Commercial Union Ins. Co. v. Taylor, 67204

• Decision Date: 01 December 1983
• Docket Number: No. 67204,67204
• Parties: COMMERCIAL UNION INSURANCE COMPANY v. TAYLOR et al.
• Court: Georgia Court of Appeals

Page 177

312 S.E.2d 177

169 Ga.App. 177

COMMERCIAL UNION INSURANCE COMPANY v. TAYLOR et al.

No. 67204.

Court of Appeals of Georgia.

Dec. 1, 1983.

Sam F. Lowe III, Sam F. Lowe, Jr., John R. Reale, Atlanta, for appellant.

William T. Elsey, Velma C. Tilley, Cartersville, for appellees.

QUILLIAN, Presiding Judge.

This appeal is from judgment for the insureds--Huey and Larry Taylor, d/b/a Taylor's Farm Supply, against their insurer--Commercial Union Insurance Company, for recovery of a loss sustained by fire. The Taylors, father and son, were the owners of Taylor's Farm Supply--a partnership which sold various merchandise used by farmers. Huey--the father, was retired and did not work at the store. Larry ran the business with the help of Steve Taylor--his nephew, and two other employees who loaded and unloaded merchandise.

Larry Taylor was absent from the warehouse one day on a selling trip when the fire sprinkler began leaking and damaged some feed. Steve turned off the master valve in the basement to prevent further damage but did not tell Larry or Huey Taylor what he had done. About two weeks later a fire occurred and Steve recalled that he had turned off the sprinkler system and told Larry. Commercial Union denied the Taylor's claim for damages as a result of the fire on the basis that the insurance policy provided the insurer would not be liable for a loss where "the hazard was increased by any means within the control or knowledge of the insured ..." The Taylors were also given a reduced rate because of the fire sprinkler system, and in consideration for such rate were required to exercise due diligence in maintaining all equipment installed for detection, prevention and extinguishment of fire, and notice of any impairment in or suspension of such protective services, within the knowledge of the named insured.

This action was tried before the trial judge, without a jury, and Commercial Union appeals judgment for the insureds. Held:

1. The appellant alleges the trial court failed to make a sufficient finding of fact on whether the loss resulted because the hazard was increased by a means within the control and knowledge of the insureds. We cannot agree. In Commercial Union Fire Ins. Co. v. Capouano, 55 Ga.App. 566, 190 S.E. 815, this Court construed the term "control and knowledge" and held that "control" presupposes knowledge and that it would be unreasonable to hold that a person had control of a thing of which he had no knowledge. Thus, in effect, finding that there could be no "control" without "knowledge." The trial court found that "[n]either named insured [Huey or Larry Taylor] knew the sprinkler had been turned off until after the fire had started." "There was no evidence that the employee turned the sprinkler off with the authority of any named insured ... One of the named insureds visually inspected the sprinkler system on a periodic basis. There is absolutely no indication of any wrongdoing on the part of any named insured. The Court finds that the insureds have acted with due diligence in maintaining the sprinkler system." We hold that these findings of fact on the issue of the increase in hazard being within the control and knowledge of the insureds to be sufficient for a determination of this issue.

2. It is contended that the court's finding that the insureds acted with due diligence in maintaining the sprinkler system is not supported by the evidence. Larry Taylor testified that he examined the sprinkler system "every two or three days ..." He had a service contract on the sprinkler system but his insurance agent let the contract expire about a year prior to the fire. The issue of due diligence is for the finder of fact. R.L. Kimsey Cotton Co. v. Pacific Ins. Co., 224 Ga. 249, 161 S.E.2d 315. The trial court's finding is authorized by the evidence and was not clearly erroneous. Allen v. Cobb Heating, etc., Co., 158 Ga.App. 209, 211, 279 S.E.2d 505.

3. The third enumeration of error argues that the conclusion of the trial court that the insureds had no knowledge that the sprinkler system was turned off was contrary to Georgia law and was based on an erroneous legal theory. Appellant argues that Steve Taylor was "the general agent for his employer since he was authorized to run the store while the employers were out," and that knowledge of the agent is knowledge of the principal--the named insureds. Hence, since Steve Taylor turned off the master valve in the fire sprinkler system, this knowledge was imputed to his principal as a matter of law (OCGA § 10-6-58; formerly Code Ann. § 4-309), and knowledge of the lack of a sprinkler system increased the hazard and with the concommitant failure to notify the insurer of the impaired sprinkler system suspended the policy.

Appellant's law is correct but his conclusion is without factual foundation in the record. Steve Taylor testified: "I was a clerk; just waiting on customers mostly." He was one of several employees. The store was divided up into three warehouses, and a retail section in which Steve Taylor was the sole employee other than Larry Taylor when he was there. Larry Taylor said that one of their drivers worked some in the retail store when he was not driving. The other employees worked in the warehouse section of the store.

Larry Taylor described Steve's duties as "when a customer came in to wait on them ..." However, he maintained two bank accounts for the store and "when I was out somebody would come by and want a bill paid and he had the authority to pay it. Q. So he did have authority to pay bills, and take in money, and generally to run the store while you were out? A. Yes, sir." The record shows that Larry and Steve were the two who ran the retail section of the store and when Larry was out Steve was left to run the store and if someone had a bill that needed immediate payment--Steve could write a check to pay that bill. This does not show general agency--at most it shows a special agency to pay a store bill when presented in the absence of the owner. See 1 EGL 449-450,...