62 S.E. 1 (S.C. 1908), McCarty v. Piedmont Mut. Ins. Co.

Citation:62 S.E. 1, 81 S.C. 152
Opinion Judge:JONES, J.
Party Name:McCARTY v. PIEDMONT MUT. INS. CO.
Attorney:Croft & Croft and Carlisle & Carlisle, for appellant. Hendersons, for respondent.
Case Date:July 31, 1908
Court:Supreme Court of South Carolina
 
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62 S.E. 1 (S.C. 1908)

81 S.C. 152

McCARTY

v.

PIEDMONT MUT. INS. CO.

Supreme Court of South Carolina

July 31, 1908

Appeal from Common Pleas Circuit Court of Aiken County; R. W. Memminger, Judge.

Action by H. D. McCarty against the Piedmont Mutual Insurance Company. Judgment for plaintiff. Defendant appeals. Reversed.

Gary, A. J., dissenting.

Croft & Croft and Carlisle & Carlisle, for appellant.

Hendersons, for respondent.

JONES, J.

This action is upon an insurance policy issued by defendant to plaintiff November 8, 1906, indemnifying him against loss by fire on a dwelling house, a tenant house, and some household furniture, situated in Aiken county, S.C. On March 16, 1907, the property insured was totally destroyed by fire. Recovery was resisted by defendant under two defenses: (1) Placing an incumbrance upon the property after issuance of the policy without the written consent of the defendant; (2) fraudulent overvaluation of the dwelling house. Judgment was rendered for the plaintiff.

The defendant is a domestic mutual insurance company, regulating its business by means of a constitution and by-laws, of which the insured becomes a member on the issuance of the policy. When application was made for the policy, on November 6, 1906, defendant's agent asked plaintiff if there was any mortgage on the property, and plaintiff answered there was not, but that he expected to put a small mortgage on it soon, and asked him if that would make any difference, to which the agent replied that it would not. [81 S.C. 155] Upon this assurance the plaintiff, on January 27th following, gave a mortgage to the Bank of Aiken for $150 without any other consent on the part of the defendant, except what may be deemed involved in the knowledge and representations of defendant's agent in negotiating for the policy. The first question presented under the exceptions is whether the doctrines of waiver and estoppel, arising out of the knowledge and acts of agents, apply to mutual assessment companies as to old line insurance companies. The decisions in

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this state show that mutual insurance companies and fraternal benefit societies are governed by the same rules of law as the old-line insurance companies. McBryde v. Mut. Ins. Co., 55 S.C. 589, 33 S.E. 729, 74 Am. St. Rep. 769; Sparkman v. Supreme Council, 57 S.C. 16, 35 S.E. 391; Thompson v. Piedmont Mut. Ins. Co., 77 S.C. 486, 58 S.E. 341; Morrison v. Benev. Ass'n, 78 S.C. 398, 59 S.E. 27; Hankinson v. Piedmont Mut. Ins. Co. (S. C.) 61 S.E. 905; Plunkett v. Piedmont Mut. Ins. Co. (S. C.) 61 S.E. 893.

Appellant contends that this rule should not apply to conditions affecting the essence of the contract, the risk assumed, such as a subsequent incumbrance. We see no value in making the distinction contended for by appellant. The mutual insurance company is a distinct entity as a corporation, and, like other corporations, must act through agents. The knowledge acquired by its agents within the apparent scope of their authority ought to be imputed to it, as in the case of any other principal. Certainly until the delivery of the policy the applicant is not a member of the mutual association, and cannot be presumed to even know the constitution and by-laws of the association, much less to be bound thereby, and experience teaches that he acquires very little knowledge of the constitution and by-laws after membership. The agent and applicant are not upon equal terms of knowledge. The applicant is generally ignorant of the [81 S.C. 156] powers of the agent and the special rules by which the solicited contract is to be controlled. The agent is generally expert in these matters, and common honesty and fairness demand that the applicant be not misled, to his injury, by the agents in one kind of association as well as the other, whether the subject-matter of waiver and estoppel relate...

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