppel is involved. There is no dispute as to where title to the property and interest under the policy of insurance rests. The insurance company has pursued the precise method provided-in the policy itself for its own protection against robbery by an insured who was in possession under rights acquired by voluntary contracts with a previous owner who had acquired the same rights from P., the original insured. The principles ruled in Peoples Bank of Mansfield v. Insurance Co., 146 Ga. 514 (supra), are controlling in this case. I am authorized to say that Mr. Justice Hines concurs in this dissent.