Reid v. Hardware Mutual Insurance Icompany Of The Carolinas, Inc.

166 S.E.2d 317 (1969)

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Nature of the Case

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Facts

D issued a fire insurance policy to Ps, in the amount of $5,000.00, insuring against loss or damage by fire, for a five-year period, a one-story frame dwelling. The building insured was described in the policy as being one one-story frame constructed, approved roof, owner occupied, one-family dwelling. The record shows that on August 18, 1965, Ps conveyed the said lot on which the dwelling was located to Milford E. Tollison, the deed reciting a consideration of One Dollar and the assumption of the aforesaid mortgage. The policy was not transferred with the property and Ps remained the named insureds therein. The dwelling described in said policy was destroyed by fire on December 18, 1965, and at such time the balance of the mortgage debt owed was $1,647.56. D was notified of the loss of said dwelling by fire and made a demand for payment by D under the aforesaid policy which was refused. P sued D for the sum of $5,000.00. D claimed the following defenses: (1) Material prejudice as a result of the failure of the insured and the mortgagee to notify it of the change in ownership and other changes in conditions of the insured premises; (2) A denial that Ps had any insurable interest in the insured dwelling because they had conveyed the title to said property to Milford E. Tollison, and it was further denied that Tollison was an insured under said policy; (3) That any interest retained by Ps was predicated upon a remote contingent liability and upon which they had sustained no loss; (4) That to permit Zelphia H. Reid (P), the original mortgagor, to recover in this case would be against public policy and would result in allowing recovery on a wagering contract; and (5) That the aforesaid policy was void ab initio because the policy was written upon the basis that the dwelling was owner occupied and it was incumbent upon the respondent to notify D of any change in occupancy because such was material to the risk. The trial judge held that there was no coverage under the policy as to Milford E. Tollison because of the failure of notification of change of ownership. Following the conveyance of the insured premises to Milford E. Tollison, he placed a new roof on the dwelling and installed a hot water heater, water piping, new windows, bath fixtures, and a new water pump and tank. It also appears that after such repairs and improvements had been made the dwelling was occupied by a tenant. The trial judge held that the record is devoid of any basis for a finding or conclusion that the hazard insured against was increased by the conveyance of the insured premises to Tollison or the improvements and repairs made thereto by him and its conversion to rental property. D was liable to Zelphia H. Reid (P) in the amount of $ 1,647.56, being the balance of the mortgage debt due by her at the time of the fire. D appealed.