Corporation of Royal Exch. Assur. of London v. Franklin
| Decision Date | 02 September 1924 |
| Docket Number | 3985. |
| Citation | 124 S.E. 172,158 Ga. 644 |
| Parties | CORPORATION OF ROYAL EXCH. ASSUR. OF LONDON v. FRANKLIN. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
A provision in a policy of fire insurance that "no officer, agent, or other representative of this company shall have power to waive any of the terms of this policy, unless such waiver be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the assured unless so written or attached," is valid and binding upon the insured.
(a) But the insurer may be estopped from relying upon this provision as a defense to an action for the recovery of a loss under the policy, and such estoppel will arise whenever an authorized agent consents to changes, permission to make which is required to be indorsed on the policy, and promises to make the necessary indorsement, having access to the policy for this purpose, upon which promise the insured relies and acts, when the agent fails to make the indorsement through mistake, oversight, neglect, or fraud, and the insurer will nevertheless be bound, if not by waiver, at least by an estoppel in pais.
Under the facts set out in subdivision (a) of the first question (infra), a jury would be authorized to find that the insurer was estopped; and the fact that the cashier of the bank making the loan to the insured, for which purpose the latter wished authority indorsed upon the policy, was also agent of the insurer, would not alter the case, in the absence of fraud or collusion.
Clauses in insurance policies which prohibit waivers unless indorsed thereon refer only to the provisions which enter into the contract of insurance, and do not affect conditions which are to be performed after loss, such as furnishing proofs of loss and giving notice.
(a) These may be expressly waived, or waived by conduct inconsistent with an intention to enforce a strict compliance with the condition, by which the insured is led to believe that the insurer does not intend to require such compliance.
(b) An adjuster sent to adjust a loss presumably has authority to waive proof of loss.
Certified Questions from Court of Appeals.
Action by T. B. Franklin, for use of, etc., against Corporation of the Royal Exchange Assurance of London. Judgment for defendant, and plaintiff brought error to Court of Appeals which certified questions to Supreme Court. Questions answered.
The Court of Appeals requested instruction upon the following questions, a determination of which is necessary for a decision of this case:
A policy of fire insurance which covered an automobile belonging to the insured contained the following provisions:
(1) Where personal property is insured against loss or damage from fire under an insurance policy containing the above provisions, and the insured during the life of the policy notifies one who is "agent" of the insurer, with whom the policy has been left by the insured for safe-keeping for the insured's benefit, of his intention to incumber the property with a mortgage or a bill of sale as security for a loan, and requests such agent to make such necessary entry and indorsement in writing upon the policy as will protect the property against loss from fire when so incumbered; and the agent assures the insured that this will be done; and the insured allows the policy to continue to remain in the hands of the agent, and, relying upon the agent to carry out such instructions, and without knowledge that such instructions have not been carried out, incumbers the property, will the insurer, in the event that the agent fails to make any written indorsement or attach any writing to the policy, be, as a matter of law, estopped from defending against a loss thereunder, upon the ground that such entry had not been made by indorsement upon the policy or by a writing attached thereto, or would a jury be authorized to find that the insurer was so estopped?
(a) In a suit by the insured against the insurer, to recover under an insurance policy containing the above provisions, for a loss by fire of the property insured, which, after the policy had been issued, had been incumbered with a mortgage to secure a loan made to the insured, where no indorsement or writing was attached to the policy giving the insured permission to incumber the property or providing that the policy should continue to cover the property when so incumbered, was the insurer estopped, under the following state of facts, as a matter of law, from setting up this defense, or would a jury be authorized to find that the insurer was so estopped?
When the policy was issued the insured left it for safe-keeping with the insurer's local agent through whom it was issued. Later, during the life of the policy, the insured approached the individual who had issued the policy to him and who was then the cashier of a bank, for the purpose of negotiating a loan to be secured by a bill of sale or mortgage upon the property insured and covered by the policy, and who was also still the "agent" of the insurer, but whose duties as such "agent" were not defined. The insured, when making application for the loan, told this person to whom he made the application that he would Whereupon the insured executed a mortgage in favor of the bank upon the property covered by the policy. This individual, who still at the time had the policy in his possession for safe-keeping for the benefit of the insured, and who at the time "carried on in connection with [his] business as cashier at the bank the business of fire insurance, [and] represented the [[insurer]," failed to make any indorsement on the policy, or to attach any writing thereto. This "agent," in his testimony, which was undisputed, said: "I drew the paper for [the insured] to sign to loan him some money. He said something to me about insurance on this property; he said he had it insured, and said I could fix that up for him all right; he said, 'Fix it so as to protect the bank;' he said for me to fix it. I told him I would look after it all right and make the indorsement. I agreed to indorse this policy in favor of the bank. By indorsing it I mean putting an indorsement on it--a loss clause payable to the bank as its interest might appear. I am familiar with that form. I did not do it. I don't know why, I put it up and really forgot it, and never did do it; just forgot it; just negligence on my part. [ The insured] told me to do it. This policy from the date of its birth was in the vault of the bank; [[the insured] never had it. I don't reckon he had ever seen it or knew what company it was in. I knew it was there. I was agent for the [insurer], and I kept the policy. I have never returned any premium to [the insured]. I took the money for the policy."
See, in this connection, 3 Cooley, Briefs on Insurance, 2617, where the author states:
"If an insurer or authorized agent consents to changes which are required to be indorsed on a policy and promises to make the necessary indorsement, having access to the policy for this purpose, but fails to make the indorsement through mistake, oversight, or neglect, the insurer will nevertheless be bound, if not by waiver, at least by an estoppel in pais." See also the same author to the effect that "such estoppels do not arise upon the power or lack of power of an agent to change the provisions of the policy or waive any of its terms, but arises in law because of the acts of the company through its agent acting within the scope of his apparent authority as its representative." 3 Cooley, Briefs on Insurance, 2508.
See, also, Johnson v. Ætna Ins. Co., 123 Ga. 404, 51 S.E. 339, 107 Am.St.Rep. 92; Lippman v. Ætna Ins. Co., 108 Ga. 391, 33 S.E. 897, 75 Am.St.Rep. 62; Simonton v. Liverpool, etc., Ins. Co., 51 Ga. 76; Sparks v. National Union Fire Ins. Co., 23 Ga.App. 38, 97 S.E. 462.
(2) Where property covered by a fire insurance policy has been damaged by fire, and the insurer has sent an "adjuster" to "investigate the loss," will a statement by the adjuster to an agent of the insured authorized to adjust and collect the loss, made before the expiration of the time provided in the policy for rendering and filing a proof of loss, to the effect that "he had the loss and [would] be back * * * in...
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