Edwards v. Great Am. Ins. Co.

• Decision Date: 12 May 1959
• Docket Number: No. 17532,17532
• Court: South Carolina Supreme Court
• Parties: Mrs. Myron J. EDWARDS and Bank of Great Falls, Respondents, v. GREAT AMERICAN INSURANCE COMPANY, a foreign corporation, Appellant.

Page 582

108 S.E.2d 582

234 S.C. 404

Mrs. Myron J. EDWARDS and Bank of Great Falls, Respondents, v. GREAT AMERICAN INSURANCE COMPANY, a foreign corporation, Appellant.

No. 17532.

Supreme Court of South Carolina.

May 12, 1959.

Charles W. McTeer, Chester, for appellant.

Hemphill & Hemphill, Chester, for respondent.

LEGGE, Justice.

On February 13, 1953, appellant issued its policy in the amount of $2,000, insuring against loss or damage by fire during the ensuing year a one-story frame tenant dwelling owned by the respondent Mrs. Edwards, the policy being payable to the respondent Bank of Great Falls, mortgagee, as its interest might appear. The agreed value of the dwelling, as stated therein, was $2,000. This policy was renewed annually, and in the renewal certificate for the year commencing February 13, 1956, there was added coverage of $500 on a barn, the agreed value of which was stated in the certificate to be $500. On July 12, 1956, both the dwelling and the barn were totally destroyed by fire. Respondents brought this action on the policy and obtained a verdict for $2,500. From the judgment entered thereon, and from the order refusing its motion for new trial, defendant appeals.

In its answer the defendant pleaded:

1. That the policy had become void because Mrs. Edwards had, without defendant's written permission, procured additional insurance on the property in excess of its agreed valuation, in violation of the following provisions of the policy:

'Other insurance may be prohibited or the amount of insurance may be limited by endorsement attached hereto.'

'Insurance on any building covered under this policy in excess of that fixed in the valuation clause is prohibited. If, during the term of this policy, the insured shall have any such insurance, whether collectible or not, and unless permitted by written endorsement added hereto, the insurance under this policy, insofar as it applies to the building(s) on which other insurance exists, shall be suspended and of no effect.'

2. That the defendant was ready and willing to pay to the respondent bank the amount of the mortgage obligation held by it, not exceeding the amount of defendant's liability under said policy, and to have the mortgage assigned to it in accordance with the following provision of the policy 'Whenever this Company shall pay the mortgagee (or trustee) any sum for loss under this policy and shall claim that, as to the mortgagor or owners, no liability therefor existed, this Company shall, to the extent of such payment, be thereupon legally subrogated to all the rights of the party to whom such payment shall be made, under all securities held as collateral to the mortgage debt, or may at its option pay to the mortgagee (or trustee) the whole principal due or to grow due on the mortgage with interest, and shall thereupon receive a full assignment and transfer of the mortgage and of all such other securities; but no subrogation shall impair the right of the mortgagee (or trustee) to recover the full amount of his, her or their claim.'

3. That if the policy involved in this action should not be held avoided because of additional insurance obtained by the plaintiff without having first obtained written permission from the defendant for said insurance, the defendant, under the terms of the policy and the statute law of South Carolina, can be held liable for only a proportionate amount of the insurance carried in the policy.

The exceptions charge error:

1. In admission of testimony that the plaintiff Mrs. Edwards had advised defendant's agent of other insurance on the property, such testimony not being responsive to any allegation of the complaint;

2. In refusal of appellant's motions for directed verdict and for new trial, upon the ground that the evidence was susceptible of no reasonable inference other than that the plaintiff Mrs. Edwards had violated the policy provisions by procuring other insurance without appellant's written permission;

3. In refusal of appellant's motion that the Bank of Great Falls have judgment for the amount due on its mortgage and that appellant be subrogated to the bank's rights in said mortgage; and

4. In refusal of appellant's motion for new trial upon the ground that under the statute (Code, 1952, Section 37-154) as charged by the trial judge the jury should have found against appellant for only such portion of the coverage under its policy as the amount of that policy bore to the total amount of the several policies on the property.

The policy in suit was issued under date February 13, 1953, through Great Falls Insurance Agency, of which Mr. J. G. Gambrell was President. Mr. Gambrell was also President of Bank of Great Falls, which held a mortgage of the insured premises dated February 14, 1952, securing Mrs. Edwards' note of that date to said bank in the amount of $1,500, payable February 14, 1953. No part of the principal of this note had been paid at the time of the trial of this case. Whether the property had been insured for the benefit of the mortgagee prior to February 13, 1953, is not revealed by the record. The policy in suit was signed by Mr. Gambrell for Great Falls Insurance Company, and contained the usual mortgagee clause providing that loss, if any, should be payable to Bank of Great Falls as its interest might appear.

Mr. Gambrell, a witness for the plaintiffs, testified that Bank of Great Falls also had another policy issued, on February 17, 1955, by Hanover Fire Insurance Company of New York, through Great Falls Insurance Agency, and deposited with the Bank of Great Falls, covering the same property against loss or damage by fire to the amount of $2,000 on the dwelling and $500 on the barn. In that policy, which was renewed on February 17, 1956, for the year following, the total insurance on the dwelling was stated to be $4,000; the value of the dwelling $4,000; the total insurance on the barn was stated to be $1,000; the value of the barn $1,000. That policy was signed by Mr. George S. Dominick, of Great Falls Insurance Agency. Mr. Gambrell testified that at the time of the fire he knew of no insurance on the property other than the two policies before referred to. He further testified that the reason for his bank's refusal to accept from appellant the amount of the mortgage debt and transfer the mortgage to appellant was that Mr. and Mrs. Edwards were indebted to the bank in addition to their mortgage obligation, 'and we had agreed among ourselves that the balance of that indebtedness would be taken care of our of the proceeds of the insurance.'

On November 9, 1954, Mr. Edwards, who handled for his wife the insurance of her property, procured, from Mullican Insurance Agency, of Great Falls, another policy of fire insurance on the property in question. That policy, issued by New Hampshire Fire Insurance Company, covered the dwelling for $2,000, the barn in question for $1,000, and another barn (with which we are not concerned) for $1,000. It was for a one-year term, and was renewed on November 9, 1955, for another year. It contained no mortgagee clause. Mr. Edwards testified on direct examination that his visit to Mullican Insurance Agency had really been for the purpose of getting insurance on some hay that he was about to put in the 'house'; and that Mr. Mullican had told him that he could not insure the hay, but that he would insure the house. Also, on direct examination:

'Q. How much insurance did you take out with him (Mullican) at that time? A. I took out about $4,000.00.

'Q. Now, did you inform anybody in the Great Falls Insurance Agency that you had taken out the additional insurance with Mullican? A. Yes, sir.

'Q. Who did you inform? A. A fellow working for the insurance agency. His name was Dominick. And also Mr....