Bank of Ipswich v. Harding County Farmers' Mut. Fire & Lightning Ins. Co.
| Decision Date | 04 June 1929 |
| Docket Number | 6395. |
| Citation | 225 N.W. 721,55 S.D. 261 |
| Parties | BANK OF IPSWICH v. HARDING COUNTY FARMERS MUTUAL FIRE & LIGHTNING INS. CO. |
| Court | South Dakota Supreme Court |
Appeal from Circuit Court, Perkins County; W. F. Eddy, Judge.
Action by the Bank of Ipswich against the Harding County Farmers' Mutual Fire & Lightning Insurance Company. Judgment for defendant, and plaintiff appeals. Affirmed.
A. L Beardsley, of Ipswich, and C. M. Parsons, of Bison, for appellant.
McNulty Williamson & Smith, of Aberdeen, and F. M. Jackson, of Hettinger, N. D., for respondent.
Respondent is a county mutual insurance company operating under the provisions of sections 9244 to 9263, Rev. Code 1919. On July 14, 1922, it issued to R. J. Clark, one of its members, a standard fire policy covering a barn on his farm. Clark had theretofore mortgaged said farm to appellant. Attached to this policy was a rider containing "Mortgage Clause with Full Contribution," according to the standard form prescribed by section 9198, Rev. Code 1919. On January 19 1923, an assessment was duly made against the members of respondent company, and notice of said assessment against Clark, amounting to $8.40, was given him March 5, 1923. This notice informed him that the policy would be suspended after April 15, 1923, if the assessment was not paid, and would be canceled on December 15, 1923, unless paid. A second like notice was given to Clark on June 4, 1923, a third like notice in September, 1923, and a fourth on November 20, 1923. The insured never paid such assessment. On June 12, 1923, respondent company notified appellant mortgagee of the failure of Clark to pay the assessment, and that the company would not be liable for any loss after April 15, 1923. Again on December 10, 1923, respondent company notified appellant mortgagee, by mail, that the policy would be canceled for nonpayment of the assessment on December 15, 1923. This letter contained the following: "We will hold the record open until December 31st, when our fiscal year closes."
Section 9259, relating to notice of assessments to members of a county mutual company, provides: "If payment is not made within the time stated in the notice, the policy of the delinquent member shall stand suspended and shall not be in effect from that time until such payment is made." Therefore, as between Clark and the insurance company, the policy was not in effect when the barn was destroyed by fire on the night of December 17, 1923.
But appellant contends that the attachment of the rider containing the standard mortgage clause with full contribution created a new contract between the insurer and the mortgagee, whereby the mortgagee was recognized as a distinct party in interest so long as it should comply with the terms of the mortgage clause agreement. Such was the holding of the court in Ormsby v. Phenix Ins. Co., 5 S. D. 72, 58 N.W. 301. In the case at bar, the mortgage clause in the rider was in part as follows: "Loss or damage, if any, under this policy, shall be payable to Bank of Ipswich, Ipswich, So. Dak., as mortgagee, as interest may appear, and this insurance as to the interest of the mortgagee only therein, shall not be invalidated by any act or neglect of the mortgagor *** provided, that in case the mortgagor shall neglect to pay any premium due under the policy, the mortgagee shall, on demand, pay the same."
In the Ormsby Case, this court, in construing the proviso following the one above quoted, said: "The stipulations in the original policy were only suspended as to her [the mortgagee] upon the express condition that she should comply with the terms of the original mortgage clause agreement; and, when she failed to comply with the terms of that agreement, the stipulations in the original policy came into force, and remained in force until the stipulations in such agreement were complied with."
So, in the case at bar, we are of the opinion that, when appellant bank failed to pay the delinquent assessment, it failed to perform one of the conditions of its separate contract with the insurer, and thereby lost the protection afforded by the mortgage clause; that is, Clark having failed to pay the premium and thereby the policy having been suspended as to him, when the appellant mortgagee, being advised of Clark's default, also failed to pay, appellant thereafter also held the insurance subject to the conditions of the original policy. By these conditions, the policy was suspended and remained suspended as to appellant until, after the loss occurred, the assessment was paid. Ormsby v. Phenix Ins. Co., supra.
But appellant contends that the notice of June 12, 1923, was not received by it. The secretary of respondent company testified that the notice was mailed in a securely sealed envelope addressed to appellant, with full postage prepaid, by being deposited in his mail box on the rural route for the carrier to get, on June 12, 1923. He testified that he mailed like notices on the same day and in the same way to all mortgagees in whose favor a mortgage clause "with full contribution" had been attached to policies issued by respondent company, which policies were on June 12, 1923, delinquent. He identified, and there was admitted in evidence, the list of such mortgagees made on June 12, as an original record of the company. This list contained the names and addresses of nine such mortgagees, including that of appellant. He testified that he had received replies to some of these letters so mailed on that date. The evidence also shows that there was regular communication by mail between the rural route on which the secretary lived and the city of Ipswich in which appellant bank was located. Indeed, the evidence shows that a letter from appellant to the secretary of respondent, dated December 17, 1923, the day of the fire, but post-marked ," the day after the fire, was answered by the secretary on December 19, 1923. Furthermore, it was admitted that the notice mailed on December 10th was received by the mortgagee; and, while there is no proof as to when it was received, its receipt was acknowledged in appellant's letter of December 17th or 18th above mentioned. For the purpose of this opinion, we may assume, though we do not decide, that the nonpayment in the interval between December 10th and December 18th did not suspend the policy as to appellant. But it is uncontradicted that the notice of June 12th was sent. Its receipt was denied by an officer of appellant bank, who claims to have made a careful search of the bank files at the time the action was started nine months later, for the purpose of locating such notice. None of the six girls employed in the bank, some of whom open the mail and do the filing, testified.
Is the evidence sufficient to support a finding that the notice of June 12th was received? On this point, 1 Jones on Evidence (2d Ed.) p. 332, § 197, says: ...
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