Court Opinion

ID: 3469415
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:37:15.719598+00
Date Added: 2024-06-11T14:04:43.110717
License: Public Domain

The facts of this controversy are, admittedly, clearly and correctly stated in the original opinion.
The rehearing was granted primarily for the purpose of permitting further consideration of those facts in the light of the legal principles relied on by counsel for Mrs. Elizabeth C. Harp, particularly the doctrine enunciated in King v. Preston and Hall, 11 La.Ann. 95.
In that case the defendants, by a formal act of sale, conveyed to the plaintiff a tract of land on which there were situated a cotton gin and other improvements. All of the improvements were covered by insurance previously obtained by the vendors; the policy, however, was not assigned to the purchaser. After the sale the gin was destroyed by fire, and under an effected compromise arrangement the insurer paid *Page 821 
the policy's proceeds to the defendant vendors. Litigation followed the payment, plaintiff claiming therein that as the purchaser of the insured property he was entitled to the insurance funds received by defendants. In rejecting the demands of plaintiff, the court reasoned as follows:
"* * * There was no contract for an assignment of the policy, nor did a sale of the property operate as an assignment. `The contract of insurance is strictly personal, it is not an incident to the subject insured. It is an obligation to make good to the party really insured any loss that he may sustain from the perils insured against, according to the nature and terms of the insurance, not an obligation to make good any damage that, from the same causes, the property insured may sustain without regard to its ownership.' See 2d Duer on Insurance, page 53; also 1st Phillips on Insurance, §§ 86, 87.
"It is needless, therefore, to determine whether the defendants were or were not entitled to recover from the insurance company. Unless the defendants received money which the plaintiff was entitled to recover, the latter has no ground of complaint. It matters not how much money the defendants may have received improperly from the insurers, the plaintiff could not be injured by such payment. We must consider the case, therefore, precisely as if no insurance whatever had been effected."
The doctrine of the King matter, obviously, is in no manner applicable here. The record before us does not show that Mrs. Elizabeth C. Harp was an insured under or a party to the insurance contract, *Page 822 
as were the vendors in that case; rather the agreed facts and circumstances indicate strongly that she was not.
The policy under which the proceeds were paid to the mortgagee herein was for a three year term beginning February 26, 1937, and was a renewal of a similar contract issued on February 26, 1934. Both contracts were obtained at the instance of the mortgagee from the Hartford Fire Insurance Company and charged by it as a part of the mortgage indebtedness against the Harp Plantation pursuant to a clause of the mortgage reciting that in the event of the mortgagor's (Mrs. Mary A. Harp) failure to keep the building insured "the said mortgagee or any and all future holder or holders of the said promissory notes may at its or their option effect such insurance, and this mortgage shall be security for the premiums so paid * * *." On the effective date of the original policy, namely February 26, 1934, the mortgagor (Mrs. Mary A. Harp) was dead and the plantation belonged to her succession. It was not until January 23, 1937, or 33 days before the original policy expired, that Mrs. Elizabeth C. Harp and Earle H. Browne, daughter-in-law and son-in-law respectively of such mortgagor, acquired the property at sheriff's sale under the foreclosure proceedings; and there is no indication or contention that these adjudicatees were thereafter named as the insureds.
It appearing, therefore, that Mrs. Elizabeth C. Harp was not a party to the insurance contract, and consequently no personal relationship existed between her *Page 823 
and the insurer, it was unnecessary as a condition precedent to the recovery herein by the widow and heirs of the transferee Earle H. Browne that she make an assignment of the policy.
The insurance proceeds, paid to the mortgagee of Mrs. Mary A. Harp, deceased, by reason of its personal contract with the insurer, was merely a substitute for the house that, prior to its destruction, served as partial security for payment of the loan originally made to the mortgagor. This substituted security was held by the mortgagee in a separate bank account until after the loan indebtedness had been paid in full, such payment having been made in accordance with the written agreement of Mrs. Elizabeth C. Harp and Mr. Browne, reading: "It is understood and agreed that in acquiring the aforesaid property, as contemplated in the beginning of this agreement, that the same shall be acquired at an equal cost to each of the parties hereto. That is each of the parties hereto shall pay or discharge one-half of the indebtedness represented by the said mortgage and unpaid taxes."
In view of the debt retirement, one-half of the insurance proceeds (substituted security), undoubtedly, would have belonged to Mrs. Harp had she not previously effected the sale to Browne of her one-half interest in the house. But as she disposed of her ownership in that original security (the house), and for it she was compensated, she is now without interest in the substitute (the proceeds of the policy).
In their brief in support of the application for a rehearing, counsel contend that *Page 824 
Mrs. Elizabeth C. Harp had an insurable interest in the house even after the conveyance of her one-half interest to Mr. Browne; and they argue: "* * * Mrs. Harp was under obligation, according to the stipulation in the mortgage covering the entire property, to keep the main residence on the plantation insured against loss by fire, as additional security for the loan. Any breach of this obligation would have resulted in accelerating installments due on the mortgage indebtedness. The loss of this house without insurance thereon, would have resulted in injury to her. She had a vital interest, therefore, under the provisions in the mortgage, to see that the main dwelling house was insured against loss by fire so long as the mortgage remained in force and unpaid. In other words, she had to see that the main dwelling house was covered by insurance against loss by fire to protect herself from loss under the provisions of the mortgage and to prevent the mortgage being called in the absence of such fire coverage."
The obligor under the mortgage was Mrs. Mary A. Harp, not Mrs. Elizabeth C. Harp; and the latter in no manner assumed the indebtedness. Furthermore, the insurance clause of the mortgage act, as we appreciate it, says nothing about the acceleration of installments due on the mortgage indebtedness; it merely recites that the mortgagee may effect insurance on the improvements in the event the mortgagor fails in her obligation to keep them insured.
Also in their brief counsel say that this court "denies to Mrs. Elizabeth C. *Page 825 
Harp the right to one-half (1/2) of the proceeds of the fire loss, stating as its reason, that at the time the property was destroyed by fire, Mrs. Elizabeth C. Harp had no insurable interest in the property destroyed." Then they quote from numerous authorities holding that the question of lack of insurable interest can be raised only by the insurer, an adverse claimant of the fund being without right to do so. This principle of law is not applicable to the instant case. The invoking of it is appropriate to a suit wherein the validity or enforceability of an insurance contract is involved. The policy under consideration is not so questioned.
No error is apparent in our original decree, and, accordingly, it is now reinstated and made the final judgment of this court.
ROGERS, J., dissents.