Opinion
No. COA96-841
Filed 17 June 1997
Insurance § 472 (NCI4th) — leased vehicle — destruction by fire — payment of insurance proceeds to lessor The trial court did not err in dismissing plaintiff insured's claim for the value of his leased vehicle, which was insured by defendant, where the vehicle was destroyed by fire and defendant paid the named loss payee, a leasing company, for the value of the vehicle. Even if plaintiff had an ownership interest in the leased vehicle, defendant fulfilled its contractual duty to pay the insurance proceeds by paying the leasing company as loss payee pursuant to its policy.
Am Jur 2d, Automobile Insurance §§ 18, 19, 21.
Liability insurance — Insurable interest. 1 ALR3d 1198.
Appeal by plaintiff from order entered 16 October 1995 by Judge E. Lynn Johnson in Moore County Superior Court. Heard in the Court of Appeals 1 April 1997.
Brown Robbins, L.L.P., by P. Wayne Robbins and Carol M. White, for plaintiff-appellant.
Kitchin, Neal, Webb Futrell, P.A., by Stephan R. Futrell, for defendant-appellee.
Andrew T. Hartsell leased a 1992 Honda Accord through Wachovia Auto Leasing Company ("Wachovia") in October 1991, for a period of forty-eight months. He purchased insurance for the vehicle from Integon Indemnity Corporation ("Integon").
In March 1992, Mr. Hartsell reported that the Honda had been stolen. The next day, the Moore County Sheriff's Department found the vehicle totally destroyed by fire. Mr. Hartsell reported the theft and fire to Integon; but nonetheless, he continued to make the lease payments to Wachovia throughout the term of the lease.
In May 1992, Mr. Hartsell sued Integon seeking insurance proceeds for the value of the car and his personal property in the car. The trial court dismissed Mr. Hartsell's claim for the value of the car stating: "[Integon] has paid the `actual cash value' of the insured vehicle to the named Loss Payee, Wachovia Auto Leasing, and therefore, [Mr. Hartsell] has no ownership interest, direct or indirect, in the vehicle at issue." Subsequently, Mr. Hartsell voluntarily dismissed his personal property claim and appealed from the trial court's dismissal of his claim for the value of the car.
The issue on appeal is whether the trial court erred by dismissing Mr. Hartsell's claim for the value of the car because for purposes of insurance coverage, he had no "ownership interest" in the burned vehicle. Mr. Hartsell does not dispute that Wachovia holds title to the Honda; rather he contends that the following language in his insurance policy allows him to claim insurance benefits as an owner of the leased vehicle:
For purposes of this policy, a private passenger type auto shall be deemed to be owned by a person if leased:
1. Under a written agreement to that person, and
2. For a continuous period of at least 6 months.
Mr. Hartsell further contends that even though the trial court found that the policy listed Wachovia Auto Leasing as the loss payee, the loss or damage under the policy was to be paid "as interest may appear to you [the insured] and the loss payee."
Even if we assume for the sake of argument that Mr. Hartsell has an ownership interest in the vehicle, we nonetheless affirm the trial court's decision to grant Integon's motion for summary judgment.
"A loss payable clause names the payee of the insurance proceeds." Cherokee Ins. Co. v. KoeNenn, 536 F.2d 585, 589 n. 5 (5th Cir. 1976). "It is well established that where one of several parties collects the total proceeds of an insurance policy, payable `as interest may appear,' he may be compelled to account for such portion which exceeds his interest, to the other person or persons interested in the insurance." In re Huselton's Estate, 237 N.Y.S. 531, 532 (1929) (citations omitted). See also 5A John A. Appleman Jean Appleman, Insurance Law and Practice § 3335 at 150 (1970) (the loss payee "must account for the portion exceeding his interest to the other beneficiaries.").
In this case, the trial court found that Integon fulfilled its contractual duty by paying the insurance proceeds to Wachovia, the party so designated. The fact that plaintiff made continued lease payments is a contractual matter with Wachovia; Integon insured the Honda, not the lease agreement. Having paid Wachovia, the loss payee, the value of the vehicle, Integon fulfilled its obligation under the insurance policy covering the subject vehicle. Accordingly, the order of the trial court dismissing Mr. Hartsell's claim is,
Affirmed.
Judge TIMMONS-GOODSON concurs.
Judge GREENE dissents.