American Indemnity Co. v. Southern Missionary College

ON Petition to Reheab.

Neil, Chief Justice.

The petition to rehear quotes excerpts from the original opinion and complains that we committed error in misr applying the applicable rule of law. .The authorities cited and argument made in support of the petition presents no new matter or any additional authority which was not fully considered.

*522Able counsel for the petitioner says:

“In the case at bar the policy covered the Southern Missionary College as owner and no way can it be intei'preted to cover their interest as a stockholder, as they failed to insure their interest as such stockholder.
“In all the cases and in all the statements of the law that a stockholder has an insurable interest state that the policy must be issued to cover that interest. ”

We welcome an opportunity to again respond to the contention of counsel that the insured was not the owner of the property and that the policy did not cover an undeclared “insurable interest”.

In Parker v. Bethel Hotel Co., 96 Tenn. 252, 34 S. W. 209, 215, 31 L. R. A. 706, it was held that ‘ ‘A corporation and its shareholders are distinct legal entities” and since the legal title to the corporate property was in the Bethel Hotel Company one who was the sole owner of the stock therein could not convey the property to another, The deed executed by the sole owner of the stock was held to be void. Moreover the alleged sole owner of all the stock in the corporation had transferred most of it prior to the date of the deed which was held to be void. The contest was between alleged secured and unsecured creditors. Insurance was in no way involved.

No one can question the soundness of this opinion, holding that the legal title was in the corporation and an attempted conveyance of the property by a lone stockholder was void. But it is interesting to note that in the same opinion it was expressly held that shareholders are beneficial owners of the corporate property, subject to the claim of creditors, such as “surplus profits of the corporation”.

*523The case is in point only as authority for the proposition that stockholders as such have no legal title to corporate property. To all of which we fully agree. But it. does not follow that a sole and unconditional owner of all the stock in a corporation does not hear such a relationship to the corporate property that he has no insurable interest therein.

The petitioner is most insistent that the Southern Missionary College should have, in applying for the policy, stated the nature of its alleged interests, i. e., that it was the owner of all the stock in the Collegedale Mercantile Enterprises, Inc. "We cannot accede to this as a sound postulate in the Law of Insurance. There are cases almost without number dealing with the question of “sole .and unconditional ownership” of property where the insurer insisted upon a forfeiture because of an invalid title, or no legal title, or no title at all in the policy holder. But in cases too numerous to require citation it is held that even though ownership does not rise to the dignity of a legal title the interest may be insurable. Thus in Couch’s Cyclopedia of Insurance Law, Vol. 4, Sec. 915, it is said:

“So, it is said that a condition for sole and unconditional ownership means the ‘real owner,’ and is not breached by the mere fact that the record title is, for purposes of convenience, in another for a time. In fact, an equitable title in the insured is a sufficient compliance with a condition that the insured must have sole and unconditional ownership. Again, a provision for ‘sole and unconditional ownership’ does not require a perfect legal title, but is satisfied if the insured has an insurable interest, and is the substantial oioner upon iuhom the entire loss would, fall.” Emphasis ours.)

*524Another statement by the same author in Yol. 2, Sec. 426, is believed to he applicable to the case at bar:

“ Although there is some question whether a stockholder in a private corporation has an insurable interest in the corporate property, the weight of authority seems to he that he has. And this is consistent with the general rules relating to ‘insurable interest, ’ namely, that such an interest does not necessarily imply a property in the subject of the insurance, or even a legal or equitable title or possession; that a qualified interest is an insurable interest; that a slight or contingent interest is sufficient, when founded upon an actual right to the thing or upon a valid contract relating to it; and that, whenever a legal connection can he shown to exist between injury to the thing insured and loss to the party insuring, it is sufficient.” (Emphasis ours.)

There is no forfeiture clause, however, in the policy, such as that the said policy shall he void if the Insured is not the “sole and unconditional owner of the property.” On the contrary the policy provides: “Ownership of Property—Records. The insured property may he owned hy the Insured or held hy him in any capacity whether or not the'Insured is liable for such loss or damage as is covered hereby, provided that the company shall not be liable for such damage to the premises unless the Insured is the owner thereof or is liable for such damage thereto.” (Emphasis ours.)

It thus conclusively appears that the policy is enforceable by the Insured if the property is held by him in any capacity. The bill of the complainant is therefore not demurrable. Moreover .the foregoing policy provision refutes the petitioner’s contention that complainant’s suit is not maintainable on the ground that the *525interest songlit to be insured was not specifically and precisely set out in the policy.

The petitioner makes no contention, either in oral argument or on the brief, that Southern Missionary College made any misrepresentation as to its interest in the property insured. The question of fraud does not enter into the present controversy. There is nothing to indicate that Southern Missionary College misrepresented its legal relationship to Collegedale Mercantile Enterprises, Inc., or deceived the petitioner either by word or act in applying for this policy of burglary insurance. The record fails to disclose the exact source of the money alleged to have been stolen from the college store. The complainant’s bill merely alleges the following fact, which is admitted by the demurrer, that 'Southern Missionary College “sustained a loss from burglary of $5,-880.62 in cash taken from the safe in the college store, located on the premises of the insured.’’ (Emphasis supplied.)

The only inference to be drawn from this allegation in the bill is that the complainant, Southern Missionary College, had an interest in the contents of the safe that was burglarized, the same being “on the premises of the Insured. ” It is immaterial under the express provisions of the policy in what capacity ownership, or right of possession, was claimed.

The petition to rehear is denied.