Standard Supply Co., Inc. v. Reliance Ins. Co.

• Citation: 49 N.C.App. 616,272 S.E.2d 394
• Decision Date: 02 December 1980
• Docket Number: No. 8010DC348,8010DC348
• Parties: The STANDARD SUPPLY COMPANY, INC. v. RELIANCE INSURANCE COMPANY; George W. Eaves; and Eaves Insurance Agency, Inc.
• Court: Court of Appeal of North Carolina (US)

Page 394

272 S.E.2d 394

49 N.C.App. 616

The STANDARD SUPPLY COMPANY, INC. v. RELIANCE INSURANCE COMPANY; George W. Eaves; and Eaves Insurance Agency, Inc.

No. 8010DC348.

Court of Appeals of North Carolina.

Dec. 2, 1980.

Reynolds & Howard by E. Cader Howard, Raleigh, for plaintiff.

Johnson, Patterson, Dilthey & Clay by Ronald C. Dilthey, Raleigh, for defendant Reliance Ins. Co.

Young, Moore, Henderson & Alvis by Joseph C. Moore, Jr., and Walter Brock, Jr., Raleigh, for defendants Eaves.

WELLS, Judge.

Plaintiff first assigns as error the granting of defendants Eaves Agency's and George Eaves' motions for directed verdict. Taking plaintiff's evidence to be true and giving plaintiff the most favorable interpretation of the evidence, it remains that plaintiff, as a matter of law, has failed to make out a case of actionable negligence against Eaves Agency or Eaves individually. Plaintiff asserts that there was evidence of failure to provide plaintiff with the renewed policy, and that since Eaves had a duty to furnish plaintiff with the policy, this breach of duty constitutes negligence on their part. While accepting, arguendo, that there was evidence as to failure to furnish the policy to plaintiff, there is no showing of any causal relationship between such omission and plaintiff's subsequent loss, i. e., plaintiff's evidence lacked the ingredient of proximate cause essential in establishing actionable negligence. Plaintiff argues that had it received the policy, it would have then been on notice of the exclusion and could have acted to procure a different type of coverage, presumably without the exclusion. Plaintiff's witnesses-the principal officers in the corporation-testified, however, that they had never read the predecessor policies (which were duplicative of the renewal policy) and that even if they had received the renewal policy, they would not have read it.

Neither can we accept plaintiff's argument that defendants Eaves were negligent in not informing Reliance that the dwelling house was unoccupied. The evidence clearly shows that Reliance ordered its own investigation of the status of the property and that its investigator reported the property to be "not vacant". Plaintiff's failure to respond to Eaves' request for the name of plaintiff's tenant cannot be translated into an act of negligence on the part of Eaves. Eaves had no duty, independent of Reliance, to inspect the property or to determine whether the property was occupied.

Plaintiff next assigns as error the failure of the trial court to direct a verdict in its favor against Reliance. The heart of plaintiff's claim against Reliance lies in the theory of waiver, based upon the proposition that Reliance had constructive knowledge that the house was unoccupied and that Reliance issued the policy while possessed of such knowledge. Whether or not Reliance had the constructive knowledge contended by plaintiff is a jury question. Plaintiff's evidence showed that the dwelling was in a state of substantial disrepair when it was inspected by Jennings. There was no electricity to the house and several windows were broken. There was no observed heat source in the house and the house was sparsely furnished. On the other hand, a neighbor informed Jennings that people were living in the house and Jennings observed a "puppy" dog on the premises during his visit. Another of plaintiff's witnesses, Thomas Urquhart, testified that he visited and inspected the house in February of 1976. He described the poor condition of the house, its lack of electricity and sparse furnishings and the broken windows. These physical conditions suggested to him that the house was vacant, and that the conditions "to me say that you can't live there." Plaintiff presented similar testimony from Richard Urquhart.

The jury question arising on this evidence is whether a reasonable person, seeing the property in the conditions existing when Jennings visited it, could have concluded that the property was occupied, or, whether these conditions were such as to put Jennings on such notice of non-occupancy as to require further investigation. Our Supreme Court, quoting from 16 Appleman, Insurance Law and Practice, has stated the rule as follows:

"Knowledge of facts which the insurer has or should have had constitutes notice of whatever an inquiry would have disclosed and is binding on the insurer. The rule applies to insurance companies that whatever puts a person on inquiry amounts in law to 'notice' of such facts as an inquiry pursued with ordinary diligence and understanding would have disclosed."

Gouldin v. Insurance Co., 248 N.C. 161, 165, 102 S.E.2d 846, 849 (1958).

In addition to the evidence of non-occupancy based on the observed conditions of the property, Reliance was never furnished with the name of a tenant for the property. This is further evidence from which the jury might, but need not, infer that Reliance was on notice of non-occupancy.

The question of whether there was notice to Reliance depends in substantial degree on whether Jennings' knowledge was imputable to Reliance. In another assignment of error, plaintiff excepted to the portion of the trial court's charge to the jury in which the court instructed the jury on the issue of agency, as follows:

I will instruct you that the Tarheel Reporting Company was acting not as an agent of the Reliance Insurance Company but as an independent contractor, and if you should find that Ed Jennings-or John Ed Jennings of the Tarheel Reporting Company failed to ascertain there were no tenants living in the house or if you should find that Mr. Jennings wrongfully concluded that the house was not vacant, that this fact is not imputed to Reliance Insurance Company, since Mr. Jennings and Tarheel Reporting Company were not agents of Reliance Insurance Company but were acting in the capacity of an independent contractor. And the issue before you is not a determination of whether or not Mr. Jennings and Tarheel Reporting Company wrongfully concluded that the dwelling was not vacant.

We hold that the foregoing...