Arkansas Mutual Fire Insurance Company v. Claiborne

• Decision Date: 11 March 1907
• Citation: 100 S.W. 751,82 Ark. 150
• Parties: ARKANSAS MUTUAL FIRE INSURANCE COMPANY v. CLAIBORNE
• Court: Arkansas Supreme Court

100 S.W. 751

82 Ark. 150

ARKANSAS MUTUAL FIRE INSURANCE COMPANY v. CLAIBORNE

Supreme Court of Arkansas

March 11, 1907

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

STATEMENT BY THE COURT.

In April, 1903, D. W. Claiborne made an application to the Security Mutual Fire Insurance Company of Little Rock Arkansas, for three thousand dollars insurance on property in Hot Springs, Arkansas.

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 twenty-four 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 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 forty rooms, and thereafter it was used as a hotel.

About the time this addition was made to the house, Claiborne took out four thousand dollars insurance on the same property in other companies. Afterwards, about the first 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:

"Mrs. M. A. Claiborne. Amendment to Policy No. 2077.

"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 21, 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 is 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 is 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.

Judgment affirmed.

C. S. Collins, for appellant.

1. The court erred in giving instructions 1 and 2. No sufficient proof is shown of notice to the company as to the breaches of the contract. A mere clerk in the office could not bind the company. 62 Ark. 353. And mere silence after knowledge of a forfeiture is not a waiver. 65 Ark. 240. It is set out in the policy that full power is vested in an executive committee of three, consisting of the president, secretary and treasurer, to authorize the issuance of a policy or to materially amend it. Thompson, the vice-president, though acting as president in the absence of the latter, could not bind the company without the concurrence of at least one other, and the holder of the policy was bound by that provision of the law. 62 Ark. 49.

2. The third and fourth instructions given were erroneous and misleading; the third because it gave the impression to the jury that if the company knew that plaintiff was carrying any larger amount of concurrent insurance than stipulated, though not knowing that the amount had been increased to $ 7,500, the forfeiture was thereby waived, and also because it, in effect, tells them that mere silence, and failure to cancel the policy, after obtaining such information, would estop. The fourth proceeds upon the theory that failure to at once return the unearned premium confirmed the policies regardless of all other facts. 64 Neb. 808; 2 Cooley's Dig. 1439; 9 Metc. (Mass.) 205; 7 Cush. (Mass.) 175; 33 N.H. 9. The by-laws of a mutual company may fairly be regarded as part of the contract, so as to continuing warranties. 4 Cooley's Dig. 1476; 11 Ia. 21; 113 Mich. 158; 71 N.W. 576; 133 Mass. 85; 14 Gray, 203; 81 Am. Dec. 689; 65 N.Y. 21.

3. This court has not yet decided that an insurance company may not stipulate with the assured that any amendments after the policy has issued must be made in the way mutually agreed upon between the parties to the contract. See 52 Ark. 11; 53 Ark. 222; 58 Ark. 278; 71 Ark. 242; Id. 292; 62 Ark. 349.

4. The evidence developed that suit had been in the name of M. A. Claiborne brought upon a contract in favor of D. W. Claiborne. A suit at law should not have been permitted without first reforming the contract in a court of equity. Northern Ass. Co. v. Grand View Bldg. Ass'n. Adv. sheets U. S. S. Ct., Dec. 1, 1906.

5. There was no waiver pleaded in the complaint, and it was error to admit the testimony of W. L. Claiborne tending to prove a waiver. Waiver must be pleaded and proved. 32 Neb. 490; 96 N.W. 604.

Hogue & Cotham, for appellee.

1. There is no ground for the charge of fraud in the application. It showed that the house was described as a "combined rooming and framed dwelling house," and that the house contained twenty-four rooms. The company could not have been misled or deceived as to the character of property insured.

2. As to the violation of the concurrent insurance clause, under the facts in this case appearing in the testimony, appellant undoubtedly waived any forfeiture incurred by reason of the issuance of insurance on the house in excess of the amount stipulated. 75 Ark. 98. And the jury having passed upon the facts, their verdict, based upon legally sufficient evidence, will be sustained. 46 Ark. 142; 51 Ark. 467; 56 Ark. 314; 19 Ark. 118; Id. 123; 23 Ark. 51.

3. The contention that waiver must be pleaded is inconsistent with the statute. Kirby's Digest, § 6137.

4. There is no proof of any by-law to the effect that only a majority of an executive committee of three had power to authorize the issuance of a policy, or to materially amend it, but this is immaterial since the weight of authority denies the distinction between mutual and stock companies with reference to the power of officers and agents to waive conditions and estop the company from insisting upon forfeitures. Richards on Ins., par. 76.

5. Plaintiff's motion for judgment for attorney's fee and 12 per cent. damages should have been sustained.

C. S. Collins, for appellant in reply.

1. On the question of waiver, appellee's counsel misapplies the statute relied on. Correct practice should require the waiver to be pleaded, if intended to be relied upon. For additional authorities see 3 Cooley's Briefs on Ins. 2768; 23 Ind.App. 121; 53 N.E. 787; 77 Am. St. 414; 7 B. Mon. 470.

2. As to distinction between mutual and stock companies, see 64 Neb. 808; 2 Cooley's Briefs on Ins. 1439, 1476; 9 Metc. (Mass.) 205; 7 Cush. (Mass.) 175; 33 N.H. 9; 11 Ia. 21; 113 Mich. 158; Richards on Ins. 76; 133 Mass. 85; 14 Gray, 203; 81 Am. Dec. 689; 1 Beasley, 333; 65 N.Y. 21.

3. The motion for attorney's fee and 12 per cent. penalty was properly denied. The contract and loss...