749 F.2d 1493 (11th Cir. 1985), 83-8656, Woods v. Independent Fire Ins. Co.

Docket Nº:83-8656.
Citation:749 F.2d 1493
Party Name:James B. WOODS, Sr., Plaintiff-Appellant, v. INDEPENDENT FIRE INSURANCE COMPANY, Defendant-Appellee.
Case Date:January 08, 1985
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 1493

749 F.2d 1493 (11th Cir. 1985)

James B. WOODS, Sr., Plaintiff-Appellant,

v.

INDEPENDENT FIRE INSURANCE COMPANY, Defendant-Appellee.

No. 83-8656.

United States Court of Appeals, Eleventh Circuit

January 8, 1985

Page 1494

Susan W. Cox, Francis W. Allen, Statesboro, Ga., for plaintiff-appellant.

Bobby Jones, Metter, Ga., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Georgia.

Before GODBOLD, Chief Judge, CLARK, Circuit Judge, and THOMAS [*], District Judge.

GODBOLD, Chief Judge:

This is a suit over fire insurance coverage. The district court granted summary judgment for the insurer, holding that coverage was voided because of a material misrepresentation by the insured in a sworn proof of loss. We affirm.

On January 17, 1980, plaintiff secured a policy of insurance covering his single-family dwelling in Brooklet, Georgia. On July 9, 1980, he conveyed the property to his mother in fee simple, because he was having marital difficulties and wanted to prevent his wife from making any claim against the house in possible divorce proceedings. Woods continued to live in the house and continued to pay taxes on it and to pay the insurance premiums. His furniture and personal belongings remained in the house. The mother never lived in the house. The policy was renewed February 20, 1981, without Woods disclosing the transfer of title. On January 15, 1982, two days before the policy was to expire, the house was destroyed by fire.

The policy itself required Woods, after a loss, to set forth the interest of himself and all others in the property, as well as any changes in title or occupancy during the term of the policy.

Woods completed a sworn proof of loss form. Under the heading "Title and Interest"

Page 1495

he stated that his interest in the property at the time of loss was 100%. He stated that no other person had any interest in the property or encumbrance thereon and since the policy had been issued there had been no assignment of the property or change in the interest, use, occupancy, location, or exposure.

After receiving the proof of loss, the insurer conducted an investigation and found that the property had been conveyed in fee simple to the mother. The insurer denied coverage on the grounds that Woods had no insurable interest in the property and that he had violated the condition of the policy providing: "We do not provide coverage for any insured who has intentionally concealed or misrepresented any material fact or circumstance relating to this insurance."

The district court granted summary judgment to the insurer, holding that the misrepresentation was material as a matter of law and that it voided the coverage. The court did not decide whether Woods did or did not have an insurable interest.

Under Georgia law "[i]t is only fraudulent false swearing, in furnishing the preliminary proof or in the examinations which the insurers have a right to require, that avoids the policies." American Alliance Insurance Co. v. Pyle, 62 Ga.App. 156, 165, 8 S.E.2d 154, 160 (1940). American Alliance cited and relied upon Claflin v. Commonwealth Insurance Co., 110 U.S. 81, 3 S.Ct. 507, 28 L.Ed. 76 (1884). In that case a merchant represented that he owned certain goods when in fact he did not. The Court first discussed the object of the proof of loss:

The object of the provisions in the policies of insurance, requiring the assured to submit himself to an examination under oath, to be reduced to writing, was to enable the company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts; material to their rights, to enable them to decide upon their obligations, and to protect them against false claims. And every interrogatory that was relevant and pertinent in such an examination was material, in the sense that a true answer to it was of the substance of the obligation of the assured. A false answer as to any matter of fact material to the inquiry, knowingly and wilfully made, with intent to deceive the insurer, would be fraudulent. If it accomplished its result, it would be a fraud effected; if it failed, it would be a fraud attempted. And if the matter were material and the statement false, to the knowledge of the party making it, and wilfully made, the intention to deceive the insurer would be necessarily implied, for the law presumes every man to intend the natural consequences of his acts. No one can be permitted to say, in respect to his own statements upon a material matter, that he did not expect to be believed; and if they are knowingly false, and wilfully made, the fact that they are material is proof of an attempted fraud, because their materiality, in the eye of the law, consists in their tendency to influence the conduct of the party who has an interest in them, and to whom they are addressed.

Id. at 94-95, 3 S.Ct. at 515.

The Court further held that it was obvious that "it was material to show what title and interest Murphy had at the time of the loss in the property insured. If he had no insurable interest, that certainly would have been a defence [sic]." Id. at 94, 3 S.Ct. at 514.

The fact whether Murphy had an insurable interest in the merchandise covered by the policy was directly in issue between the parties. By the terms of the contract he was bound to answer truly every question put to him that was relevant to that inquiry. His answer to every question pertinent to that point was material, and made so by contract, and because it was material as evidence; so that every false statement on that subject, knowingly made, was intended to deceive and was fraudulent.

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