Summary
In Zeiger v. Farmers' Laborers' Coop. Ins. Ass'n, 358 Mo. 353, 214 S.W.2d 426 (1948), the loss payable clause required the insurer to give the mortgagee notice of the mortgagor's failure to pay any premium due, and if the mortgagee desired to continue the insurance in force it was to pay the premium within ten days after such notice.
Summary of this case from Waynesville Sec. v. Stuyvesant Ins. Co.Opinion
No. 40524.
November 8, 1948.
1. INSURANCE: Failure to Pay Assessments: Buildings Not Insured. Since plaintiffs failed to pay the assessments required by the insurance policy, they did not have their buildings covered by insurance at the date of the fire.
2. INSURANCE: Mortgages: Insurance Assessments Not Paid: Failure of Insurance Company to Notify Mortgagee: Obligation of Insurance Company: Compromise Agreement Not Binding on Mortgagors. When the insance company failed to comply with its agreement to notify the mortgagee when insurance assessments were not paid, so that the mortgagee could keep the insurance in force by paying the assessments, the insurance company was liable to the mortgagee for the amount of the fire loss, and the mortgagors would not be bound by any compromise agreement under which it was paid.
3. INSURANCE: Mortgages: Failure to Pay Insurance Assessments: No Rights Under Insurance Policy: Personal Obligation of Insurance Company to Mortgagee: Mortgage in Default: Foreclosure Proper. When the insurance company failed to notify the mortgagee of the failure of the mortgagors to pay assessments, the obligation of the insurance company to pay the amount of the fire loss to the mortgagee did not arise under the insurance policy, but was a separate clause in the mortgage for the benefit of the mortgagee, and the mortgagors had no interest therein. So they were not entitled to have such payment applied to the mortgage notes. The mortgage was in default and was properly foreclosed.
4. INSURANCE: Assessments Valid. The assessments against plaintiffs' insurance policy were made in substantial compliance with the method prescribed by the constitution of the insurance company.
5. PLEADING: Refusal to Permit Amended Petition Immaterial. It was immaterial whether the trial court acted properly in refusing to permit an amended petition to be filed and striking part of the reply, as said amended petition and reply were based upon substantially the same facts as the petition upon which the case was tried.
Appeal from Shelby Circuit Court. — Hon. Harry J. Libby, Judge.
AFFIRMED.
Roy Hamlin, Waldo Edwards and Gaylord Wilkins for appellants.
(1) In an equity case, the court is not bound by the findings of facts made by the court below, but must and should review the whole record and while giving just and proper consideration to the opinion of the chancellor who heard the evidence in the first instance, must decide all questions of face anew and for itself. Punch v. Hipolite Co., 100 S.W.2d 878, 340 Mo. 53; Krug v. Brammer, 316 Mo. 891, 292 S.W. 702; Brightwell v. McAfee, 249 Mo. 562, 155 S.W. 820. (2) The debt of plaintiffs to the Land Bank, as evidenced by their notes and two mortgages was approximately $2000, and the payment by the insurance company of said $2000, under said insurance policy, to the Federal Land Bank of St. Louis paid off and extinguished the debts of plaintiffs, and any foreclosure thereafter was unauthorized, unlawful, null and void and did not convey and title by virtue of said foreclosure to the Byrds to the farm and lands of plaintiffs. 26 C.J., p. 438, sec. 588; Hartford Fire Ins. Co. v. Bleedorn, 132 S.W.2d 1066. (3) The mortgage clause attached to the insurance policy in this case is a standard union mortgage clause, and no act or omission of the mortgagors can affect the rights of the mortgagee therein, and the mortgagee had first claim to the proceeds of the insurance money up to the amount of the debt secured — in the instant case, at least two thousand dollars. Gordon v. Northwestern Natl. Ins. Co., 77 S.W.2d 512, 228 Mo. App. 1008. (4) Under the laws of Missouri, and the facts in this case, the obligation of the insurance company to pay the Land Bank under the policy of insurance and the mortgage clause affixed thereto became fixed, either at the date of the fire, or, at most, upon the receipt of the proof of loss, or the waiver of them; that the insurance company was not entitled to attach conditions to its payments under the mortgage clause of the amount due under the policy. Loewenstein v. Queen Ins. Co., 227 Mo. 100, 127 S.W. 72; Equitable Fire Marine Ins. Co. v. Holland Banking Co., 262 S.W. 444, 214 Mo. App. 560. (5) The insurance company admitted that it violated its mortgage clause attached to the policy of insurance by not notifying the Land Bank of any default in the payment of assessments, but even though said company admitted a violation of the contract on its part, at the same time, the insurance company asked the court to let it profit thereby and asked for its money back from the Land Bank. Loewenstein v. Queen Ins. Co., 277 Mo. 100, 127 S.W. 72; Miller v. Union Assur. Soc., Ltd., of London, 39 F.2d 25. (6) The secretary of the association showed that the purported and alleged assessments were illegal and void. Farmers' Mutual Fire Ins. Co. v. Meyer, 49 S.W.2d 270. (7) The court erred, on the date of the trial, in refusing to permit plaintiffs, appellants herein, to file an amended petition in two counts. Secs. 37, 38, General Code for Civil Procedure, Laws of 1943.
Lane B. Henderson for respondents Byrd.
Where a safe way is open to a party to protect himself from financial loss at a normal expense and he speculates unsuccessfully on a line of acton that leads to financial disaster, he can not call on a court of equity for relief. Phoenix v. Holt, 312 Mo. 563, 279 S.W. 714; Betzler v. James, 227 Mo. 375, 126 S.W. 1007; B.F. Goodrich Rubber Co. v. Bennett, 281 S.W. 75.
Ralph Nolen and Olliver W. Nolen for respondent Farmers' Laborers' Cooperative Insurance Association of Monroe County.
(1) The insurance policy contained a union or standard mortgage clause. This created in effect, two contracts, one with appellants (mortgagors) and the other with respondent, The Federal Land Bank et al. (mortgagees). Trust Co. v. Insurance Co., 201 Mo. App. 223, 210 S.W. 98; Gordon v. National Ins. Co., 228 Mo. App. 1008, 77 S.W.2d 512; 5 Appleman's Ins. Law and Practice, pp. 554-557. (2) The secretary of the insurance company produced documentary evidence of the mailing of the notices and of plaintiff's failure to pay assessments. Hill v. Conn. Mutual Life Ins. Co., 235 Mo. App. 752; Girvin v. Metropolitan Life Ins. Co., 84 S.W.2d 664; Williams v. Mutual Ins. Assn., 72 S.W.2d 166; Anderson v. Merchants Mutual Aid Soc., 46 S.W.2d 938; Hannum v. Waddell, 135 Mo. 153. (3) Appellants' failure to pay the assessments when due nullified their interest in the insurance as a result of the fire. Dierks v. German Ins. Co., 34 Mo. App. 31; Easter v. Brotherhood of American Yeoman, 154 Mo. App. 456; O'Donnell v. Kansas City Life Ins. Co., 222 S.W. 920; Haseltine v. Farmers Mutual Ins. Co., 263 S.W. 810. (4) Appellants forfeited all their interest and rights in the policy of insurance by failing to pay the assessments. Day v. Woodman Circle, 174 Mo. App. l.c. 269; Girvin v. Metropolitan Life Ins. Co., 84 S.W.2d 644; Williams v. Mutual Ins. Assn., 72 S.W.2d 166. (5) The subrogation receipt was valid and entitled the insurance company to the balance of the money. Dick v. Franklin Ins. Co., 10 Mo. 376; Mosby v. Aetna Ins. Co., 285 Mo. 242, 225 S.W. 715; Dick v. Franklin Ins. Co., 81 Mo. 103. (6) Plaintiffs did not plead an invalid assessment but pleaded that all assessments were paid. The assessments were valid. Sec. 6177, R.S. 1939; Anderson v. Merchants Mechanics Mutual Aid, 46 S.W.2d 938; American Guaranty Co. v. Mattson, 100 Mo. App. 316.
G.V. Head for respondents The Federal Land Bank of St. Louis, Federal Farm Mortgage Corporation and Shelby-Monroe National Farm Loan Association.
(1) The court did not commit error in declining to permit the filing of the proposed second amended petition. Sec. 81, Civil Code. (2) The assessments were regularly and legally levied. Farmers' Mutual Fire Ins. Co. v. Meyer, 226 Mo. App. 1223, 49 S.W.2d 270. (3) Appellants failed to pay the assessments effective December 17, 1938, and October 7, 1939. Borgraefe v. Knights of Honor, 22 Mo. App. 127. (4) Default in payment of the assessments terminated appellants' rights under the policy. Constitution and by-laws are part of policy. Haseltine v. Farmers' Mutual Fire Ins. Co., 263 S.W. 810; Sovereign Camp W.O.W. v. Newsom, 142 Ark. 132, 219 S.W. 759. (5) Constitution and by-law provisions terminating policy on default in payment of assessments are valid and binding. Dircks v. German Ins. Co., 34 Mo. App. 31; Easter v. Brotherhood of American Yeoman, 154 Mo. App. 456, 135 S.W. 964; O'Donnell v. Kansas City Life Ins. Co., 222 S.W. 920; Hart v. Farmers' Mutual Fire Lightning Assn., 208 Iowa 1020, 226 N.W. 777. (6) Even if note is given for full premium. Travelers Ins. Co. v. Springfield Fire Marine Ins. Co., 89 F.2d 757; Hartford Fire Ins. Co. v. Jones, 215 Ala. 107, 110 So. 30; McCullough v. Home Ins. Co., 118 Tenn. 263, 100 S.W. 104. (7) Failure to pay assessment automatically terminates rights under policy. Scheele v. State Home Lodge, 63 Mo. App. 277; Knode v. M.W.A., 171 Mo. App. 377, 157 S.W. 818; Day v. Woodmen Circle. 174 Mo. App. 260, 156 S.W. 721; Brittenham v. W.O.W., 180 Mo. App. 523, 167 S.W. 587; Anderson v. Merchants' Mechanics' Mutual Aid Society, 46 S.W.2d 938; Hamilton v. Northeast Mutual Ins. Assn., 116 S.W.2d 159. (8) The trustee's sale was regular and valid. The insurance company is subrogated to the rights of the mortgagee. If policy and rider are in conflict, the rider controls. Wagner Electric Corp. v. Ocean Acc. Guarantee Corp., 36 F.2d 186; Aetna Ins. Co. v. Sacramento-Stockton S.S. Co., 273 F. 55; Barnett v. Prudential Ins. Co., 194 S.W.2d 317. (9) Standard mortgage clause creates separate contract with mortgagee. 5 Appleman, Ins. Law Practice, pp. 554, 557; Trust Co. v. Ins. Co., 201 Mo. App. 223, 210 S.W. 98; Gordon v. National Ins. Co., 228 Mo. App. 1008, 77 S.W.2d 512; Tarleton v. De Veuve, 113 F.2d 290; Labonte v. St. Paul Fire Marine Ins. Co., 88 N.H. 219, 186 A. 6: Goldstein v. National Liberty Ins. Co., 256 N.Y. 26, 175 N.E. 359; Federal and Bank v. Atlas Assur. Co., 188 N.C. 747, 125 S.E. 631. (10) A policy with standard mortgage clause constitutes two separate contracts. Abbottsford Building Loan Assn. v. William Penn Fire Ins. Co., 130 Pa. Super. 422, 197 A. 504; Union Assurance Society v. Equitable Trust Co., 63 S.W.2d 869. (11) The company's separate contract with the mortgagee covers the interest of the mortgagee only. Syndicate Ins. Co. v. Bohn, 65 F. 165; Savings Bank v. Schancupp, 108 Conn. 588, 144 A. 36; Citizens State Bank v. State Mut. Rodded Fire Ins. Co., 276 Mich. 62, 267 N.W. 785; Reed v. Firemen's Ins. Co., 81 N.J.L. 523, 80 A. 462; Fidelity-Phenix Fire Ins. Co. v. Cleveland, 57 Okla. 237, 156 P. 638. (12) If mortgagor's rights against company are terminated, mortgagee's contract with company becomes the sole contract. Willits v. Camden Fire Ins. Assn., 124 Pa. Super. 563, 189 A. 559; Savings Bank v. Schancupp, 108 Conn. 588, 144 A. 36. (13) On mortgagor's default, situation is the same as though the policy from the beginning covered only the mortgagee's interest. Shelby County Trust Banking Co. v. Security Ins. Co., 66 F.2d 120. (14) If insurance covered only interest of mortgagee, company, upon payment to mortgagee, would be subrogated to mortgagee's rights under note and mortgage. Dick v. Franklin Fire Ins. Co., 10 Mo. App. 376; Dick v. Franklin Fire Ins. Co., 81 Mo. 103. (15) The company is subrogated in such a case, even though the policy contains no express stipulation for subrogation. Carpenter v. Providence Washington Ins. Co., 16 Pet. 495, 10 L.Ed. 1044; Gainesville Natl. Bank v. Martin, 187 Ga. 559, 1 S.E.2d 636; Stuyvesant Ins. Co. v. Reid, 171 N.C. 513, 88 S.E. 779. (16) Respondent insurance company was subrogated to rights of mortgagees. 26 C.J. 461; 29 Am. Jur. 1012; 6 Appleman, Ins. Law and Practice, pp. 550-552, 555-557, 565; Tarrant Land Co. v. Palmetto Fire Ins. Co., 220 Ala. 428, 125 So. 807; American Ins. Co. v. Hattaway, 194 Ga. 15, 20 S.E.2d 406; Metropolitan Life Ins. Co. v. Mennonite Mutual Fire Ins. Co., 131 Kan. 628, 293 P. 402; Grangers' Mutual Fire Ins. Co. v. Farmers' Natl. Bank, 164 Md. 441, 165 A. 185; Niagara Fire Ins. Co. v. Fitzsimmons, 101 N.J. Eq. 437, 139 A. 523. (17) The mortgage clause provision for subrogation is valid and binding. 6 Appleman, Ins. Law and Practice, p. 550; Dick v. Franklin Fire Ins. Co., 10 Mo. App. 376; Mosby v. Aetna Ins. Co., 285 Mo. 242, 225 S.W. 715; Surratt v. Fire Association, 43 F.2d 467. (18) Appellants' authorities on subrogation. 6 Appleman, Ins. Law and Practice, p. 555; Insurance Co. v. Martin, 151 Ind. 209, 51 N.E. 361; 26 C.J. 438; Mosby v. Aetna Ins. Co., 285 Mo. 242, 225 S.W. 715; Tarrant Land Co. v. Palmetto Fire Ins. Co., 220 Ala. 428, 125 So. 807; Sun Ins. Office v. Heiderer, 44 Colo. 293, 99 P. 39; Frontier Mortgage Corp. v. Heft, 146 Md. 1, 125 A. 772. (19) Appellants were not entitled to credit on the mortgage indebtedness for the amount paid by the insurance company. A payment which gives rise to a right of subrogation effects an equitable assignment. 6 Appleman, Ins. Law and Practice, p. 563; Carpenter v. Providence Washington Ins. Co., 16 Pet. 495, 10 L.Ed. 1044; Savings Bank v. Schancupp, 108 Conn. 588, 144 A. 36; Insurance Co. v. Martin, 151 Ind. 209, 51 N.E. 361; Calendro v. American Foreign Ins. Co., 227 Iowa 829, 289 N.W. 485; Frontier Mortgage Corp. v. Heft, 146 Md. 1, 125 A. 772; Ross v. Jones, 174 Wn. 205, 24 P.2d 622; Baker v. Monumental Savings L. Assn., 58 W. Va. 408, 52 S.E. 403. (20) The insurance company, having paid the mortgage debt after denial of liability to the mortgagor, can enforce the note and mortgage. 6 Appleman, Ins. Law and Practice, p. 569; National Fire Ins. Co. v. Selden, 262 Ill. App. 497; Niagara Fire Ins. Co. v. Fitzsimmons, 101 N.J. Eq. 437, 139 A. 523; Girard Fire Marine Ins. Co. v. Farmer, 36 S.W.2d 282. (21) The mortgagor is not entitled to credit on the note for the insurance proceeds. 6 Appleman, Ins. Law and Practice, p. 570; Brogoitti v. Walter, 43 Ariz. 290, 30 P.2d 835; Savings Bank v. Schancupp, 108 Conn. 588, 144 A. 36; Insurance Co. v. Martin, 151 Ind. 209, 51 N.E. 361; Federal Union Ins. Co. v. Griffin, 151 So. 107; Frontier Mortgage Corp. v. Heft, 146 Md. 1, 125 A. 772; Grangers' Mutual Fire Ins. Co. v. Farmers' Natl. Bank, 164 Md. 441, 165 A. 185; Badger v. Platts, 68 N.H. 222, 44 A. 296. (22) The bank might have incurred liability to the insurance company if the bank had given the mortgagors credit for the insurance proceeds. 6 Appleman, Ins. Law and Practice, p. 565; City of New York Ins. Co. v. Abraham, 20 So.2d 183; McKay v. National Union Fire Ins. Co., 182 Minn. 378, 234 N.W. 589; American Eagle Fire Ins. Co. v. Grant Building Loan Assn., 108 N.J. Eq. 83, 154 A. 112. (23) The interest acquired by the insurance company in the bank's mortgage was subject to the bank's right to full payment. Brogoitti v. Walter, 43 Ariz. 290, 30 P.2d 835; Savings Bank v. Schancupp, 108 Conn. 588, 144 A. 36; Grangers' Mutual Fire Ins. Co. v. Farmers' Natl. Bank, 164 Md. 441, 165 A. 185. (24) The failure of the insurance company to give notice to the mortgagee of the mortgagors' default in payment of the assessments, vests in the mortgagors no rights under the policy.
Plaintiff, Zeiger, and his wife filed this suit to set aside a deed to a tract of land executed pursuant to a foreclosure sale under a deed of trust or mortgage at Paris, Monroe County, Missouri. The trial court denied the relief asked for and plaintiffs appealed.
The defendants named were: The Farmers' Laborers' Cooperative Insurance Association of Monroe County, Missouri, A Corporation; The Federal Land Bank of St. Louis, A Corporation; Shelby-Monroe National Farm Loan Association, A Corporation; Fred B. Byrd and Lailah Byrd, his wife; and Federal Farm Mortgage Corporation. The only parties that need be mentioned in the course of the opinion are the plaintiffs and the two defendants, The Federal Land Bank and The Insurance Company.
[427] The evidence reveals that in 1933 plaintiffs owned the tract of land in question. During that year they obtained a loan from the defendant, Federal Land Bank, in the sum of $2,500. Plaintiffs were required by the terms of the mortgage to keep the buildings on the land insured. On June 21, 1937, the defendant, Cooperative Insurance Association, issued a five year policy for plaintiffs covering the buildings on the land for a total of $2,900. The sum of $2,000 was placed on the dwelling which burned on July 12, 1940. In September, 1942, the Federal Land Bank foreclosed under the mortgage for alleged default in payment of the debt and defendants, the Byrds, were the purchasers for the sum of $1,610. This was less than the amount due on the loan on the date of the fire. The defendant insurance company was a farmers' mutual fire insurance company, governed by Art. XV, Chap. 37, page 1013, Mo. R.S. Ann., R.S. Mo., 1939. This company had a constitution and by-laws which under the law constituted a part of the contract of insurance. The constitution and by-laws were printed on the face of the policy. Haseltine v. Farmers' Mut. Fire Ins. Co. of Billings, Christian County, Missouri, 263 S.W. 810, l.c. 812 (1). Under Sec. 6177 and the constitution and by-laws of the company, the Board of Directors was given authority to levy assessments from time to time against the members or the policy-holders to pay for losses sustained. The evidence shows that on November 23, 1938, and again on September 15, 1939, the Board of Directors ordered an assessment of twenty-five cents on each $100 of the policy. Each assessment against plaintiffs was in the sum of $7.25. The evidence further discloses that these assessments were not paid; that notices of these assessments were mailed to Zeiger and that another notice was mailed informing him his insurance had been suspended and that by paying assessments in arears the policy could be reinstated. To refute this evidence Zeiger testified that he paid all assessments of which he received notice. The trial court found that the notices had been mailed but that the assessments were not paid. The evidence does not permit any other inference to be drawn. Since plaintiffs failed to pay their assessments the insurance was suspended. The contract of insurance so provided. Note the following provision in the constitution:
"And if any member shall fail to pay the amount of such assessment within thirty days from the time the notice is so mailed, then such member shall at the expiration of said time be barred from any benefits of this Association, whether of insurance or otherwise; provided, that if such member shall at any time after the expiration of said thirty days pay his original assessment and all other assessments subsequently made, he shall be reinstated as a member of the Association, but the Association shall in no event be liable for any loss taking place during the time of such default; provided, further, that in any event such member shall be liable for the assessment of which he has been notified as above provided, and for such other assessments as may be made during the thirty days herein provided."
Therefore, under the terms of the policy plaintiffs did not have their buildings covered by insurance at the date of the fire. 45 C.J.S., Sec. 576, pages 371, 372; 44 C.J.S. 1365, Sec. 372; Williams v. Northeast Mut. Ins. Ass'n., 72 S.W.2d 166; Day v. Supreme Forest, Woodmen Circle, 174 Mo. App. 260, 156 S.W. 721; Hamilton v. Northeast Mut. Ass'n., 116 S.W.2d 159, l.c. 164 (8).
Plaintiffs contended at the trial, as they do here, that even though the assessments were not paid the insurance company nevertheless paid $2,000 to the defendant bank under a mortgage clause of the policy; that this should have been credited to their notes and therefore they were not in default on the payments at the time of foreclosure, hence, the sale was void. The mortgagee clause of the policy provided that any loss or damage under the policy was payable to the Federal Land Bank "as interest(s) may appear." This clause also provided that in case the mortgagor should fail to pay any premium due under the policy the insurance company was to give [428] the bank notice of the default, then if the bank desired to continue the insurance it was to pay the premium within ten days after such notice. It was conceded that the insurance company failed to notify the bank of the default in the payment of the assessments due on the policy. After the fire the bank demanded payment, by the insurance company, of the full amount of the policy covering the dwelling, that is, $2,000. The insurance company refused but tendered a less amount. The matter was settled by the insurance company paying the bank the full amount of $2,000, but at the same time the parties entered into an agreement wherein it was stated that the insurance company was denying liability under the policy and that the amount was being paid to the bank under the mortgagee clause. The agreement provided further that the bank would assign to the insurance company the notes and mortgage when and if the amounts due the bank were paid in full by plaintiffs. The bank claimed only as much of the $2,000 as would be required to pay plaintiffs' notes in full. The insurance company claimed the balance. The bank held the $2,000 but did not give any credit on plaintiffs' notes. After the foreclosure proceedings were had the bank applied a sufficient amount of the $2,000 to the indebtedness to pay it in full. Plaintiffs claim the bank should have credited the $2,000 on the notes on the date it received the money. The question is, were plaintiffs entitled to any part of the $2,000 paid to the bank? Plaintiffs claim that they were not bound by the agreement entered into between the bank and the insurance company at the time payment of the $2,000 was made to the bank. In this plaintiffs are correct. They state their position in their brief as follows:
"Under the laws of Missouri, and the facts in this case, the obligation of the insurance company to pay the Land Bank under the policy of insurance and the mortgage clause affixed thereto became fixed, either at the date of the fire, or, at most, upon the receipt of the proof of loss, or the waiver of them; that the insurance company was not entitled to attach conditions to its payments under the mortgage clause of the amount due under the policy. Neither could the Land Bank and the insurance company, either by agreement or contract, postpone the date when the loan to the Land Bank was due, and consequently, the amount of the mortgage has to be determined as of the date when the payment was due and is not to be calculated from the date that the Land Bank accepted the money under the so-called subrogation agreement."
Did plaintiffs have any rights under the policy at the time of the fire? The answer must be in the negative. As noted above and the cases cited, failure to pay assessments suspended all rights of plaintiffs under the policy. The insurance company's failure to notify the bank as the mortgagee clause required rendered the insurance company liable to the bank for any loss sustained thereby. However, this liability did not arise under the policy but under the terms of the mortgagee clause. Plaintiffs remained liable to the bank for the full amount of the indebtedness. The right or cause of action the bank had against the insurance company for failure to notify the bank of the delinquency in the assessments did not inure to plaintiffs but was personal to the bank. Loewenstein v. Queen Ins. Co., 227 Mo. 100, 127 S.W. 72, was cited by plaintiffs as authority for their claim. In that case the insurance was in full force at the time of the fire. The insurance company contended the owner of the property had failed to comply with the terms of the policy pertaining to the proof of loss. The court held the company had waived the proof of loss and hence the insurance was in force for the owner's benefit. The court in that case held that the mere claim of nonliability on part of the insurance company did not operate as a subrogation of the rights of the mortgagee to the insurance company, but that there must be in fact a valid defense against the owner of the property. In other words, if there were actually no liability to the owner at the time of the fire but there was liability to the mortgagee because of the mortgagee clause, and if the insurance company paid the loss, then the insurance company would be subrogated to the rights [429] of the mortgagee. The situation in the case before us is, that neither plaintiffs nor the bank had any rights under the policy of insurance at the time of the fire. The bank did have some rights under the mortgagee clause for failure of the insurance company to notify the bank of plaintiffs' default in payment of assessments. The evidence shows that after the fire plaintiffs also failed to make the payments required by the terms of the note and mortgage. This justified the institution of foreclosure proceedings.
Plaintiffs also cite and quote from Hartford Fire Ins. Co. v. Bleedorn, 132 S.W.2d 1066, l.c. 1071, 235 Mo. App. 286. In that case the insurance was admittedly in force and the insurance company admitted liability. The dispute was whether the mortgagee was to receive all of the money to be paid by the insurance company or whether the owner was entitled to benefit of the proceeds. The St. Louis Court of Appeals held, and correctly so, that the policy having been issued on application of the mortgagee and the premium charged to the mortgagor the policy was issued for the benefit of the mortgagor. It is evident the case does not aid plaintiffs. Miller v. Union Assur. Soc., Ltd., of London, England, 39 F.2d 25, cited by plaintiffs, is authority against their position. In that case the insurance policy was in force at the time of the fire. The insurance company claimed that the owner of the property had violated the terms of the policy by permitting the property to be occupied by a distiller. The insurance company canceled the policy after the fire as of the date the distillery was moved into the property. The insurance company was forced to pay the mortgagee because under the terms of the policy no act of the owner of the property would cancel the policy as to the mortgagee. The insurance company then recovered judgment against the owner for the amount it was forced to pay the mortgagee. The court held that the insurance company was subrogated to the rights of the mortgagee.
The mortgagee clause attached to the policy was, as plaintiffs say in their brief, a standard union mortgagee clause. Such a clause is a separate and distinct contract for the benefit of the mortgagee. Trust Co. of St. Louis County v. Phoenix Ins. Co. of Hartford, Conn., 201 Mo. App. 223, 210 S.W. 98, l.c. 102 (3, 4); Wisman v. Hazel Dell Farmers Mut. Fire Lightning Ins. Co., 230 Mo. App. 489, 94 S.W.2d 908; Prudential Ins. Co. of America v. German Mut. Fire Ins. Ass'n. of Lohman, 60 S.W.2d 1008, l.c. 1010 (4) (first appeal), 231 Mo. App. 699, 105 S.W.2d 1001; 26 C.J. 239; Appleman Insurance Law Practice, Vol. 5. Sec. 3401, page 552, l.c. 559.
Plaintiffs had no rights under the policy at the time of the fire and we restate, as stated above, that the only claim the bank had was for breach of contract under the mortgagee clause. This clause being a separate contract for the benefit of the bank, plaintiffs had no interest therein. Appleman Insurance Law Practice, Vol. 5, page 538, Sec. 3383; Sterling Fire Ins. Co. v. Beffrey, 48 Minn. 9, 50 N.W. 922; Gillespie v. Scottish Union Nat. Ins. Co., 61 W. Va. 169, 56 S.E. 213.
Appellants say that the assessments alleged to have been unpaid were void because all assessments were twenty-five cents on the $100 insurance, the maximum permitted, and not based on a pro rata of the actual losses. The evidence of the secretary of the insurance company, quoted by appellants in their brief, seems to sustain their contention. However, when the entire evidence of this witness is examined it clearly shows that it was the policy of the board to make assessments whenever the losses were sufficient to justify an assessment of twenty-five cents. The record does not show that appellant, Zeiger, was assessed any more than his pro rata share of the amount of the losses. Plaintiffs in their petition did not claim that the assessments were illegal. Treating the question as though it were an issue in the case the point must be decided against appellants. The method of assessments was a substantial compliance with the method [430] prescribed by the constitution of the company. That was all that was necessary. 46 C.J.S. 827, Sec. 1477.
Appellants contend the trial court erred in not permitting plaintiffs to file an amended petition and also in striking from the reply matters contained in the proffered amended petition. The alleged cause of action, as stated in the amended petition and as stricken from the reply, was based upon substantially the same facts as the case tried and now here for review. The unsurmountable obstacle confronting plaintiffs in the case tried would also have been present if the case had been tried on the amended pleadings, the obstacle being that the insurance policy had been suspended long before the fire. Therefore, we need not decide whether the trial court should have, under the new code, permitted the amended pleadings to be filed.
Our conclusions on the merits of this case are in harmony with the the result reached by the trial court and the judgment is therefore affirmed. Bohling and Barrett, CC., concur.
PER CURIAM:
The foregoing opinion by WESTHUES, C., is adopted as the opinion of the court. All the judges concur.