Graham v. Roberts, 43 N.C. 99, 8 Ired. Eq. 99 (1851)

Dec. 1851 · Supreme Court of North Carolina

43 N.C. 99, 8 Ired. Eq. 99

EDWARD E. GRAHAM & AL. Exr's vs. WILLIAM ROBERTS.

Where premises devised to A for life, remainder to B, are insured, and after the testator's death, are consumed by fire and the insurance paid ; Held, that A, the tenant for life, is entitled to the interest on the insurance money, in lieu of her right to the premises devised, during her life, and, after her death, the principal is to be paid to .B, the remainder-man ; that the executors are net authorised to pay the money to A, but.it is their duty to keep it secure, paying' to A the interest annually, and that the premiums of insurance are a proper charge against A and B.

Cause removed from the Court of Equity of Craven County, at the Fall Term, 1851.

This was a bill, filed by the executors of Mrs. Mary Mc-Kmlay, to obtain directions from the Court as to the proper execution of the will. The only point of law submitted arose upon the following facts. Certain premises in the town of Newbern, were, by the said will, devised to Mrs. Elizabeth Daves for life, and after her death to her children, John, Edward and Graham. The premises were insured, and, after the death of the testatrix, they were con> sumed by fire, and the insurance money received by the executors. The opinion of the Court was asked, whether this money belonged to those, to whom the premises insured had been devised.

W. II. Haywood, for the plaintiffs.

James W. Bryan, for Elizabeth B. Daves and children, submitted the following argument :

1. The executors, qua executors, have no interest in the insurance money, having no property in the thing insured, and the same enures to the benefit of the owners of the property insured: they could not recover back the premium paid by them; Lowry v Bourdien, Dougl. 468. The party insured must have an interest, or property at the time of insuring, and at the time the fire happens, or he can sustain no loss, and consequently can be entitled to no satisfaction. These insurances from fire have been introduced! in later times, and therefore differ from insurances of ships, because there interest or no interest is almost constantly inserted, and if not inserted you cannot recover, unless you prove a property. To whom or for what loss are they to make satisfaction ? Why, to the person insured, and for the loss he may have sustained, for it cannot properly be called insuring the thing, for there is no possibility of doing it, and therefore, must mean insuring the person from damage. The insurers have an option by the terms of the policy to pay or rebuild, and this most manifestly shows, they meant to insure upon the property, because nobody else than the owner of the property can give them leave to lay even a brick, for another person might fancy a house of a different kind ; Lynch v Dalzell, 4 Bro. P. C. 431, the 'Sadlers Comp, v Badcock and others, 2 Atk. 554, 16 Wendell’s R. 385, 3 Denio. R..301, 4 Hill’s Rep. 187. The executors might, therefore, have been compelled by the devisees of the insured property, to lay out, in rebuilding the houses destroyed by fire, the money paid by the insurance office, and thus it would have gone to the persons successively entitled under the will of the testatrix.

2. The proceeds of the policy cannot be considered as part of the testatrix’s general personal estate, but they are affected with a trust for the benefit of the parties interested in the real estate. The proceeds of the policy are a substitution for the property insured, and consequently belong to those parties who were entitled to the property insured, under the will of the testatrix; Parry v Ashley, 3 Simons Rep. 97, (5 Eng' Ch. Rep. 31), Norris v Harrison, 2 Mad Ch. R. 268, Am. Edition, 481. Where a building is insured against fire, in which there is a life estate, in case of a partial destruction of it by fire, the insurance money is to be applied to the repairing of the building; Brough v Higgins, 2 Gratt. R. 408, 1 U. S. Digest (1847) 222.

3. The tenant for life of the insured property, being also guardian of the remaindermen, is entitled to the possession of the entire fund of insurance money, the same being considered in this Court a substitution for the property insured and would be liable upon her guardian bond to the remain-dermen upon the falling in of their interests; Norris v Harrison, 2 Mad. 268. Every devise of land must of necessity be specific whether in particular or general terms ; Howe v Earl of Dartmouth, 7 Yesey, 137. The insurance money being a substitution for this specific devise, the tenant for life is entitled to hold and enjoy the same in specie, and the same is not to be converted for the benefit of those in remainder; Goodenough v Trememondo, 2 Beavan, 512, (17 Eng. Ch. R. 512) Bethune v Kennedy, 1 Mylné and Craig, 114 (13 Eng. Ch. R. 314,) Collins v Bollins, 2 Mylne and Keene, 702.

Pearson, J.

We are of opinion that the money, received upon the policy of insurance, stands in place of the buildings consumed by fire — that Mrs. Daves is entitled to the interest thereon tor life, in lieu of the use and occupation of the buildings, and the said John, Edward and Graham Daves will, at her death, be entitled to the principal money. The executors are not authorised to entrust Mrs. Daves with the money. It is their duty to keep it secure, paying to her the interest annually. The premiums of insurance is a proper charge against her and the remainder-men.

Per Curiam. Declared accordingly.