Aetna Ins. Co. v. Kacharos

• Court: Alabama Supreme Court
• Writing for the Court: GARDNER, Justice.
• Citation: Aetna Ins. Co. v. Kacharos, 226 Ala. 504, 147 So. 438 (Ala. 1933)
• Decision Date: 09 March 1933
• Docket Number: 6 Div. 313.
• Parties: ÆTNA INS. CO. v. KACHAROS.

147 So. 438

226 Ala. 504

ÆTNA INS. CO. v. KACHAROS.

6 Div. 313.

Supreme Court of Alabama

March 9, 1933

Rehearing Denied April 20, 1933.

Appeal from Circuit Court, Walker County; R. L. Blanton, Judge.

Action on a policy of fire insurance by Lillian Kacharos against the Ætna Insurance Company. From a judgment for plaintiff defendant appeals. Transferred from Court of Appeals.

Affirmed.

Coleman Spain, Stewart & Davies, of Birmingham, for appellant.

Coleman D. Shepherd, of Jasper, for appellee.

GARDNER Justice.

This is a suit on a fire insurance policy. The insured was a purchaser of the property, the subject-matter of this suit at a mortgage foreclosure sale under order of the court, evidenced by the register's deed executed January 17, 1930. The litigation reached this court (Dewyer v. Dover, 222 Ala. 543, 133 So. 581), but nothing there determined is of interest here. At the time of the issuance of the policy, July, 1931, and at the date of the loss, December, 1931, the period for the exercise of the statutory right of redemption had not expired.

It is insisted, therefore, there is no liability under the terms of the policy, for the reason insured was not the unconditional and sole owner, and the authorities noted by counsel as supporting this insistence have been duly examined ( Essex Sav. Bank v. Meriden Fire Ins. Co., 57 Conn. 335, 17 A. 930, 18 A. 324, 4 L. R. A. 759; Hartford Fire Ins. Co. v. Keating, 86 Md. 130, 38 A. 29, 63 Am. St. Rep. 499; Exchange Underwriters' Agency v. Bates, 195 Ala. 161, 69 So. 956; Loventhal v. Home Ins. Co., 112 Ala. 115, 20 So. 419, 33 L. R. A. 258, 57 Am. St. Rep. 17; New Brunswick Fire Ins. Co. v. Nichols, 210 Ala. 63, 97 So. 82; Boulden v. Phoenix Ins. Co., 112 Ala. 424, 20 So. 587; Gunn v. Palatine Ins. Co., 217 Ala. 91, 114 So. 690; Brown v. Comm. Fire Ins. Co., 86 Ala. 189, 5 So. 500; Westchester Fire Ins. Co. v. Green, 223 Ala. 121, 134 So. 881; 26 Corpus Juris 172), but we are not persuaded they bear out this view.

On the contrary, the case of Gaylord v. Lamar Fire Ins. Co., 40 Mo. 13, 93 Am. Dec. 289, supporting the contrary view, is a case much in point, cited and quoted by this court in Loventhal v. Home Ins. Co., 112 Ala. 108, 20 So. 419, 423, 33 L. R. A. 258, 57 Am. St. Rep. 17. A consideration of underlying principles leads to a like conclusion.

Forfeiture clauses of this character in policies of insurance are to be strictly construed against the insurer, and always with reference to their legitimate effect, that is, the protection of the insurer against risks that are materially different from those which he has undertaken. As said in the Loventhal Case, supra, it is an interest, not a title, of which the conditions of insurance speak; the terms interest and title not being synonymous, and the court there approved the following discussion of the question: "The purpose of the provision is to prevent a party who had an undivided or contingent, but insurable, interest in property, from appropriating to his own use the proceeds of a policy, taken upon the valuation of the entire and unconditional title, as if he were the sole owner, and to remove him from the temptation to perpetrate fraud and crime; for without this a person might thus be enabled to exceed the measure of an actual indemnity. But where the entire loss, if the property is destroyed by fire, must fall upon the party insured, the reason and purpose of this provision does not seem to exist; and in the absence of any particular inquiry as to the specific nature of the title, or of any express stipulation in the policy that the assured held the legal or equitable title,-either being available to secure an entire, unconditional, and sole ownership,-the provision referred to can, we think, have no force to defeat the plaintiff's recovery in this case."

And, as pointed out in Capital City Ins. Co. v. Caldwell Bros., 95 Ala. 77, 10 So. 355, 356, ownership and not title is the material factor in assuming insurance risk on improved real estate, the court saying: "The extent of the ownership is the important element of inquiry. This, because the law, voicing common experience, presumes that the absolute owner of property will be more watchful of its preservation than would a mere tenant, or one owning only a partial interest. And this watchfulness would be scaled, not by the form of the title, but by the extent of ownership."

This ruling has application to a purchaser at a foreclosure sale. True there remained in the mortgagor the statutory right of redemption, a mere privilege (Arnold v. Black, 204 Ala. 632, 87 So. 170; Lewis v. McBride, 176 Ala. 134, 57 So. 705), but so long as that privilege remains unexercised, the risk of loss falls upon the purchaser, and it is to his interest that the whole of the property be preserved and protected. The Missouri court, in the Gaylord Case, supra, answering a like argument, said: "No injustice is done to the defendants. It was not a matter of any importance to them that this title was subject to be divested by a possible redemption; for if there had been a redemption before the loss, there would have been no title, no insurable interest in the plaintiffs, and, of course, no possible right to recover."

We are persuaded, therefore, both upon reason and authority, the insured was the unconditional and sole owner of the property within the meaning of this clause of the policy.

At the time of the destruction of the house by fire, it had been unoccupied more than ten days, but less than thirty. The property had been insured the year previous, and while the insurance of July, 1931, was in a sense a renewal of the insurance, yet an entirely new policy was issued and it was not, as counsel seem to indicate, a renewal of the policy of the previous year, and the authorities noted (National L. & A. Ins. Co. v. Lokey, 166 Ala. 174, 52 So. 45; 2 Cooley's Briefs [2d Ed.] 1406; Commercial Fire Ins. Co. v. Morris, 105 Ala. 498, 18 So. 34; 1 Couch on Ins. 4919), would appear inapplicable.

But, however that may be, the next question to be considered was, under the evidence, clearly a question of fact to be determined upon a consideration of conflicting proof. The insurer, it seems, treated the property as farm property, and offered proof to show that policies issued on such improvements contained a limitation for vacancy of ten days, rather than thirty, as in the ordinary policies on town and city property. The policy issued and delivered to plaintiff in July, 1931, however, permitted as to loss by fire, a vacancy of thirty days. A month later, the insurer's special agent, having general supervision of the business of the company in that territory, discovering this fact, visited the plaintiff for the purpose, it seems, of getting a reduction of the amount of the risk from $700 to $600, and a correction in regard to the vacancy period limiting it to a period of ten days. This agent procured plaintiff's signature to an application for the insurance, which he states is the usual custom in insurance of that character of property. This application purports to have been signed on July 14, 1931, the date of the policy sued upon, but in fact it was not signed until a month later. In this application is an inquiry as to whether title was by warranty deed, and the answer in the affirmative. Defendant now insists this answer constitutes a material misrepresentation which should avoid the policy.

The failure to require an application upon the issuance of the policy was the fault of the insurer. The policy had been issued and delivered and the signature to the application was secured without consideration, and without any previous understanding to that effect. Such representation therefore could not have the effect of avoiding the policy. 26 Corpus Juris 161. Moreover, the...