United States Fidelity & Guaranty Co. v. Yost

Decision Date09 January 1939
Docket Number32903
Citation185 So. 564,183 So. 260,183 Miss. 65
PartiesUNITED STATES FIDELITY & GUARANTY CO. v. YOST
CourtMississippi Supreme Court

(Division A.)

1 INSURANCE.

An insurer, which for many months conducted in Tennessee litigation brought against insured hotel company for death of hotel guest who was killed in accident in hotel elevator would be deemed to have waived right to claim exemption under clause of indemnity policy providing that policy did not cover loss caused by any elevator while in charge of any person under age fixed by law for elevator attendants notwithstanding that elevator operator had stated to insurer that he was 19 at time of accident when he was in fact under 18, the minimum age for elevator operators under city ordinance, where an hour's investigation of public records would have disclosed operator's true age, and insurer had relied on operator's statement and not on hotel company's statement.

2 ACTION.

The rules of substantive law of a state where a cause of action arises are to be applied by the court of the forum, but the quantum of proof required is governed by the law of the forum.

3 INSURANCE.

For a waiver of forfeiture of policy to be applied, it is unnecessary that an insured has been misled, or that the facts constitute an estoppel.

4. INSURANCE.

Slight circumstances of intention to waive forfeiture of insurance policy are sufficient to support finding of waiver, and the law will seize on them as evidence of an intention.

ON MOTION. (Division A. Jan. 9, 1939.) [185 So. 564. No. 32903.]

1. COSTS. Where trial court's judgment was rendered on January 11, 1937, for $25,000 with 6 per cent. interest per annum from April 14, 1934, until paid, Supreme Court affirming judgment properly allowed $1,455.63 damages, being statutory 5 per cent. of the aggregate of $25,000, plus 6 per cent. per annum interest thereon from April 14, 1934, to January 11, 1937, the date of rendition of trial court's judgment (Code 1930, sec. 3387). 2. COSTS. The sum of money on which statute authorizing 5 per cent. damages on affirmance of judgment contemplated damages are to be rendered is that which appears from the judgment to be due when judgment was rendered, and for which a recovery was awarded, and it does not contemplate damages or interest which thereafter accrues (Code 1930, sec. 3387).

Division A

September 12, 1938

Suggestion Of Error Overruled, October 31, 1938.

APPEAL from the chancery court of Amite county HON. R. W. CUTRER, Chancellor.

Bill for discovery and attachment by John N. Yost, administrator, against the United States Fidelity & Guaranty Company, to recover from the defendant, as insurer, the amount of a judgment which the predecessor-administrator had recovered from the Noel Hotel Operating Company, the insured. From a judgment in favor of the administrator, the insurer appeals. Affirmed.

Affirmed. Request overruled.

J. T. Lowrey, of Gloster, and Wm. G. Hall and Wm. M. Hall, both of Memphis, Tenn., for appellant.

The Supreme Court of Mississippi declared at an early date that the courts of Mississippi would not hold the law of a sister state and acts thereunder invalid where the courts of a sister state had not previously so held.

Dwight v. Richardson, 12 S. & M. 325; Newsom v. Cocke, 44 Miss. 352.

The general rule is that doubts must be resolved in favor of the validity of municipal ordinances.

43 C. J. 570, sec. 908.

The courts of Tennessee and Mississippi, following the Supreme Court of the United States held that such ordinances are "law" within the meaning of such exclusion clauses in Phoenix Indemnity Co. v. Barrett, 167 Tenn. 116, 67 S.W.2d 135; Hunter v. Western, etc., Indemnity Co., 19 Tenn.App. 589, 92 S.W.2d 878; Sommerville v. Keeler, 165 Miss. 244, 145 So. 721; and the uncontroverted evidence was that Ensley was born April 10, 1914, and was therefore under the age of eighteen on May 14, 1931, when the elevator he was operating killed Robert Payne.

Appellant's representatives, through whom it would have obtained actual knowledge about Ensley's non-age, Caldwell, the adjuster who investigated the case, and Hume & Armistead, the attorneys who under its employment assumed and conducted the defense of Payne's suit against the Noel Hotel Operating Company, testified that they did not know Ensley was under the age of eighteen at the. time of the accident, until he so testified upon the trial of the case shortly before its close, and there was no contradiction or attempt at contradiction of their testimony to that effect. The court's finding that appellant had actual knowledge of Ensley's nonage when it assumed the defense of Payne's suit, would in consequence be unwarranted by and contrary to the undisputed evidence.

There was no proof of anything to put appellant upon inquiry about the date of Ensley's birth until he testified with reference to it upon the trial of the case shortly before its close.

When Payne's representative brought suit against the Noel Hotel Operating Company, claim for liability in none. of the four counts of the declaration was predicated upon the Hotel Company's having had an operator in charge of the elevator under the age of eighteen contrary to the city's ordinance. Without something of that sort appearing in the record, there was and is no basis for a finding that appellant was put on inquiry as to the date of Ensley's birth and that appellant is chargeable with the knowledge of what the inquiry would have led to with the use of the facilities shown for obtaining it.

The Court of Appeals of New York expressly declares that an insurance company is not bound to inquire whether the law was valid before it undertakes a defense unless it is put upon inquiry, and that it is not put upon inquiry where it is given information upon which it might rely.

S. & E. Motor Hire Corp. v. New York Indemnity Co., 225 N.Y. 69, 174 N.E. 65.

In Fulton Co. v. Mass. Bonding & Insurance Co., 138 Tenn. 278, 197 S.W. 866, the Supreme Court of Tennessee makes no such express statement of the rule as does the Supreme Court of New York in the above case, but it is clear from its decision that it recognized that an insurer had to be put upon notice by something before it could be charged with the knowledge to which its inquiry might lead, and that the insurer when it relied upon information given it, did not have to make further inquiry and was not chargeable with the knowledge to which the inquiry would lead.

Stearns Lbr. Co. v. Travelers Ins. Co., 159 Wis. 627, 154 N.W. 991.

In 39 C. J., page 1074, sec. 42, the following statement is found: "Estoppel to deny that an injury to an employee resulting from a cause not covered by the policy may be asserted notwithstanding lack of actual knowledge of the facts on the part of the insurer, where it appears that there was negligence in not obtaining information as to the facts." That statement on its face would appear to support the Chancellor's decision, but upon examining the cases cited in support of that statement it was found that it did not, and that those authorities are in line with those cited above, as it clearly appeared that in those cases the insurer was put upon notice or inquiry and negligently failed to pursue the inquiry. Those cases are Fairbanks Canning Co. v. London Guaranty, etc., Co., 154 Mo.App. 327, 133 S.W. 664; Globe Nav. Co. v. Maryland Cas. Co., 39 Wash. 299, 81 P. 826.

It is apparent from the undisputed evidence in this case that appellant 's attorneys could not have retired from the case immediately upon the disclosure by Ensley of his correct age, without doing injustice and damage to the assured. The disclosure came just before the close, of the evidence. Assured had no counsel in the case who could have stepped into the shoes of insurer's counsel and completed the trial. There is hardly room for anybody to doubt that if the insurer had withdrawn from the case in such circumstances, it would have made itself liable for any verdict and judgment that would have been rendered against the assured. The insurer, therefore, was not free to withdraw from the case. That is a necessary element to hold that one has waived or been estopped from asserting a right of the sort here involved.

In the case of Morrison v. Royal Indemnity Co., 167 N.Y.S. 732, 181 A.D. 709, a similar situation was considered and the court held that the insurer's failure to withdraw in such circumstances did not constitute a waiver or estop it from subsequently disclaiming liability under the exclusion clause of its policy.

In the case at bar, counsel remained in the case and argued the case to the jury and then notified assured that it disclaimed liability, and that the assured then entered into a stipulation with them that their filing and submitting motion for new trial would be without prejudice to appellant's rights. That was probably not necessary according to the decision in the New York case, but it set beyond question their right to do those things without waiving the insurer's right to set up the exclusion clause. It has been held in Tennessee and Mississippi that art insurer may defend under a reservation without waiving any rights under a policy.

Foreman v. Union Indemnity Co., 12 Tenn.App. 89; Travelers Indemnity Co. v. Holiman, 174 Miss. 220, 164 So. 36; Gray v. Houck, 167 Tenn. 233, 68, S.W.2d 117; Travelers Ins. Co. v. Inman, 157 Miss. 810, 126 80. 399.

The Supreme Court of New Jersey expressly held in Suydam v Public Indemnity Co., 161 A. 499, that it was not necessary for an insurer to give notice of reservation to the injured party, because of his lack of interest. in the contract prior to judgment and the issuance and return of execution unsatisfied. The Supreme...

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