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ÔÔ€ÔÝ  ÝÒ û ÒÒ „ ÒÙ€€ÙÑ  ÑÑ € ÑÑ\R AØ'\ÑßL€!# ;+'h|` Å `€€LßÌÌÌÌ€€€€€€€€€€€IN€THE€COURT€OF€APPEALS€OF€TENNESSEEÌÌÌÌÌÌÌÌÌÌCECIL€KING€€€€€€€€€€€€€€€€€€€:€€€€KNOX€CHANCERY€Ì€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:€€€€CA€No.€03A01„9605„CH„00162Ì€€€€€Plaintiff„Appellee€€€€€€:Ì€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:Ì€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:Ìvs.€€€€€€€€€€€€€€€€€€€€€€€€€€:€€€€HON.€FREDERICK€D.€McDONALDÌ€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:€€€€CHANCELLOR€Ì€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:ÌWILLIAM€G.€DUNLAP,€ET€AL.€€€€:Ì€€€€€€€€€€€€€€€€€€€€€€€€€€€€€:Ì€€€€€Defendants„Appellants€€€:€€€€AFFIRMED€AND€REMANDEDÌÌÌÌÌÌÌÌÌÌJOHN€D.€SCHWALB,€WITH€BREWER€KRAUSE€BROOKS€&€MILLS,€OF€NASHVILLE,ÏTENNESSEE,€FOR€APPELLANT€MID„CENTURY€FIRE€INSURANCE€COMPANYÌÌCHARLES€E.€RADER,€OF€KNOXVILLE,€TENNESSEE,€FOR€APPELLEEÌÌÌÌÌÌÌÌÌÌ€€€€€€€€€€€€€€€€€€€€€€O€P€I€N€I€O€NÌÌÌ€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Sanders,€Sp.J.ÌÌÌÓÓà àà àDefendant€Mid„Century€Fire€Insurance€Company€has€appealedÏfrom€a€chancery€decree€awarding€the€Plaintiff,€Cecil€King,€recoveryÏof€most€of€the€proceeds€of€a€fire€insurance€policy€issued€to€WilliamÏG.€Dunlap€and€wife,€Joyce€A.€Dunlap,€the€owners€of€a€residenceÏdestroyed€by€fire€which€Dunlaps€had€contracted€to€Ö€$Ödeed€to€King€uponÏKing's€paying€the€purchase€price€of€the€residence.€€We€affirm.€€€€€€€ÌÌà àà àIn€August,€1992,€Plaintiff„Appellee€and€Defendants€WilliamÏG.€Dunlap€and€wife,€Joyce€A.€Dunlap€(Dunlaps),€entered€into€aÏcontract€in€which€the€Dunlaps€agreed€to€sell€to€King€Lot€3€in€theÏCooley€Addition€in€the€City€of€Knoxville€for€$6,500.€€King€was€toÏpay€the€consideration€in€monthly€installments€of€$103.87,€includingÏ11.5%€interest,€plus€$28.13€per€month€into€an€escrow€account€forÏpayment€of€insurance€and€taxes,€for€a€total€amount€of€$130€perÏmonth.€€Upon€payment€of€the€purchase€price€for€the€property,€theÏDunlaps€were€to€execute€a€general€warranty€deed€to€King€conveyingÏthe€property€free€and€clear€of€encumbrances.ÌÌà àà àIt€appears€the€residence€located€on€the€property€was€in€aÏbad€state€of€repair€and€had€been€condemned€by€the€City€of€KnoxvilleÏat€the€time€of€the€sale.€€The€parties€agreed€King€would€make€theÏnecessary€repairs€required€by€the€City.€€It€also€appears€that€at€theÏtime€the€Dunlaps€conveyed€the€property€to€King€it€was€encumbered,Íalong€with€other€property,€by€a€deed€of€trust€held€by€DefendantÏFirst€Peoples€Bank€of€Jefferson€County€in€the€amount€of€$26,200.ÌÌà àà àSubsequently,€the€Dunlaps€purchased€a€fire€insuranceÏpolicy€on€the€property€for€$30,000€which€was€issued€by€theÏDefendant„Appellant,€Mid„Century€First€Insurance€Company.€€The€firstÏinsurance€policy€was€issued€to€Dunlaps€as€owners€and€the€insured.€ÏThe€First€Peoples€Bank€of€Jefferson€City€was€also€an€insured€asÏmortgagee.€€King€was€not€an€insured€under€the€policy.ÌÌà àà àKing€entered€into€possession,€made€mortgage€payments€withÏirregularity,€but€made€the€necessary€repairs€to€the€building€whichÏpassed€inspection€by€the€city.€€In€August,€1994,€the€building€on€theÏproperty€was€destroyed€by€fire€and€that€is€what€really€precipitatedÏthis€litigation.€€The€Plaintiff„Appellee,€Cecil€King,€filed€suitÏagainst€the€Dunlaps€and€by€amendments€against€Defendant€Mid„CenturyÏFirst€Insurance€Company€(Mid„Century)€and€First€Peoples€Bank€ofÏJefferson€County.ÌÌà àà àAs€pertinent,€the€Plaintiff€alleged€in€his€complaint,€asÏamended,€he€had€entered€into€a€contract€with€Dunlaps€to€purchase€theÏproperty€on€the€terms€set€forth€above;€he€had€made€all€paymentsÏunder€the€contract€until€the€residence€was€totally€destroyed€by€fireÏand€Dunlaps€had€purchased€a€$30,000€fire€insurance€policy€fromÍDefendant€Mid„Century€out€of€the€monthly€escrow€payments€he€hadÏmade.€€He€said€the€contract€between€him€and€Dunlaps€provided:€€"InÏthe€event€any€sum€of€money€becomes€payable€under€any€insuranceÏpolicies€carried€on€subject€property,€sellers€shall€have€the€rightÏto€receive€any€said€sum€of€money€and€apply€it€on€account€of€theÏindebtedness€secured€hereby."€€He€alleged€there€was€less€than€$5,500Ïowed€on€the€property€and€Dunlaps€were€entitled€to€collect€only€theÏbalance€owed€on€the€property€out€of€the€insurance€proceeds€and€heÏwas€entitled€to€collect€the€balance.€€Plaintiff€alleged€Dunlap€toldÏhim€he€intended€to€collect€the€full€amount€of€the€insurance€proceedsÏand€not€give€King€any€part€of€it.ÌÌà àà àPlaintiff€asked€that€Dunlaps€be€enjoined€from€collectingÏany€of€the€insurance€proceeds€above€the€balance€owed€under€theÏcontract.€€He€asked€that€Mid„Century€be€required€to€pay€all€theÏinsurance€proceeds€into€court€and€First€Peoples€Bank€be€required€toÏmarshall€assets€to€collect€from€other€properties€securing€itsÏmortgage.€€ÌÌà àà àAnswers€to€the€complaint€were€filed€by€each€of€theÏDefendants.€€Also,€various€counterclaims€and€corresponding€pleadingsÏwere€filed.€€To€enumerate€them€all€would€serve€only€to€lengthen€thisÏopinion.€€Suffice€it€to€say,€it€was€the€contention€of€the€DunlapsÏthat€Plaintiff,€King,€had€defaulted€in€his€installment€paymentsÍunder€the€contract€and€they€had€declared€a€forfeiture€and€terminatedÏthe€purchase€contract€prior€to€the€fire.€€They€insisted€King€was€notÏan€insured€under€the€policy€of€insurance;€they€owned€the€propertyÏand€they€were€entitled€to€the€total€proceeds€of€the€insurance,Ïexcept€for€the€rights€of€First€Peoples€Bank€as€mortgagee.ÌÌà àà àMid„Century€admitted€it€had€issued€a€policy€to€Dunlaps€forÏ$30,000€on€the€property.€€It€denied€the€Plaintiff,€King,€had€anÏinsurable€interest€in€the€property.€€It€alleged€Dunlaps'€contractÏwith€King€had€increased€its€risk€on€the€policy€and€the€contract€ofÏinsurance€was€void.€€It€further€averred,€in€any€event,€the€extent€ofÏany€recovery,€if€any,€by€Dunlaps€was€limited€to€the€balance€owed€byÏKing€on€his€contract.€€It€also€contended€First€Peoples€Bank€hadÏknowledge€of€Dunlaps'€transfer€of€the€property€to€King,€whichÏincreased€Mid„Century's€risk,€but€First€Peoples€Bank€failed€toÏnotify€Mid„Century€of€the€transfer€to€King€and€the€policy€ofÏinsurance€was€void€as€to€First€Peoples€Bank.ÌÌà àà àBy€way€of€cross€claim,€Mid„Century€asked€the€court€toÏadjudicate€and€declare€the€rights€of€the€parties€to€the€contract€ofÏinsurance.€€It€asked€the€court€to€declare€that€King,€Dunlaps€andÏFirst€Peoples€Bank€were€entitled€to€no€recovery€whatsoever€under€theÏterms€of€the€insurance€policy.ÌÌà àà àIt€was€later€agreed€by€all€the€parties,€prior€to€the€trialÏof€the€case,€that€regardless€of€how€the€court€might€determine€theÏrights€of€the€other€parties€to€the€litigation,€First€Peoples€BankÏwould€be€paid€from€the€insurance€proceeds€the€sum€of€$5,604,€whichÏwas€the€amount€still€owed€on€First€Peoples€mortgage,€and€$1,900Ïattorneys'€fees,€for€a€total€of€$7,504.ÌÌà àà àUpon€the€trial€of€the€case,€the€principal€issues€centeredÏaround€the€contentions€of€Dunlaps€that€King€had€defaulted€in€hisÏpayments€under€the€contract€of€purchase€and€Dunlaps€had€declared€aÏforfeiture€of€the€contract,€to€which€King€had€agreed,€and€King€was€aÏrenter€of€the€property€at€the€time€of€the€fire€and€was€not€entitledÏto€any€of€the€insurance€proceeds.€€It€was€also€Dunlaps'€contentionÏthat€the€policy€of€insurance€issued€by€Mid„Century€was€a€valuedÏpolicy,€the€residence€had€been€totally€destroyed€by€the€fire,€andÏthey€were€entitled€to€$30,000,€less€the€amount€due€First€PeoplesÏBank€as€mortgagee.ÌÌà àà àIt€was€the€insistence€of€King€that€he€had€not€defaulted€inÏhis€payments€under€the€contract€with€Dunlaps€nor€had€he€agreed€withÏDunlaps€that€the€contract€was€forfeited€or€that€he€was€renting€theÏproperty€from€Dunlaps.€€He€also€insisted€Dunlaps€were€entitled€onlyÏto€the€balance€due€under€his€contract€to€purchase€the€house,€thatÍhe,€King,€was€entitled€to€all€the€remaining€insurance€proceeds€afterÏFirst€Peoples€Bank€received€its€agreed€amount€of€$7,504.ÌÌà àà àMid„Century€contended€at€trial€it€was€not€liable€toÏDunlaps€or€anyone€else€for€the€total€face€amount€of€the€policy€ofÏinsurance.€€It€insisted€the€proof€established€the€house€or€structureÏof€the€building€retained€its€identity€as€a€residence€after€the€fireÏand€could€not€be€considered€to€be€totally€destroyed€by€the€fire€andÏits€liability€could€not€exceed€the€total€value€of€the€structureÏafter€the€fire,€which€would€be€limited€to€no€more€than€$13,200.€€ItÏalso€contended€King€could€not€recover€any€of€the€insurance€proceedsÏas€he€was€a€stranger€to€the€policy.ÌÌà àà àThe€chancellor,€in€his€determination€of€the€case,€asÏpertinent€to€this€appeal,€held€as€follows:€€1.€First€Peoples€BankÏshould€be€paid€the€$7,504€from€the€insurance€funds€as€agreed€by€theÏparties.€€2.€There€had€not€been€a€forfeiture€of€the€contract€betweenÏKing€and€Dunlaps.€€Dunlaps€were€entitled€to€be€paid€the€balance€owedÏunder€the€contract€with€King€and€$5,604€of€the€balance€owed€by€KingÏwas€being€paid€to€First€Peoples€Bank€on€Dunlaps'€mortgage,€leavingÏKing€owing€a€balance€to€Dunlap,€including€interest,€of€$745.13.€ÏUpon€payment€of€this€amount,€the€€Dunlaps€were€ordered€to€execute€aÏdeed€to€King.€€3.€The€insurance€policy€was€a€valid€policy€pursuantÏto€TCA€ðð€56„801,€et€seq.€€The€court€also€held€the€residence€had€beenÍtotally€destroyed€by€fire€and€Mid„Century€was€liable€for€the€faceÏamount€of€the€policy€of€$30,000.€€4.€Dunlaps'€interest€in€theÏinsurance€proceeds,€as€record€title€owners€of€the€property,€wasÏlimited€to€the€balance€owed€by€King€on€the€property.€€King,€asÏpurchaser€of€the€property,€had€an€equitable€ownership€interest€inÏit,€together€with€the€right€to€be€subrogated€to€the€rights€ofÏDunlaps€under€the€insurance€policy.€€King€was€entitled€to€theÏbalance€of€the€policy€proceeds€after€payment€to€Dunlaps€and€theÏBank.ÌÌà àà àMid„Century€has€appealed,€presenting€the€following€errorsÏfor€review:Ìà à"Whether€the€trial€court€erred€in€declaring€the€structure€aÏtotal€loss€when€it€still€maintained€its€identity€and€character€as€aÏhouse.Ìà à"Whether€the€trial€court€erred€in€declaring€a€stranger€to€anÏinsurance€policy€entitled€to€insurance€proceeds€from€Mid„Century.Ìà à"What€is€the€extent€or€amount€of€a€vendor's€insurable€interestÏunder€an€agreement€for€deed€or€land€installment€contract."ÌÌà àà àWe€find€no€error€in€the€chancellor's€determination€of€theÏcase,€and€affirm€for€the€reasons€hereinafter€stated.€€We€firstÏconsider€the€Appellant's€contention€that€the€court€was€in€error€forÏfinding€there€was€a€total€loss€when€the€residence€"still€maintainedÍits€identity€and€character€as€a€house."€€Appellant€fails€to€cite€usÏto€any€authority€holding€that€because€a€building,€after€a€fire,€canÏstill€be€identified€as€to€its€type€of€structure,€per€se,€cannot€beÏconsidered€a€total€loss.€€Appellant,€in€its€brief,€states:€€"WhereÏthe€house€has€not€lost€its€specific€identity€and€characters€ofÏbuilding€as€of€here,€then€there€is€no€basis€to€find€that€the€houseÏis€a€total€loss...."€€The€Appellant€then€cited€ò òThird€National€BankÏv.€American€Equitable€Insuranceó ó€ò òCompanyó ó,€178€S.W.2d€915Ï(Tenn.App.1943);ò ò€Hollingsworth€v.€Safecoó ó€ò òInsurance€Companyó ó,Ï782€S.W.2d€477€(Tenn.App.1989)€and€ò òLaurenzi€v.ó ó€ò òAtlas€Insuranceó ó,Ï131€Tenn.€644,€176€S.W.€1022€(1915)€as€supportive€of€its€argument.€€ÌÌà àà àWe€fail€to€find€that€any€of€these€cases€support€itsÏargument.€€In€the€ò òThird€National€Bankó ó€case,€the€insured€made€noÏclaim€of€total€destruction€of€the€house.€€Both€parties€proceeded€onÏthe€theory€that€the€cost€of€repairs€was€the€measure€of€damages€andÏthe€trial€court€and€this€court€held€that€to€be€the€measure€ofÏdamages.ÌÌà àà àIn€ò òHollingsworthó ó,€the€parties€stipulated€the€cost€ofÏrepairs€to€the€residence€would€be€between€$31,000€and€$32,000,€whichÏwas€covered€by€a€$45,000€policy.€€The€trial€court€awarded€a€totalÏloss€and€this€court€reversed.ÌÌà àà àThe€ò òLaurenzió ó€case,€which€is€a€landmark€case€in€this€area,Ïas€pertinent,€stated:ÌÒ  ÒÒ  ÒÓÓà àWas€there€a€total€loss?€€The€roof€of€the€building,Ïa€wooden€structure,€was€wholly€destroyed;€likewise€allÏof€the€walls€except€on€one€side,€and€part€of€the€frontÏporch;€but€these€were€so€badly€burned€in€places€that€theÏlumber€in€them€was€not€worth€the€labor€of€rescuing€andÏremoving.€€However,€the€walls€standing€were€consideredÏso€dangerous€by€the€city€authorities€that€they€wereÏrequired€to€be€taken€down.€€The€floor€remainedÏuninjured,€except€that€a€large€hole€was€burned€throughÏit€in€one€place.€€The€brick€foundation€on€which€theÏstructure€stood€was€unimpaired.€€Since,€under€theseÏfacts,€the€identity€and€specific€character€of€theÏstructure€as€a€building€were€obliterated,€we€think€theÏloss€was€total,€although€the€parts€last€referred€toÏremained€unconsumed.€€(Citations€omitted.)ÌÌÒ ° ÒÒ „ ÒÓÓ131€Tenn.€663.ÌWe€find€the€facts€in€ò òLaurenzió ó€to€be€similar€to€the€case€at€bar.€€TheÏchancellor,€in€addressing€the€issue€of€liability€after€finding€theÏpolicy€of€insurance€was€a€valid€policy€pursuant€to€TCA€ðð€56„7„801,€etÏseq.,€said:€€"Thus€the€question€is:€was€the€house€totally€destroyedÏby€the€fire?€€While€some€of€the€house€remained€after€the€fire,€theÏburned€structure€was€practically€worthless.€€Indeed€the€City€requiredÏwhat€remained€of€it€be€taken€down,€and€what€was€left€was€bulldozedÏover€by€the€City€so€that€nothing€any€longer€exists€in€any€formÏwhatsoever.€€It€is€concluded€that€there€was€a€total€loss,€and€theÏInsurance€Company€is€liable€for€the€face€value€of€the€policy,Ï$30,000.00."€€ò òLaurenzi€v.€Atlas€Insuranceó ó€ò òCompanyó ó,€131€Tenn.Ï644,€176€S.W.€1022€(1915).€ÌÌà àà à€The€record€also€shows€that€after€the€fire€had€occurred,€aÏrepresentative€of€Mid„Century€went€out€to€look€at€the€residence€"andÏthey€made€the€statement€that€they€would€not€attempt€to€remodel€it."€ÏThe€insurance€company€also€introduced€into€evidence€a€copy€of€aÏcertified€real€estate€appraisal.€€The€appraisal€contained€no€estimateÏof€the€cost€of€repairs€to€the€building€but€it€does€contain€an€"'as„is'€value€of€site€improvements€$200.00"ÌÌà àà àWe€cannot€say€the€evidence€on€the€question€of€a€total€lossÏof€the€property€caused€by€the€fire€preponderates€against€the€findingsÏof€the€chancellor,€and€affirm€in€accordance€with€Rule€13(d),€TRAP.ÌÌà àà àThere€is€also€another€compelling€reason€why€we€must€affirmÏthe€chancellor.€€Mid„Century,€in€its€answer€to€the€Plaintiff'sÏamended€complaint,€admitted€the€fire€was€a€total€loss.€€PlaintiffÏKing,€in€the€second€grammatical€sentence€of€paragraph€four€of€theÏamended€complaint,€stated:€€"Thereafter€on€August€26,€1994,€theÏresidence€located€on€said€property€at€2504€Glenwood€Avenue€caughtÏfire€and€was€damaged€to€such€an€extent€as€to€become€a€total€loss."€ÏMid„Century,€in€the€second€grammatical€sentence€of€its€answer€to€theÏcomplaint,€said:€€"The€allegations€of€the€second€grammatical€sentenceÏof€paragraph€four€are€admitted."ÌÌà àà àIn€the€case€of€ò òRast€v.€Terryó ó,€532€S.W.2d€552,€554Ï(Tenn.1976),€in€addressing€the€resulting€effect€of€an€admission€in€anÏanswer€of€an€allegation€in€a€complaint,€our€supreme€court,€speakingÏthrough€Justice€Henry,€said:€€"When€the€allegations€of€the€complaintÏare€admitted€in€the€answer€the€subject€matter€thereof€is€removed€asÏan€issue,€no€proof€is€necessary€and€it€becomes€conclusive€on€theÏparties."€€òòSeeóó€òòalsoóó€ò òJohn€P.€Saad€&€Sons€v.ó ó€ò òNashville€Thermal,Ïetc.ó ó,€642€S.W.2d€151,€152€(Tenn.App.1982).ÌÌà àà àWe€consider€together€Appellant's€other€two€issues,€ofÏwhether€the€court€erred€in€declaring€a€stranger€to€an€insuranceÏpolicy€entitled€to€insurance€proceeds€and€what€a€vendor's€interest€isÏunder€a€contractual€agreement€to€deed€land.€We€find€no€error€in€theÏholding€of€the€chancellor€on€either€of€these€issues€and€affirm€forÏthe€reasons€hereinafter€stated.ÌÌà àà àIn€determining€how€the€insurance€proceeds€should€beÏdisbursed,€the€chancellor,€in€his€memorandum€opinion,€as€pertinent,Ïstated:€€"Payment€of€insurance€proceeds€to€Defendant€Bank€to€theÏextent€of€its€mortgage€interest€is€concurred€in€by€all€parties,€andÏwill€be€ordered.€€The€named€insured,€Dunlap,€is€next€entitled€toÏpayment€of€the€balance€due€on€King's€purchase€price.€€Dunlap€is€notÏentitled€to€more,€because€payment€of€the€balance€owed€by€KingÏsatisfies€Dunlap's€interest.€€Is€Plaintiff€King€entitled€to€theÍremaining€issuance€proceeds?€€Dunlap,€record€title€owner,€was€theÏnamed€insured€in€the€policy.€€Coverage€was€not€expressly€limited€inÏthe€policy€to€Dunlap€alone.€€Plaintiff€King€as€purchaser€of€theÏproperty€had€an€equitable€ownership€interest€in€it.€€In€theseÏcircumstances€King€is€subrogated€to€the€rights€of€the€legal€owner,ÏDunlap,€entitling€him€to€stand€in€the€shoes€of€Dunlap.€€This€includesÏthe€right€to€be€subrogated€to€rights€of€Dunlap€under€the€insuranceÏpolicy,€and€this€is€particularly€equitable€here,€because€King€wasÏpaying€the€insurance€premiums€pursuant€to€the€purchase€agreement.€€ItÏis€concluded€that€King€is€entitled€to€the€balance€of€the€policyÏproceeds€after€payment€of€the€Bank€and€Dunlap.€€Were€the€result€to€beÏotherwise€the€insurance€company€would€receive€a€windfall€benefit,€notÏhaving€to€pay€the€full€amount€of€its€policy€obligation€to€pay€for€theÏtotal€fire€loss€of€the€house.€€ò òWalker€v.ó ó€ò òWalkeró ó,€138€Tenn.€679,€200ÏS.W.€825€(1917);€ò òGreer€v.€Shelby€Mutualó ó€ò òInsurance€Companyó ó,€659ÏS.W.2d€627€(Tenn.App.1983).€€Although€subrogation€alone€establishesÏKing's€right€to€the€balance€of€the€insurance€proceeds,€it€appearsÏthat€King€inquired€of€the€Insurance€Company's€agent€about€insuranceÏcoverage€on€the€premises€and€was€told€that€he€(the€agent)€would€lookÏinto€it.€€Nothing€more€was€heard€from€the€agent.€€Standing€alone€thisÏmight€not€justify€King's€entitlement€to€insurance€proceeds,€but€itÏdemonstrates€that€the€insurance€company€was€made€aware€of€King'sÏinterest€in€the€premises€as€a€purchaser,€an€interest€giving€him€anÏequitable€ownership€interest,€and€as€such€making€him€one€whoÍforeseeably€might€become€entitled€to€assert€an€equitable€claim€toÏinsurance€proceeds."ÌÌà àà àAppellant€strongly€argues€that€Plaintiff€King€was€not€anÏinsured€under€the€policy;€he€was€not€named€in€the€policy€and€couldÏhave€no€lawful€claim€to€proceeds€of€the€policy.€€It€argues€anÏinsurance€contract€is€a€contract€of€indemnity€and€one€who€is€not€aÏparty€thereto€can€have€no€lawful€claim€to€the€proceeds.€€It€cites€aÏnumber€of€cases€as€supportive€of€its€argument.ÌÌà àà àAppellant€also€argues€the€limit€of€Dunlaps'€insurableÏinterest€is€the€amount€of€the€outstanding€debt€due€from€King.€€ItÏinsists€the€extent€of€its€obligation€under€the€insurance€policy€isÏlimited€to€the€amount€of€King's€remaining€indebtedness€to€DunlapsÏunder€the€purchase€agreement.ÌÌà àà àNeither€of€the€parties€has€cited€us€to€any€cases,€either€inÏthis€jurisdiction€or€other€jurisdictions,€directly€in€point€on€theÏissues€before€us.€€We€conclude,€however,€that€the€unreported€€case€ofÏò òErma€C.€Parker€v.€Tennessee€Farmers€Mutual€Ins.€Co.ó ó,€decidedÏby€this€court€in€opinion€filed€in€the€office€of€the€clerk€inÏKnoxville€on€December€30,€1988,€being€1988€Tenn.App.,€LEXIS€865,€isÏcontrolling€in€the€case€at€bar.€€There€are€many€similarities€in€theÏò òParkeró ó€case€and€the€case€at€bar.€€In€ò òParkeró ó,€Mrs.€Parker,€byÍcontract€in€December,€1978,€sold€a€dwelling€and€one€acre€of€land€to€aÏMr.€Goodman€for€$15,500.€€Mr.€Goodman€made€a€down€payment€and€theÏbalance€of€the€purchase€price€was€to€be€paid€in€monthly€installmentsÏover€a€period€of€18€years.€€It€was€agreed€title€to€the€property€wouldÏbe€conveyed€to€Goodman€when€the€purchase€price€was€paid.€€After€theÏsale,€Mrs.€Parker€kept€in€force€a€fire€insurance€policy€in€the€faceÏamount€of€$18,000.€€In€1986,€the€dwelling€was€destroyed€by€fire€andÏupon€Mrs.€Parker's€filing€proof€of€loss,€the€insurance€companyÏdiscovered€for€the€first€time€the€property€was€subject€to€a€saleÏagreement€between€Parker€and€Goodman.€€The€insurance€company€tenderedÏMrs.€Parker€an€amount€equal€to€the€balance€of€Mr.€Goodman'sÏoutstanding€indebtedness€to€her.€€In€so€doing,€the€insurance€companyÏrelied€upon€the€following€provision€in€the€policy:€€"InsurableÏInterest€„€We€will€not€pay€more€than€the€insurable€interest€anÏinsured€person€has€in€the€covered€property€at€the€time€of€loss."€ÏMrs.€Parker€rejected€the€offer€and€filed€suit.€€The€trial€court€foundÏthe€Plaintiff,€as€holder€of€legal€title€to€the€property,€was€entitledÏto€recover€the€face€amount€of€the€policy€and€entered€a€judgment€inÏher€favor€for€$18,000€plus€interest€from€the€date€of€the€fire.€€UponÏappeal,€this€court€held:€€"In€general...where€the€insured€vendor€hasÏsold€the€property€and€the€vendee€has€gone€into€possession€and€paid€aÏportion€of€the€purchase€price,€but€title€is€still€held€by€theÏinsured,€as€between€the€insured€and€the€insurer€the€insured€is€theÏowner€of€both€the€legal€and€equitable€titles€to€the€property€andÍentitled€to€recover€the€full€amount€of€the€policy.€€However,€asÏbetween€the€vendor€and€the€vendee,€the€insured€takes€the€proceeds€ofÏinsurance€which€exceed€the€amount€owed€to€the€vendor,€as€trustee€forÏthe€vendee."ÌÌ€à àà àSince€the€ò òParkeró ó€case€was€not€published€and€since€theÏscrivener€was€the€same€as€in€the€case€at€bar,€we€quote€at€length€fromÏò òParkeró ó€as€follows:ÌÒ ½ ÒÒ  ÒÓ K ÓÓÓà àA€landmark€case€on€this€issue€is€ò òState€MutualÏFireó ó€ò òInsurance€Co.€v.€Updegraffó ó,€21€Pa.€513€(1853).€ÏIn€that€case,€the€vendor€of€property€subject€to€anÏexecutory€contract€for€sale€was€found€to€be€entitled€toÏfull€recovery€under€a€fire€insurance€policy.€€The€firstÏinsurance€policy€was€issued€to€the€vendor€after€theÏcontract€for€sale€of€the€property€but€before€conveyance.€ÏThe€sale€agreement€provided€for€payments€in€yearlyÏinstallments.€€The€vendee€took€possession€immediately.€ÏThe€premises€insured€were€destroyed€by€fire€before€theÏcontract€price€was€completely€paid.€€The€vendor€submittedÏa€claim€for€the€entire€proceeds€under€the€policy.€€TheÏinsurance€company€refused€the€claim,€contending€theÏvendor€was€entitled€to€no€more€than€the€value€of€hisÏbeneficial€interest€in€the€property€which€was€the€unpaidÏbalance€of€the€purchase€price.€€Rejecting€this€position,Ïthe€court€held€the€insurer€was€liable€to€the€vendor€forÏthe€entire€amount€of€the€policy€and€the€vendor€would€holdÏthose€proceeds€in€excess€of€his€interest€in€trust€for€theÏvendee.€€The€Supreme€Court€of€Pennsylvania€filed€anÏexceptionally€well„reasoned€opinion€from€which€we€quoteÏextensively€as€follows:Ìà à"By€the€contract€of€sale€the€purchaser€of€realÏestate€becomes€in€equity€the€owner;€but€this€rule€appliesÏonly€as€between€the€parties€to€the€contract,€and€cannotÏbe€extended€so€as€to€affect€the€interests€of€others.€****ÏAt€law€the€vendor,€before€payment€of€the€purchase€moneyÏand€delivery€of€the€conveyance,€is,€to€all€intents€andÏpurposes,€the€owner€of€the€estate.€€It€is€true€that€he€isÏa€trustee€for€the€vendee,€who,€as€between€the€parties€toÏthe€contract,€is€bound€to€take€the€estate€subject€toÏevery€loss€which€may€happen€to€it€without€the€fault€ofÍthe€vendor,€and€is€consequently€entitled€to€every€benefitÏaccruing€to€it€after€the€agreement.€****€As€the€vendor€isÏa€trustee€for€the€vendee,€every€act€of€his€in€relation€toÏthe€estate€will€be€presumed€to€be€for€the€benefit€of€theÏvendee,€subject€of€course€to€the€prior€claims€of€theÏvendor€himself.€****€Although€the€vendor€is€not€bound€toÏinsure,€or€even€to€continue€an€insurance€already€made,€heÏmay,€like€any€other€trustee€having€the€legal€title,Ïinsure€if€he€thinks€proper€to€the€full€value€of€theÏproperty.€****€An€insurance€upon€a€house,€effected€by€theÏvendor€is€prima€facie€an€insurance€upon€the€whole€legalÏand€equitable€estate,€and€not€upon€the€balance€of€theÏpurchase€money.€€Where€the€form€of€the€policy€shows€it€toÏbe€upon€the€house,€and€not€upon€the€debt€secured€by€it,Ïthe€burden€of€showing€that€the€insurance€was€upon€theÏlatter€and€not€upon€the€former,€rests€upon€theÏunderwriters.€€There€is€no€hardship€in€this.€€The€premiumÏpaid,€as€compared€with€that€usually€charged€where€theÏinsurance€is€upon€houses€and€not€upon€debts€secured€byÏthem,€is€generally€decisive€of€the€question,€and€theÏrates€of€insurance€are€peculiarly€within€the€knowledge€ofÏthe€insurance€company.€€If€the€insurance€was€upon€theÏwhole€estate,€the€premium€would€be€according€to€the€usualÏrates€for€houses€of€that€description€and€location;€if€itÏwas€only€upon€the€debt€due€to€the€vendor,€there€would€beÏa€large€reduction,€on€account€of€the€responsibility€ofÏthe€vendee,€and€the€value€of€the€lot€of€ground€includedÏin€the€sale,€because€both€of€these€would,€in€that€case,Ïstand€as€indemnities€to€the€underwriters.€€They€would€beÏentitled€to€a€cession€of€the€vendor's€claims,€from€whichÏan€ample€indemnity€might€be€recovered.€€If€the€lot€wasÏworth€the€balance€of€the€purchase€money,€there€would€beÏno€risk€whatever€and€the€premium€would€be€quiteÏinsignificant.€****€But€there€was€no€evidence€tending€toÏprove€that€the€premium€was€less€than€the€usual€rates€forÏhouses€of€the€description€set€forth€in€the€policy,€whereÏthe€whole€state€is€insured.€€Nor€was€there€any€offer€toÏreturn€any€portion€of€the€premium.€****€The€instrumentÏbefore€us€is€an€open€policy€of€limited€extent.€€TheÏunderwriters€agreed€to€make€good€to€the€insured,€not€allÏhis€loss,€but€all€such€loss€or€damage€not€exceeding€theÏsum€stated€as€shall€happen€by€fire€to€the€property,„„theÏloss€or€damage€to€be€estimated,€not€according€to€theÏbalance€of€the€purchase€money€which€may€remain€unpaid€atÏthe€time€of€the€damage€nor€according€to€the€probabilitiesÏof€recovering€such€balance€from€the€vendee,€or€from€theÏlot,€but€'according€to€the€true€and€actual€value€of€saidÏproperty.'€€The€policy€is€in€the€form€of€an€insuranceÍupon€a€house€and€not€upon€a€debt;€and€no€evidenceÏwhatever€was€given€to€change€its€character€or€to€showÏthat€anything€more€or€less€was€intended€by€the€parties.€ÏIt€follows€that€the€plaintiff€below€was€entitled€toÏrecover€under€a€trust,€as€to€surplus,€for€the€benefit€ofÏthe€vendee.€€The€underwriters€have€shown€no€equitableÏright€to€intermeddle€between€the€vendor€and€the€vendee.€ÏUnder€such€circumstances€they€must€be€content€to€respondÏto€the€party€with€whom€they€made€the€contract€ofÏinsurance."€€òòSeeóó€òòalsoóó,€ò òDublin€Paper€Co.ó ó€ò òv.€InsuranceÏCompany€of€North€Americaó ó,€361€Pa.€68,€63€A.2d€85Ï(1949).Ìà àIn€ò òDublin€Paper€Companyó ó,€òòsupraóó,€the€plaintiffÏpurchased€property€pursuant€to€a€land€sale€contract.€ÏApproximately€one€month€later€the€property€was€destroyedÏby€fire.€€At€the€time€of€the€loss€the€property€wasÏinsured€under€a€fire€policy€issued€to€the€€vendor€priorÏto€the€sale€agreement.€€The€plaintiff€sued€the€estate€ofÏthe€deceased€vendor€and€his€insurer€to€recover€proceedsÏdue€under€the€policy.€€The€insurer€claimed€only€paymentÏof€the€unpaid€purchase€price€to€the€vendor€was€due.€€TheÏcourt,€following€òòUpdegraffóó,€òòsupraóó,€reiterated€theÏproposition€that€the€insurable€interest€of€an€owner€ofÏproperty€is€not€reduced€to€the€unpaid€balance€of€theÏpurchase€price€where€the€owner€has€entered€into€a€saleÏagreement€but€has€not€yet€conveyed€legal€title€to€theÏpurchaser.€€"The€measure€of€the€insured's€recovery€[is]Ïthe€one€created€by€the€policy,€that€is€'the€actual€cashÏvalue€of€the€property€at€the€time€of€the€loss€orÏdamage.'"€€What€happens€to€the€proceeds€after€the€insurerÏhas€fulfilled€its€obligation€to€pay€is€"between€theÏvendor€and€the€vendee€alone,€or€persons€in€privity€withÏthem."€ò ò€Dubinó ó,€p.97.Ìà àOther€jurisdictions€have€treated€the€issue€in€theÏsame€fashion.€€For€instance,€in€ò òWilson€v.€Fireman'só óÏò òInsurance€Company€of€Newark,€New€Jerseyó ó,€269€N.W.2dÏ170€(Mich.1978),€property€destroyed€by€fire€had€earlierÏbeen€sold€pursuant€to€a€land€sale€contract.€€The€MichiganÏSupreme€Court€held€the€purchasers€under€that€contractÏwere€entitled€to€the€proceeds€of€a€fire€insurance€policyÏin€effect€on€the€property€when€it€was€destroyed,€less€theÏamount€of€the€seller's€interest.€€Citing€ò òDubinó ó€andÏò òUpdegraffó ó,€òòsupraóó,€the€court€said,€despite€the€provisionÏin€the€policy€limiting€the€insurer's€liability€"to€theÏextent€of€the€actual€cash€value€of€the€property€at€theÏtime€of€the€loss...nor€in€any€event€for€more€than€theÏinterest€of€the€insured,"€the€insurer€was€obligated€toÏpay€the€entire€proceeds.€€Those€proceeds€in€excess€of€theÍvendor's€interest€would€be€paid€to€the€vendees.€€TheÏpurchasers€had€paid€the€insurance€premiums€and,€"as€inÏò òUpdegraffó ó,€there€[was]€no€evidence€to€indicate€that€theÏinsurance€premium€was€less€than€the€usual€rate€for€such€aÏhouse...."Ìà àThe€same€issue€was€decided€in€ò òNational€Securityó óÏò òFire€&€Casualty€Co.€v.€Milleró ó,€394€So.2d€31Ï(Ala.Civ.App.1980).€€The€plaintiff€owned€property€uponÏwhich€she€was€issued€a€fire€insurance€policy€by€theÏdefendant€insurer.€€Plaintiff€later€sold€the€propertyÏpursuant€to€a€land€sale€contract.€€The€agreement€betweenÏthe€plaintiff€and€the€purchasers€was€that€legal€titleÏwould€not€be€conveyed€until€the€purchase€price€was€paid.€ÏMonthly€installments€were€provided€for.€€The€premisesÏburned€before€full€payment€was€made€and€plaintiff€filed€aÏclaim€for€the€loss€under€her€policy.€€The€defendantÏrefused€to€remit€the€full€amount€due€under€the€policy,Ïcontending€the€insured€was€not€entitled€to€a€sum€greaterÏthan€the€value€of€her€interest€which€was€equivalent€toÏthe€unpaid€purchase€price€due€on€the€property.€€The€courtÏsaid€the€insurance€company€could€not€set€up€the€equitableÏtitle€of€the€purchasers€as€a€defense€to€liability€on€itsÏcontract€with€the€insured,€though€it€was€noted€thatÏproceeds€recovered€by€the€insured€in€excess€of€herÏinterest€would€be€held€by€her€in€trust€for€theÏpurchasers.Ìà àAt€5A€Appleman,€òòInsurance€Law€and€Practiceóó,€212„15Ï(1970),€it€is€stated:Ìà0 àThe€equitable€rule€has€obtained€in€many€states€thatÏwhere€the€building€which€was€the€subject€ofÏconveyance€is€destroyed€or€damaged,€the€vendor€mustÏapply€the€proceeds€upon€the€purchase€price€andÏaccount€for€the€balance€to€the€purchaser.€€OtherÏjurisdictions€have€stated€the€vendor€must€eitherÏapply€the€proceeds€to€the€purchase€price€or€toÏrepairs.€€Nor€would€carrying€out€the€contractÏwithout€abatement€of€the€purchase€price€after€theÏbuilding€burned€affect€the€purchaser's€rights€to€theÏinsurance€money.Ìà àAlso,€with€regard€to€the€rights€to€insuranceÏproceeds,€it€is€stated€at€92€C.J.S.,€òòVendor€&óó€òòPurchaseróó,Ïðð€296:Ìà0 à[T]he€insurance€money€in€a€case€of€loss€is€asÏbetween€the€parties€and€the€insurance€company,Ïpayable€to,€and€collectable€by€the€vendor...asÏbetween€the€vendor€and€the€purchaser,€the€betterÏrule€would€seem€to€be€that€it€should€belong€toÏwhoever€must€bear€the€loss€resulting€from€the€injuryÍto€the€property.€€Hence,€if€the€loss€falls€on€theÏpurchaser...he€is€entitled€to€the€benefit€of€theÏinsurance€money,€and€if€it€is€collected€by€theÏvendor,€he€will€hold€it€for€the€benefit€of€theÏpurchaser€who€will€be€entitled€to€credit€therefor€onÏthe€unpaid€purchase€price€or€on€a€mortgageÏindebtedness€assumed€by€him€as€part€of€the€purchaseÏprice.ÌÌÌÌÒ ° ÒÒ „ ÒÓÓà àà àIt€appears€the€policy€issued€by€Mid„Century€to€Dunlaps€wasÏissued€as€coverage€against€fire€damage€or€loss€of€the€dwelling.€ÏThere€is€no€indication€it€was€intended€solely€for€the€purpose€ofÏsecuring€the€unpaid€portion€of€indebtedness€on€the€property.€€Also,Ïthe€contract€of€insurance€was€exclusively€between€Mid„Century€andÏDunlaps.€€Therefore,€as€held€in€the€cases€cited€above,€Mid„CenturyÏmay€not€now€use€the€equitable€title€of€King€as€a€defense€to€itsÏliability€on€a€contract€with€Dunlaps.ÌÌà àà àAlso,€as€indicated€by€the€foregoing€authorities,€King,€uponÏentering€into€the€sales€agreement€with€Dunlaps€and€taking€possessionÏof€the€property,€became€the€equitable€owner€of€it.€€Consequently,€viaÏthe€doctrine€of€equitable€conversion,€the€risk€of€loss€had€accrued€toÏKing€at€the€time€the€fire€occurred.€€òòSeeóó€ò òOldham€v.€Kennedyó ó,€22ÏTenn.€260€(1842);€ò òBaker€v.€Smithó ó,€35€Tenn.€289€(1855).€ÏConsequently,€the€proper€result€would€be€that€Dunlaps,€thoughÏentitled€to€full€recovery€from€Mid„Century,€must€hold€those€proceedsÏin€excess€of€their€interest,€i.e.,€the€unpaid€balance€of€the€purchaseÏprice,€in€trust€for€King.ÌÌà àà àThe€chancellor,€in€the€case€at€bar,€accomplished€this€endÏresult€in€his€final€decree€by€awarding€a€recovery€of€the€face€amountÏof€the€policy€for€$30,000,€ordering€Mid„Century€to€pay€the€proceedsÏof€the€policy€into€the€registry€of€the€court,€and€ordering€the€clerkÏto€pay€First€Peoples€Bank€the€sum€of€$7,504,€which€was€the€balanceÏowed€on€its€mortgage€against€the€property,€and€$745.13€to€Dunlaps€forÏthe€balance€owed€by€King€to€Dunlaps€under€contract€of€purchase.€€TheÏcourt€subrogated€King€to€the€rights€of€Dunlaps€to€the€remainder€ofÏthe€insurance€proceeds€and€ordered€the€proceeds€be€paid€to€King.ÌÌà àà àWe€affirm€the€decree€of€the€chancellor€and€the€cost€of€thisÏappeal€is€taxed€to€the€Appellant.€€The€case€is€remanded€to€the€trialÏcourt€for€any€further€necessary€proceedings.ÌÓÓÌÌÌÌÌ€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€__________________________€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€ÏClifford€E.€Sanders,€Sp.J.ÌÌÌÌÌCONCUR:€ÌÌÌ__________________________€ÌHerschel€P.€Franks,€J.€ÌÌÌ__________________________ÌCharles€D.€Susano,€Jr.,€J.ÌÌÌÌà àà àÌÌ