Trice Ex Rel. Aetna Insurance v. Fleming

Adkins, J., delivered the opinion of the Court. Dean Knickerbocker, holding a first mortgage from Henry A. Fleming and wife in the amount of $4,200, on March 31st, 1931, default having occurred, assigned it to V. Calvin Trice for foreclosure. After executing this mortgage the Flemings conveyed the property to Nellie Kirkpatrick, from whom they took a second mortgage for $2,300. The foreclosure suit was instituted on April 1st, 1931.

The policies of insurance on the buildings taken out by Mrs. Kirkpatrick, which contained the usual clause in favor of the first and second mortgagees, expired on March 31st, 1931. Mr. and Mrs. Kirkpatrick testified that renewals of these policies were sent them by mail by Mr. Phillips, the insurance agent in Cambridge; that he had not asked them for the premiums, and they had not been paid; that they expected to pay them by installments as they had previously done. Mr. Kirkpatrick testified that he was informed by Phillips that Knickerbocker had canceled them. Mr. Kirkpatrick further testified that on inquiry of his agent, a Mr. McMann, he was informed that Mr. Knickerbocker had taken insurance to the amount of $5,200 or $5,500 in the Agency of J. Richard Smith; that he (Kirkpatrick) then went to ⁴⁵⁴ Phillips’ office and took out additional insurance in the amount of $2,000, because they did not think $5,500 was enough; that he supposed the policies taken out by Knickerbocker were written in the same way as the old policies.

He said he went to see Knickerbocker but he was not at home. The fire occurred on the 19th of April, after the Kirkpatricks had returned to their new home in West Virginia. Mrs. Kirkpatrick testified that about March 28th she had a conversation with Knickerbocker, Trice, and Richard Smith, with regard to the transfer of the insurance from the Agency of Phillips to that of Smith, at which there was no one present except Smith, Trice, Knickerbocker, and herself. She did not say what that conversation was.

Mr. Trice in rebuttal testified that he, with Knickerbocker and Smith, went to see Mrs. Kirkpatrick on the occasion referred to, because the interest on the Knickerbocker mortgage was considerably overdue, taxes had not been paid, and the fire insurance was about to expire, and Knickerbocker wanted to talk with Mrs. Kirkpatrick about what she would be able to do in reference to the interest, taxes, and insurance; that Mrs. Kirkpatrick said she was not able to pay any taxes or interest or insurance; that she was expecting about $100 for some kind of government relief from her husband. “She and Mr. Knickerbocker had a lot of conversation about using some of that money to pay the interest, taxes and insurance.” She said she had seven children to look after and her husband was not well, and she did not feel she would like to use that money for those things, and she could not pay any interest, taxes, or insurance. Mr. Kirkpatrick was not present at this conversation. He testified that he had not refused to pay the premiums. Mr. Knickerbocker died before the taking of testimony.

Mr. Kirkpatrick testified that when he went to Mr. Phillips’ office to pay an installment on the premiums on the two policies, “I learned the policies had been can-celled” by Mr. Knickerbocker. It was agreed that if he and Fleming were present they would testify that they had no knowledge of any change in the policies, from the ⁴⁵⁵ time of the sale of the property to the Kirkpatricks to the date of the fire: and that they had not been consulted with reference to any agreement of settlement of the policies as acted upon by Mr. Trice as assignee and Mr. Knickerbocker in these proceedings, but the testimony was objected to as irrelevant. The fire occurred on April 19th, 1931. On March 31st, 1931, the day this mortgage was assigned to Trice for foreclosure, Knickerbocker applied to J. Richard Smith, an insurance agent, for insurance.

On the same day Smith, as agent for the Continental and the Fireman’s Fund Insurance Companies, issued two binders, in the amount of $3,200 each. The binders read as follows: “Cambridge, Maryland, March 31, 1931. Assured, Dean Knickerbocker, loss, if any, payable to V. Calvin Trice, assignee of mortgage for purpose of foreclosure” (here follows coverage). Amount $3,200.

Terms, three months from March 31, 1931. Remarks: “It is understood and agreed that this property is deeded in the name of Mrs. Nellie Kirkpatrick, the first mortgage is held by Dean Knickerbocker and the second mortgage is held by Henry Fleming, we are insuring Dean Knickerbocker and V. Calvin Trice, Dean Knickerbocker having assigned his interest to V. Calvin Trice, assignee of mortgage for purpose of foreclosure.” On April 16th, 1931, six policies were issued in the total amount of $6,400. In each of the policies Dean Knickerbocker is named as the assured, and loss, if any, made payable to V. Calvin Trice, assignee of mortgage for purpose of foreclosure, and in each the same language follows the word “Remarks” as in the binders. The agent testified that Knickerbocker applied for the insurance and the policies were delivered to him and he paid the premiums.

They were not paid, however, until after the fire, and the agent testified he thought not until after the audit was made. But he said when the policies were issued he extended the credit to Knickerbocker. The foreclosure suit was begun on April 1st, 1931, by the filing of a certified copy of the mortgage and sworn ⁴⁵⁶ statement by mortgagee of principal and interest due. Bond was filed on April 22nd, 1931.

The mortgaged property was sold April 28th, 1931, and on May 21st, 1931, the assignee filed his report of sale, as assignee for the purpose of foreclosure, in which he recited the assignment to him of the mortgage after default, the institution of the foreclosure proceedings, the filing of bond, and the advertisement of the property for sale; that between the institution of the proceedings and the sale the dwelling house on said land was burned, “and the interest of the said Dean Knickerbocker and of the said V. Calvin Trice, Assignee of the said Mortgage for the purpose of foreclosure, being insured for $5,500, or an amount in excess of the said mortgage, principal and interest and costs, the said insurance to be collected by the said Assignee of Mortgage for the purpose of foreclosure and distributed in this case as though the insurance was part of the proceeds of sale”; that the property was sold at public sale to Mrs. Ida L. Wallace for $550. The sale was finally ratified on July 29th, 1931, on which date the trustee filed a special report and account of the insurance collected from the several companies, amounting in all to $3,700, the companies refusing to pay more, which the assignee accepted rather than suffer the delay incident to suits, “which said sum has been paid to him and Dean Knickerbocker, the mortgagee, which said sum is now brought into this court that the same may, together with the proceeds of the sale of $550.00, or in all the whole fund of $4,250.00, be distributed by the auditor of this court, which distribution and audit to be subject to the final ratification by this court. That the said mortgagee, Dean Knickerbocker, agreed to the said settlement of the said loss for $3,700.00, but not waiving or releasing his claim against the mortgagors, or their assignees, for the balance of the mortgage debt, interest, costs, expenses and taxes, which balance and difference is the amount remaining after deducting the fire insurance of $3,700.00, the receipts of sale of $550.00, or $4,250.00, from the total amount of the mortgage debt, interest, ⁴⁵⁷ cost, expenses and taxes, for which difference the assignee of mortgage for the purpose of foreclosure will, after the said audit and ratification, proceed to obtain a deficiency judgment.” The mortgagee’s assent is attached to the report, assenting “to the settlement and adjustment of the fire insurance made by the assignee of mortgage for the purpose of foreclosure, in this case, * * * I hereby reserving all my rights to obtain a deficiency judgment against the mortgagors, or their assignee or assignees, for the difference between the amount of the mortgage debt, interest, costs, expenses and taxes, and the sum of $4,250.00, which is the amount of $3,700.00 fire insurance and $550.00, proceeds of sale.” On August 1st, 1931, the auditor’s report was filed, distributing the proceeds of sale and of the policies in accordance with the report of the assignee and the assent of the mortgagee. In