Arkansas Mut. Fire Ins. Co. v. Claiborne

• Decision Date: 11 March 1907
• Citation: 100 S.W. 751
• Parties: ARKANSAS MUT. FIRE INS. CO. v. CLAIBORNE.
• Court: Arkansas Supreme Court

100 S.W. 751

ARKANSAS MUT. FIRE INS. CO. v. CLAIBORNE.

Supreme Court of Arkansas.

March 11, 1907.

Appeal from Circuit Court, Garland County; Alexander M. Duffie, Judge.

Action by M. A. Claiborne against the Arkansas Mutual Fire Insurance Company. Judgment for plaintiff. Defendant appeals. Affirmed.

In April, 1903, D. W. Claiborne made an application to the Security Mutual Fire Insurance Company of Little Rock, Ark., for $3,000 insurance on property in Hot Springs, Ark. In the application for the insurance which he filed with the company the property is described as a "combined rooming and frame dwelling house" having 24 rooms, with the furniture, bedding, etc., contained therein. The application was made on a printed form with printed questions. To the question, "Are you the sole owner of the property to be insured?" there was no answer; the space for the answer being left blank. To the question, "In whose name is the title to the land on which said building is situated?" the response was "D. W. Claiborne." The Security Mutual did not desire to carry all the insurance, so it turned over half of the insurance to the Arkansas Mutual Fire Insurance Company, and that company issued to Claiborne its policy of insurance for $1,500 upon the property for a term of three years, $1,000 on the house and $500 on the furniture; the house being described in the policy as a two-story frame building occupied as "a dwelling house." The policy permitted $3,000 concurrent insurance, including the amount of the policy. Claiborne and his family lived in part of the house, and the rooms not used by them were rented to those desiring rooms. In the latter part of 1904 Claiborne added another story to the house, making it a three-story house, having about 40 rooms, and thereafter it was used as a hotel. About the time this addition was made to the house Claiborne took out $4,000 insurance on the same property in other companies. Afterwards, about the 1st day of January, 1905, Claiborne was killed. At the time of his death he was on his way to Little Rock to have the policy amended so as to permit this concurrent insurance taken out by him. After his death his son went to Little Rock, and had some negotiations with the officers of the company in reference to amending the policy so as to permit this additional insurance and to show that the property belonged to Mrs. M. A. Claiborne, widow of D. W. Claiborne, and to change the policy to her name. After the death of Claiborne his wife took out in another company $500 additional insurance on the property. His son, W. L. Claiborne, acting as the agent of his mother, who was then the owner of the property, applied to the company to have its policy amended so as to show that Mrs. Claiborne was the owner of the property and that the company had consented to the additional insurance which had been taken on the property. A few days later the company mailed the policy to Claiborne, with the following amendment: "Amendment to policy No. 2077. Mrs. M. A. Claiborne. D. W. Claiborne the original owner of the property being now deceased Mrs. M. A. Claiborne as Administratrix of the property of D. W. Claiborne is hereby named as assured under this policy. This policy is further amended to correct description of property as follows: it is understood that the property insured hereunder covers the three-story shingle roofed frame building and its contents as above described and located at 305 Ouachita Avenue, Hot Springs, Ark. Attached to and made a part of policy No. 2077 of this company. Little Rock, Arkansas, January 21st, 1905. The Arkansas Mutual Fire Ins. Company, by C. S. Collins, Secretary." This amendment did not refer to the matter of additional insurance, and Claiborne continued his negotiations with the company, but no further amendment was made. On the 25th day of February, 1905, a fire in Hot Springs got beyond control, and in the general conflagration which followed several hundred houses were destroyed, among them the house of Mrs. Claiborne and the contents thereof. The fire did not originate in her building, and she was in no way to blame for it. Mrs. Claiborne made out proofs of loss, and submitted them to the different companies in which the property was insured, but the defendant company refused to pay, and Mrs. Claiborne brought suit in the Garland circuit court to recover the amount of the policy. The defendant company filed an answer in which it set up that D. W. Claiborne, who made application for the policy, perpetrated a fraud on the company by pretending in his application that the house was a dwelling house, when, in fact, it was a hotel, that by so doing he procured the insurance at $1.50 per thousand when it should have been $3.75. It further alleged that the intestate, Claiborne, and plaintiff, took out a larger amount of concurrent insurance than was permitted by the policy without knowledge or consent of the defendant company, and that this avoided the policy. On the trial there was a verdict in favor of the plaintiff, and defendant appealed.

C. S. Collins, for appellant. Hogue & Cotham, for appellee.

RIDDICK, J. (after stating the facts).

This is an appeal by an insurance company from a judgment rendered against it on a policy of insurance against fire issued by it.

The first contention of the defendant company is, that Claiborne, who was an insurance agent, perpetrated a fraud upon the insurance company in his application for the policy by pretending that the building on which he applied for insurance was a dwelling house, when, in fact, it was a hotel; but in the application which by the terms of the policy is made a part thereof Claiborne described the property as a combined rooming and frame dwelling house having two stories and containing 24 rooms. This description shows that Claiborne did not represent the building to be an ordinary dwelling, and the testimony shows that at the time he made the application the house was not used as a hotel, but as a home for his family and for persons to whom he rented rooms, some of whom boarded with his family. Shortly before Claiborne's death the house had been changed to a hotel. The evidence tends to show that so far as insurance rates are concerned there is no material difference between a rooming house containing as many as 24 rooms and a hotel, and, if the rates on which this policy was issued were too low, the company itself was to blame as the application gave substantially a correct description of the house.

But this matter is immaterial now for another reason. After Claiborne died one of his sons, W. L. Claiborne, went to the home office of the company, and had some negotiations with the company in reference to a change in the policy, affecting, among other things, the description of the building. The company made an amendment to the policy and mailed it, along with the policy, to W. L. Claiborne, who was acting for his mother, who was, in fact, the owner of the property. This amendment contains the following language: "It is understood that the property insured hereunder covers the three-story shingle roofed frame building and its contents as above described." Now the amendment shows that the company had been informed that another story had been added to the building, and that it amended the policy so as to cover the building in its altered shape. The application for insurance made before the alteration showed that the building had 24 rooms, and with another story added the company must have known that it then probably contained several more rooms. It did, in fact, after the alteration contain 40 rooms, and the company either knew this or could have learned it by making inquiry. Having been put on inquiry by the information that another story had been added to the building, we must presume that the company knew the number of rooms it contained. Now, the application of Claiborne for insurance stated, among other things, that his total wealth was less than $15,000. It would be such an unusual thing for a man owning no more than that to build a house of 40 rooms exclusively for a dwelling house that we cannot conclude that this company at the time they made this amendment to the policy believed that it was insuring a building used for a dwelling house only. We should reach this conclusion even if W. L. Claiborne had not testified that at the time he asked for the amendment to the policy he informed the officers of the company of the extensive alterations that had been made on the building and told them that it had been changed from a rooming house to a hotel. With this information they made the amendment referred to, and thus recognized and treated the policy as still valid, and cannot now claim a forfeiture on that ground.

These same reasons dispose of the contention that the policy was avoided because a provision of the policy that it should become void ...