Young v. California Ins. Co.

• Decision Date: 25 June 1935
• Docket Number: 6081
• Citation: 55 Idaho 682,46 P.2d 718
• Court: Idaho Supreme Court
• Parties: J. C. YOUNG, Respondent, v. THE CALIFORNIA INSURANCE COMPANY and HARTFORD FIRE INSURANCE COMPANY and NORTH BRITISH & MERCANTILE INSURANCE COMPANY and ROYAL INSURANCE COMPANY, Appellants

46 P.2d 718

55 Idaho 682

J. C. YOUNG, Respondent, v. THE CALIFORNIA INSURANCE COMPANY and HARTFORD FIRE INSURANCE COMPANY and NORTH BRITISH & MERCANTILE INSURANCE COMPANY and ROYAL INSURANCE COMPANY, Appellants

No. 6081

Supreme Court of Idaho

June 25, 1935

INSURANCE-AVOIDANCE OF POLICY-FRAUD-FALSE SWEARING-INTENT-RELIANCE-INSTRUCTIONS.

1. To void fire policies providing that they should be void in case of fraud or false swearing by insured touching any matter relating to insurance, whether before or after loss, coupled with overvaluation by insured in his proofs of loss, insurers must have established insured's wilful intent to knowingly, wilfully and fraudulently obtain from insurers payment of greater sum than value of property at date of fire.

2. Insurers' agent's knowledge of kind, character and value of property in insured's place of business at time fire policies were issued held imputed to insurer.

3. In action on fire policies providing that they should be void in case of fraud or false swearing by insured touching any matter relating to insurance, whether before or after loss instructing that conceding that insured made false and fraudulent representations knowingly and with intent to defraud in his claims of loss, if insurers neither believed relied nor acted on such alleged fraudulent representations to their detriment, then as matter of law insurers had not been defrauded and policies would not be voided, held not error where alleged false and fraudulent swearing did not deceive insurers whose adjuster at no time believed, relied or acted on alleged fraudulent statements or proofs of loss.

4. Insurers who did not base their nonliability on fire policies on false and fraudulent statements made in proofs of loss but on other grounds and who first urged nonliability predicated on fraud and false swearing in proofs of loss in answer in action could not avail themselves of defense of fraud or false swearing, since defects not specified are waived.

5. Terms "fraud" and "false swearing" within fire policies providing that they should be void in case of fraud or false swearing by insured touching any matter relating to insurance must have same application, and the false swearing must have been know- ingly and wilfully false to deceive or mislead insurers in order to void policies.

6. That jury found that damages sustained by fire were less than amount claimed in proofs of loss and less than amount of face of policies, held not to furnish sufficient evidence of fraud and false swearing, knowingly and intentionally made by insured, to defeat right of recovery, since insurers' liability was fixed by loss and not by proofs which only determined when policies were payable.

7. In action on policy wherein defense is based on fraud instructions are sufficient if they substantially lay down the law and need not draw fine distinctions as to amount of evidence required to establish fraud or as to what will constitute fraud or attempt to defraud.

APPEAL from the District Court of the Seventh Judicial District, for Canyon County. Hon. John C. Rice, Judge.

Action to recover on fire insurance policies. Judgment for plaintiff. Affirmed.

Judgment affirmed, with costs awarded to respondent. Petition for rehearing denied.

Willis C. Moffatt, Carl A. Burke and Laurel E. Elam, for Appellants.

False statements made knowingly by the insured in his invoices, statements or proofs of loss with the intent to cause the insurer to pay more than the actual loss avoid the policy and prevent recovery thereon, although the insurer has not relied upon such false statements or been misled thereby to his detriment. (14 R. C. L. 1343; 26 C. J. 382; 7 Couch on Insurance, sec. 1557; Domagalski v. Springfield Fire & Marine Ins. Co., 218 N.Y.S. 164; Anibal v. Insurance Co. of North America, 84 A.D. 634, 82 N.Y.S. 600; Boise Association of Credit Men, Ltd., v. United States Fire Ins. Co., 44 Idaho 249, 256 P. 523.)

Rhodes & Eastabrook and Cleve Groome, for Respondent.

An insurance policy is a contract of indemnity and the question, in case of loss, is, what was the value of the property at the time of the loss, not what was the cost price to the insured, and in order for a statement with reference to a loss to be false, it must be shown that the statement was material; and before the policy can be forfeited on that ground it must further be shown that the insurer was prejudiced. (Dalton v. Milwaukee Mechanics Ins. Co., 126 Iowa 377, 102 N.W. 120; Miller v. Mutual Ben. Life Ins. Co., 31 Iowa 216, 7 Am. Rep. 122; Kentucky Livestock Ins. Co. v. McWilliams, 173 Ky. 92, 190 S.W. 697; Western Assur. Co. v. Bronstein, 77 Colo. 408, 236 P. 1013.)

BUDGE, J. Morgan and Holden, JJ., concur. Givens, C. J., and Koelsch, D. J., dissent.

OPINION

BUDGE, J.

Respondent operated a pool-hall and confectionery store at Wilder. He owned the fixtures used, with the exception of three show-cases, and the merchandise carried in connection with this business. Upon this property he obtained four policies of insurance from four different companies, aggregating $ 4,000. One Dille, agent for all of the companies except the Royal Insurance Company, residing at Caldwell, a short distance from Wilder, called upon respondent at his place of business on or about September 2, 1932, examined the stock of merchandise, furniture, fixtures and equipment in respondent's place of business and discussed with respondent the matter of taking out additional insurance. Respondent informed Dille that he did not care to renew certain of the policies nor to take out additional insurance. However, through Dille's solicitation respondent was finally persuaded to carry insurance through Dille as agent on the personal property to the extent of $ 3,500, in addition to the Royal Insurance Company policy for $ 500 he already had, and paid Dille the premium on that amount of insurance. The policies were delivered and became effective the next day. On September 18, 1932, the property alleged to be covered by the insurance policies was almost totally destroyed by fire. Appellants were given notice of the fire by respondent and an adjuster was shortly thereafter sent to Wilder to investigate and ascertain the extent of loss. The adjuster furnished respondent with a blank form upon which to enumerate the property destroyed and its value. Respondent advised the adjuster that all of his books, invoices and what-not had been destroyed by the fire and that it would thus be impossible for him to furnish either the original or certified copies of all the invoices and books from which an itemized list of the property could be made, whereupon the adjuster informed respondent that he must have some information of the property destroyed and its value to submit to his companies. Respondent thereafter made up and submitted to the adjuster an itemized list of the property alleged to have been insured and destroyed. This was returned to respondent by the adjuster with a form of affidavit inclosed, and on or about November 9, 1932, respondent executed the affidavit and thereafter submitted it and the itemized statement to the adjuster. This statement was objected to by the adjuster. On or about November 16, 1932, with the help of his attorney, respondent made a second statement, which was likewise objected to by the adjuster, whereupon on December 5, 1932, respondent prepared and swore to a third statement, which was also objected to or not accepted. All three statements were substantially the same in form and all had attached thereto the affidavit of respondent in which he swore as to the character, kind, amount and value of the property alleged to have been destroyed.

In the first statement submitted, preceding an enumeration of the property destroyed, appear figures or amounts set opposite to the word "cost" and there is a conflict in the evidence as to who wrote the word "cost" thereon. On the second and third statements submitted the word "cost" appears at the head of the enumeration of the property destroyed, beneath which is placed a stated amount. The word "claimed" is also placed at the head of enumerated amounts on the second and third statements. In the affidavits attached to the statements general language is used to the effect that the inventories contain the cash value of each item and the loss thereon, said values being figured as of the date of the fire. From what is stated generally in the affidavits, whether the word "cost" on the first statement was written by respondent or the adjuster is of no serious importance, since the measure of damages is not the cost,--or what the insured paid for the various articles.

With the three claims of loss to which reference has heretofore been made respondent furnished, as required by the insurance policies, an affidavit sworn to by one W. N. Rhoads, a justice of the peace in and for Wilder Precinct, wherein the said justice certified that he was familiar with the circumstances of the fire at Wilder on September 18, 1932, in which the property of respondent was destroyed; that said business and property was totally destroyed; that he was familiar with the property owned by respondent in the operation of his business and that he honestly believed that respondent had sustained a loss in excess of $ 6,000 as a result of the fire, which affidavit was admitted in evidence.

Respondent in his three statements or proofs of loss, which were admitted in evidence, claimed that he had been damaged in excess of the total coverage or the face amount of the four policies of insurance. His actions, however, were limited to the amount of the four policies, namely, $ 4,000.

The four actions instituted to recover against the insurance companies were ultimately...