Hartford Ins. Co. v. Brewer

HARTFORD INSURANCE COMPANY of the Midwest v.
Damon BREWER and Carolyn Brewer

CA 95-237                                          ___ S.W.2d ___

                  Court of Appeals of Arkansas
                             En Banc
                 Opinion delivered May 29, 1996


1.   Judgment -- summary judgment -- when granted. -- Summary
     judgment is an extreme remedy and should be granted only when
     there are no genuine issues of material fact left to be
     determined and when the case can be decided as a matter of
     law. 

2.   Contracts -- interpretation of -- intent of parties to be
     determined from whole context of agreement. -- To determine
     rights and duties under a contract, the court must determine
     the intent of the parties; this is not to be accomplished
     through the establishment of a judicial inquisition, but
     instead by examining the written agreement to construe it and
     declare its legal effect; the intent of the parties is to be
     determined from the whole context of the agreement; the court
     must consider the instrument in its entirety. 

3.   Appeal & error -- appellant failed to bring up record
     sufficient to demonstrate error -- summary judgment affirmed.
     -- Although the court was asked to construe a written contract
     of insurance so as to reverse the circuit court's decision to
     grant summary judgment, the contract appeared neither in the
     abstract nor even in the record; it was appellant's burden to
     bring up a record sufficient to demonstrate error; without the
     contract in question the appellate court could not determine
     whether the trial court erred; appellant failed in its burden,
     and the summary judgment was affirmed.


     Appeal from Faulkner County; David L. Reynolds, Judge;
affirmed.
     Anderson & Kilpatrick, by:  Michael E. Aud, for appellant.
     Helen Rice Grinder, for appellee.

     John Mauzy Pittman, Judge. *ADVREP*CA1*
                             EN BANC



                                   CA 95-237

                                                 May 29, 1996


HARTFORD INSURANCE COMPANY         AN APPEAL FROM THE CIRCUIT
OF THE MIDWEST                     COURT OF FAULKNER COUNTY,
          APPELLANT                ARKANSAS
                                   [NO. CIV-93-70]

VS.
                                   HONORABLE DAVID L. REYNOLDS
                                   FAULKNER COUNTY CIRCUIT JUDGE

DAMON BREWER AND                   AFFIRMED
CAROLYN BREWER
          APPELLEES




                   John Mauzy Pittman, Judge.


     The appellant, Hartford Insurance Company, appeals from an
order granting summary judgment in favor of appellees, Damon and
Carolyn Brewer, on their claim to entitlement to the proceeds of an
insurance policy issued by appellant.  Appellant contends that the
trial court erred in granting appellees' motion for summary
judgment and instead should have awarded summary judgment to
appellant.  For the reasons that follow, we affirm.
     Although the record in this case is sketchy at best, the
parties seem to agree upon certain facts.  In December 1990,
appellee Damon Brewer's mother, Ethel Brewer, died intestate,
leaving a residence in Conway to vest in her heirs by operation of
law.  See Ark. Code Ann.  28-9-203(c) (1987).  In July 1991,
appellant issued a homeowner's insurance policy covering the
property through June 1992.  Apparently, the named insured was the
"Estate of Ethel Brewer."  On February 3, 1992, the other heirs of
the decedent transferred all their interest in the property to
appellees, who are husband and wife.  Twelve days later, the
property burned.  Appellees then sought to collect under the policy
issued by appellant.  The claim was denied, and appellees filed
this action, in their individual capacities only, in circuit court. 
After initial pleadings were filed, both appellant and appellees
filed motions for summary judgment.  The court granted appellees'
motion and awarded them judgment for $38,500.00 under the policy,
attorney's fees, and a twelve-percent penalty.
     On appeal, appellant argues that the trial court erred because
the named insured, the "Estate of Ethel Brewer," had no insurable
interest at the time of the loss as required by Ark. Code Ann. 
23-79-104 (Repl. 1992).  While appellant seems to concede that the
estate had an insurable interest at the time that the policy was
issued and that the appellees had an insurable interest at the time
of the loss, appellant specifically argues that an estate is a
legal entity separate and distinct from a decedent's individual
heirs and that "it is not enough to have an insurable interest in
property unless the person or persons having such interest also are
specifically named as insureds."  In other words, it is appellant's
argument that appellees had no contract of insurance with
appellant, and that appellant was entitled to judgment as a matter
of law.  Appellees respond that, "[s]ince the heirs of Ethel Brewer
already had whatever interest they were to obtain from her estate
when the estate became the named beneficiary, it is clear that the
policy must be read to cover the heirs of the estate and, by
conveyance, to [cover] Damon and Carolyn Brewer."  
     Summary judgment is an extreme remedy and should be granted
only when there are no genuine issues of material fact left to be
determined and when the case can be decided as a matter of law. 
Cherepski v. Walker, 323 Ark. 43, 913 S.W.2d 761 (1996).  In light
of the record with which we have been presented, however, we are
unable to reach the merits of appellant's argument.  Although we
are essentially being asked to construe a written contract of
insurance so as to reverse a circuit court's solemn judgment
thereon, the contract appears neither in the abstract nor even in
the record.  It is axiomatic that, to determine rights and duties
under a contract, we must determine the intent of the parties. 
This is not to be accomplished through the establishment of a
judicial inquisition, but instead by examining the written
agreement to construe it and declare its legal effect.  Duvall v.
Massachusetts Indemnity and Life Insurance Co., 295 Ark. 412, 748 S.W.2d 650 (1988); Floyd v. Otter Creek Homeowners Association, 23
Ark. App. 31, 742 S.W.2d 120 (1988).  It is well settled that the
intent of the parties is to be determined from the whole context of
the agreement; the court must consider the instrument in its
entirety.  Continental Casualty Co. v. Davidson, 250 Ark. 35, 463 S.W.2d 652 (1971); Fowler v. Unionaid Life Insurance Co., 180 Ark.
140, 20 S.W.2d 611 (1929); Floyd v. Otter Creek Homeowners
Association, supra.  Clearly, it is an appellant's burden to bring
up a record sufficient to demonstrate error.  McAdams v. Automotive
Rentals, Inc., 324 Ark. 332, ____ S.W.2d ____ (1996); May
Construction Co., Inc. v. Benton School District No. 8, 320 Ark.
147, 895 S.W.2d 521 (1995); Young v. Young, 316 Ark. 456, 872 S.W.2d 856 (1994).  Without the contract in question, which may
have spoken in any number of ways to the issue of the person or
persons entitled to the policy proceeds, we cannot determine
whether the trial court erred.  Therefore, we conclude that
appellant has failed in its burden, and we affirm.
     Affirmed.
     Rogers, J., agrees.
     Jennings, C.J., concurs.
     Mayfield, Neal, and Griffen, JJ., dissent.
*ADVREP*CA1-A*               EN BANC





                                   CA 95-237

                                                May 29, 1996


HARTFORD INSURANCE COMPANY         AN APPEAL FROM FAULKNER
OF THE MIDWEST                     COUNTY CIRCUIT COURT
                APPELLANT          

V.                                 HON. DAVID L. REYNOLDS, JUDGE


DAMON BREWER AND WIFE,
CAROLYN BREWER 
                APPELLEES          DISSENTING OPINION



                   Wendell L. Griffen, Judge.


     þA blind man should not judge of colors.þ  Proverb
     
     The majority would affirm this patently wrong result due to an
abstracting error. The Arkansas Supreme Court has repeatedly held
that even an abstract that falls considerably short of the
requirements of Rule 4-2 may not be "flagrantly" deficient.  Linder
v. Howard, 296 Ark. 414, 757 S.W.2d 549 (1988); Ark. Sup. Ct. R. 4-
2(b)(2); see also Haynes v. State, 309 Ark. 583, 832 S.W.2d 479
(1992);  Goodloe v. Goodloe, 253 Ark. 550, 487 S.W.2d 593 (1972). 
The balance of the parties' briefs may overcome the deficiency and
provide the court with the matters "necessary to an understanding
of all questions presented to the court for decision."  Ark. Sup.
Ct. R. 4-2(a)(6); Fight v. State, 314 Ark. 438, 863 S.W.2d 800
(1993); Haynes v. State, 309 Ark. 583, 832 S.W.2d 479 (1992). 
     Here, the homeowner's insurance policy at issue was not
included in the record or abstracted.  However, the issue on appeal
has nothing to do with the existence or the basic terms of the
contract.  Indeed, the parties agree to all the material issues
surrounding the contract.  The narrow question on appeal is whether
the named insured ("The Estate of Ethel Brewer") continued to have
an insurable interest or, more specifically, whether summary
judgment on this question was proper given the factual state of the
record.  I contend that the absence of the contract in the record
was not fatal, given the parties' apparent stipulations regarding
the contract, and that we should have properly proceeded to the
issue of summary judgment. 
     With regard to summary judgment, I disagree with the result
reached in this case and the reasoning announced in the prevailing
opinion because it is clear that genuine issues of material fact
exist that preclude entry of summary judgment.  It is equally clear
that no accurate determination can be made that either party is
entitled to judgment, as a matter of law or otherwise, until those
factual issues are resolved.  Therefore, the trial court should not
have entered summary judgment in favor of appellees in the face of
the clear and time-honored principle affirmed by Rule 56 of the
Arkansas Rules of Civil Procedure.  The same logic compelled denial
of the appellantþs summary judgment motion.
     We must remember that the object of summary judgment
proceedings is not to try the issues, but to determine if there are

any issues to be tried, and if there is any doubt whatsoever, the
motion for summary judgment should be denied.  Rowland v.
Gastroenterology Assocs., 280 Ark. 278, 657 S.W.2d 536 (1983); 
Walker v. Stephens, 3 Ark. App. 205, 626 S.W.2d 200 (1981).  That
is why courts have consistently stated that summary judgment is an
extreme remedy which should only be allowed when it is clear that
there is no issue of fact to be litigated.  Lee v. John Doe, 274
Ark. 467, 626 S.W.2d 353 (1981); McCaleb v. National Bank of
Commerce, 25 Ark. App. 53, 752 S.W.2d 54 (1988).  This case
demonstrates what can happen when parties and courts forget or
ignore this fundamental rationale.
     The parties agree that appellant issued its policy covering
the residence in question to an insured known as the þEstate of
Ethel Brewer.þ  Appellant claims that its insured lost any
insurable interest in the property once the heirs at law sold their
respective interests to Damon Brewer and his wife.  Neither party
before us is the Estate of Ethel Brewer.  The record contains
nothing that suggests the status of the Estate of Ethel Brewer. 
Neither the trial judge nor this court knows the status of the
Estate of Ethel Brewer.  Especially important is whether the Estate
of Ethel Brewer has claims pending against it that might be
satisfied by the proceeds of the insurance policy.  Whether the
Estate is open or closed, whether claims are pending against it
and, if so, in what amounts, whether the Estate has somehow
transferred any interest that it may have in the policy proceeds to
appellees, and whether Damon Brewer is entitled to recover,
personally, from appellant based upon an insurance policy issued to
somebody else known as the Estate of Ethel Brewer, are questions
that should be resolved before a court of law orders appellant to
give insurance proceeds payable on a policy in the name of the
Estate to anybody else.   But instead of joining the Estate in this
litigation and developing the evidence on these issues, the parties
have presented this case for summary adjudication with nothing in
the record concerning any of them.  The trial court improperly gave
the imprimatur of legitimacy to their efforts by granting
appelleesþ summary judgment motion, and now the result announced in
the prevailing opinion compounds the error. 
     None of the aforementioned basic questions were raised by
either party at the trial level or on this appeal.  Of course,
appellant has an interest in paying nothing to anybody, so it can
hardly be expected to raise the possibly legitimate interest of the
named insured to defeat its position.  Appellees appear interested
in recovering the policy proceeds in their personal capacities;
otherwise Damon Brewer would have made certain that the Estate of
Ethel Brewer was joined in the lawsuit.  As matters now stand, the
record does not contain any fact showing what right the Estate has
to the policy proceeds, whether it has an insurable interest that
justifies a finding that supports recovery, or whether it has an
insurable interest but is otherwise precluded from recovery.  One
thing is certain, the parties to this appeal have done everything
but join the insured, the only party in the world whose interest is
questioned in the appeal.  
     I would reverse and remand this case to the trial court for
further proceedings, beginning with joinder of the Estate of Ethel
Brewer.  If the Estate is not a necessary party to this lawsuit to
determine who gets the proceeds of its insurance policy, if any
proceeds are payable, then appellees have plainly failed to
demonstrate how the Estate became disqualified.  At minimum, the
status of the Estate of Ethel Brewer is a matter to be proved in
order to determine whether the Estate has an insurable interest
represented by the proceeds of the insurance policy that appellant
issued to it and for which premiums were paid.  After all, the
question raised by appellantþs summary judgment motion was whether
the Estate (rather than appellees) had an insurable interest at the
time of the loss.  If there were any questions of fact to be tried
on that point, summary judgment was inappropriate.
     Appellees do not resolve the issue of the Estateþs insurable
interest by their argument that they purchased the interests of the
other heirs at law.  The law in Arkansas and elsewhere is that an
insurable interest may continue even after a transfer of ownership. 
Hartford Fire Ins. Co. v. Stanley, 7 Ark. App. 94, 644 S.W.2d 628
(1983); Appleman, Insurance Law and Practice,  2181 (citing cases
where a vendor retains an insurable interest if he has
indebtedness, some other lien, or a reversion interest in the
property or if the contract for sale is forfeitable, or if the
vendor remains in possession, or where the deed has been placed in
escrow.)  Arkansas is in accord with the general rule that coverage
under a fire insurance policy is personal to the insured and for
its benefit only.  Echo, Inc. v. Stafford, 21 Ark. App. 201, 730 S.W.2d 913 (1987).  Insurance contracts do not run with the
property.  Firemanþs Fund Ins. Co. v. Rogers, 18 Ark. App. 142, 712 S.W.2d 311 (1986).  Consequently, when the insured parts with its
interest in the property, the insurance policy is no longer in
effect.  Appleman, supra,  2241; 44 C.J.S.  229, 233.  This
explains why one must determine whether the Estate retained any
cognizable interest in the property after appellees acquired the
interests of the other heirs at law.  If it did not, appellees are
entitled to nothing.
     Neither the record in this case nor the abstract presented on
this appeal indicates the status of the Estate.  It is certainly
conceivable that the Estate may retain some inchoate or
reversionary interest in the property that was insured pending its
closure despite the actions by the heirs at law to transfer their
respective interests to appellees.  If the Estate indeed has an
insurable interest, then nothing explains why appellees are
entitled to be paid the full amount of the policy proceeds.  After
all, when the fire occurred the policy was, without question, yet
effective with the Estate as the named insured.  Thus, the policy
proceeds would reasonably inure to the Estate until there were no
outstanding claims or legal challenges pending, and then to the
heirs at law pro rata.  Given that the heirs at law had transferred
their interests to appellees, this would mean that appellees would
recover after the factual issues inherent in the case had been
resolved, rather than reap a recovery without regard to the
Estateþs status and conceivable interest.
     Unless one embraces the inaccurate notion that the heirs at
law can properly and effectively contract among themselves to
dispose of property within an estate that may be subject to the
claims of creditors without leave of a probate court, there is no
reason to accept the appelleesþ position that they are, for
purposes of this litigation, the same as the Estate of Ethel
Brewer.  The record certainly does not contain anything that
supports that conclusion.  "Estate" and "heirs" are not equivalent
terms.  Black's Law Dictionary 548 (6th ed. 1990) (citing Martin v.
Hale, 167 Tenn. 438, 71 S.W.2d 211 (1934).  There is nothing in the
record showing that the Estate released any interest that it had in
the insured property to appellees.  The record does not include any
order from the probate court demonstrating that appellees have been
authorized to pursue a claim to recover these insurance proceeds in
their personal capacities.  Even if appellees made premium payments
it is obvious that the insurance was obtained for the benefit of
the Estate.  This would mean that appellees would be entitled to
recover the amount paid for the premiums from the Estate.  It does
not mean that appellees would divest the Estate of any interest
that it otherwise held in the property that was insured.
     Ordinarily, where a contract exists between A and B, before C
can recover money allegedly due under the contract, C must prove
how she has succeeded to rights belonging to A or B.  One would
think that where neither A nor B stipulates that C has the right to
recover, a trial would be necessary to settle the question.  Yet
today, we decide that C (appellees) was entitled to judgment
without trial--even in the face of argument from A (appellant) that
B (The Estate of Ethel Brewer) had no insurable interest whatsoever
and without concern for whatever rights B might have. If this case
had proceeded to trial and produced no proof about the Estate's
interest in the insurance policy after the fire loss, appellant
would have been entitled to a directed verdict in its favor.  It is
mind-boggling how appellant can now be held to the bizarre result
of summary judgment in appellees' favor when it would have deserved
the opposite result on a motion for directed verdict at trial. 
     In sum, whether a party has an insurable interest in property
is ordinarily a question of fact.  Colorado Farm Bureau Mut. Ins.
Co.v CAT Continental, Inc., 649 F. Supp. 49 (D. Colo.).  The trial
court granted summary judgment for appellees, denied the summary
judgment motion filed by appellant, and announced in its amended
order of February 13, 1995, that þthe Court doth find that the
Plaintiffþs (sic) had, at the time of the loss of the dwelling
located at 1923 Simms Street, Conway, Arkansas, an insurable
interest . . . .þ  However, there are no facts in the record
showing how appellees (plaintiffs below) acquired the insurable
interest held by the Estate of Ethel Brewer, or even that they did
acquire it.  As the proverb quoted at the beginning of this opinion
suggests, one must first see before judging.  In this case the
trial court and this court are blind concerning crucial, fact-
intensive issues on which the parties appear strangely eager to
avoid developing proof so that a court can render an informed
judgment.  Therefore, it was error to grant summary judgment on the
motion of either party. 
     Mayfield and Neal, JJ., join in this dissent.