Creed v. Sun Fire Office of London

COLEMAN, J. This is an action by appellants upon a policy of insurance issued for the benefit of plaintiffs, insuring a certain dwelling against loss or destruction by fire. The suit is in the j oint name of Katie Creed and Mattie Flinn, the assured. The defendant pleaded several special pleas, upon some of which issue was joined, and to the others a replication was filed by plaintiffs. The court sustained a demurrer to the replication, and the plaintiffs declining to plead further, judgment was rendered for the defendant. Several questions have been argued, but the rulings of the court upon the demurrers to the replication present the material questions involved on this appeal. The first is, whether, when a policy of fire insurance contains a stipulation that the policy shall be void if the interest of the insured be other than “the unconditional and sole ownership of the property insured,” and the plea avers a state of facts which, if true, shows that the interest of the insured was not truly stated in the policy, and that the interest of the insured was not that of “unconditional and sole ownership,” a replication to such plea is good, which avers that the policy was procured from an agent of the defendant, authorized to issue policies of fire insurance, to whom the insured, at the time the policy was applied for and received, truly and fully stated their interest in the property to the agent, and that the agent, being fully informed, himself drew up the application for the insurance, received the [529] premium therefor, and with full knowledge of the facts, turned the policy over to plaintiffs. We have held that if the applicant make full and true answers to the questions contained in the application, and suppresses no material fact, which it is his duty to make known, the company will not be permitted to take advantage of the carelessness, inadvertence or misunderstanding of its agent, the insured being without fault. — Ala. Gold Life Ins. Co. v. Garner, 77 Ala, 210; Williamson v. New Orleans Ins. Asso., 84 Ala. 106, 4 So. Rep. 36; Pelican Ins. Co. v. Smith, 92 Ala. 428, 9 So. Rep. 327; Equitable Fire Ins. Co. v. Alexander, (Miss.) 12 So. Rep. 25. Upon the same principle and for stronger reasons, the company cannot avoid, its obligation if its own agent knowingly and intentionally writes down the answers differently from those made by the insured. We think the replication a full answer to the plea on this question. The next proposition involves a question new in this State. Has a creditor an insurable interest in a building, the property of the estate of his deceased debtor, which may be subjected to his debt, the personal property being insufficient to pay the debts of the estate? After much deliberation our conclusion is that he has an interest which may be insured. We concede and affirm that a simple contract creditor, without a lien, either statutory or contract, without a jus in re or jus ad rent ', owning a mere personal claim against his debtor, has not an interest in the property of his debtor. Such contracts are void a.s being against public policy. We do not think the principle applies after the death of the debtor, as to property liable for the debt and which, if destroyed, will result in the loss of the debt. The real estate as well as the personal property of a deceased debtor is liable for his debts, but the real estate can not be subjected to the payment of his debts until after the personalty has been exhausted. After the death of the debtor the debt is no longer enforceable in personam. The proceedings to reach the property of the estate of the deceased debtor are in rem. The property of the debtor takes the place of the debtor, and becomes, as it were, the debtor. Whoever knowingly receives the property of a deceased debtor and wrongfully converts it, is answerable to the creditor. — 8 Brick. Dig., 464, § ID; //;., 465, § 162. The relation of creditor and debtor invests the creditor [530] with an insurable interest in the life of his debtor, to the extent of his debt. — Alexander v. Sanders, 93 Ala. 345, 9 So. Rep. 388 ; 11 Amer. & Eng. Encyc of Law, p. 319. It would seem upon like principles that when the property becomes directly subject to proceedings in rem, for the satisfaction of the debt, the creditor should become invested with an insurable interest in the property. Certainly if a creditor can not obtain satisfaction of his debt from the personal property of his deceased debtor, and has a legal right, which can not be defeated, to enforce its collection by proceedings in rem against a building belonging to the estate of the deceased debtor, and if it be true that the destruction of the building by fii’e would immediately and necessarily result in pecuniary loss, the loss being the direct consequence of the fire, the creditor has an interest in the protection of the building. He has no lien as in the case of a mortgagee, nor such lien as the statute may confer on an attaching or execution creditor, but his right to subject the specific property to his debt, invests him with an interest but little less, if any, than that of the attaching or execution creditor or mortgagee. In the case of Herkimer v. Rice, 27 N. Y. 163, the question arose as to whether an administrator of an insolvent estate held an insurable interest in the real estate of the deceased debtor. The court (Denio, C. J., rendering the opinion) held that he did, and the conclusion was based in great part upon the proposition, that the creditors had such an interest, which the administrator could protect by insurance for them. We think whatever could be done by an administrator for the creditor in this respect, could be done directly by the creditor for himself. — Rohrbach v. The German Fire Ins. Co., 62 N. Y. 47. Other reasons might be given, but we are of the opinion these are sufficient to show that the creditor of a deceased debtor, whose estate is insufficient to pay the debts, has an insurable interest in the property of the estate, which by law may be subjected by proceedings in rem to the payment of the. debts. The recovery can not exceed the amount of the insurable interest. The next question is, whether the pleadings show such an insurable interest. The pleas and the replication appear to have been drawn with technical caution, so far as 'the rights of Mattie Flinn, the creditor, are [531] affected. The plea shows that the building and lot, upon which it is located, belonged to the estate of Thos. Creed, deceased, and that neither of the assured are his legal heirs. Upon the death of Thos. Creed the land descended to his legal heirs. Prima facie, upon the facts of the plea, the insured owned no insurable interest. The replication avers that Katie Creed was the widow of Thos. Creed, and that he owned no other real estate, and this statement of facts is followed with the conclusion, that she owned a dower and homestead interest. Tiers was clearly an insurable interest. Its value is a fact to be ascertained by proof. The replication then further averred that Mattie Flinn was a creditor of Thos. Creed, stating the amount of her claim, the insufficiency of personal assets to pay the debts, and that there was no other real property belonging to his estate. The interest shown by the plea to be in Katie Creed (dower and homestead) does not include the entire estate. Under the replication there is a remainder interest in the real estate, liable for the debts of the estate. The pleadings inform us that the lot and building were in the city of Montgomery. Whether it exceeded in value two thousand dollars, the constitutional limit of the value of the homestead exempt from debts during the life time of the widow, does not appear. We are not unmindful of the statutory provision by which under some circumstances the fee to the homestead may become vested in the widow and minor children or widow or minor child. The consideration of these questions does not rise upon the pleadings. The court erred in sustaining the demurrer to the replication. The proportionate interest of the insured is a matter of adjustment between themselves if both are entitled to recover. Reversed and remanded.