Coddington v. Safeguard Ins. Co. of New York

• Decision Date: 23 December 1963
• Docket Number: No. 5-3157,5-3157
• Citation: 373 S.W.2d 413,237 Ark. 457
• Parties: Juanita CODDINGTON, Individually and as administratrix, Appellant, v. SAFEGUARD INS. CO. OF N. Y. et al., Appellees.
• Court: Arkansas Supreme Court

Page 413

373 S.W.2d 413

237 Ark. 457

Juanita CODDINGTON, Individually and as administratrix, Appellant, v. SAFEGUARD INS. CO. OF N. Y. et al., Appellees.

No. 5-3157.

Supreme Court of Arkansas.

Dec. 23, 1963.

Peter G. Estes, Fayetteville, for appellant.

Greenhaw & Greenhaw, Fayetteville, for appellees.

JOHNSON, Justice.

This is an appeal from an order sustaining demurrers filed by appellees Safeguard Insurance Co. of New York and McCartney-Lewis-Faucette, Inc., resulting in the dismissal of appellant Juanita Coddington's complaint. The original complaint was filed in Washington Circuit Court on March 22, 1962, by Juanita Coddington and her late husband, M. A. Coddington. For simplicity we shall refer to them as appellants. The complaint alleged substantially as follows:

That appellants were husband and wife and citizens of Washington County and were owners of a certain dwelling house located in the City of Fayetteville.

That appellee Safeguard Insurance Co. of New York is a capital stock company operating in the State of Arkansas as an insurer of buildings and that appellee McCartney-Lewis-Faucette, Inc., is a corporation authorized to do business in the State of Arkansas and is engaged in the sale of fire and casualty insurance with its principal place of business in Fayetteville.

That in or about the month of July, 1960, and for many years prior thereto, appellants had owned the dwelling house herein mentioned which was covered and had been covered by a fire insurance policy issued by appellee Safeguard Insurance Company in the sum of $3,000.00, the same being sold to them by appellee McCartney-Lewis-Faucette, Inc.

That during the month of July, 1960, the dwelling house was completely destroyed by fire while the said insurance policy No. 335712 was in force and effect; that for many years prior thereto and up until a few months prior to the aforesaid fire, appellants had occupied the house as their residence but had moved therefrom and had within one week thereafter notified appellee McCartney-Lewis-Faucette, Inc. of their vacating the property, and that the policy was thereafter renewed by a renewal notice.

That appellants had been assured by appellee McCartney-Lewis-Faucette, Inc., that their property was fully covered in the sum of $3,000.00 and that they had relied upon said representation and paid their premium to appellee therefor, and notwithstanding the Valued Policy Law of the State of Arkansas, the agent, servant and employee of appellee Safeguard Insurance Company by misrepresentation, fraud and deceit induced appellants to accept the sum of $2,000.00 for their complete loss of their building by fire, instead of paying them the sum of $3,000.00 as required by the terms of their policy;

That if their building was not covered by said policy of insurance as was represented to them by appellee McCartney-Lewis-Faucette, Inc., then said failure to coverage was due to the negligent issuance and handling of their insurance policy through no fault on their part.

Appellants prayed that the release executed by them be cancelled and declared void by the court and that they have judgment against appellees for the sum of $1,000.00, together with the statutory penalty and attorney fees.

An amendment to appellants' complaint was filed on October 18, 1962, which alleged in addition to those things pleaded and prayed for in the original complaint that appellee McCartney-Lewis-Faucette, Inc., was at the time of the issuance of the policy in question and the renewal thereof, a general agent of appellee Safeguard Insurance Company, having power to issue policies of insurance and transact other business of the company; did, in fact, issue the policy of insurance in question and have power to waive any of the terms of said policy allowed to be waived by law;

That within one week after appellants had vacated the premises here in question, they notified appellee McCartney-Lewis-Faucette, Inc., that they had vacated the property and appellee's agents made no objection to the vacancy and in fact while said property was vacant and being so notified of the vacancy renewed said policy of insurance, and that the course of action of appellee Safeguard Insurance Company, by its authorized agent, McCartney-Lewis-Faucette, Inc., led appellants honestly to believe that the occupancy clause in said policy had been waived and by reason thereof appellees were estopped from invoking the provision in the policy involving occupancy;

That appellees had by misrepresentation, fraud, deceit and contrary to the Valued Policy Statutes of the State of Arkansas induced appellants to accept the sum of $2,000.00 for the loss of their building by fire and induced them to sign releases and other documents, without knowing the contents thereof, and by reason thereof releases and other documents having to do with the settlement should be cancelled and further prayed that appellees be held to have waived the clause in the policy pertaining to occupancy; be estopped from enforcing the clause in the insurance contract; and that the attempted settlement be cancelled and declared void.

Appellees had filed their separate demurrers to appellants' complaint in April, 1962.

On June 13, 1963, the trial court concluded as follows:

'[T]hat the demurrers should be sustained for the reason that the complaint of the plaintiff alleges fraud but it does not allege facts sufficient to constitute fraud to bring the case under an exception to the general rule which requires that any payment made in accord and satisfaction be returned prior to the institution of suit. The general pleading of fraud is not enough but the facts must be plead to support the fraudulent acts alleged which are an exception to the general rule. Some of the exceptions to the general rule are set out in 178 Ark. 1110 , Texas Co. v. Williams, and 114 Ark. 559 , Pekin Cooperage Co. v. Gibbs, and consist of the following specific acts:

'1. Mental incapacity to execute release.

'2. Fraudulent representation as to the contents of written instrument.

'3. Trick or subterfuge where papers were substituted at time of signing.

'4. Illiteracy or infirmity.

'5. Minority.

'The only allegation of fact in the complaint sets out that the plaintiff signed the release and proof of loss without reading it and that the release was contrary to the stated value of policy requirement (66-3901).'

Following this order sustaining the demurrer, appellants declined to plead further, and on July 17, 1963, their complaint was dismissed with prejudice. From that order comes this appeal.

For reversal appellants contend that a compromise settlement made contrary to the Valued Policy Statute is not an accord and satisfaction, is contrary to law, against public policy and void from its inception as distinguished from voidable and is an exception to the general rule which requires that payments made in accord and satisfaction be returned...