Clay v. Phoenix Ins. Co

• Decision Date: 16 August 1895
• Parties: CLAY. v. PHOENIX INS. CO.
• Court: Georgia Supreme Court

97 Ga. 44

25 S.E. 417

CLAY.

v.PHOENIX INS. CO.

Supreme Court of Georgia.

Aug. 16, 1895.

Insurance—Construction of Policy—Notice to Company— What Constitutes— Condition against Incumbrances—Waiver of Breach.

1. Without sacrificing the substantial limitations imposed upon the liability of an insurer by the contract between the parties, stipulations and conditions in policies of insurance, like those in all other contracts, are to have a reasonable intendment, and are to be so construed, if possible, as to avoid forfeitures, and to advance the beneficial purpose's intended to be accomplished.

2. Where a real-estate renting agent is likewise an insurance agent, and, at the request of the owner of premises, procures a policy of insurance to be issued by a company represented by him upon tenements placed under his control as a renting agent, if the policy contains a condition that it shall be void if the premises should become vacant or unoccupied without notice to the company, and before a loss the premises do in fact become vacant and unoccupied, but with full knowledge on the part of the agent of the company of the fact, such knowledge would amount to notice to the insurance company, even though the information from which it was derived was really imparted to the person who was thus both real-estate renting and insurance agent in business relating to the former, rather than to the latter, capacity. In such a case notice is the potential fact necessary to the protection of the insurer; and if the agent having full power to cancel the policy, nevertheless permits it to remain of full force after notice of the breach of condition, the company is bound.

3. In such a case, if the policy of insurance contain a stipulation "that if the property insured, or any part of it, is mortgaged, or otherwise incumbered, either prior or subsequent to the date thereof without consent of this company written thereon, " the same should be void, but at the time it was issued the agent of the company through whom the policy was issued knew of the existence of a mortgage upon the premises insured, and the company nevertheless issued the policy, but failed to enter thereon its consent to such incumbrance, but in the meantime accepted the premiums required, it will, in case of loss, be held to have waived such stipulation, and will be estopped to insist upon a forfeiture thereunder. In such case, refusal to insure, or cancellation of the policy, is the right of the insurer, and not forfeiture of insurance after loss.

4. Under the principles here announced, there was sufficient evidence to justify the submission of the questions of fact involved to a jury, and the court accordingly erred in granting a nonsuit.

(Syllabus by the Court.)

Error from superior court, Bibb county; J. J. Hunt, Judge.

Action by C. C. Clay against the Phoenix Insurance Company. Prom a judgment of nonsuit, plaintiff brings error. Reversed.

The following is the official, report:

C. C. Clay sued the insurance company upon a policy of insurance, and for damages and attorney's fees, alleged to be due him on account of the bad faith of the company in refusing to pay loss he alleged he sustained by the burning of a house and certain furniture covered by its policy of insurance. At the close of the testimony for plaintiff defendant's counsel moved for a nonsuit on the following grounds: (1) Because plaintiff, by his proof, failed to make out any cause of action; (2) because plaintiff, by his proof, showed that when the policy was issued, and since, there was a mortgage upon the property, not disclosed to defendant; (3) that during the continuance of the policy the premises insured became vacant in violation of the policy; (4) that no notice, either of the mortgage or the vacancy, was given to defendant, nor was any consent made by it thereon or therein, in accordance with the terms of the policy. The motion was sustained, and to this ruling plaintiff excepted. Plaintiff introduced the policy. By it defendant, subject to the conditions therein mentioned, insured plaintiff against loss or damage by fire to the amount of $900, —$500 on a building "occupied by assured as a family residence, " $200 on household furniture, including pictures, paintings, etc., and a piano while contained therein, and $200 on piano. The term of insurance was from November 22, 1890, to November 22, 1891. The policy contained the stipulations that if the property insured, or any part of it, was mortgaged or otherwise incumbered, either prior or subsequent to the date of the policy, without the consent of the insurance company written on the policy, or if the premises should be occupied or used so as to increase the risk, or become vacant or unoccupied without notice to or consent of the company in writing upon the policy, then the policy was void. Further, that the insurance might be terminated at any time at the request of the assured, and might also be terminated at any time at the option of the company, on giving notice to that effect, and refunding a ratable proportion of the premium for the unexpired term of the policy. Further, that it was a part of this contract that any person other than the assured who may have procured the insurance to be taken by the insurance company should be deemed the agent of the assured, and not of the company, under any circumstances whatever, or in any transaction relating to the insurance. The policy was signed by defendant's president and secretary, and countersigned at Macon, November 22, 1890, by W. W. & R. S. Collins, agents. Plaintiff also introduced the record of proof of loss. Among other things, this contained the statement that the total insurance on the property was $1,600 (in the policy notice was acknowledged of $500 concurrent insurance); that the property belonged at the time of the fire to C. C. Clay; that J. H Tallman had a mortgage on the house and lot for $2,500; that the building described or containing the property was, at the time of the fire, in charge of a negro in the yard, and Mr. George Brooks, living near; that the fire occurred about 11 o'clock p. m., September 6, 1891; and that the house and furniture were a total loss, and were of the value of $2,750. Plaintiff also introduced the demand made by him upon the insurance company.

Two witnesses were introduced by plaintiff, —J. J. Clay and George Brooks. Clay testified: "The house was destroyed by fire on the night of September 6, 1891. It was worth $1,500, and contained furniture and fixtures worth at a low estimate $1,000. The list presented shows $1,502 worth of property contained in the house, but I cannot say that it was all in there at the time of the fire. On Friday before the fire occurred on Saturday or Sunday night, I went through the house with Brooks. We were going to move the furniture the following Monday to Brooks' house, and thought there were five or six loads; all of $1,000 or $1,200. I missed two pictures which cost me $50 apiece. Won't say there were $1,500 worth in there at that time. I had it in there. They stole it out. There was a piano which was worth $300. I suppose it was all burned. I got there on Sunday night or Monday after the fire, and saw remnants on the ground, —the iron parts of them, parts of lounge and mattress springs, which had not burned up. The house was totally destroyed, and I judge from the fire they all burned up. Can't swear positively that all the things on the list were there on Friday before the fire. I didn't take a list of them then, but noticed one or two things gone. I think everything was there; at least $1,000. All the kitchen utensils were there. I procured this insurance from Hill, who clerked for Collins & Bro., the agents of defendant. Hill and Collins were then doing business together. Think I told Hill, when I applied for insurance, I wanted the policy written in the name of C. C. Clay, the property belonging to him. Friday morning before the fire I went to Jim Keel to get a permit for the property to remain vacant, and I saw him and Bob Collins. The house was then unoccupied, and had been two days. Collins & Bro. had charge of the property when I got back to Macon three weeks before the fire. I never took it out of their hands. It never was out of their hands. I told them Friday morning to rent it out if I did not succeed in making arrangements with Brooks. I rented it the last time myself on Monday evening, and the woman stayed until Wednesday, and I turned her out for nonpayment of rent. The property then belonged to C. C. Clay, and I was acting for him, and am now. If the case goes against me now, it will be my loss. At that time it would have been his. At that time he was the owner of the property. I sold it to him March 20, 1890, and was agent for Mrs. B. E. Clay in making the sale. The property did not originally belong to me, but to her. When I took out the insurance I told Mr. Hill there was a mortgage on the property, and he would find the facts at the office of Turpin & Brother. I know he went to Turpin & Company to get it. I saw him going there. He says, T will go around and get it;' and he found there was other insurance on it. He couldn't get it anywhere else. I don't know whether I said the mortgage was to Tall-man or not. I notified him I had borrowed money, and had to keep it insured to pay this mortgage, to secure the payment of loss. How I know he went to Turpin Brothers? I didn't know how much insurance I had there. I had insurance with some other gentlemen, —I cannot remember who, —and the policy expired, and I then wished to do business with Collins Brothers, and that is how come them to get it. Question. When you told Hill there was a mortgage on this property, he wrote the policy anyway, did he? Answer. I have got it there. Q. He did not require any statement made by you other than that? A. I do not remember what he said. It has been a long time ago. I paid the money. I know he got my money. I reckon...