American Ins. Co. v. Woolfolk

• Decision Date: 17 December 1929
• Docket Number: No. 13509.,13509.
• Citation: 96 Ind.App. 445,169 N.E. 342
• Court: Indiana Appellate Court
• Parties: AMERICAN INS. CO. v. WOOLFOLK et al.

96 Ind.App. 445

169 N.E. 342

AMERICAN INS. CO.

v.WOOLFOLK et al.

No. 13509.

Appellate Court of Indiana, in Banc.

Dec. 17, 1929.

Appeal from Perry Circuit Court; O. R. Deahl, Judge.

Action by Lewis Woolfolk and others against the American Insurance Company. Judgment for plaintiffs, and defendant appeals. Affirmed.Edmund L. Craig, of Evansville, for appellant.

William C. Mason and Elbert M. Swan, both of Rockport, for appellees.

McMAHAN, J.

Complaint by Lewis Woolfolk, Charles M. and Mary E. Wachter, and Grandview Bank, against appellant on a fire insurance policy issued to Woolfolk as owner. Loss, if any, was made payable to the bank and C. M. Wachter, as mortgagees or trustees. From a judgment in favor of plaintiffs, the defendant appeals, presenting the correctness of the overruling of its demurrer to the second paragraph of reply of each of the plaintiffs' several replies, and error in the conclusions of law.

The complaint alleges the issuance of the policy, loss by fire of the property insured, notice and proof of loss, that the Wachters held a vendor's lien on the real estate, and that the bank held a mortgage on it; the policy being made a part of the complaint.

Appellant's answer is in four paragraphs. The first paragraph is addressed to that part of the complaint relating to the claim of Woolfolk, and alleges that the policy in suit was originally issued on March 12, 1925, and that such original policy provided it might be renewed in consideration of the premium for the renewal term, and in case of renewal any increase of hazard should be made known to the insurer at the time of renewal or that policy should be void; that such policy was continued by renewal March 12, 1926; that the policy sued on was a renewal of the policy of March 12, 1925; that each of said policies contained provisions to the effect that the policy should be void if the interest of the insured was not correctly stated, if the interest of the insured was other than unconditional and sole ownership, and unless otherwise provided, it should be void if, with the knowledge of the insured, foreclosure proceeding was commenced or any change other than by death of the insured took place. It was also alleged that when the policy was renewed the interest of the insured was not truly stated, in that the property had been sold by the sheriff to the Wachters and was not the property of Woolfolk, and for the further reason that part of the property insured, a McCray refrigerator, was not the property of the insured; that such changes of title were not known by the insurer. The second paragraph of answer was addressed to the part of the complaint relating to the claims of the bank and, after setting out the conditions under which the policy should be void, as alleged in the first paragraph, sets out an additional provision to the effect that if, with the consent of the insurer, an interest shall exist in favor of a mortgagee or any person having an interest in the subject of insurance other than the interest of the insured, the conditions theretofore mentioned should apply in the manner expressed in such provisions relating to such interest as shall be written upon or attached to the policy; that the original policy, as well as the renewal policy, was made payable to the bank as mortgagee or trustee and provided that the mortgagee should give the insurer notice of any foreclosure proceedings and of any change of ownership or increase of hazard coming to the knowledge of the mortgagee; and that a failure on the part of the mortgagee to comply with such provisions rendered the insurance void as to such mortgagee. It then alleged that when the policy was renewed, the interest of the insured was not truly stated, in that the property had been sold by the sheriff to the Wachters and was not the property of Woolfolk and that the McCray refrigerator was not his property; that after the issuance of the policy, the bank, with knowledge of the foreclosure proceeding of Wachters, did not notify the insurance company, and that a change of interest and title took place by reason of the sheriff's sale; that Joseph Forsyth and Bert Newman, who are shown by the complaint to have executed the policy as agents of appellant, were, at all the times mentioned, agents of the defendant and also officers of the bank, by reason of which facts so alleged the policy was void as to the interest of the bank.

The third paragraph is, in substance, the same as the second, except that it relates to the claim of the Wachters, and omits all references to the bank and to Forsyth and Newman, and alleges that the policy is void as to the Wachters by reason of the failure to give notice of their foreclosure proceeding. The fourth paragraph is a general denial. Woolfolk and the bank filed separate replies. Wachter and Wachter filed a reply. The second paragraph of each reply is the same, and in substance is as follows: That appellant had notice of each and all of the alleged breaches of the policy alleged in the several paragraphs of answer, and before the time the policy in suit was issued, by and through the knowledge of the agents of appellant who wrote and procured the insurance and who, with such knowledge, received of and from Woolfolk the premium paid therefor by the insured and failed to cancel the insurance or to return or tender back to the insured the premium so paid by him; and that appellant thereby waived the conditions relating to each breach alleged in each of the paragraphs of answer. The third paragraph of reply was by the bank and the Wachters and, referring to the McCray refrigerator, alleged they had no knowledge concerning the ownership and insurance on it, and that if it were insured it was insured by Woolfolk without their knowledge.

The third paragraph of the reply of Woolfolk and the fourth paragraph of the reply of the bank and the Wachters are the same, and allege that the insurance company “had notice and knowledge of each and every one of said alleged breaches for a reasonable and seasonable time and more than ten days before the alleged fire and loss, and that defendant failed to and did not take any action in relation thereto, and thus elected to and did waive the conditions of said policy” of insurance as to each and every breach thereof alleged in the answer.

Appellant filed demurrers for want of facts to the second and third paragraphs of the reply of the bank, to paragraphs 2 and 3 of the reply of Woolfolk, and to the second and third paragraphs of the reply of the Wachters. The action of the court in overruling each of these demurrers is assigned as error.

The first contention is that the court erred in overruling the demurrer to the second paragraph of each of the several paragraphs of reply. As heretofore stated, each of these paragraphs was to the effect that appellant had notice and knowledge, through its agents who procured the insurance and who wrote the policy and collected the premium therefor, of each and all the breaches set out in the answer, and that, with such notice and knowledge, appellant failed to cancel the policy and to return or tender back to...