HALE V. SIMMONS. HALE V. SIMMONS. 4-5944 139 S. W. 2d 696 Opinion delivered May 6, 1940. 1. INsuRANcE—INsuRABLE INTEREST.—Both lessor and lessee have an insurable interest in leased property, and either may insure his interest for his own benefit. 2. INSURANCE—LEASED PREMISES.—Where appellees leased from appellant a lot for two years with a small building on it worth $100 for $3 per month and the taxes assessed against it and [200 ARK.— PAGE 556]
HALE v. SIMMONS. tore down the building and erected another at an expense of $900 which was destroyed by fire, six months and 12 days before the lease expired, an insurance policy procured by appel-lees coyered only the unexpired. portion of. the lease which,, as far as.the lessees were concerned, was $96 and this was held to be the measure of their recovery, the remainder of the insurance policy for $750 waS the property of appellant to whom, under the lease, the building was to go on the expiration thereof.. , Appeal from Jackson Chancery Court ; ,A.. S. Irby, Chancellor ; reversed. J. F. Parish and Ras Priest, for appellaitt. RiekeliS (6 . Pickens, for appellee. - SMITH, J. On January 4, , 19.37, Mrs. Nora, , Hale entered into a written lease contract with Frank McCoy for a lot in the town of G-rubbs, for the term of two years, at the monthly rental of $3. The contraet provided "that the said Frank McCoy shah have an option of said property if he Wants same." Whether this option was to renew the lease , or buy the lot is . not disclosed in the lease contract nor in the' testithay. It was provided that the lessee should, in addition to the rent, pay "such sum . or sums of money as shall be equal to the amount of taxes and' duties , that shall be levied or assessed on the leased premises for each year and part of a year during the terra aforesaid." What the "duties" were which the lessee agreed to pay is not specified in the contract nor disclosed by the testimony. The lease . further provided . that "the • said , Frank McCoy has the right to build or add any such improvements ds he' wishes to without , the consent of the lessor, and that .the said Frank McCoy will quit and deliver up the premises • to the said . lessor, her heirs or assigns, peaceably and quietly, at the determination of the term aforesaid, in as good order and condition as the same noW or may hereafter be put into, reasonable wear and use thereof, and casualties by fire, excepted." There was a small building on the lot at the time of the execution of the lease, of the value of $100, as all parties cOncede. McCoy sub-let a half interest in the lease t6 . R. T. Simmons, and they formed a co-partner-[200 ARK.—PAGE 557]
HALE V. SIMMONS. ship to operate a filling station and a small liquor and grocery store on the demised lot. After forming this partnership, McCoy & Simmons tore down the small building and used the material thus obtained in the erection of a larger building. This cost McCoy and SiMmons $900, making Hip vAbia of the neVi building $1,000. McCoy and Simmons procured a fire insurance policy at their own cost on this building in the sum of $750, "payable to R. T. Simmons, Frank McCoy and Mrs, Nora Hale, as their respective interests may appear." The building burned, and the insurance company paid the . amount of the policy into . court, and this litigation 'involves the proper distribution of this insurance money. • The court below awarded Mrs. Hale $100, the value of the old building which had been used in the erection of the -new one, and *ordered the balance of the insurance. .money to be paid to McCoy & Simmons. This appeal -is from that decree. - ."-The unexpired term of the-lease at the time of the fire'was 6 months and 12 days; and the undisputed testimony Is to the effect that the rental value of the property as improved was $15 per month. tinder the law both lessor and lessee have an insur-able interest in leased property, and either may insure his interest for his Own benefit, but the policy here involved was for the benefit of both lessor and lessees "as their respective interest'S may appear," so that the question for decision is, what were the respective interests? The question here presented for decision is the subject , of an extended annotation to the case of Harrington v. .Agricultwral Ins. Co., 179 Minn. 510, 229 N: W. 792, 68 A. L.R. 1340. In this case the annotator states that "The general rule, subject to the qualifications to 'be noticed, may be stated to be that the insured with a limited interest in tbe res insured may not recover the full value of the res. See Western Assur. Co. v. Stoddard, 88 Ala. 606, 7 ,So. • 379. In most of the cases where it is apparent. that [200 ARK. — PAG:E 558]
HALE v. SIMMONS. to allow the insured to recover the full value of the property destroyed, within the amount of the policy, would enable him to realize a profit on his insurance, the Courts have limited the recovery to the value of the actual interest of the insured in the property destroyed." Numerous is€ iif;e 'cited . by the 'arinotator in surapert Of the Statement just quoted. In the Harrington . case, just .cited i .in a well-considered opinion by the Supreme Court of Min-nesota, (to quote a headnote) that ." A lessee procured an open fire policy on 'improvements and betterments' made by him, but which under the lease became the property of the le§sery -the lessee's . Only ilithteg t being- the right to use them during the relatively short period which the -lease had to run. Held, that an award, on a total loss, 'AS for full ' sound Value,' Was erroneous, thelessees only 1;ightof,recovery being for the loss of his right: to use itbejusured property for the remainder of theAerm of the-lease:" -, gere, the JesseeS erectedthe, building, at a cost to - themselves of $am,which,they, would have the right to _occupy upfm the payment: of only $3 per month rent "with the Aa-xes and-duties." But this right to occupy hdcroillr.6 mouths Arid 12 days to run when the fire O&Urred arid the building was destroyed, and there is no testimony to the effect :that the lease would have h.oen . renewed. By the express terms of .the lease any building- erected by the lessees became the property of the lessor upon the termination of the lease. The insurance policy, therefore, covered only the value Of this unexpired portion of the lease so far as the lessees are concerned, which the testimony shows is $96, the admitted rental value of -the property being $15 per month. We adopt this concession, although it ta.kes no account of the fact that the rental . value of the property was only $15 per month, and the rent itself which the lessees would have been required . to pay was $3 per month. The lessees had no insurable interest in the property eteept the value of their right to occupy it during the remainder of the term upon the payment of a monthly rental of $3, [200 ARK.--PAGE 559]
and the measure of this value would be the difference between the rental value and the rent reserved. But, as stated, we accept appellant's concession and find this value to be $96. The .decree of the court below will, therefore, be reversed, and the cause will . be remanded, with directions to allow $96 of the insurance money to McCoy & Simmons, the lessees, and the balance to the lessor.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.