Houran v. Ætna Insurance

Kuhn, J. Charles and Mary Schiel, in July, 1908, purchased a lot from Carrie E. C. Berston on land — 420 — contract. The negotiations were had on the part of Mrs. Berston by her husband, Neil J. Berston, who signed his wife’s name to the contract. The contract was in the form of a book such as is in common use in the sale of lots in new subdivisions. . The Schiels arranged with Michael E. Houran to construct a house on the lot, and on November 5, 1909, the interest of the Schiels in the contract was assigned to Houran to secure him for what was due him. The book containing the contract and showing this assignment was produced at the hearing in this court. After the house was completed Mr. Houran and Mrs. Schiel went to the office of a Mr. Henderson, the agent of the defendant company, and the insurance policy on which this action is based was obtained on the property. The policy was issued on December 29, 1909, and insured “Neil J. Berston, of Flint, Michigan, in an amount not exceeding $1,500 on * * * two-story frame building, and additions thereto, * * * ” on the lot purchased by the Schiels from Mrs. Berston. Attached to the policy at the time it was issued was a loss payable clause, as follows: “Loss, if any, payable first to M. E. Houran, as his contract interest may appear; balance, if any, payable to Charles and Mary Schiel, purchasers under land contract.” The facts concerning the issuance of the policy, as testified to by Mr. Henderson, the agent, stand uncontradicted. The directions as to how the policy was to be written were given by Mr. Houran. He told him that Mr. Berston owned the fee to the property, but that he wanted the policy written so as to protect him (Houran) first, and then the Schiels. The Berstons took no part in the issuance of the policy, and had no knowledge of it. Mr. Houran paid the premium, and the policy was mailed to him the next day. Mr. Houran died in April, 1910, and his widow, — 421 — Mary M. Houran, who was his sole devisee and legatee, and Thos. F. Stockton were named as executors of his estate, and qualified as such in May, 1910. Cornelius Houran, a son of deceased, who had assisted his father in the business, continued to perform such duties after his father’s death, and more or less looked after his mother’s interest in the estate, with her consent. The amount due on the land contract was paid' by the Schiels, and they became entitled to a deed to the lot. A warranty deed dated September 29, 1910, conveying the lot, was executed by Carrie E. C. Berston to Mary Houran, and was taken by Cornelius Houran for the purpose, as he testified, of securing the estate of Michael Houran the payment of the amount due the Houran estate from the Schiels.. This amount was $2,433.94, and contained charges made for materials furnished the Schiels on different buildings, including buildings other than the insured premises. It is the claim of both of the executors of the estate that they did not know of the existence of the deed prior to the date of the fire, which occurred June 21, 1911, and damaged the insured premises to the extent of $1,280. This suit was brought by the plaintiff as assignee of Neil J. Berston, Charles and Mary Schiel, and the executors of the estate of Michael E. Houran, deceased. Plaintiff having recovered a judgment in the sum of $1,360, the cause was removed to this court by writ of error. It is the claim of the defendant that, the policy having named Neil J. Berston as the insured, the contract is solely with him, and the loss payable clause merely constitutes Michael E. Houran and Mary Schiel appointees of the insured. The case of Jaskulski v. Insurance Co., 131 Mich. 603 (92 N. W. 98), is called to our attention. In that case the policy was issued to Joseph Navrot, the owner of the land. One Eckert made a loan to Navrot, — 422 — and to secure it had taken a mortgage upon the insured property. They were both present when the policy was issued to Navrot. Indorsed on the policy was: “Loss, if any, payable to Frank C. Eckert, mortgagee, as his interest may appear.” After Navrot’s death the insured property was sold by order of the probate court and conveyed to the plaintiff. Eckert foreclosed his mortgage, and the plaintiff redeemed, and Eckert assigned his interest in the policy to the plaintiff. Navrot’s widow also quitclaimed to the plaintiff. No notice of the sale or transfer was given to the defendant company. The plaintiff claimed the right to recover on the policy on the ground that it was, in fact, issued for the benefit of Eckert, the payee of the policy, and that he thereby had a contract with the defendant company. This court held that, under these circumstances, the contract of insurance was made with Navrot alone, and he alone could bring suit upon it. An examination of the record in that case further discloses that the application for insurance was made and signed by Navrot alone. The policy of insurance covered other property than that covered by the Eckert mortgage. It was not claimed that Eckert negotiated the insurance, or that he paid any assessment during Navrot’s lifetime, and it was very properly held that the mere fact that he held possession of the policy, and that it contained the loss payable clause above set forth, did not make him a contracting- party. The instant case presents an entirely different situation. It is undisputed that Neil J. Berston had no interest whatever in the property and knew nothing about the insurance. The parties who entered into the contract of insurance were Michael E. Houran and Mary Schiel, each having an insurable interest, as insured, and the defendant company, represented — 423 — by Mr. Henderson its agent, as insurer. It is said in the opinion of Mr. Justice Ostrander that neither Houran nor Mrs. Schiel disclosed to the agent the real interest which each had in the premises, and that most material facts were concealed, and that this is undisputed in the record. It does not seem to me that a fair reading of the record would justify the conclusion that Henderson, the agent of the company, did not know the exact relations of the .parties and their interest in the property at the time the contract of insurance was made. On cross-examination he testified as to what occurred at the time this contract was made, as follows: “Q. Now, when Mr. Houran and Mrs. Schiel came in, you say Mr. Houran stated to you he wanted the policy changed? “A. Yes, sir. “Q. He stated to you what was the condition of the title, did he not? “A. Yes, sir. “Q. He stated to you he was selling lumber to these parties, did he not? “A. Yes, sir. “Q. Mrs. Schiel stated the same thing to you, didn’t she? “A. Why, yes, sir; it was understood he was. “Q. The three of you were there in the office together, were you not? “A. Yes, sir. “Q. All three engaged in the conversation? “A. Yes, sir. “Q. And they wanted you to draw a policy that would protect Mr. Houran and Mrs. Schiel and her husband, did they not? “A. Yes, sir; I suppose that was the idea. “Q. That was the idea. You drew that policy in accordance — you drew that policy as you supposed, to protect those parties, did you not? “A. Yes, sir.” It is apparent from the contract of insurance itself that there was no intention on the part of the con — 424 — tracting parties to insure Carrie E. C. Berston or Neil J. Berston. The premium was paid by Houran, and he had possession of-the policy, and the placing of Mr. Berston’s name in the policy did not give him any right or interest to any portion of the proceeds arising from any loss secured by the policy. As was said by Justice Champlin in Balen v. Insurance Co., 67 Mich. 179 (34 N. W. 654): “It was unimportant, under the facts of this case, whose name was inserted in the policy as owner. Whosever name was inserted stood there merely as a nominal party, without any beneficial interest in the insurance secured thereby.” See 1 Cooley’s Briefs on Insurance, p. 793; Traders’ Ins. Co. v. Pacaud, 150 Ill. 245 (37 N. E. 460, 41 Am. St. Rep. 355); Hopkins Manfg. Co. v. Insurance Co., 48 Mich. 148 (11 N. W. 846). It is further contended that there was such a change of interest in the subject of insurance without the consent of the defendant company that the policy by its terms became void. The Schiels, by paying Mrs. Berston the amount they owed on the contract, simply increased their interest in the property. It cannot be said that the risk to the insurer was increased by this transaction. Foiles v. Insurance Co., 175 Mich. 716 (141 N. W. 879). The taking of the deed from Mrs. Berston- to Mary Houran raises another question. It was taken as security for indebtedness of the Schiels due on other property than the insured premises. It is claimed that this is such a material change of interest as to avoid the policy. Knowledge -of this deed was denied, however, by the executors of the estate, and Cornelius Houran testified that he told neither of them about it. The question of fact thus raised was submitted to the jury by the trial court as follows: “Now, if you find by a preponderance of evidence — 425 — that Mr. Stockton or Mrs. Houran, either of them, authorized the making or accepting of the deed from Mrs. Berston or Mrs. Houran, or if either of them knew that said deed was given before the fire, then plaintiff cannot recover.” The court further charged the jury that: “If you find that Cornelius Houran had general management of the business affairs of the Houran estate at the time of the delivery of the Berston deed, and that either executor had knowledge of such management or consented thereto, then the Houran estate is bound by Cornelius’ acts.” We are satisfied from reading the testimony that these controverted questions of fact were properly submitted to the jury. We have examined the other assignments of error, but we find no reversible error in the record. The judgment is affirmed. McAlvay, C. J., and Brooke and Moore, JJ., concurred with Kuhn, J.