*1 a court make an award of fees allows faith, acted bad it finds
when
vexatiously, oppressive wantonly or
reasons, litigant or if successful has persons.6 a class of
conferred benefit on sup instant record case the trial court that
ports finding unreasonably
respondents did not act with O.S.1981, 30, meaning of 85 and record anything sup is there
neither finding part faith on the
port a bad nothing there is
respondents. Therefore court
herein to show that the trial abused in denying discretion an award of attor
its
ney fees. opinion Appeals of the Court of and the of the trial court
VACATED order
SUSTAINED.
LAVENDER, SIMMS, HARGRAVE, and
SUMMERS, JJ., concur.
KAUGER, J., part; concurs in dissents in
part.
HODGES, V.C.J., WILSON, ALMA
J., dissent.
OPALA, C.J., disqualified. SHEBESTER,
Ralph W. Shebester d/b/a Station, Plaintiff-Appellant, Stallion INSURERS, a
TRIPLE CROWN Florida corporation, Defendant-
Appellee,
Quality Company, Qual Insurance d/b/a
ity Property Casualty Insurance
Company, Defendant.
No. 74087.
Supreme Court of Oklahoma. 11, 1992.
Feb. (Okl.1988). Wells, 6. B & P Construction Co. v. 759P.2d *2 Garvin, policy not include the Agee, insurance did seller Brett Agee Alan beneficiary; aas Meisel, Valley, plaintiff- Agee, Pauls & appellant. destroyed The property and the proceeds paid to the pur- were Dingus, and Rita Murray E. Abowitz J. chaser; *3 Welch, and Oklahoma Murray, Abowitz proceeds payment 4. Prior to of the to defendant-appellee. City, for (the purchaser), agent the the company for the insurance was informed PALA, O Chief Justice. agreement by the seller that the sales re- Appeals of for The States Court United quired that the seller named as a benefi- be following certified the the Tenth Circuit ciary policy of the and the insurance that question to the Uniform Certifica- pursuant purchaser’s to the seller had not debt been Act, Questions tion of of Law 20 O.S.1981 satisfied?” seq.: 1601 et §§ our The circuit court invites attention states to some authorities in other and property a cause “Does a seller of state requests appropri- we search an for against agent in tort an of an of action contractu, ate norm1 —ex Oklahoma-law alleges the company where seller insurance delicto, governs ex or otherwise—which that: duty agent the an insurer’s toward of property pur- the 1. The seller sold to proceeds persons claim insurance who agreement chaser credit terms under an on insured, on a the based contract with purchaser the to have required policy, to which the agent collateral the of policy on property force insurance the an acquires proceeds’ the knowledge before beneficiary, as a to with the seller named payout is effected.2 unpaid the of the balance of the extent question We answer the certified in the purchase price; the negative hold that under facts of and , purchased purchaser 2. The insurance case tortious invasion this no actionable purchase coverage, may pressed failed to the re- under Article of hut be either 9 seller, quired coverage the the Oklahoma’s Uniform Commercial Code for thus vendee-mortgagor policy such a the has comes within the federal court’s where This action agreed property to for the diversity jurisdiction, insure the benefit § 28 U.S.C. The vendor-mortgagee. right The of the to the upon question seeks an answer certified based directly against proceeds may enforced the be where all of Oklahoma events occurred. law insurer.’); Employer’s [Employers] Mut. Casu given that the We thus take as a transaction 330, alty Drug Co. 234 So.2d v. Standard governed suit is Oklahoma law. (Miss. Couch); 1970) (citing Northwestern 333 York Fire & Ins: Co. v. New Ins. Marine Life explains problem 2. The circuit court 229], (Ky.Ct. Ky. Co. 37 S.W.2d [238 following paragraph: mortgagee (insurer App.1931) to liable authority in other for the "There is states light proceeds mortgagor paid of mort to proposition company, insurance with that an knowledge gagee’s equitable lien and insurer’s mortgage knowledge contract of a sales policy was written but of lien after the purchaser/mortgagor obligates the clause that payout). unaware au before We are of procure for the insurance benefit of liability thority such to an has extended pay seller/mortgagee, pro- cannot the loss agent company except insurance an of purchaser/mortgagor without in- ceeds to Eng Insurance Co. case Westchester Fire lish, v. seller/mortgagee. curring See to the (Tex.Ct. App. [Civ.] 543 S.W.2d Insurance, (2d 29:68 on and 29:89 Couch 1976). There, Appeals Court of held the Texas 1984); Appleman ed. Insurance Law agent may be to a that an liable insurance Practice, (1969). See when, also Cromer theory mortgagee negligence under 360], Cromer, S.C. S.E.2d [293 mortgagee’s interest in the after of the notice (‘[A]n (S.C.Ct.App.1987) insurer who makes property, to include the mort fails after notice in der- mortgagor’s to another gagee as on the ogation equitable lien does so at its appears to this policy. insurance It court that Seeburg, peril.’); controlling precedent Wade v. S.W.2d there is certi no (‘Even though Supreme (Tex.Ct.App.1985) question as not listed the decisions fied Oklahoma_” [Emphasis sup policy, a ven- Court an insured in a fire plied]. may dor-mortgagee proceeds recover outstanding or under this state’s common law. buyer debt. The insured [U.C.C.]3 horse, question answer we policy’s We also another which but it named itself as the fairly beneficiary. comprised view as within that which After horse died but be- posed, though perhaps explicitly pro- payout proceeds buyer, fore of the to the pounded to us. seller entitled the seller be made demand on the insurer’s agent, proceeds. if the latter for his recover share insurer, principal an (1) acted for undisclosed seller copies furnished the (1) third-party beneficiary buyer’s installment-purchase his (2) wrongful pay- buyer’s insurance contract or letter from the quasi-contrac- managing partner, out in of the insurer’s breach the com- directed proceeds pany tual to one whose deliver the seller the amount outstand- contract.5 Several months la- prevail. ing claim We defer cir- should *4 agent paid ter the insurer’s panel all the a cuit court’s decision as to of proceeds directly whether, the buyer. case, to on the in the record this of applicable appellate standards federal buyer, The seller sued the the insurer’s allow to review the seller invoke either of agent, and the insurer6 in the United ex contractu recovery.4 the theories of two District States Court for the Dis- Western of gave trict Oklahoma. The district court I. judgment against buyer the seller a $25,000.007 summary judgment ANATOMY OF FEDERAL and LITIGATION went of agent.8 favor purchase An installment contract for the horse, seller, of litigation, a which led to this appealed, who that claims provides purchase that the agreement will insur- to insure the horse for his bene- the in- ance for the seller’s to recovery benefit the extent of fit entitles him through judgment 3. 12A O.S.1981 paid §§ 9-101 9-507. 7. The has not been and seller "possibility judg- collecting contends the of that explicit grant jurisdic- 4. This court needs no of ment dubious at best." questions tion to answer certified from the fed- court; power eral comes from the United purposes 8. The district court assumed—for of grant sovereignty. States Constitution's By answering of state deciding agent’s summary judgment motion— question by a state-law certified agreement gave equitable that the seller an lien court, may federal we affect the outcome mortgage. contractually Such a non- created litigation, federal is the but it court who federal statutory principle lien is on the based that hears and decides the cause. Scott v. One Bank regards equity ought what as done to be done. Co., N.A., 39, Trust St.3d Ohio 577 N.E.2d Pomeroy, Equity Jurispru- 4 J. A Treatise on 1077, (1991). "Except gov- 1079-80 by in matters 1233, (5th 1941). Symons dence § ed. S. erned Congress, the Federal Constitution or Acts of question eq- We do not address whether applied the law to be case is mortgages uitable in chattels survive Okla- Tompkins, of the the law state." Erie R. Co. v. adoption 64, homa’s 817, 822, 1188, the U.C.C. This issue is not 304 U.S. 58 S.Ct. 82 L.Ed. fairly comprised question. (1938). within certified Certification assures federal thorough For a discussion of apprised both the view that are courts substantive norms equitable argu- Article 9 abolished legal system. liens and an governing the Oklahoma Because Hillman, procedural viability, ment for their continued applied norms are to be see federal Nickles, court, simply identify Eq- McDonnell and we the avail- Common Law and federal uity able ex contractu remedies under law Under The Oklahoma Commercial Code 19.- § Uniform panel and leave whether, the circuit court University to decide 03. Professor Grant Gilmore of the it, School, Chicago under the record the seller Law one of the commenta- before may present appeal. invoke these theories suggests tors for Article in a treatise written adoption after the Code’s that "if the Code in dispute buy- 5. In between the is whether lien, equitable some sense abolishes it will er, partnership, actually instructed insur- again.” have to be invented all over Professor appears ance flicting It seller. that con- beyond Gilmore believes that the area of institu- instructions have come from the types financing tionalized transactions “there partnership’s managing and from the enti- land, strange stretches no man’s in which attorney. ty’s strange things.” [Emphasis sup- do creatures insurer, plied]. Quality Company, Security Property Insurance Interests in Personal 11.1, Quality (1965). Property Casualty § Insurance 336-337 d/b/a Company, appeal. regard is not a to this Because Oklahoma does not Article 9 as a receivership, proceedings against repeal it is in stayed sweeping preexisting were it all common-law rights. below. City Adams v. Nat. B. & T. Co. Nor- agent. policy proceeds er’s converted Although frankly surer’s he admits precisely applicable identify meaning cannot he of 12A O.S.Supp.1984 within liability, he asserts that when theory of 9-306(2).10 agent responds The insurer’s facts, jurisdictions some with similar faced installment-purchase agreement pre- an insurer’s recognized have security Ar- did not even create interest. proceeds.9 wrongful payout of vent governs in 9 of ticle the U.C.C. this state security in personal property.11 interests all II. security agreement describing A written THE TORT THEORIES SELLER’S signed by the the collateral and debtor qua the sine non nonpossessory of a secur- A. short, goods.12 although ity interest In OF THE UNIFORM COM- APPLICATION writing before us is MERCIAL CODE buyer, language signed it lacks security he has a The seller claims showing an intent secure collateral.13 insur- in the collateral and interest 1-25), (former man, Okl., (1977); pledges one Central 55 O.S.1961 P.2d 30-31 (60 Community & T. B. & Co. Enid v. B. contracts O.S. Nat. T. statute conditional sales Co.,.Okl., 318). Utica See *5 528 § § 1961 Oklahoma Code Comment 9- Prod., Okl., v. 622 P.2d existing legislation Nat. Bank & Trust Assoc. superseded 101. It deal- also (1981), rights held where we 1065 security receipts, ing devices as trust such broker, se, are to and his inter between a seller liens, assignments of accounts re- factor’s governed by the version of Arti be not Kansas U.C.C. § ceivable. Official Comment 9-101. by principles common- 9 but rather cle agency. law "indispensable requisite qua 12. Sine non means Dictionary, p. Black’s 1242 or condition”. Law See, generally, on Insurance 2d 5 Couch 9. infra (5th 1979). ed. note 17. agreement “agreement security which A is an security provides or interest." 12A creates pertinent O.S.Supp.1984 of 12A 10. The terms 9-105(1). O.S.Supp.1984 § 9-306 are: § security requisites of a interest are The formal [¡Insurance (1) "... ‘Proceeds’ includes ... 9-203; O.S.Supp.1984 perti- § out at its set 12A payable any by or reason of loss from source nent terms are: though damage even to the collateral ... "(1) security not ... a interest is enforceable by payments may be made third insurance party against or re- debtor third insurers, except or their tortfeasors spect does attach to the collateral and not person payable it is to a the extent that unless: security agreement.... party than a (2) to the (a) possession is in the collateral pro- Except otherwise where this article pursuant agreement; or the secured vides, security in collat- interest continues signed security agreement which debtor has eral, sale, notwithstanding exchange or other collateral, description ... contains a thereof, disposition disposition unless the (b) given; and has been value party in the securi- authorized the secured (c) rights has in the collateral. the debtor otherwise, ty agreement or and also continues (2) security it be- A interest attaches when proceeds including collec- identifiable the debtor with comes enforceable . tions received the debtor.” respect Attachment occurs to the collateral. following support Seller cases cites specified in sub- as soon as all of events theory: First Bank conversion Nat. his U.C.C. (1) place this have taken section section General, Bethany American 927 F.2d v. agreement postpones, time explicit unless (10th Cir.1991); Brown v. First National Bank of * * *” attaching. (10th Cir.1980); Dewey, Terra F.2d 581 description of collat- To whether a determine Berry Corp. Western & Neb. sufficient, § see 12A O.S.1981 9-110 eral is the reasons to be dis- N.W.2d For "any description person- provides opinion, these in this section of this cussed infra property real estate is sufficient whether al or applicable to this case. authorities are not reasonably specific if identifies or not it it is what described." security as interest A interest is defined "an personal property secures or fixtures which agreement be- complete The terms of obligation.” performance 12A of an provide: the seller l-201(37)(a). tween O.S.Supp.1988 § hereby entered into this “This replaced statutes on chat- Article Oklahoma 51-94), (former day between Shebes- of March mortgages O.S.1961 8th tel precludes This the sell- for conversion lie. would What fundamental flaw 9-306(2) invoking to sue er § right seller has here is the recover mon- from action, proceeds. a chose in conversion ey, which under Okla- intangible person- homa law is considered al property.16 agent’s wrongful The pay- B. extinguishes ment to another neither seller’s claim superior nor affects THE EX AGENT’S DELICTO LIABILITY proceeds. claimant’s title to the We ac- AT COMMON LAW cordingly hold that .the seller’s claim for seller, The who admits that under extant wrongful payout is not maintainable jurisprudence Oklahoma these facts do not common-law conversion. tort, give rise to a common-law theorizes his action should be maintainable as one extensively seller relies on sev conversion, quasi-conversion, “yet eral sections of Couch on Insurance 2d or a unnamed” tort. support “yet his theory.17 unnamed” tort
We have considered this instructive
text
illegal
Conversion is an
taking of
authority
and the
support
cited in its
but
personalty
another’s
inconsistent with his
unpersuaded
remain
that a new tort should
ownership rights.14
general
rule
be fashioned to hold an insurer’s
only tangible personal
liable ex
delicto for failure to
Oklahoma is that
pay proceeds
property An
proper
be converted.15
action
claimant.18
Station,
Commission, Okl.,
ter Stallion
seller,
hereinafter referred to as
16. Perkins v. Oklahoma Tax
Partnership,
1).
(syllabus
and the Calm Tom
consist-
The terms of
Flint,
Flint,
ing
Kelly
George
provide:
of John A.
J.
60 O.S.1981 312
*6
Marchbanks,
Swan,
and Pat
hereinafter referred
thing
right
"A
in action is a
to recover
buyers.
to as
money
personal property,
judicial
or other
agreed
It is
that seller desires to sell and
proceedings.”
buyers
willing
purchase
Quarter
41,
are
Stanton,
See Moore v.
77 Okl.
Showum Jet and
Corp.,
his dam is Calm
Petrol.
396 Pa.
[sic]
151 A.2d
$75,000.00,
(1959);
agreed
Siegal
price
The
616
total
is to be
v. Trav-Ler
with
Karenola Radio &
158,
Corp.,
Ill.App.
following
Television
333
B. notice of person’s another adverse claim THE renders an legally SELLER AS THIRD-PARTY BENE- insurer liable to the enti FICIARY OF THE tled claimant for the wrongfully BUYER’S INSUR- amount paid.28 jurisprudence ANCE POLICY National applying these rules is indeed yields scarce. It no The seller contends that even if clear clue to the rationale for imposing this tort, he has no cause of action in form of that bears the unmistak is nonetheless liable to him for the undis oblig quasi-contractual able earmarks of a principal closed insurer’s breach of con ation.29 A expressly tract. contract made for a person’s
third
recognizes
benefit
enforceable
remedy
Oklahoma law
person.26
He
party
where,
here,
need not be a
certain situations
privity
nor
occupy
be named
the contract
parties
contract
between
be ab-
third-party beneficiary
Assuming
Quasi-contracts (also
status.27
implied-
sent.
called
that,
record,
on this
contracts)
seller meets the
in-law constructive
are a class
procedural
evidentiary
obligations
standards to
imposed
or created
law
place
position
regard
one who without
to the assent of the
acting
principal
for an undisclosed
A party’s
disregarded.
bound.
intention is
place
also to
third-party
itself
facts,
benefi The
is drawn from the
and the
ciary
buyer’s
status under
policy,
obligation
imposed
as a matter of law or
applicable norm of Oklahoma
equity.30
law would natural
contract,
light
agent’s
24. The record sheds little
expressly
"A
made
for the benefit of
real
person, may
status vis-a-vis the insurer. As we view
a third
be enforced
him at
issue,
the resolution of that status must be de-
time before the
thereto rescind it.”
ferred to the circuit court’s own assessment of
Okl.,
Equitable
27. Barbero v.
Gen. Ins.
*8
the record before it. That court must determine
670,
(1980).
P.2d
673
evidentiary
support
whether the
materials
the
agent’s
seller’s assertions as to the
status and
2d, supra
28. 4 Couch on Insurance
note 17 at
whether the record as a whole entitles the seller
27:178,
Appleman’s
§
891. See 6
Insurance Law
appeal
to invoke in this
either of the two ex
4008,
(1991
Parts);
and Practice §
135
Pocket
appear
contractu theories which
to us as not
1198,
(1984).
see also 46 C.J.S. Insurance §
136
having
prius.
supra
been advanced at nisi
See
2,
quoted
note where we
text
from the
of the
e.g. Gray Holyoke
29. See
v.
Mutual Fire Insur-
4,
question
certified
and note
where we ob-
291,
Company,
ance
(1974)
293 Ala.
611 (and timely claimants of it has liability of an whom knowl- The insurer agent acting edge, insurer’s for acts hence that of the the an insurer at its for insurer) wrong principal an peril paying proceeds undisclosed out the own when implied- on proceeds ful rests an payout of interpleading all without claimant rightful obligation pay in-law to claim proper a action. hold that an accordingly ant. We interpleader Oklahoma’s statute by is itself an undisclosed insurer bound a provides potentially exposed that a to quasi-contractual duty, only toward multiple liability or for wrongful double policy, beneficiary named in the also to but payment may property tender the claimed those outsiders of whose claimed interest into court for timely priority has a decision of proceeds not competing Interpleader, are claims.32 is ice.31 there several which viewed When 31. The business public Lewis, gor-promisor’] upon building's pertinent tionally, utory ance business et Lord Chief Justice tury Tracts U.S. ed been services ners 337-338 etc., an action services; Okl. duty tends dehors absent owner and insured that is articulated 18, public public with any plied]. This is the private which from Oklahoma’s “If, owner with a “that when hospital use, seq., cases States named the automatic 411, Okl., make it of the written toward those treatise implied law to divorce community after death benefit ... L.Ed. 1011 and must submit 78), death benefit interest. insurers rendered to an unconscious interest it ceases provision is made for the public (1955), in which a “grants 186 P.2d Berry v. terms are: right] 617 P.2d Supreme power by fire sued for the reasonable value of its U.S. quoted beneficiary. entering into a written contract in Oklahoma Insurance Code. Addi- principle private De Portibus Maris are its contractual extensive at 15 subcontractor are found at 36 24 L.Ed. intention_” damage 389, 408, 411, common interest public only” where *9 proceeds of insurance is are at German Alliance Ins. Co. v. (1914). In that Welling 817, earlier in Munn v. Piggee Mercy Hospital, Barbour, with valid Hale in his revocation 206, O.S.Supp.1989 designate Court noted large;" quasi-contractual duty property frequently dies after and it public 818-819 regulations consequence, when used named to to 77, to be good." [Emphasis sup- 209 See, to be contractor v. American explains within preserve and so Okl., persons to (1980), e.g., an interest in that becomes “clothed claims, 34 S.Ct. controlled policy. juris O.S.1981 seventeenth-cen (1947), Some (1876): directed recover for his being ‘affected to the contract the words case the Unit affected (1 the four receive in a manner of the insur- using to a named an insurer’s privati’ beneficiary which was repaired other than Illinois, it for the Harq.Law which ex- patient. provision 612, examples in which divorced Roofing, with a it, A; affect 617- stat- 335, cor- has [of its Payne, though mistake of proceeds. named decedent’s pertinent terms are: cases cited therein. See Scott on tain tion of that is funds to a claimant cases where (1915); entitled York v. tiff ney In such mer such contract in favor of the decedent’s for- multiple liability.... way See death benefit in the action has "A. Persons ance ... C. causes or subject of tion and "* * * 2022 are: payment. persons causing interplead any person plaintiff discretion may court proceeds * also, fee. required duty spouse beneficiary pertinent liability * * see Callahan, no interpleader is Trusts Ill.App. [******] be cases receive the insurance from payable upon law and e.g., unless the * * * person should procures wrongful payment of an insurer Where the very beneficiary also, the action a trustee been joined policy is or are having when This of such of the the statute the statute liability on an insurer for who in like manner § ” much like e.g., terms of 12 thereby deposited 220 Mass. discharge who is not entitled to the prerequisite as defendants appears death are not to benefit ... at to be their claims money; contract, action with claims court, a reasonable claims makes proper State National Bank v. be party policy arid the 84 O.S.1981 is issued ... shall 1796-1802 as to the death or Security Bank than the exposed revoked_” any policy taken, provides providing with reasonable. See 3 no interest in the him from the ac- he is liable seeking the claims of the court * * * all results from a for the enforced subject O.S.Supp.1984 the court are such 107 N.E. the life provisions costs described in to double or paying authorized ” § disability takes, relief that cer- required 231; rightful imposi- and, of the notice to the insur- plain- attor- upon even trust New take ... its in favor, appropriate been would have seller, obligee the collat- qua here. in
eral pro assignment to a tanto
equity amounts superi- policy proceeds, clearly was the
or claimant. agent’s status vis-a-vis the
Whether the to the seller
insurer was disclosed when disputed. sought payout As
latter opinion in this and in the
pointed out earlier footnotes,33
explanatory the decision on is entitled to
whether the seller advance theo-
appeal either of the two ex contractu that, grounds at the
ries of on the question, in
critical time
acting principal must be for an undisclosed panel. court
reached the circuit QUESTION
CERTIFIED ANSWERED. LAVENDER,
HODGES, V.C.J., and WILSON,
DOOLIN, ALMA KAUGER and
SUMMERS, JJ., concur; HARGRAVE, JJ., concur in
SIMMS
part part. in and dissent
SIMMS, Justice, concurring part,
dissenting part: portion majority
I concur
opinion answering question certified
the federal court. dissent, however, majority’s
I from the questions of
decision to address unasked
contractual liabilities and remedies. BATTENFIELD,
Billy Ray Appellant, Gloyd McCoy, Appellate L. Asst. Public Defender, Norman, appellant. Oklahoma, Appellee. STATE Turpén, Atty. Michael C. Gen. Susan No. F-85-195. Dickerson, Gen., Atty. Stewart Asst. Okla- City, appellee. homa Appeals of Oklahoma. Court Criminal Sept. FOR ORDER DENYING PETITION Ordered Published Feb. AND REHEARING DIRECTING
ISSUANCE OF MANDATE opinion styled In our the above cause, appel- numbered this Court affirmed *10 4, 20, See the text in footnotes and 24.