SPIRES Et Ux. v. Hanover Fire Ins. Co.

Dissenting Opinion by

Me. Justice Linn:

The complaint is sufficient, in my judgment, to require an answer, and states a case in which the defendant should wish to state why it refuses to pay. The charge is that the defendant received the regular premium; that it insured against damage to plaintiff’s property, (Hangar No. 1 in the sum of 117,50o) 1 and, after the fire settled with two beneficiaries, the tenant and the chattel mortgagee, but refused to settle with plaintiffs, owner of the hangar. Why? The complaint discloses that the tenant, the named insured, declined to file a *66 proof of loss on account of Hangar No. 1. No fraud or other reason appears why defendant should not pay or .at least state its defense, if any. The settled rule, the rule which I think should be applied, is that summary judgment will not be granted unless a case is clear; if a case is not clear, the parties must have opportunity to develop the facts at trial: Ottman et al v. Nixon-Nirdlinger et al., 301 Pa. 234, 243-244 , 151 A. 879 (1930); Smith v. Brockway Motor Truck Corp., 302 Pa. 217, 219-220 , 153 A. 333 (1931).

This summary judgment seems to be put on various grounds: (1) it is said the plaintiff is not named in the policy. The opinion states: “The first [reason] is that their [plaintiffs] contention that the insurance was carried primarily for their benefit is unwarranted.” The complaint averred: “19. The insurance carried with the defendant herein on Hangar No. One and the offices therein was carried by the said M. E. Kaehler and Louis A. Raub for the benefit of the land owner, H. J. 0. Spires and Alta Spires, his wife, the plaintiffs herein.” The allegation is that the tenants were under á contractual duty to insure for the lessor’s benefit; and that they did insure the premises. Where one has agreed to perform a particular act, his performance of that act will be presumed to have been done pursuant to that agreement : cf. Lightner’s Appeal, 82 Pa. 301, 304 (1876). The pleaded facts therefore support the conclusion that the insurance was for the account of plaintiffs as fully as if the policy had said, “for the account of whom it may concern.” On proof of the facts averred, the jury would be justified in finding that, in obtaining this insurance on the Hangar, the tenants acted as agents for their lessors as undisclosed principals. It is not essential that plaintiffs characterize the relation in their complaint, or aver, in so many words, that agency existed, if, in fact,

*67 the averments support a finding of such relation. The law i has not excepted insurance 2 contracts from the rules of agency. In Miltenberger v. Beacom, 9 Pa. 198 (1848), this Court said that the contract of insurance, “like other contracts, may be effected by the agency of a third person, without the authority of the party to be benefited, if he subsequently recbgnize it.” An insurance company may of coursé provide against liability to an undisclosed principal by requiring sole and unconditional ownership by the insured but the policy in suit did not so provide: compare Schloss v. Importers & Exporters Ins. Co., 83 Pa. Superior Ct. 426 (1924); Penna. Fire Ins. Co. v. Dougherty, 102 Pa. 568 (1883) ; Livingstone v. Boston Ins. Co., 255 Pa. 1 , 99 A. 212 (1916) ; The Millville Mutual Fire Ins. Co. v. Wilgus, 88 Pa. 107 (1878) ; Franklin Fire Ins. Co. v. Shadid, 68 S. W. 2d 1030 (Tex. 1934). In Insurance Co. of Pa. v. Smith, 3 Wharton 520 (1838) the company recovered its premium from an undisclosed principal. In Isaac et al. v. Donegal and Conoy Mut. Fire Ins. Co., 308 Pa. 439 , 162 A. 300 (1932) it appeared that the policy covered the property of three persons but part of it was owned by one of them individually. The sub-agent of the insurance company knew of the title to the property and was held' to have waived the sole and unconditional ownership requirement.

2. I must also differ from the decision that plaintiffs are not the real parties in interest within Procedural Rule 2002. Being remedial, it should receive a liberal *68 interpretation. 3 It provides that “all actions shall be prosecuted by and in the name of the real party in interest ...” The tenants agreed to return the leased property at the end of the term and to keep it (not merely their interest in it) insured. It was so insured, as they aver, for their benefit. The tenants, who were named in the policy, held the legal title to the chose in action (the protection afforded by the policy) while part of the beneficial interest in the insurance was in plaintiffs; the relation of trustee and beneficiary existed. As the defendant has settled by satisfying its obligation to the tenant and to the chattel mortgagee, two of the three beneficiaries, the only unsatisfied policy obligation is that owing to the plaintiffs; as the only party now interested, they have the right to discharge that obligation and are therefore the real parties in interest within the meaning of Rule 2002; Kusmaul v. Stull et al., 356 Pa. 276 , 51 A. 2d 602 (1947).

A variety of comparable situations have been considered which would now fall directly within the real party in interest rule. In Gardner v. Freystown Mut. Fire Ins. Co., 350 Pa. 1 , 37 A. 2d 535 (1944), we held that Rule 2002, Pa. R. C. P., allowed a bailee to sue in his own name although the bailor was also beneficially interested in the fund: This Court said, “. . . where the *69 contract of bailment provides that the bailee shall insure the goods while in his possession, either bailee or bailor may maintain an action against the insurer on the policy for the full amount of the loss occasioned (citing cases).” See also Roberts v. Firemen’s Ins. Co., 165 Pa. 55 , 30 A. 450 (1894); B. N. Exton & Co., Inc., v. Home Fire & Marine Ins. Co., 249 N. Y. 258 , 164 N. E. 43 (1928). The relation of tenant and remainderman was considered in Welsh v. London Assurance Corp., 151 Pa. 607 , 25 A. 142 (1892). In Pearson Mfg. Co. v. Pittsburgh Steamboat Co., 309 Pa. 340 , 163 A. 680 (1932), a mortgagor-mortgagee relationship was considered. See also Peoples Street Ry. Co. v. Spencer, 156 Pa. 85 , 27 A. 113 (1893).

3. The majority opinion proceeds on the theory that plaintiffs cannot recover because not named in the policy. It is not disputed that if the tenants obtained judgment on the policy the plaintiffs could enforce an equitable lien on the proceeds as held in trust. 4 That equitable right does not exclude the remedy at law. Where a named insured owes a contractual duty to an unnamed beneficiary to sue for and collect insurance, the unnamed beneficiary, as the real party in interest, may give notice to the company of his claim, pursuant to which the company may either defend against it or interplead the parties; the law should not permit the company to gain any advantage by the named insured’s default. If the tenants recovered the proceeds they would hold them in trust for the plaintiffs who were beneficiaries under the policy. The trustee, with no active duties to perform, became the trustee of a dry or self-executing trust; in such case, the beneficiary may ignore the trustee and *70 sue in Ms own name: Cable v. Cable, 146 Pa. 451 , 23 A. 223 (1891); Wescott v. Edmunds, 68 Pa. 34 (1871). In the Westcott case, at pages 36-7, Agnew, J., stated, “It is very clear that the active duties of the trust under this win ceased at the death of Catherine Hanee, the life-tenant under the trust; and after that there remained no further duty to he executed’ by the trustee, but to convey the estate to the persons in remainder. But this; it has been ■ decided, does not continue the trust, the law, in this state, executing the legal title in the remaindermen without the formality of a conveyance. It is true, that decrees have been made in such cases compelling trustees to convey to the person in remainder or to married women after coverture had ceased; but it is said this was merely to remove the cloud from the title arising from the apparent trust. Whatever might have been the impression as to the necessity of such a decree, it is now clearly settled by authoritative decision that the legal estate vests without a conveyance: [citing cases].”

I think the real party in interest rule was intended to render unnecessary the complex remedy suggested by the majority to the effect that the plaintiff proceed in equity against the. tenant and the insurance company. It is because the plaintiffs are the real parties in interest that the tenants, who have been paid, are now indifferent to the result. There is only one issue, whether defendant should pay the insurance for which it collected the premium and that issue is remediable at law without resort to the equity side of the court.

I. would reverse the judgment and require the insurance company to file its answer.

Mr. Justice Patterson and Mr. Justice Allen M. Stearns concur in this opinion.

Under a printed direction on the policy form stating, “Insert here number of apartments and/or number of roomers or boarders” the policy contains the following: “Item 1. $17,500. On the One story Skeleton Steel building with metal roof, occupied for office — class rooms and administrative or other purposes not more hazardous. Known as Hangar No. 1.”

Insurance in modern times in this Commonwealth is a matter of general public concern and is regulated by “The Insurance Company Law of 1921,” Act of May 17, 1921, P. L. 682, 40 PS 341 et seq. as amended and by The Insurance Department Act of May 17, 1921, P. L. 789 as amended, 40 PS 1 et seq.

Such an interpretation of the term “real party” was indicated by Mr. Justice Stebn in Badger v. Upper Darby Twp., 348 Pa. 551, 555 , 36 A. 2d 507 (1944), where he said, “If, as would appear, the insurance company is the real party in interest, a decision denying plaintiff the right to prosecute her claim because of failure to give written notice to the township would be one of sheer literalism, for, had such notice been given, the township would undoubtedly, in due course, have turned it over to the company, to which plaintiff’s counsel had sent it in the first instance. It is not unusual for lawyers representing claimants in accident cases to communicate with insurance companies directly rather than with defendants, since the former control the negotiations for settlement and prepare the defense in ease of litigation.”

Pearson Mfg. Co. v. Pittsburgh Steamboat Co., 309 Pa. 340, 344 , 163 A. 680 , 94 A. L. R. 1382, note p. 1387 (1932) ; Peoples Street Ry. Co. v. Spencer, 156 Pa. 85 , 27 A. 113 (1893) ; Ins. Co. of Pa. v. Phoenix Ins. Co., 71 Pa. 31 ; 92 A. L. R. 559; 21 A. L. R. 1460.