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ICSC Legal Database - CasesMonday, February 22, 1999 05:01 PM

Case Index:
00116

Citation:
Alabama Farm Bureau Mutual Insurance Company v. Meyers, 516 So. 2d 661 (Ala. Civ. App. 1987).

Issue:
Whether a vendor's insurance company was obligated to pay for damages which occurred to vendor's house

subsequent to the execution of a contract of sale yet prior to the closing of the transaction? in addition, if the

insurance company was obligated to pay, whether the vendor was then obligated to transfer the insurance

proceeds to the purchaser in order to reimburse the purchaser for monies expended on repairing the house?

Facts:
Plaintiff-vendor sold a house to the purchaser which was damaged during a hail storm sometime between the

time of the execution of the contract for sale and the closing of the transaction. The damage was discovered

sometime after closing and after the purchaser had paid the full purchase price for the house. The purchaser

paid $1,913.00 to repair the damage to the house and then sued both the Plaintiff and the Defendant-insurance

company for insurance proceeds for the damage to the house. Plaintiff filed a cross claim against Defendant.

The district court dismissed the purchaser's action against the Defendant-insurance company and upheld the

Plaintiff-vendor's

cross-claim against the Defendant-insurance company and the purchaser's damages claim against the

Plaintiff-vendor. Both the Plaintiff-vendor and the Defendant-insurance company appealed to the circuit court.

The circuit court affirmed the district court's ruling. The Plaintiff vendor and Defendant-insurance company

appealed.

Holding:
Affirmed. The Court held that the Plaintiff had an insurable interest at the time of the hail storm; and therefore,

Defendant was obligated to pay insurance proceeds to Plaintiff. The court further held that a constructive trust

had been established for the benefit of the purchaser upon Plaintiff's realization of the insurance proceeds.

Plaintiff was then obligated to transfer these proceeds to the purchaser.

Publication:
Legal Update

Date:
Winter 1987

Classification 1:
Insurance

Classification 2:

Classification 3:

00116 - Legal Update - Winter 1987