Capital City Ins. Co. v. Caldwell

• Decision Date: 05 January 1892
• Citation: 10 So. 355,95 Ala. 77
• Parties: CAPITAL CITY INS. CO. v. CALDWELL ET AL.
• Court: Alabama Supreme Court

10 So. 355

95 Ala. 77

CAPITAL CITY INS. CO. v. CALDWELL ET AL.

Supreme Court of Alabama

January 5, 1892

Appeal from circuit court, Madison county; H. C. SPEAKE, Judge.

Action on a policy of fire insurance by Caldwell Bros. against the Capital City Insurance Company. From a judgment for plaintiffs, defendant appeals. Affirmed.

Lawrence Cooper, for appellant.

Humes, Walker & Sheffey, for appellees.

STONE C.J.

All men know that, in cities and towns, business houses generally and residences frequently, are constructed in such close proximity that the loss of one by fire endangers others. It is on this account that fire insurance companies, in placing their risks, take into the estimate what are called the "exposures," and regulate the premiums they charge for insurance in reference thereto. So, if the building proposed to be insured be very valuable, and the sum to be insured be large, it is not customary to place the entire risk in one company, but in several. This because, if loss is suffered, (and losses will be suffered,) the burden will be distributed among many companies, and not left entirely to one, which it might crush. And when many buildings are so nearly connected, one with the others, as that the burning of one of them would be likely to set fire to the others, it is neither customary, nor in accordance with business principles, to insure them all in one company. And this, at least, is but carrying into practical operation the economic philosophy of insurance,-the helpful participation and aid of the many in sharing the loss which casualty casts on one. A loss of $10,000 might bankrupt one trader, while, if it were distributed among a hundred or more, it would scarcely be felt. In theory, all the premium payers contribute their several contingents, which collectively make up the sum to be paid. This is the rationale of insurance. The Home Protection Insurance Company had its business office in Huntsville, Ala. The Capital City Isurance Company had its habitation in Montgomery, Ala. The former was the Huntsville agent of the latter. This is not uncommon. It furnishes to insurance companies the opportunity, when large insurance is sought, or when application is made for insurance of two or more buildings, or their contents, which are situated in one block, or in dangerous proximity to each other, to distribute the risk, and thus escape an individual heavy loss, which, if it fell on one company, might be very disastrous to its business aims. The foregoing reflections are common knowledge. We have given expression to them because, in our opinion, they shed light on several questions which the record before us presents for our decision. They tend to explain why it was that the store-house, the subject of insurance in this case, was insured in the Capital City Insurance Company, and why it was that the agent of the Home Protection Company was the agent or person through whom the insurance was obtained. The Home Protection Insurance Company, being a corporation, could not act as the agent of the Capital City Company, otherwise than through its officers or agents. Corporations cannot act in any other way. Caldwell Bros. were merchants, having their place of business in Scottsboro, Ala., not far from Huntsville. Stuart, a resident of Scottsboro, was the agent at that place of the Home Protection Insurance Company. The Capital City Company had no agent at that place. The Home Protection was the Capital City's agent at Huntsville. Caldwell Bros. had obtained insurance on their stock of merchandise, and they made application to Stuart for insurance on the store-house. We have no doubt that the preparation of the written application was largely participated in by him. Such is the usual custom. The merchandise, insured in the Home Protection, being in the store-house on which the insurance was sought the burning of either would be apt to involve the destruction of the other. Hence the reasonable desire that the two risks should be assumed by different companies, in order that, if loss ensued, it should not fall entirely on one company. We think we are in safe bounds when we suppose that, when Caldwell Bros. applied to Stuart for insurance on the store-house, the latter preferred the risk should be assumed by the Capital City Company, rather than that the double loss should fall on one company, in case of its destruction by fire, and that it was at his instance the policy was taken in the Capital City Company. The circumstances of this case furnish ample evidence from which the jury could infer that Stuart was the authorized agent of the Capital City Insurance Company in receiving the forwarding the application. And, if there were doubt of this, the conduct of the Capital City, through its agents, after the fire, furnishes circumstances tending to show a ratification of the issue of the policy in this case. These, however, were questions for the jury. There was no error in receiving testimony of Stuart's agency in receiving and forwarding the application for insurance in this case, nor of any other act done by him, bearing on the merits of the present controversy.

When the application was made for insurance in this case, the general questions were propounded, and answered by one of the Caldwell Bros. One question propounded was, "Have you fee-simple title?" The answer was, "Yes." One clause of the application is in the following language "Said answers are considered the basis on which insurance is to be effected, and the same is understood as incorporated in, and forming a part and parcel of, the policy, as well as the warranty of this applicant." A question was raised on the trial as to the title held by the Caldwell Bros. in the lot on which the store-house stood, and as to the manner of proving that title. The complaint filed by plaintiffs consists of a single count, which is a substantial copy of form 13 of the Code, p. 792. The case was tried on issues raised by four pleas. The first plea is a general denial of the averments of the complaint. The others are special pleas, but neither of them specially raises the question of title. One of the plaintiffs, while on the witness stand, was asked as to the ownership of and title to the lot on which the store-house stood. He testified that the building belonged to himself and brother,-Caldwell Bros. In the cross-examination the following questions were asked and answers given: "Question. You and your brother owned it? [this store-house.] Answer. Yes; Snodgrass and I built it, and then my brother took his place. Q. Did you do it in writing? A. No. Q. From whom did you buy the lot? A. A man named Hugh Bynum. Q. Did he make you and Snodgrass a deed for it? A. I don't remember. I gave him a horse for the lot. Snodgrass sold his interest to my brother George. Q. Was that contract in writing between Snodgrass and G. B. Caldwell? A. I am not certain. I think it was. Q. Have you the paper with you? A. No. Q. Where is it? A. I reckon it is at home, or destroyed. Q. What is your best recollection about it? A. I know that, when we traded for the accounts, there was a written contract between Snodgrass and myself, but, as to the lot, I don't remember whether there was or not. Q. If there was any deed made, you do not know it? A. So far as the house and lot were concerned, I could not say whether there was a scratch of the pen." The foregoing is substantially all the evidence hearing on the...