Fire Insurance Exchange v. BowersFire Insurance Exchange v. Bowers
Defendants Bowers owned residential property in Springfield, upon which Defendant North American Savings Bank held a deed of trust. Plaintiff had issued a policy of insurance to Defendants Bowers insuring the building on the proрerty against various losses, including fire damage. Following a fire which resulted in substantial, but partial damage to the building, a dispute arose between the parties as to the amount that Plaintiff was obligated to pay and between Defendants as to who was to receive those proceeds.
These disputes resulted in Plaintiff filing an interpleader action and depositing what it contended it was obligated to рay in to the circuit court. Thereafter, that court entered summary judgment in favor of Defendants Bowers, requiring Plaintiff to pay an additional sum to them beyond that paid in to the court, and also entered judgment on the pleadings denying Defendant North American Savings Bank’s request to recover under the policy. Plaintiff and Defendant North American Savings Bank appeal. 1
We first discuss Plaintiffs appeal. It contends the triаl court erred in the entry of summary judgment. Review of summary judgment requires that the facts be viewed in the light most favorable to the party against whom judgment was entered without deference to the trial court’s conсlusions.
ITT Commercial Finance v. Mid-America Marine Supply Carp.,
The primary issue raised by Plaintiff is what is its monetary obligation under its policy, as it may be affected by
Whenever there is a partial destruction or damage to property covered by insurance, it shall be the duty of theparty writing the policies to pay the assured a sum of money equal to the damage done to the property, or repair the same to the extent of such damage, not exceeding the amount written in the policy, so that said property shall be in as good condition as before the fire, at the oрtion of the insured.[ 2 ]
The policy provides that if the property is not repaired or replaced, and here it was not, Plaintiff is obligated to pay to the limit of the insurance the “actual cash value” of the structure. “Actual cash value” is defined in the policy as “replacement cost of the property at time of loss less depreciation.” Whether the requirements of the statute and this pоlicy provision would arrive at the same amount, we need not decide. The amount to be paid under
Under
The record here contains a document stating that the “full replacement cost” of the property at the time of loss was $40,000.00. There appears to be little, if any dispute that this was the value before the loss, as Defendants Bowers urge. Even if this is so, there was no evidence of the value of the property after the fire. Defendants Bowers rely on evidence showing the cost of rеpair and replacement, but as just earlier noted, such evidence does not establish the value after the occurrence, although it may be some evidence of the damage.
In casеs of partial loss, the insured has the burden to prove the value of the property both before and after the casualty.
Wells,
Turning now tо the appeal of Defendant North American Savings Bank, we first recite various principles relating to judgment on the pleadings under Rule 55.27(b). Moving for judgment on the pleadings is similar to presenting a motion to dismiss, as in both situations, the facts pleaded by the opposite party are assumed to be true.
Angelo v. City of Hazelwood,
Defendants Bowers moved for judgment on the pleadings because Defendant North American Savings Bank caused the deed of trust on the Bowers’ property to be foreclosed and the bank purchased the property, bidding the amount of Bowers’ indebtedness to the bank. Defendants Bowers stаte that as this occurred, their debt to the bank is extinguished and the bank no longer has a claim on the insurance proceeds. They cited to the trial court and now cite to us:
Economy Preferred Insurance v. Schomaker,
The bank counters that it has not fully recovered the amount of the indebtedness, that it should be allowed to present evidence showing that the property was worth less than it bid, and that the deed of trust contains a provision nullifying the holding of thоse cases. That provision states:
5.
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If under paragraph 21 [providing for foreclosure] the Property is acquired by Lender [North American Savings Bank], Borrower’s [Defendants Bowers’] right to any insurance policies and proceeds resulting from damage to the Property prior to the acquisition shall pass to Lender to the extent of the sums secured by this Security Instrument immediately prior to the acquisition.
This provision, at least as applied here, appears relatively clear. Obviously, the land and perhaps the remaining portion of the building have some value. If the portion of paragraph 5 abоve quoted is applied literally, then the bank has acquired the property but is still entitled to the insurance proceeds up to the amount of the debt before they acquired the property. This would entitle them to more than was owed, contrary to the holdings, at least by inference, in Economy Preferred Insurance, and directly contrary to that in Northwestern Nat’l Ins. Co.
When the bank acquired the property the debt was paid, as they paid the amount of the indebtedness for the proрerty. In
Northwestern Nat’l Ins. Co.,
the court rejected the contention of the former mortgagee that it was entitled to insurance proceeds as the property was not worth the amount bid. It purchased the propеrty at the foreclosure sale for the amount due. The court stating,
But it is the debt, the creditor-debtor relationship, that gives birth to the right to compel the mortgagor to purchase insurance and to cоllect the proceeds and serves as the supporting pillar for the whole structure so far as the mortgagee is concerned. Once that relationship is terminated, the reason for any claim on the part of the mortgagee on the insurance proceeds likewise evaporates. Surely it cannot be denied that purchase at the foreclosure for the full amount of the balаnce due on the note constituted payment and • extinguished the debt.... So long as the payment was made in the full amount of the indebtedness, it extinguished the debtor-creditor relationship and thus terminated the clаim upon which the proceeds of the insurance money which had inured to the benefit of the mortgagee upon the occurrence of the fire. Aliability may be fixed by the occurrence of cоnditions which provide for its existence, such as the liability of the insurance company in the instant case to pay to the mortgagee became fixed upon the happening of the fire, but after it becomes thus fixed, it may terminate as to the party in whose favor it existed,here the mortgagee. In the instant case what caused that termination was the payment of the debt by purchase at the forеclosure sale for the full amount of the balance due on the note, and ended the creditor-debtor relationship of the mortgagee and mortgagor.
As the bank asserts, there was not a provision in
Economy Preferred Insurance
or
Northwestern Nat’l Ins. Co.
similar to the provision in paragraph 5 uрon which they rely. However, as we read the holding of those cases, once the debt has been satisfied, whatever claim the mortgagee has is extinguished. The effect of
Thus, while the bank had a claim and an entitlement to insurance benefits prior to the foreclosure sale, by paying the full amount оf the indebtedness for the property, the bank terminated the creditor-debt- or relationship and the enforceability of the deed of trust. We conclude" that by purchasing the property for the amоunt of the indebtedness, the debt was .satisfied, the provision of the deed of trust could not longer be enforced, and whatever claim might have been made for the insurance proceeds by the bank terminаted. Therefore, the trial court properly entered judgment on the pleadings in favor of Defendants Bowers.
Summary judgment in favor of Defendants Bowers and against Plaintiff is reversed. Judgment on the pleadings in favоr of Defendants Bowers and against Defendant North American Savings Bank is affirmed. The matter is remanded to the trial court for further proceedings in accordance with the decision of this Court herein statеd.
Notes
. The summary judgment and judgment on the pleadings disposed of all parties and issues, and complied with Rule 74.01. Separate documents were entered and they comprise the "final judgment.”
See Magee v. Blue Ridge Professional Bldg. Co.,
. Defendant North American Savings Bank purchased the property following a foreclosure sale under its deed of trust. It seeks repair to the structure but Defendants Bowers do not. Therefore, in the dispute between Plaintiff and Defendants Bowers, we only discuss the first of the two options under
. Although cited by Defendants Bowers, they acknowledge that Westoak Realty & Investment, Inc. only restates the rule in Northwest era Nat'l Ins. Co., in distinguishing it. See 682 S.W.2d at 123. Westoak's holding has no relevance here.