Summary
finding that it was "completely irrelevant" to the claim of insureds that they had no financial liability to their hired construction company when an insured structure burned down mid-construction, because they still had an insurable interest in the property to be built
Summary of this case from Sky Harbor Atlanta Ne. v. Affiliated FM Ins. Co.Opinion
46679.
ARGUED NOVEMBER 1, 1971.
DECIDED NOVEMBER 24, 1971. REHEARING DENIED DECEMBER 13, 1971.
Action on insurance policy. Mitchell Superior Court. Before Judge Culpepper.
Frank C. Vann, Smith, Cohen, Ringel, Kohler, Martin Lowe, Sam F. Lowe, Jr., Robert W. Beynart, for appellant.
Ben L. Bateman, Robert E. Hughes, Frank S. Twitty, Jr., James C. Brim, Jr., H. Thaxton Monk, Jr., for appellees.
Fred B. Hand, Jr., amicus curiae.
1. Rulings on a motion for summary judgment which do not affect the interest of the appellant may not be enumerated as error by it. Where appellant's only interest in this litigation is its liability to the plaintiffs under a homeowner's insurance policy following a fire loss to a building under construction, it is not concerned with limitations placed on the funds after they reach the hands of the insured, or with priorities between creditors as to the funds of another policy issued by another insurance company and covering only the interest of the builder.
2. The beneficiary of a homeowner's insurance policy who contracted for the construction of a residence was entitled, under the terms of the policy, to the actual cash value of the dwelling under construction, including building materials and supplies on the premises without deduction due to the fact that under the terms of the building contract he was to pay the contractor only upon delivery and acceptance, and without regard to the fact that the contractor's own loss would be indemnified to him by another insurance company which insured the liability of the contractor.
ARGUED NOVEMBER 1, 1971 — DECIDED NOVEMBER 24, 1971 — REHEARING DENIED DECEMBER 13, 1971 — CERT. APPLIED FOR.
The Batemans, as owners of certain property, entered into a contract with Godwin to erect a residence, and took out with appellant American Insurance Company a homeowner's insurance policy which insured the dwelling during and after construction for its actual cash value. The building contract provided that Bateman should owe nothing until the house was completed and accepted, at which time he would pay the full construction cost of $15,800. FHA as mortgagee deposited $15,800 in a bank for Bateman's use and was named loss payee in the contract of insurance. Godwin in turn took out a builder's risk policy with Insurance Company of North America naming Farmers Bank of Pelham as loss payee, the bank having lent Godwin $14,000 upon the security of an assignment of the proceeds of the building contract.
At a time when the structure was uncompleted but had, according to some of the testimony, a value of about $16,500 it was totally destroyed by fire. Claims of lienholders, including various subcontractors and materialmen, totaled over $11,000. Godwin, in addition to sums borrowed for this construction, had used a part of the borrowed money on other construction projects, and his bank account was overdrawn. Under the circumstances the insurance companies refused to pay and Bateman brought an action against both insurers, the bank, the FHA, the contractor and the lienholders seeking a judgment against his insurer, the appellant here, and further seeking a certain relief as to the other parties. This was followed by a motion for summary judgment, after which the court entered an order finding both insurers liable to their respective insureds, directing payment by the Insurance Company of North America to Godwin and the bank as their interests may appear in an amount stipulated by the parties to be $13,890, Godwin's debt to the bank to be paid out of this fund and the bank thereupon to release the construction fund of $15,800 deposited therein by Bateman to his lender, the FHA. It was further directed that Bateman's recovery from appellant, being the actual cash value of the uncompleted house, should be held by Bateman in favor of certain listed lienholders whose liens were stipulated to be valid and properly filed. The question of the amount due as actual cash value was left open for jury determination.
1. (a) "Rulings which do not affect the interests of the appellant or plaintiff in error may not be assigned as error by him." 5 CJS 829, Appeal Error, § 1497; Lively v. Oberdorfer, 216 Ga. 673 (3) ( 119 S.E.2d 27) and cit.; Hoffman v. Chester, 201 Ga. 447, 451 ( 39 S.E.2d 857). The American Insurance Company as a defendant here is interested only in whether or not it is liable to its insured, Bateman, on its homeowner's policy and, if so, the proper method of determining its liability. If liable, it is to its insured alone, and the fact that the court directed Bateman to satisfy the lienholders out of the proceeds of this policy when received is no concern of the appellant. Neither is it concerned with whether the Farmers Bank of Pelham is a proper loss payee as to the proceeds of the builder's risk policy which Insurance Company of North America issued to Godwin, or with the respective priorities of the bank and the lienholders. For this reason we will not consider enumerations of error 2, 4 and 5 relating to parts of the final order in this case not appealed by any of the entities affected thereby. We recognize the point attempted to be made, which is a contention that the trial court in attempting to protect both creditors and lienholders was thereby influenced to find both insurance policies productive of available funds which it allocated in such a manner as to give the greatest protection to third-party litigants here, and appellant contends that in so doing it found a total amount of insurance coverage greater than the total value of the loss, and that it was in fact injured thereby. The issue is not, however, the reasons persuading the court to rule in a certain way, but whether the ruling as made is correct.
(b) There is no rule of law that where various interests and various insurance policies are involved the total payable under all the policies must necessarily be equivalent to the market value of the property. An insurable interest means any actual, lawful and substantial economic interest in the safety or preservation of the subject. The measure of that interest is the extent to which the insured might be damnified by the loss. Code Ann. § 56-2405. Thus, an owner may insure his interest in the property under construction, and a contractor may indemnify himself against loss during the same period of time, and both policies will be payable, in the event of a fire, to the extent of the loss of each insured under his separate policy. Lititz Mutual Ins. Co. v. Lengacher, 248 F.2d 850.
2. Since, then, the liability of the appellant is not affected by the liability of Insurance Company of North America to Godwin, is the award in favor of Bateman for the actual cash value of the destroyed building the proper measure of its liability? Bateman's interest was insured "to the extent of the actual cash value of the property at the time of the loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality." Here the insurer argues in effect that Bateman suffered no loss because under the terms of his contract with Godwin he was required to pay nothing until the structure was completed. This is completely irrelevant. The building was a fixture upon land alleged to be owned by the plaintiffs, which allegation is not controverted by any defendant. It was being constructed under the plaintiffs' purchase contract as their residence. The construction liens constituted a burden of the property. The Batemans thus had an economic interest in the house they had contracted to have constructed as their residence, and whether they had paid for the work, or even whether or not a liability would exist against them in the future as to the substantially completed building which had been destroyed, they had as vendees under the building contract an insurable interest in the property. In fact, in Commercial Union Assur. Co. v. Ryalls, 169 Ala. 517 (53 S 754), it was held that the vendee in a contract to purchase real estate provided a certain building should first be erected thereon had an insurable interest in the building to be constructed. And in Bernhardt v. Boeuf Berger Mut. Ins. Co. (Mo.App.) 319 S.W.2d 672, the insured was held to have had an insurable interest in a house as the promisee of a construction contract, where he and his mother intended to use it as a residence after completion, although title to the land was in the mother who had verbally promised that she would convey it to him after completion. The policy itself, once insurable interest exists, determines the measure of damages, and fixes it as "the actual cash value of the property at the time of loss." Since this includes all loss by fire to the building and materials and supplies located on the premises intended for use in its construction, the court properly set such value as the measure of damages, leaving the identification and amount of these to be determined by a jury. Similarly, he left for jury determination "other losses as covered by the policy" without specification of which particular items are referred to. Appellant admits that it owes for the loss of certain items of personal property; whether other items are also involved was not passed upon. Enumerations of error 1 and 3 are also without merit.
Judgment affirmed. Bell, C. J., and Pannell, J., concur.