Accident & Cas. Ins. Co. v. Lasater

• Decision Date: 15 March 1949
• Citation: 222 S.W.2d 202,32 Tenn.App. 161
• Parties: ACCIDENT & CASUALTY INS. CO. v. LASTER.
• Court: Tennessee Court of Appeals

222 S.W.2d 202

32 Tenn.App. 161

ACCIDENT & CASUALTY INS. CO. v. LASTER.

Court of Appeals of Tennessee, Eastern Section.

March 15, 1949

Certiorari Denied by Supreme Court June 18, 1949.

Appeal in Error from Circuit Court Hamilton County; Fred B. Ballard Judge.

Action by H. M. Lasater against the Accident & Casualty Insurance Company on a burglary insurance policy. Judgement for plaintiff, and defendant appeals in error.

Affirmed.

Kefauver, Duggan & Wilson and J. F. Wheless Chattanooga, for plaintiff in error.

Charles A. Noone, Chattanooga, for defendant in error.

McAMIS Judge.

This is an action upon a policy of burglary insurance in force and effect on November 16, 1946, and December 14, 1946 when the insured claims to have sustained losses by burglary from his grocery store at 1909-11 Broad Street, in Chattanooga Tennessee. The jury awarded a recovery of $449.01 for the first loss and $1,266.72 for the second. Judgment was entered after defendant's motion for a new trial was overruled and the present appeal in error resulted.

The insurer, by the assignments, here renews its primary defenses, (1) that the insured failed to comply with the policy provisions by keeping an inventory and records from which it could be determined with reasonable certainty the extent of the loss and failed to furnish due proof of loss of the character and within the time provided by the policy, (2) that no agent or representative of the Company had authority to waive these policy provisions and they were not validly waived either before or after the alleged losses occurred, (3) that there is no material evidence of a burglary loss, and (4) that the court erred in the charge to the jury and in declining to charge defendant's special requests.

The pertinent policy provisions governing the first question are:

'Exclusions. That this Policy does not apply herein: (b) If Named Insured does not regularly keep books and accounts in such manner that the exact amount of the loss can be accurately determined therefrom by the Company.'

'G. Proof of Loss. Inventory. * * * Affirmative Proof of Loss or Damage, under oath, on form provided by Company must be furnished Company at its United States Head Office in New York, N. Y., within Sixty (60) Days from date of discovery of such Loss or Damage. Such Proof shall contain (a) complete inventory of all Property stolen or damaged, (b) stating original cost, (c) actual cash value of each article at time of loss (d) and amount of loss thereon, and shall also contain statement in detail as follows: (e) describing damage done to Property; (f) defining interest of Named Insured in Property for which indemnity is claimed; (g) reasonable evidence of commission of any crime, to which loss or damage to Property covered hereunder was due, and of time of its occurrence * * *.

'No notice to any Agent, or knowledge possessed by any Agent or by any other Person shall be held to effect a Waiver or Change in any part of this Policy nor estop Company from asserting any right under Terms of this Policy; nor shall Terms of this Policy be waived or changed, except by Endorsement issued to form a part hereof * * *.'

Since the insured admits that he kept only a dollar inventory from which it would be impossible to arrive at a complete inventory in itemized form of the articles stolen stating the original cost or actual cash value of each as required by Section G above quoted, it seems important to determine at the outset whether (a) the issuing agent waived the provision above quoted requiring the insured to keep books and accounts in such manner that the exact amount of the loss can be accurately determined by the Company and (b) if there was such a purported waiver by the agent whether the action and knowledge of the agent is to be imputed to the Company. If the Company waived and requirement of keeping books and inventories before the loss occurred, it would seem to follow that it could not insist, after the loss had occurred, upon the insured furnishing a proof of loss containing detailed information which it would be impossible for him to furnish under the system of bookkeeping in the contemplation of the parties when the policy was issued.

Both the insured and the issuing agent, Mr. Draper, testified that the matter of keeping inventory and records was discussed between them before the policy was issued and that the insured explained to the agent that in the operation of a grocery store like that conducted by insured it was impossible to keep a complete inventory of the numerous items in stock; that the insured, following the prevailing practice employed by chain grocery stores and other self-service groceries, kept only a dollar inventory, i. e., the stock would be charged with each day's purchases at the retail price and credited with each day's sales, with appropriate markups and markdowns in event of price fluctuations; that by this method it would be possible to determine at a given time the dollar value of the stock on hands but impossible to determine the number of each of some 3,500 different items carried in stock.

It is a principle of frequent application in other types of insurance that where the insurer at the time of issuing the policy has knowledge of existing facts which, if insisted upon, would render nugatory the contract from its very inception, such knowledge constitutes a waiver of conditions in the contract inconsistent with the known facts and the insurer is estopped thereafter from asserting a breach of such conditions. See Insurance Company v. National Bank, 88 Tenn. 369, 12 S.W. 915, involving a condition in a fire policy as to the title of the insured; Life & Casualty Insurance Co. v. King, 137 Tenn. 685, 195 S.W. 585, involving a condition that an applicant for life insurance be in sound health at the date the policy was issued; Hayes v. Commonwealth Life Ins. Co., 8 Tenn.App. 554, also involving health insurance; Johnson Transfer & Freight Lines, Inc., v. American Nat. Fire Ins. Co., 168 Tenn. 514, 79 S.W.2d 587, 99 A.L.R. 277, involving a policy of cargo insurance. Maryland Casualty Co. v. McTyier, 150 Tenn. 691, 266 S.W. 767, 48 A.L.R. 1168, involved a policy of burglary insurance, but recovery was resisted on the ground of a change of title and not upon a breach of a condition requiring the keeping of books, inventories and other records, though the principle under consideration was applied to hold the insurer estopped to defend upon the ground of a change of title.

The thesis of all these cases is well stated in Life & Casualty Insurance Co. v. King, supra [137 Tenn. 685, 195 S.W. 587] :

'The law is charitable enough to assume, in the absence of any showing to the contrary, that an insurance company intends to execute a valid contract in return for the premium received and when the policy contains a condition which renders it void at its inception, and this result is known to the insurer, it will be presumed to have intended to...