Welch v. Sun Underwriters Insurance

CoNNOR, J. The plaintiff, I. M. Welch, has not appealed from the judgment rendered on the verdict at the trial of this action in the Superior Court. The jury found, in accordance with all the evidence, and under the instructions to which there were no exceptions, that he is not entitled to recover upon the policy on which this action was brought. Judgment was rendered accordingly that he recover nothing of the -defendant in this action. All the evidence tended to show that after the issuance of the policy and before the fire which destroyed the property insured thereby, the said plaintiff violated certain stipulations and covenants contained in the policy. It is expressly provided therein that in the event of such violations, the policy should become null and void, and that defendant should not be liable thereunder. In view of the verdict and judgment, defendant’s exception to the refusal of the court to allow its motion for judgment as of nonsuit, at the close of the evidence, as to the plaintiff, I. M. Welch, need not be considered on this appeal. At the date of the fire, to wit, 15 November, 1924, the policy was null and *549 void as to tbe plaintiff, I. M. Welch, and defendant is not liable to Mm in any sum, by reason of the issuance of the policy. Smith v. Insurance Co., 193 N. C., 446, 139 S. E., 310. As defendant is not liable under the policy to plaintiff, I. M. Welch, the insured, it must follow that it is not liable to plaintiffs, Wiggins & Ammons, under the loss payable clause contained in the policy as issued by defendant and accepted by plaintiffs. This loss payable clause is not the New York or New Jersey standard mortgage clause, and defendant is not liable to plaintiffs, Wiggins & Ammons, under this clause, for the reason that they are simply appointees to whom any loss that may be due to the insured, is payable. As defendant is not liable to the insured under the policy, which has been rendered null and void as to him, it is not liable to Wiggins & Ammons. They cannot recover upon the policy as issued by defendant and accepted by the plaintiffs. Roper v. Insurance Co., 161 N. C., 151, 76 S. E., 869. A person, firm or corporation named in an ordinary loss payable clause contained in a policy of fire insurance is merely an appointee, whose rights under the policy are not independent of the rights of the insured. Such appointee has merely the right to receive the whole or part of the money to which the insured is entitled. If for any reason the insured cannot recover on the policy, the appointee under the loss payable clause has no right of action against the insurer. Everhart v. Ins. Co., 194 N. C., 494. The distinction between an ordinary loss payable clause, and the New York or New Jersey standard mortgage clause is well settled. Bank v. Assurance Co., 188 N. C., 747, 125 S. E., 631; Roper v. Insurance Co., supra. Plaintiffs, Wiggins & Ammons, evidently apprehending that the policy on which the action was brought, and as issued by defendant and accepted by them, would be declared null and void, as to the insured, and therefore as to them, because of the violation by the insured of its terms, on 6 June, 1927, by leave of court, filed an amended complaint, containing allegations upon which they prayed for a reformation of the policy, with respect to its provisions affecting their right to recover of defendant. Defendant’s contention, that conceding that the allegations in the amended complaint were sufficient to support the prayer for the reformation of the policy, there was no evidence tending to show facts upon which the policy could be reformed by the court, in the exercise of its equitable jurisdiction, must be sustained. There was no evidence tending to show that the loss payable clause was attached to and made a part of the policy, instead of a New York or New Jersey standard mortgage clause, by reason of fraud on the part of the agent of defendant, or by reason of a mutual mistake of the parties. It is well settled that reformation of an executed contract may be had only for mutual mistake, or mistake on one side and fraud on the other. This principle is applicable *550 to policies of insurance. Britton v. Insurance Co., 165 N. C., 149, 80 S. E., 1012. In the opinion in that case, Brown, J., says: “But the reformation is subject to the same rules of law as applied to all other instruments in writing. It must be alleged and proven that the instrument sought to be corrected failed to express the real agreement or transaction because of mistake common to both parties, or because of mistake of one party and fraud or inequitable conduct of the other.” All the evidence upon the trial of this action showed that plaintiffs accepted the policy as issued by defendant; that they were able to read, and had full opportunity to read the policy, which was in their possession from the date of its issuance to the date of the fire. The language of the loss payable clause, contained in the policy, is clear and unambiguous. Plaintiffs, in their original complaint, founded their cause of action upon the policy as issued by defendant. They thereby elected to rely upon said policy for their recovery in this action. There was error in the refusal of defendant’s motion for judgment as of nonsuit, as against all the plaintiffs. Whether a new cause of action was alleged in the amended complaint, which could not be maintained because more than twelve months had elapsed from the date of the fire to the filing of the amended complaint, need not be decided upon this record. Upon all the evidence, plaintiffs were not entitled to the equitable remedy of reformation of the policy. Without a reformation, we think it clear that they cannot recover on the policy. For error in the refusal of the motion for judgment as of nonsuit, at the close of all the evidence, the judgment is Reversed.