Case v. Ewbanks, Ewbanks & Co.

• Decision Date: 21 December 1927
• Docket Number: 539.
• Parties: CASE v. EWBANKS, EWBANKS & CO.
• Court: North Carolina Supreme Court

140 S.E. 709

194 N.C. 775

CASE v. EWBANKS, EWBANKS & CO.

No. 539.

Supreme Court of North Carolina

December 21, 1927

Appeal from Superior Court, Henderson County; Moore, Judge.

Action by W. B. Case against Ewbanks, Ewbanks & Co. Judgment for plaintiff, and defendants appeal. Affirmed.

Policy provisions restricting waiver do not apply to agent knowing conditions at inception of contract.

Action to recover damages for breach of contract by which defendant as insurance agents and brokers, agreed to procure for, and to issue to, plaintiffs a policy of insurance, insuring him against loss or damage, by fire, on a building owned by plaintiff. From judgment on the verdict sustaining the allegations of the complaint, defendants appealed to the Supreme Court.

Ewbank Whitmire & Weeks, of Hendersonville, John M. Robinson, of Charlotte, and McD. Ray, of Hendersonville, for appellants.

O. V F. Blythe and Shipman & Justice, all of Hendersonville, for appellee. cONNOR, J.

On August 24, 1923, plaintiff was the owner of a building located on a lot in the town of Hendersonville, N.C. The lot on which the said building was located was owned in fee simple by Dr. J. S. Brown. A few days prior to said date, at a public sale conducted for the owner of said lot and building, Mrs. M. C. Dotson, plaintiff had purchased the building, and Dr. Brown had purchased the lot. The building had been used for many years as a hotel or boarding house. There was evidence tending to show that said building was worth from $8,000 to $9,000. At the time plaintiff bought the building, he also purchased from Mrs. Dotson the furniture contained therein. Plaintiff, who had occupied the building prior to said sale, under a lease from Mrs. Dotson, and used same as a hotel or boarding house, continued to use the same for such purpose until it was destroyed by fire in December 1923.

Prior to the sale of the lot to Dr. Brown, and of the building to plaintiff, defendants, as insurance agents, had issued to Mrs. Dotson, the owner of the building and lot, a policy of fire insurance on the building in the sum of $5,000. After the sale, defendants, who were fully informed that plaintiff had become the owner of the building, and that Dr. Brown had become the owner in fee simple of the lot on which the building was located, agreed with plaintiff to procure for, and to issue to, him a policy of fire insurance on said building in the sum of $5,000, and on the furniture contained therein in the sum of $1,000. At the time of this agreement, defendants advised plaintiff that, as he was not the owner in fee simple of the lot on which the building was located, he would be required to procure a lease from Dr. Brown for the lot, in order that the policy should be valid. In accordance with this advice, plaintiff procured a lease for the lot for 12 months from Dr. Brown, and so notified defendants, who thereupon informed plaintiff that they had procured for, and had issued to, him a valid policy in accordance with their agreement. Plaintiff then paid to defendants the sum of $68.70, as the premium for said policy. Defendants did not deliver the policy to plaintiff at this time, but, in accordance with their offer, which was accepted by plaintiff, retained it in their possession for plaintiff. For this reason plaintiff did not read the policy, or hear it read, prior to the destruction of the building and furniture by fire. He relied upon defendants' assurance, when he paid the premium, that they had issued to him a valid policy. Before the expiration of said policy, in December, 1923, the said building and its contents, without any fault or want of care on the part of plaintiff, was completely destroyed by fire.

After the destruction of the building and its contents, by fire, plaintiff called on defendants for his policy of insurance, in order to make claim thereunder for his loss. Defendants then delivered to plaintiff a policy of insurance, dated August 24, 1923, issued by defendants as agents for the Northern Assurance Company, Limited, of London, in form sufficient to insure plaintiff against loss or damage by fire on his building in the sum of $5,000, and on the furniture contained therein in the sum of $1,000. It was stipulated, however, in said policy that same was void, if plaintiff was not, at the time of its issuance, the owner in fee simple of the land on which the building was located, and that such stipulation was not waived, unless such waiver was in writing attached to the policy. The policy was in the form prescribed by statute. C. S. § 6437.

The policy delivered by defendants to plaintiff did not contain a waiver of the stipulation with reference to the title of plaintiff to the land on which the building was located. No clause was inserted therein or attached thereto containing such waiver. The company denied liability under the policy for loss on either the building or the furniture, for that plaintiff was not, at the date of its issuance, the owner in fee simple of the land on which the building was located. It contended that the policy was void both as to the building and as to the furniture.

Notwithstanding the absence from the policy of a clause showing that plaintiff's title to the land was that of a lessee, and not that of an owner in fee simple, and notwithstanding the company's denial of liability under the policy, for this reason, plaintiff commenced an action in the superior court of Henderson county against the company to recover on the policy. This action, in which the amount involved was over $3,000, upon the petition of the company, a nonresident of the state of North Carolina, and sole defendant therein, was removed from the state court to the District Court of the United States for the Western District of North Carolina for trial, under the provision of the act of Congress. The action was thereafter tried in said District Court at Asheville, N.C. The said trial resulted in a judgment that plaintiff recover of the company the sum of $1,000, and interest, on account of the loss by fire of his furniture, and that he recover nothing on account of the loss of his building by fire. It was held in said District Court that the policy with respect to the building was void, because of the violation of the stipulation relative to plaintiff's title to the land, but that said policy was valid with respect to the furniture, for that said stipulation had reference to the building, but not to the furniture. Upon advice of counsel that said judgment was in accordance with the law as held in the federal courts upon the facts as contended by plaintiff, and as found by the jury, plaintiff did not perfect his appeal from said judgment to the Circuit Court of Appeals for the Fourth Circuit. The judgment was affirmed by said Court of Appeals upon the appeal of the company. 12 F. (2d) 551. Plaintiff has received from the company the amount due on the judgment rendered in the District Court of the United States, and said judgment has been fully satisfied.

Plaintiff thereafter commenced this action in the superior court of Henderson county to recover of defendants, as insurance brokers and agents, damages for their negligent failure to procure for, and to issue to, him a policy of insurance insuring plaintiff against loss or damage by fire on his building, in accordance with their contract and agreement with him. The issues submitted to the jury were answered in accordance with the contentions of plaintiff, and from the judgment in accordance with the verdict defendants...