American Fire Ins. Co. v. First Nat. Bank

• Decision Date: 23 December 1895
• Citation: 73 Miss. 469,18 So. 931
• Court: Mississippi Supreme Court
• Parties: AMERICAN FIRE INSURANCE CO. v. FIRST NATIONAL BANK ET AL

18 So. 931

73 Miss. 469

AMERICAN FIRE INSURANCE CO. v. FIRST NATIONAL BANK ET AL

Supreme Court of Mississippi

December 23, 1895

FROM the circuit court of Warren county, HON. J. D. GILLAND Judge.

This action was brought by First National Bank of Vicksburg and C J. Searles Co., a trading corporation doing a mercantile business in the city of Vicksburg, against appellant, to recover upon a policy of insurance for $ 2,500 to C. J Searles Co., issued March 3, 1894, upon its stock of goods which was destroyed by fire June 15, 1894. The policy provided that "any loss that may be ascertained and proven due the assured shall be payable to the First National Bank, as its interests may appear at the time of the fire and the remainder, if any, to the assured." The defenses relied on are: (1) That Searles Co. had not paid a sufficient privilege tax; (2) that the policy was void, because at the time of its issuance there was additional insurance without the consent of the insurance company. The material facts, as applied to these defenses, are these: Searles Co. took out its privilege tax license on June 1, 1893, paying therefor $ 15, and, about June 1, 1894, the sheriff of Warren county sent them a like license for 1894; and after the fire, and after finding there was an excess of stock over $ 3,500, on advice, this license was returned, and one was procured for $ 30. The stock of Searles Co., just prior to the commencement of the fiscal year 1893, and during the year following June 1, 1893, at times largely exceeded $ 3,500. On March 13, 1893, it inventoried $ 9,330.51; on April 1, 1894, $ 8,282.12; on June 15, 1894, at the time of the loss, and according to proof of loss by Mr. Searles, president of Searles Co., $ 8,956.77. On March 3, 1894, the date of the policy, Mr. Griffith, the president of appellee bank, fixed the stock at $ 3,465. Mr. Searles could not say whether, on March 3, 1894, the stock exceeded $ 3,500, or equaled $ 7,500. He stated that a firm engaged in that business could not do a business of any magnitude with a stock of $ 2,500; "that the stock might run down to that amount, but, as a general thing, he had to have a pretty healthy stock to handle the line of business" that he had; that he carried $ 7,500 of insurance; that he did not know exactly whether he had enough stock, at the time the policy was issued, to cover $ 7,500. "Our custom was this: The stock of goods would vary, and we carried a general line of insurance of $ 7,500. Sometimes we would have that amount of goods in the warehouse, and then, again, it would run down to $ 2,500 or $ 2,000."

At the time of the issuance of this policy, there was $ 5,000 of other insurance on this property, without the knowledge of appellant. On June 4, 1894, appellant sent to the First National Bank for this policy, as it desired to change the "form" attached to the policy, which described the property insured, and its location, and also contained this clause: "It is understood and agreed that this building is to be occupied as a warehouse only, during the continuance of this policy." Mr. Griffith, the president of the bank, not knowing which of the policies of the Searles Company was wanted, sent to appellant's agent this policy, with the three other policies covering the additional insurance. Appellant's agent changed the form attached, by substituting another form, identical in language with the original form, except that the above clause was omitted, and, in lieu thereof, after the description of the house, these words were inserted, viz., "and used solely for warehouse purposes." The four policies were then returned to the bank. Mr. Griffith testified that they were returned by appellant's agent, Mr. Buck, but that he did not know that Buck knew of the contents of the other policies, although the property insured, name of company, etc., were indorsed on each policy. Mr. Buck said that he did not return the policy in person, and that he did not know of the additional insurance until after the fire; that, if he had these policies in his hands, he would almost certainly have ascertained what they insured, and that he would have looked at them. It does not appear, from this record, that the business of C. J. Searles Company came to an end with the fire destroying the stock of goods. The peremptory instruction for appellant was refused. The appellee had a verdict and judgment, from which this appeal is prosecuted.

Reversed and cause remanded for new trial.

Booth & Anderson, for the appellant.

1. The evidence clearly shows that, at the time the policy sued on was issued, the C. J. Searles Co. was doing business without having paid a sufficient privilege tax, and that the policy was, therefore, void. Code 1892, § 3390; Pollard v. Phoenix Ins. Co., 63 Miss. 244. The case of Sneed v. Assurance Co., 72 Miss. 51, has no application to the present controversy, for the reason that the C. J. Searles Co. had, from the time it embarked in business to the date of the fire, carried a stock in excess of the amount covered by its license.

The court below, in the fourth instruction given for the plaintiff, told the jury that the defendant had the burden of proving that the C. J. Searles Co. did not have it sufficient privilege tax license on the day the policy issued. This was clearly erroneous, in view of the evidence before the jury, showing, by the amount of stock on hand at different times before and after that day, that the average largely exceeded the amount covered by the license. That was putting upon the defendant the burden of proving an exception to the rule on that particular day.

On June 4, 1894, appellant took the policy sued on and substituted one written form for another. At that time the C. J. Searles Co. had no privilege license at all. The appellees claim that this change constituted a new contract, and that, the privilege license having been taken out during the same month, although it was taken out after the fire, and dated the first of the month in which it was taken out, was sufficient to make valid the contract, and the requirements of the law were met. The difficulty of maintaining this defense lies chiefly in the fact that the change in the policy was immaterial, being one of form merely, but the same result would follow had its change been a material one. The provision of the statute that such licenses should be dated on the first day of the month of their issuance and be good for one year from that date, was designed solely for the convenience of the collector, and has no influence upon the rights of the licensee. See Code 1892, § 3408; act of 1875, Acts, pp. 9 and 10; Code 1871, § 1750. When the new license was issued to the C. J. Searles Co., its stock had been destroyed, and it had gone out of business.

2. The warehouse book should have been kept in "a fireproof safe," under the requirements of the policy. It was a book in which was kept a full record of the articles of merchandise on hand, for it showed what came into the warehouse and what went out, and the values of the articles of merchandise were susceptible of proof. It was a very important book, and the failure to preserve and produce it works a forfeiture of all right under the policy.

3. There was also a forfeiture by reason of the additional insurance taken out without a previous agreement authorizing it indorsed upon the policy. The evidence does not sustain the contention that the appellant's agent, Buck, had notice. Insurance Co. v. Scales, 71 Miss. 975. If he had received notice, the result would not have been altered, for, by the terms of the policy, he was expressly denied all authority to waive such a condition save by indorsement in writing on the policy, and the policy contains no such indorsement. None of the cases opposed to this view will be found to have involved the construction of a condition altogether similar to that of the policy sued on. See Insurance Co. v. Sheffy, 71 Miss. 919; Cleaver v. Insurance Co., 32 N.W. 660; Zimmerman v. Insurance Co., 42 N.W. 462; Gould v. Insurance Co., 51 N.W. 454; Quinlan v. Insurance Co., 31 N.E. 31; Walsh v. Insurance Co., 73 N.Y. 10; Marvin v. Insurance Co., 85 N.Y. 278; Porter v. Insurance Co., 35 N.E. 678.

Miller, Smith & Hirsh, for the appellees.

1. It was a controverted question, decided favorably to appellee by the jury, whether there was over $ 3,500 of stock on hand on the third of March, 1894, when the policy was issued, and the finding should not be disturbed. The criticism of the fourth instruction given for the plaintiff is ineffectual. The burden of proof was on the defendant, who plead affirmatively the fact that when the contract of insurance was entered into the excess existed. Sneed v. Assurance Co., 72 Miss. 51.

2. A new policy was issued by the change of the "form," on June 4, 1894, and a sufficient privilege tax license having been taken out during that month, though after the fire, gave validity to all contracts made in the month and covered by this policy. Code of 1892, § 3408.

3. This suit was brought by the First National Bank, to whom the policy was made payable as its interest might appear, and, it appearing that the bank owns the entire interest in the policy, it is not affected by the failure of the C. J Searles Co. to pay a sufficient privilege tax, under § 3401, code of...