Morse v. Morse

Betty J. MORSE v. Jerry B. MORSE

CA 97-648                                          ___ S.W.2d ___

                  Court of Appeals of Arkansas
                           Division I
               Opinion delivered February 4, 1998


1.   Appeal & error -- chancery appeals -- evidence reviewed de
     novo. -- In deciding appeals from chancery courts, the
     appellate court reviews the evidence de novo and reverses only
     if the chancellor's findings are clearly erroneous. 

2.   Insurance -- personal contract -- when enforceable. -- A
     contract of insurance is a personal contract and not a
     contract running with the property; however, pursuant to Ark.
     Code Ann.  23-79-104(a) (Repl. 1992), insurance proceeds are
     payable to the person insured only if that person has an
     insurable interest both at the time of making the contract and
     at the time of the loss. 

3.   Insurance -- insurable interest defined. -- An insurable
     interest is any actual, lawful, and substantial economic
     interest in the safety or preservation of the subject of the
     insurance free from loss, destruction, or pecuniary damage or
     impairment.

4.   Insurance -- no connection between property and debt --
     contract creditor has no insurable interest in debtor's
     property. -- Where the property settlement agreement revealed
     no connection between the seventy-two acres deeded to appellee
     and the $20,000 owed to appellant, and appellant admitted in
     her testimony that she had no security for the $20,000 debt,
     appellant was in the position of an ordinary contract
     creditor; a simple contract creditor has no insurable interest
     in the property of his debtor.  

5.   Insurance -- property deeded to appellee -- appellant had no
     insurable interest at time of loss. -- Where appellant deeded
     the property to appellee and, under the terms of the property
     settlement agreement, relinquished any and all right, claim,
     or interest that she might have had in the property; where the
     property was not pledged as security for any debt; and where
     appellant had no possessory interest in the property,
     appellant had no insurable interest in her former home at the
     time it was destroyed.

6.   Appeal & error -- argument made without legal authority --
     point affirmed. -- Failure to cite convincing legal authority
     for a point on appeal results in affirmance of that point.

7.   Torts -- abuse of process -- elements of claim. -- The
     elements of a claim for abuse of process are: (1) a legal
     procedure set in motion in proper form, even with probable
     cause, and even with ultimate success, but (2) perverted to
     accomplish an ulterior purpose for which it was not designed,
     and (3) a willful act in the use of process not proper in the
     regular conduct of the proceeding; showing that a vexatious
     lawsuit was filed is not enough by itself, there must be a
     specific abusive use of process.

8.   Civil procedure -- pleadings -- pleader must show entitlement
     to relief. -- A pleading that sets forth a claim for relief
     must contain a statement in ordinary and concise language of
     facts showing that the pleader is entitled to relief; failure
     to state facts giving rise to the essential elements of a
     claim should result in dismissal.

9.   Civil procedure -- appellant's counterclaim insufficient --
     chancellor's decision affirmed. -- Where appellant's
     counterclaim did not recite facts that related to the elements
     necessary to prove abuse of process, the chancellor's
     decision, though unclear as to the line of reasoning upon
     which he based his dismissal, was affirmed; a chancellor's
     decision will be affirmed if correct for any reason. 


     Appeal from Crawford Chancery Court; Mark Hewitt, Chancellor;
affirmed.
     Rush, Rush & Cook, by:  David L. Rush and Coy J. Rush, Jr.,
for appellant.
     Kirkman T. Dougherty, Jeanne Ann Whitmire, and Michael J.
Medlock, for appellee.

     Judith Rogers, Judge.  
     Appellant Betty Morse appeals from a chancery court decree
awarding her ex-husband, appellee Jerry Morse, $46,834 in insurance
proceeds.  She also appeals from the dismissal of her counterclaim
for abuse of process.  We find no error and affirm.
     Appellant and appellee were divorced on August 23, 1995.  At
the time of their divorce, they owned two parcels of real property
in Crawford County.  Under the terms of a property settlement
agreement, appellant deeded one of the parcels, a seventy-two-acre
tract, to appellee.  The agreement also provided, under the section
entitled þPERSONAL PROPERTY,þ as follows:
          3.  To equalize the division of property, Husband
     shall pay to the Wife to [sic] total sum and amount of
     $20,000.00.  He shall have five (5) years from the date
     of this agreement to satisfy this debt.  Any portion of
     the $20,000.00 not paid prior to June 28, 2000, shall be
     immediately due and payable on that date.

     Appellant and appelleeþs marital residence was situated on the
seventy-two acres deeded to appellee.  Several weeks before
appellant and appellee separated, they had procured a homeownerþs
insurance policy covering the residence and its contents.  The
policy, issued by Farm Bureau Mutual Insurance Company, listed
appellant and appellee as named insureds and was effective for a
period beginning June 1, 1995, and ending June 1, 1996.  After the
divorce, appellee lived in the home and was still living there
when, on March 28, 1996, the home was destroyed by fire.  Farm
Bureau tendered a check in the amount of $46,834 made out to
appellant and appellee.  However, appellant refused to endorse the
check.  As a result, appellee filed a petition in Crawford County
Chancery Court asking that Farm Bureau be required to interplead
the $46,834 into the court registry; that he be declared the owner
of the insurance proceeds; and that appellant be held in contempt
for her þrefusal to comply with the terms of the Property
Settlement Agreement and Decree of this Court, as entered of record
last year.þ  Appellant answered and filed a counterclaim for abuse
of process.  Further, she asked that a constructive trust be placed
on the insurance proceeds to the extent of the $20,000 owed her
under the property settlement agreement.  Later, by amended
counterclaim, she alleged that she was entitled to half of the
insurance proceeds and to immediate payment of the $20,000.
     On September 18, 1996, Farm Bureau placed $46,834 into the
court registry.  Thereafter, a hearing was held, and the chancellor
found that the insurance money belonged to appellee since the
proceeds were for damage caused to property that appellant had
quitclaimed to appellee.  The chancellor directed the court clerk
to disburse $26,834 to appellee, leaving $20,000 in the court
registry.  The $20,000 would be disbursed upon a showing that
appellee was using the money to rebuild his residence.  The
chancellor also granted appellant a lien on the seventy-two acres
that would remain in effect until the $20,000 debt was satisfied. 
Additionally, during the course of the hearing, the chancellor
dismissed appellantþs abuse of process counterclaim.
     Appellantþs first argument on appeal is that the chancellor
erred in not awarding her half of the insurance proceeds.  In
deciding appeals from chancery courts, we review the evidence de
novo and reverse only if the chancellorþs findings are clearly
erroneous.  Roberts v. Feltman, 55 Ark. App. 142, 932 S.W.2d 781
(1996).
     Appellant bases her argument upon the contention that a
contract of insurance is a personal contract and not a contract
running with the property.  See National Bedding and Furniture
Indus., Inc. v. Clark, 252 Ark. 780, 481 S.W.2d 690 (1972); Whitley
v. Irwin, 250 Ark. 543, 465 S.W.2d 906 (1971).  Her statement of
the law is correct.  However, insurance proceeds are payable to the
person insured only if that person has an insurable interest both
at the time of making the contract and at the time of the loss. 
National Bedding and Furniture Indus., Inc. v. Clark, supra. 
Arkansas Code Annotated  23-79-104(a) (Repl. 1992) provides that
a contract of insurance on property is only enforceable for the
benefit of one who has an insurable interest in the things insured
þat the time of the effectuation of the insurance and at the time
of the loss.þ  The statute goes on to define insurable interest as
þany actual, lawful, and substantial economic interest in the
safety or preservation of the subject of the insurance free from
loss, destruction, or pecuniary damage or impairment.þ  Ark. Code
Ann.  23-79-104(b) (Repl. 1992).  
     There is no doubt that appellant had an insurable interest in
the property at the time the insurance went into effect.  At that
point, she and her husband owned the house and were living in it. 
The question is whether she had an insurable interest in the house
on March 28, 1996, when it burned.  Under the statute, it is
imperative that appellant show an insurable interest not only at
the time the insurance went into effect, but at the time the loss
occurred.  Appellant argues that she had an insurable interest at
the time the loss occurred because the destruction of the house
diminished her ability to collect the $20,000 appellee owed her
under the property settlement agreement.  However, the property
settlement agreement reveals no connection between the seventy-two
acres deeded to appellee and the $20,000 owed to appellant.  The
agreement does not recite that the real property is security for
the $20,000 debt.  Further, appellant admitted in her testimony
that she had no security for the $20,000 debt.  As a result, she is
in the position of an ordinary contract creditor.  It is generally
recognized that a simple contract creditor has no insurable
interest in the property of his debtor.  3 Couch on Insurance 3d
 42:23 at 42-31 (1996); 4 Appleman, Insurance Law and Practice  2138 at
57 (1969).  Additionally, the term þinsurable interestþ means an
þactual, lawful, and substantialþ economic interest in the
property.  Ark. Code Ann.  23-79-104(b) (Repl. 1992).  The
possibility that appellee might have used the home to pay the
$20,000 debt is too speculative to give appellant an insurable
interest in the house at the time of its destruction.  
     This case is similar to the situation we recently addressed in
Marion v. Town and Country Mutual Insurance Co., 59 Ark. App. 120,
952 S.W.2d 681 (1997).  In Marion, appellantþs property was
purchased at a foreclosure sale.  Appellant filed an appeal from
the foreclosure proceedings and obtained an order staying the
judgment pending appeal.  Shortly thereafter, her property was
destroyed by fire.  We affirmed the trial courtþs ruling that
appellant had no insurable interest in the property at the time of
the fire, saying that, even though appellant still had a possessory
interest in the property, the delivery of the commissionerþs deed
to a buyer had the effect of terminating her insurable interest in
the property.  Likewise, in this case, appellant deeded the
property to appellee and, under the terms of the property
settlement agreement, þrelinquished any and all right, claim or
interest she might have in and to said property....þ  Further, the
property was not pledged as security for any debt, nor did
appellant have a possessory interest in the property.  Under these
circumstances, appellant had no insurable interest in her former
home at the time it was destroyed.  
     Appellantþs second argument is that the chancellor erred in
failing to require appellee to pay the $20,000 owed under the
property settlement agreement from the proceeds of the insurance
policy.  Appellant cites no authority for her argument on this
issue.  Failure to cite convincing legal authority for a point on
appeal will result in affirmance of that point.  Pender v. Pender,
57 Ark. App. 305, 945 S.W.2d 395 (1997).  In any event, the
agreement recites that appellee has until June 28, 2000, to pay the
debt.  Any action to recover the $20,000 before that time would be
prematurely brought.  See Pearce v. Hollis Constr. Co., 212 Ark.
434, 206 S.W.2d 15 (1947); Winn v. Collins, 207 Ark. 946, 183 S.W.2d 593 (1944).  
     Finally, appellant argues that the chancellor erred in
dismissing her abuse of process claim.  In her second amended
counterclaim, appellant attempted to set forth a cause of action
for abuse of process in the following manner:
          That the Defendant has fully complied with all
     orders of this Court, wheresoever and whatsoever,
     including Quitclaiming the appropriate property to the
     Plaintiff.  Thus, the action by the Plaintiff in suing
     the Defendant is an abuse of process, and the Defendant
     is entitled to damages in the sum of FIFTY THOUSAND AND
     00/100 DOLLARS ($50,000.00), attorneyþs fees, and costs.

     The elements of a claim for abuse of process are:  (1) a legal
procedure set in motion in proper form, even with probable cause,
and even with ultimate success, but, (2) perverted to accomplish an
ulterior purpose for which it was not designed, and (3) a willful
act in the use of process not proper in the regular conduct of the
proceeding.  Cordes v. Outdoor Living Center, Inc., 301 Ark. 26,
781 S.W.2d 31 (1989).  Showing that a vexatious lawsuit was filed
is not enough by itself.  There must be a specific abusive use of
þprocess.þ  McNair v. McNair, 316 Ark. 299, 870 S.W.2d 756 (1994);
Union Natþl Bank v. Kutait, 312 Ark. 14, 846 S.W.2d 652 (1993). 
Arkansas requires that a pleading that sets forth a claim for
relief contain a statement in ordinary and concise language of
facts showing that the pleader is entitled to relief.  Ark. R. Civ.
P. 8(a)(1).  Failure to state facts giving rise to the essential
elements of a claim should result in dismissal.  Perrodin v.
Rooker, 322 Ark. 117, 908 S.W.2d 85 (1995).  Appellantþs
counterclaim did not recite facts sufficient to sustain her claim. 
In particular, she did not recite facts which related to the
elements necessary to prove abuse of process.  Even though it is
unclear whether the chancellor based his dismissal on this line of
reasoning, a chancellorþs decision will be affirmed if correct for
any reason.  Synergy Gas Corp. v. H.M. Orsburn & Son, Inc., 15 Ark.
App. 128, 689 S.W.2d 594 (1985).
     Affirmed.
     Stroud and Neal, JJ., agree.