Claxton v. Fidelity & Guaranty Fire Corporation

• Decision Date: 14 June 1937
• Docket Number: 32675
• Citation: 179 Miss. 556,175 So. 210
• Parties: CLAXTON et ux. v. FIDELITY & GUARANTY FIRE CORPORATION
• Court: Mississippi Supreme Court

175 So. 210

179 Miss. 556

CLAXTON et ux. v. FIDELITY & GUARANTY FIRE CORPORATION

No. 32675

Supreme Court of Mississippi

June 14, 1937

Division A

1 INSURANCE.

Under standard schedule fire policy which was to be void for insured's fraud or false swearing regarding property insured, where false statements were knowingly and willfully made by insured, intent to deceive would be implied.

2 INSURANCE.

In action on standard schedule fire policy which was to be void for insured's fraud or false swearing regarding insured dwelling and personalty, under evidence that insured grossly overvalued personalty, stated that he had had piano five or six years, whereas he had had it twenty years, and claimed loss of silver which was not in dwelling, insured could not recover for loss of personalty.

3 INSURANCE.

As respects fire policy, a schedule policy, insuring various items and fixing amount of insurance on each, is separable although premium is paid as entirety, and fact that policy is void as to one item does not render it unenforceable as to others.

4. INSURANCE.

A standard schedule fire policy which was to be void for insured's fraud or false swearing regarding insured dwelling and personalty, was divisible, and hence insured's fraud in grossly overvaluating personalty, which avoided policy as to personalty, did not avoid policy as to dwelling.

5. INSURANCE.

Insurance contracts are construed most favorably to insured.

6. APPEAL AND ERROR.

Where dwelling and personalty were insured under standard schedule fire policy, trial court incorrectly held policy indivisible and entirely void because of insured's fraud in grossly overvaluating personalty, and made no finding as to facts relating to liability and amount of loss on dwelling, case would be remanded for determination of such question.

HON. Jas. A. FINLEY, Chancellor.

APPEAL from the chancery court of Monroe county HON. JAS. A. FINLEY, Chancellor.

Suit by the Fidelity & Guaranty Fire Corporation against Harvey A. Claxton and wife, wherein defendants filed a cross-bill. From an adverse decree, defendants appeal. Affirmed in part, and reversed and remanded in part, with directions.

Affirmed in part; reversed and remanded in part.

McFarland & Holmes, of Aberdeen, for appellants.

The rule with reference to over valuation is as follows: "Where the actual value of the property is greater than the amount of insurance, its valuation is immaterial, and even if overstated, the insured has been held entitled to recover on the policy."

Jensen v. Palatine Ins. Co., 81 Neb. 523; Dogge v. Ins. Co., 49 Wis. 501, 5 N.W. 889; Siebros Finance Corp. v. Fire Assn. of Philadelphia, 129 Misc. 223, 218 N.Y.S. 221.

Before a false statement under oath in proof of loss will vitiate a policy of insurance, such statement must be intentionally false and disclose a purpose to fraudulently over-value, or contain a statement of items having no existence. A mere innocent mistake or exaggerated statement will be insufficient for that purpose.

Fire Ins. Company v. Coffman, 218 Ky. 568, 291 S.W. 725; Nugent v. Rensselaer Co. Mt. F. Ins. Co., 106 A.D. 308; Unger v. Peoples Fire Ins. Co. of New York, 4 Daly 96; 14 R. C. L. 1444, sec. 608; Broff v. Northwestern Mutual Fire Assn., Ann. Cas. 1912A, page 1138 and notes.

To avoid liability on this policy because of an overestimate of loss by the insured, the complainant, appellee here, must show that this estimate was made with an intent to deceive and defraud the insurer.

Austin v. Maine Farmers Mutual Fire Ins. Co., 56 A. L. R. 384; Phoenix Ins. Co. v. Summerfield, 70 Miss. 827; Miss. Fire Ins. Co. v. Dixon, 133 Miss. 570, 98 So. 101; 20 A. L. R. 1164; Strauss v. Ins. Co., 102 So. 861; Garnier v. Aetna Ins. Co., 159 So. 705; Banks v. Banks, 79 So. 841; Aetna Ins. Co. v. Robertson, 94 So. 7.

In the case of Jensen v. Palatine Insurance Company, 81 Neb. 523, and Dogge v. Insurance Co., 49 Wis. 501, 5 N.W. 889, the court held that where the actual value of property is greater than the amount of the insurance, its valuation is immaterial, and even if over-stated, the insured is entitled to recover on the policy. This is also in effect held in the Summerfield case, 70 Miss. 827.

There are two lines of authorities with reference to the divisibility or indivisibility of fire insurance policies similar to the one involved in this case. One line of authorities holds that such a policy is indivisible, while the other line of authorities holds that such a policy is divisible. The Mississippi court holds that a policy such as the one involved here is a divisible policy, "and the validity of the insurance under one item would have no effect upon the validity of the other items of insurance; that such policy, in effect, is the same as if there were separate policies of insurance on each separate item."

National Union Fire Ins. Co. v. Provine, 148 Miss. 659, 114 So. 730; Gee Lbr. Co. case, 118 Miss. 740, 80 So. 9.

Leftwich & Tubb, of Aberdeen, for appellee.

The findings and decree of the trial court will not be disturbed on appeal unless clearly erroneous.

Heard v. Cottrell, 56 So. 277, 100 Miss. 42; Lott v. Hull, 61 So. 421, 104 Miss. 308; Lee v. Wilkinson, 62 So. 275, 105 Miss. 358; Bland v. Bland, 62 So. 641, 105 Miss. 478; Grace v. Purce, 90 So. 590, 127 Miss. 831, 21 A. L. R. 1035; Crump v. Tucker, 115 So. 397, 149 Miss. 711.

The findings of fact in an equity suit on conflicting evidence will not be disturbed on appeal.

Mutual Life Ins. Co. v. Herron, 30 So. 691, 79 Miss. 381; Bank of Lauderdale v. Cole, 71 So. 260, 111 Miss. 39; Jackson v. Banks, 109 So. 905, 144 Miss. 392; Bacot v. Holloway, 104 So. 696, 140 Miss. 120.

The Chancellor's finding on conflicting evidence regarding fraud will not be disturbed on appeal.

Rawlings v. Anderson, 115 So. 714, 149 Miss. 632.

The contract of insurance sued on is not separable or severable, when fraud enters into it.

National Union Fire Ins. Co. v. Provine, 114 So. 730, 148 Miss. 659; Scottish Union National Ins. Co. v. Warren Gee Lbr. Co., 80 So. 9, 118 Miss. 740; Darden v. Liverpool & London & Globe Ins. Co., 68 So. 485, 109 Miss. 501.

We contend that the authorities are almost unanimous to the effect that when fraud enters the entire contract is vitiated and it is not separable but that it fails as a whole.

1 Couch on Insurance, page 458, sec. 213; 26 C. J. 382, sec. 492; 14 R. C. L. 1343, sec. 515; Miss. Fire Ins. Co. v. Dixon, 98 So. 101, 133 Miss. 570; Mitchell v. Miss. Home Ins. Co., 72 Miss. 53, 18 So. 86.

The assured made false statements in his proof of loss and when called by the appellee for examination under oath under the terms of the policy of insurance and which false statements rendered the entire policy void.

7 Couch on Insurance, sec. 1539, page 5490, and sec. 1557, page 5511; Claflin v. Commonwealth Ins. Co., 110 U.S. 81, 28 L.Ed. 76, 3 S.Ct. 507; Willis v. Horticultural Fire Relief, 69 Ore. 293, 137 P. 761, Ann. Cas. 1916A 449; North British & Mercantile Ins. Co. v. Nidiffer, 112 Va. 591, 72 S.E. 130, Ann. Cas. 1916A 464; Linscott v. Orient Ins. Co., 88 Maine 497, 51 A. S. R. 435; Doloff v. Phoenix Ins. Co., 82 Maine 266, 17 A. S. R. 482; Barnes v. Union Mutual Fire Ins. Co., 51 Maine 110, 81 Am. Dec. 562; Moore v. Virginia F. Ins. Co., 28 Gratt (Va.) 508, 26 Am. Rep. 373.

Where false swearing in the proofs of loss avoids a policy it renders it void in toto and the insured cannot recover pro tanto for the loss of that property to which the false statements do not relate.

Oshkosh Packing Co. v. Mercantile Ins. Co., 31 F. 200; Dumas v. Northwestern Nat. Ins. Co., 12 App. Cas. 245, 40 L. R. A. 358; Dolloff v. Phoenix Ins. Co., 82 Me. 266, 19 A. 396, 17 A. S. R. 482; Knop v. National F. Ins., 107 Mich. 323, 65 N.W. 228; Hamberg v. St. Paul F. Ins. Co., 68 Minn. 335, 71 N.W. 388; Hall v. Western Underwriters' Assn., 106 Mo.App. 476, 81 S.W. 227; Home Ins. Co. v. Connelly, 104 Tenn. 93, 56 S.W. 828; Moore v. Virginia F. Ins. Co., 28 Gratt. (Va.) 508, 26 Am. Rep. 373; Worachek v. New Denmark Mut. Home F. Ins. Co., 102 Wis. 88, 78 N.W. 411; Cashman v. London, etc., Ins. Co., 10 N. Bruns. 246; Harris v. Waterloo Mut. F. Ins. Co., 10 Ont. 718; Schuster v. Dutchess County Ins. Co., 102 N.Y. 260, 6 N.E. 406; Fitzgerald v. Atlanta Home Ins. Co., 61 A.D. 350, 70 N.Y.S. 552; Meyer v. Home Ins. Co., 127 Wis. 293, 106 N.W. 1087; Ann. Cas. 1916A 462; Plath v. Minn. Farmers' Mutual Fire Ins. Assn., 23 Minn. 479, 23 Am. Rep. 697; Globe & Rutgers Fire Ins. Co. v. Stallard, 68 F.2d 237; Hyland v. Millers National Ins. Co., 58 F.2d 1003; Alfred Hiller Co. v. Ins. Co. of North America, 125 La. 938, 52 So. 104, 32 L. R. A. (N. S.) 453; Schmidt v. Philadelphia Underwriters, 109 La. 884, 33 So. 907; Germania Fire Ins. Co. v. Schild, 69 Ohio 136, 68 N.E. 706, 100 A. S. R. 663; Agricultural Ins. Co. v. Hamilton, 51 A. S. R. 457, 33 A. 429, 30 L. R. A. 633; Stevens v. Queen Ins. Co., 81 Wis. 335, 29 A. S. R. 905, 51 N.W. 555; Joiner v. Firemans Ins. Co., 6 F.Supp. 103; Cuetara Hermanos v. Royal Exchange Ins. Co., 23 F.2d 270.

The policy was rendered void as the interest of the insured was other than unconditional and sole ownership in part of the property.

4 Couch on Insurance, sec. 920, page 3205; Geiss v. Franklin Ins. Co., 24 N.E. 99, 123 Ind. 172, 18 A. S. R. 324; Westchester Fire Ins. Co. v. Weaver, 17 A. 401, 18 A. 1034; 70 Md. 536, 5 L. R. A. 478; Ledvinka v. Home Ins. Co., 115 A. 596, 139 Md. 434, 19 A. L. R. 167; Germania Fire Ins. Co. v. Schild, 69 Ohio St. 136, 100 A. S. R. 663, 68 N.E. 706; Dow v. National Ins. Co., 26 R. I. 379, 67 L. R. A. 479, 106 A. S. R. 728, 58 A. 999; Virginia F. & M. Ins. Co. v. Lennon, 140 Va. 766, 38 A. L. R. 186, 125 S.E. 801.

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