E.C. Winson & Son v. The Mutual Fire & Tornado Ass'n

• Decision Date: 18 June 1915
• Docket Number: 30042
• Parties: E. C. WINSOR & SON, Appellees, v. THE MUTUAL FIRE & TORNADO ASSOCIATION, Appellant
• Court: Iowa Supreme Court

153 N.W. 97

170 Iowa 521

E. C. WINSOR & SON, Appellees, v. THE MUTUAL FIRE & TORNADO ASSOCIATION, Appellant

No. 30042

Supreme Court of Iowa, Des Moines

June 18, 1915

Appeal from Buena Vista District Court.--HON. D. F. COYLE, Judge.

ACTION at law upon an insurance policy indemnifying the plaintiff against loss or injury to certain property by lightning. Verdict and judgment for plaintiff and defendant appeals.

Affirmed.

Ed P Malmberg and Bailie & Edson, for appellant.

F. C Gilchrist and Faville & Whitney, for appellee.

WEAVER J. DEEMER, C. J., EVANS and PRESTON, JJ., concur.

OPINION

WEAVER, J.

On May 20, 1909, the defendant association issued its policy to the plaintiff, insuring them against loss or damage by fire, lightning, tornadoes, cyclones and windstorms for the period of five years, to the amount of $ 2,000 upon the horses and mules of insured party, not to exceed $ 150 on each animal. The plaintiffs' petition alleges that on April 7, 1913, while said policy was still in force, lightning struck the tent in which the insured animals were then being kept at or near the town of Nyhart in the state of Missouri, killing nine horses and injuring five others, to the loss and injury to plaintiffs in the aggregate sum of $ 1,600, for which amount a recovery is demanded. In an amendment to the petition, it is further alleged that, at the time the horses were insured, plaintiffs were engaged in business as contractors in the excavation and construction of drainage ditches and that such has continued to be their business; that they employed their horses in performing such work and kept them in or about a tent near where they were so employed. They aver that, at the time the insurance was taken out, the defendant's agent was informed of the foregoing facts and knew that the horses were then employed upon a job of ditching in Buena Vista county and would thereafter be used by the plaintiffs in doing other work of like character in Iowa and adjoining states; and that defendant consented to such use and knew thereof, and with such notice and knowledge, it has since, from time to time, collected assessments and premiums from plaintiffs in consideration of its policy of insurance.

Answering the petition, defendant admits that plaintiffs reside at Laurens in Pocahontas county, Iowa, admits issuing the policy sued upon and that it has collected and received premiums and assessments thereon. It admits the agency of the person taking the application for insurance and its knowledge that the horses were in Buena Vista county when insured, but denies any knowledge or notice that they were thereafter to be used in any other state than Iowa. For a further answer, it is alleged that the defendant is a mutual association organized under the laws of Iowa and is without power to insure property outside of the state, and if the policy is construed as covering the plaintiffs' horses in Missouri, it is ultra vires and void. Still further answering, it is pleaded that, by removal of the horses to Missouri, the hazard of loss and injury was materially increased without notice to the association, and the policy thereby rendered void. By an amendment to the answer, it is further alleged that, in applying for the insurance, plaintiffs falsely represented that the insured property was free from incumbrance, when in fact the horses were then subject to the lien of a chattel mortgage and that other and additional mortgage liens were thereafter placed upon said property by the plaintiffs without notice to and without the consent of the association, whereby the policy became void.

Replying to the answer, plaintiffs reassert that the policy was issued with notice and direct reference to the fact that the horses were then being used and were thereafter to be used in carrying on the business of Winsor & Son wherever they might obtain contracts in their line of employment, and that, with knowledge of such facts and conditions, the association has continued to recognize the validity of such policy and continued to levy and demand payment of assessments thereon at divers times down to a date since the commencement of this action, and by so doing has waived the right, if any it ever had, to deny its liability on the policy or to defend against plaintiffs' demand for payment thereof. They further allege that, at the time the policy was issued, they resided and have ever since had their home at Laurens, in Pocahontas county, Iowa; that their absence and employment in Missouri was temporary only, with the purpose, when their contract there was completed, to return with their horses to their said home in Iowa where their said property was always kept, except when temporarily employed elsewhere. Referring to the charge of false statements in the application for insurance, the reply denies the same and avers that the application was made and the policy issued with knowledge on the part of the association and its agent that there was a chattel mortgage outstanding upon the horses. This mortgage indebtedness, it is alleged, was thereafter largely reduced and the subsequent mortgages mentioned in the answer secured only the unpaid remnant of said indebtedness and served to decrease the hazard and risk created by the original incumbrance. Plaintiff further says that, with knowledge of all these facts, the association has continued to make and collect assessments upon the policy, thereby waiving its right, if any it had, to plead or urge a defense to this action on that ground. The reply also pleads that the association did not attach a copy of the application to the policy, as required by law, and cannot, therefore, plead or prove the alleged false representations. These issues were tried to a jury, which returned a verdict for plaintiff, and from the judgment entered thereon, the defendant appeals.

The appellant submits its case relying upon the following propositions: First, that the removal of the property from Iowa to Missouri increased the risk or hazard to such an extent as to avoid the policy; second, that the association was without any authority to carry any risk outside of the state of Iowa, and therefore the removal of the property to Missouri rendered the insurance void; third, that the policy was rendered void by the incumbrance existing on the property when the contract was made; and fourth, that the policy was in any event rendered void by the giving of a subsequent mortgage. These points we will consider in the order stated.

I. The point that the taking of the horses to Missouri operated to increase the risk, and thereby avoided the policy, though stated in their premises, is not argued by counsel, and we therefore treat it as having been abandoned. We cannot say, as a matter of law, that the danger of a horse being struck by lightning is any greater in Missouri than in Iowa. Moreover, as we shall note in a subsequent paragraph, there was no burden on plaintiffs to negative an increase of risk.

II. The defense most thoroughly argued and relied upon seems to be that the association is one organized under the law of this state and is without authority to carry insurance upon property in another state, and that even though the policy sued upon might be enforced had the property remained in this jurisdiction until the loss occurred, it became of no validity when plaintiffs took the horses into Missouri for the temporary purpose of performing a contract there.

In support of this position, we are cited to chapter 5 of title 9 of the Code, and especially to Sec. 1759-n of the Supplement of 1907, and to a section of the by-laws of the association. A reading of the statute develops nowhere any provision expressly limiting the authority of mutual insurance associations in the manner contended for. The by-law relied upon is to the effect that the principal place of business of the association is at Newton in Jasper county but the territory in which it may effect insurance shall embrace the entire state. This, at the utmost, limits the territory in which insurance may be written; but it by no means follows that a valid policy written in Iowa upon property in Iowa becomes void the moment it crosses the line into another state. The contract was an Iowa contract upon property in Iowa and enforceable in the courts of this state. There is nothing in our insurance act which restricts the authority of the appellant to the insuring of live stock only while it is found or kept on the owner's premises. The association might perhaps have so limited its own liability by an appropriate provision in its contract, but it was not required to do so. Indeed, the insurance of movable property, and especially such as teams employed in a service which may or frequently does take them away from the owner's premises for greater or less periods of time, would be of little value if closely restricted as to location, and few owners would go to the expense of procuring insurance if they understood that their indemnity was of that very incomplete and imperfect character. The well-settled rule in such cases is that, if the policy does not by express or clearly implied terms restrict the insurer's liability to loss occurring upon the owner's premises, the insurance follows and attaches to the property wherever it goes, so long as it is being put to uses such as are usual and ordinary with property of that nature and description; and this is the more emphatically true where the property when insured is, with the knowledge of the insurer, being used and employed in a business which necessitates its being kept for considerable periods of time at places other than the premises of the owner. Kinney v. Ins. Co., 159 Iowa 490, 141 N.W. 706; Wood's Insurance (2nd Ed.) 47; McCluer v....