Aetna Insurance Company v. Mount

• Decision Date: 22 June 1907
• Citation: 90 Miss. 642,44 So. 162
• Court: Mississippi Supreme Court
• Parties: AETNA INSURANCE COMPANY v. JAMES B. MOUNT

44 So. 162

90 Miss. 642

AETNA INSURANCE COMPANY v. JAMES B. MOUNT

Supreme Court of Mississippi

June 22, 1907

March 1907

FROM the circuit court of, first district, Hinds county, HON DAVID M. MILLER, Judge.

Mount appellee, was plaintiff in the court below; the insurance company, appellant, was defendant there. From a judgment in plaintiff's favor defendant appealed to the supreme court.

The plaintiff, a merchant engaged in business in the town of Smithland, in Point Coupe Parish, Louisiana, at which point was located his store building containing a stock of goods and merchandise, took out three policies of fire insurance with the defendant company, as follows: one policy, dated July 1, 1904, numbered 3,694, for $ 1,000 on his stock of merchandise while contained in the aforesaid building; one policy dated September 11, 1904, numbered 3,786, for $ 1,750 of which $ 1,500 covered his stock of merchandise aforesaid and $ 250 his store furniture and fixtures and iron safe in the store building; and one policy dated March 5, 1905, numbered 4,050, for $ 900 jointly on his stock of merchandise and on his store furniture and fixtures. All three policies were of the kind commonly known as the New York Standard form, and were issued and delivered to the plaintiff by the defendant company's agency in Baton Rouge, Louisiana. On May 1, 1905, within the period of insurance stipulated in the policies, the store building and goods and merchandise therein were totally destroyed by fire. The defendant having refused to pay the amounts of the policies, the plaintiff brought this suit to recover the amounts stated, aggregating $ 3,515. In addition to plea of general issue the defendant set up by, special plea, an alleged violation by the plaintiff of the fire proof safe clause of the policies as shown in the opinion. The plaintiff's replication to the special plea was that the defendant failed after the fire and before suit brought to tender back to plaintiff the unearned portion of the premium and was estopped to set up such defense. A demurrer by the defendant to the replication was overruled, and the defendant joined issue on the special plea. Tender of the unearned part of the premium was made by the defendant in court with its pleadings. No demand was made by plaintiff, before suit, for the unearned part of the premiums. The facts as to the pleadings and evidence are further stated in the opinion.

Reversed and remanded.

McLaurin, Armistead & Brien, and Tim E. Cooper, for appellant.

The two principal questions presented by this appeal are:

First, whether if this insurance had been taken out in the state of Mississippi, on property situated here, the insurance company could rely upon the breach of the iron safe clause, without returning or offering to return the unearned premium. And if this question is answered in the negative;

Second, whether, since this was a Louisiana contract, and since it is held in that state to be unnecessary to return the unearned premium, this court will follow the Louisiana rule and permit the defense to be made here, which might have been made if the policy had been there sued on.

But for the decisions in Insurance Company v. Dobbins, 81 Miss. one case on p. 623, S.C., 33 South, 504, and the other on p. 630, we would approach the discussion of the first question in the utmost confidence, and could, we think, assert that no case could be found holding that the insurer must return the premium as a condition of avoiding the policy. We concede that the language of the court in those cases suggests that a return of the unearned premium is necessary, if the breach of the policy is insisted on; but the question there presented was different from that now before the court in this, that the premiums in those cases were received by the insurance company after the loss had occurred, while the premiums in this case were paid at the time the policies were issued. We will take up the cases referred to by the court in its opinions in 81 Miss. and we shall attempt to show that they are irrelevant to the question here involved, and that in each state from which this court cited decisions, the rule is well settled that a return of the premiums is not required.

The notes of Mr. Freeman to the case of Wheaton v. North British Insurance Co., 9 Am. St. Rep., 237, referred to by this court in its opinion, does not refer to the question here involved. The annotator there was dealing not with the question of the construction of the contract of insurance, and whether if a breach was insisted upon, the insurer was required by the contract to return the unearned premium. Mr. Freeman was referring to the question of estoppel by the conduct of the insurer after the loss had occurred, by which conduct the insured was invited to, and relying on which conduct he had incurred expense and the trouble of making proofs of loss. Works on insurance and in the decisions as a "waiver," but Mr. Freeman more accurately refers to it as an estoppel against the insurer. It is estoppel known in the books as an "estoppel by misrepresentation." Now, a waiver is a contract, and not only must the minds of the party meet upon it as a contract, but like all other contracts, it must be supported by a consideration, unless being acted on it becomes estoppel. 20 Ency. of Law, 1097; Ripley v. Insurance Co., 30 N.Y. 446; Stewart v. Crosby, 50 Me. 134; Howie v. Insurance Co., 32 Conn. 21. Mr. Bigelow's definition of an estoppel by misrepresentation is this:

"By misrepresentation is meant a false impression of some fact or set of facts created upon the mind of one person by another, by language, or by language and conduct together, or conduct alone equivalent to language, where there appears to be no intention to warrant the same." If after loss has occurred under a policy which has been breached by the insured, by which breach the policy is forfeited, the insurer is then for the first time informed of the fact, he may stand upon the forfeiture according to the terms of the contract; but if he does not do this, but so conducts himself as to warrant the insured in believing that the forfeiture will not be insisted upon, and the insured relying on such representations, is induced to, and does, incur expense and trouble, this changed condition of the insured furnishes the consideration for the waiver and results in estoppel. Now, it is apparent that when, as in this case, the insurer does nothing to lead the insured to change his position, and there is no change in his condition, the doctrine of estoppel, or waiver, can have no application. The right of the insured in such case to recover must exist, if at all, by the contract of insurance, and not from the waiver by the insurer, acted on by the insured and resulting in estoppel. We do not think this proposition was intended to be controverted by anything said by this court in the Dobbins cases, supra. In those cases, the position of the assured was changed after the loss had occurred. We do not think it is necessary to further consider so much of the opinion of the court as refers to Mr. Freeman's notes to the case of Wheaton v. Ins. Co., 18 P. 758.

Taking up the cases referred to by this court, and which relate directly to the question whether it is incumbent on the insurer to return the unearned premium, as a condition of relying upon the forfeiture for breach of the contract of insurance, we will examine first the case of Schreiber v. German-American Hail Ins. Co., 43 Minn. 368. In that case, the insured had given notes in a mutual company for the premiums on the policies, and after the loss, the insurance company sued upon the notes and enforced their payment. The Minnesota court expressly put its opinion upon the ground that this was an assertion of the validity of the policy. The quotation from that opinion by this court ends just where the supreme court of Minnesota came to consider the precise question involved in the case now before the court. It is to be here observed that the policy in the Minnesota case was breached by taking out additional insurance, and that the company had notice of that insurance before the loss, and did not cancel its policy, but after the loss, coerced payment of notes given by the insured. But immediately following that part of the opinion of the Minnesota court, quoted by this court in the Dobbins case, the Minnesota court proceeded as follows: "We find no case exactly like this. There are some which seem to intimate that before electing to avoid wholly the policy, the insurer must return the premium even voluntarily paid. Fishback v. Ins. Co., 54 Cal. 422; Harris v. Equitable Life Ins. Co., 644 New York, 196; Home Ins. Co. v. Riel (Pa.), 17 A. 36. Without expressing any opinion of what is said in those cases, we do not hesitate to hold in this case, that the defendant could not retain the premiums thus collected, and also avoid the policy; that under the circumstances, it was the defendant's duty, as soon as it learned of the breach of the condition, to determine whether it would abide by the policy and retain the premiums, or restore them and elect to avoid it. It has never returned nor offered to return the premiums, and by retaining them must be deemed to have elected to abide by the policy." Of the cases referred to by the Minnesota court, it is sufficient to say, that in the New York case the objection was fraud in procuring the reinstatement of a lapsed policy, by reason of which the reinstatement never attached. It is further to be observed, that the recovery in that case was not for the amount of the policy, but only for the premiums paid.

In the case of Home Life Ins. Co. v. Riel, 17 A. 36, the defense was that the application for the insurance was not signed...