Ferguson v. Phoenix Assur. Co. of New York

• Decision Date: 07 April 1962
• Docket Number: No. 42568,42568
• Citation: Ferguson v. Phoenix Assur. Co. of New York, 189 Kan. 459, 370 P.2d 379, 99 A.L.R.2d 118 (Kan. 1962)
• Parties: , 99 A.L.R.2d 118 Forrest D. FERGUSON, Appellee, v. PHOENIX ASSURANCE COMPANY OF NEW YORK, Appellant.
• Court: Kansas Supreme Court

Page 379

370 P.2d 379

189 Kan. 459, 99 A.L.R.2d 118

Forrest D. FERGUSON, Appellee, v.PHOENIX ASSURANCE COMPANY OF NEW YORK, Appellant.

No. 42568.

Supreme Court of Kansas.

April 7, 1962.

Syllabus by the Court

1.A policy of burglary insurance stipulating that felonious entry be made into the safe by actual force and violence, 'of which force and violence there are visible marks made by tools, * * * upon the exterior of (a) all * * * doors of * * * such safe,' is interpreted to impose a rule of evidence upon the assured, and the assertion by the insurance carrier of the evidentiary requirement that there be visible marks of force and violence on the exterior of the outer door to the safe (opened by manipulating the combination lock thereon), when entry into the safe was gained by actual force and violence of which there were visible marks on the exterior of the inner door to the safe, is held to contravene the public policy of this state, all as more particularly set forth in the opinion.

2.If the parties to an insurance contract adopt a provision which contravenes no principle of public policy and contains no element of ambiguity, the courts have no right by a process of interpretation to relieve one of them from disadvantageous terms which he has actually made.Upon this principle the insurance carrier has a perfect right, if it sees fit, to require proof even of so-called evidentiary facts as an indispensable basis for recovery, and the only inquiry can be whether the parties have assented to the incorporation in their agreement of a provision which clearly calls for such evidentiary proof.

3.It is no longer subject to question that insurance is vitally affected with the public interest.

4.Where a rule of evidence is imposed by a provision in an insurance policy, the assertion of such rule by the insurance carrier, beyond the reasonable requirements necessary to prevent fraudulent claims against it in proof of the substantive conditions imposed by the policy, contravenes the public policy of this state.This becomes apparent when the statement of the rule of evidence in the policy itself, or its assertion by the insurance carrier, is designed to prevent recovery on an obviously justifiable claim.

Jack C. Lorenz, Council Grove, argued the cause, and Marlin Brown, Council Grove, and George V. Allen, Lawrence, were with him on the briefs, for appellant.

David H. Heilman, Council Grove, argued the cause and was on the briefs for appellee.

SCHROEDER, Justice.

This is an action against an insurance company on a Storekeepers Burglary and Robbery Policy for loss of money by safe burglary.The question presented on appeal is whether the loss is covered by the provisions of the policy.

The facts have been stipulated and are not in controversy.The plaintiff, Forrest D. Ferguson(appellee), was insured under a 'Storekeepers Burglary and Robbery Policy' issued by the Phoenix Assurance Company of New York (defendant-appellant).He operated the Rexall drug store in Council Grove, Kansas.During the night of March 8, 1960, the insured's place of business was broken into by forcing the front door open, as evidenced by tool marks.As a result of the burglary there was actual damage to the premises in the amount of $70; narcotics were taken from a storage drawer from within the premises of the value of $32.59; and money was taken from within the safe in the sum of $433.76.

Before the case was tried the insurance company confessed judgment in the amount of $152.59.This comprised the $70, the $32.59, and $50 for the loss of money from within the safe.The only amount in dispute is the remaining $383.76 taken from the safe.

The safe used in the drug store herein had two doors, the outer one was locked by means of a combination lock and the inner one by means of a key.Both doors to the safe were locked.In gaining access to the safe the outer door was opened by manipulating he combination thereof, and the inner door was opened by punching out the lock.There were no visible marks upon the exterior of the outer door of the safe to show the use of force or violence in gaining access through this door, but the inner door did disclose marks of force and violence upon its exterior, evidencing the use of tools in gaining access.

The policy of insurance entitled 'Storekeepers Burglary and Robbery Policy' limited liability to $1,000 under each of the seven 'INSURING AGREEMENTS.'Among them is the following:

'IV.Burglary; Safe Burglary

'To pay for loss by safe burglary of money, securities and merchandise within the premises and for loss, not exceeding $50, by burglary of money and securities within the premises.'

The policy in chronological sequence then listed the 'EXCLUSIONS.'The only one having any bearing upon this case reads:

'This policy does not apply:

'(a) to loss due to any fraudulent, dishonest or criminal act by any insured, a partner therein, or an officer, employee, director, trustee or authorized representative thereof, [while working or otherwise and] whether acting alone or in collusion with others; provided, this exclusion does not apply to [kidnapping,] safe burglary or robbery or attempt thereat by other than an insured or a partner therein;'

This exclusion was amended by an attached rider to include the words set forth in the brackets.

The policy then set forth the 'CONDITIONS' among which was: '1.Definitions * * * (j) Safe Burglary.'The definition of the term 'Safe Burglary,' however, was amended by a rider attached to the policy.The amended definition, which is substantially identical to the original, reads:

"Safe Burglary' means (1) the felonious abstraction of insured property from within a vault or safe, the door of which is equipped with a combination lock, located within the premises by a person making felonious entry into such vault or such safe and any vault containing the safe, when all doors thereof are duly closed and locked by all combination locks thereon, provided such entry shall be made by actual force and violence, of which force and violence there are visible marks made by tools, explosives, electricity or chemicals upon the exterior of (a) all of said doors of such value or such safe and any vault containing the safe, if entry is made through such doors, or (b) the top, bottom or walls of such vault or such safe and any vault containing the safe through which entry is made, if not made through such doors, or (2) the felonious abstraction of such safe from within the premises.'(Emphasis added.)

The trial court said there was no question but that a burglary occurred, the money was taken, and the insurance was carried for that particular purpose.It held the provision relied upon by the insurer was 'an escape clause' and allowed full recovery under the policy for the money taken from the safe.Judgment was entered for $536.35, as requested in the petition, plus $300 for attorney fees to be assessed as costs against the insurance company.(G.S.1959 Supp., 40-256.)

Appeal has been duly perfected by the insurance company presenting as the only dispute the construction of the insurance policy in question as it relates to safe burglary.

A study of the policy discloses that if the appellee is entitled to recover the loss must fall within provision No. IV. of the 'INSURING AGREEMENTS.'

The appellant in its answer and at the pretrial of the case denied any liability under the policy for the money taken from the safe.However, just prior to trial the appellant amended its answer and confessed judgment for a sum which included $50 under the second provision of Insuring Agreement No. IV.--payment for money taken by burglary within the premises.This, the appellant contends, is the only ambiguous provision in the policy, and the question has been resolved in favor of the insured by the company prior to trial.

The appellant contends the definition of safe burglary in the policy is clear and unambiguous.It says, since entry was made to the safe in question through the doors thereof, and there were no visible marks of force and violence made by tools, explosives, electricity or chemicals upon the exterior of the outer door through which entry was made, the loss was not insured under the plain meaning of the policy.

The appellant argues if the appellee is demanding payment for a loss that was clearly excluded in the contract, then appellee is requesting coverage for which no consideration or premium was paid.

The appellee contends the appellant's interpretation of safe burglary within the terms of the policy is not applicable and is illogical and contrary to the public policy of this state.It is argued the appellee is entitled to recover for the loss as a result of the burglary of his safe, when the facts are that the inner door of the safe was locked by a key and the safe entered by force and violence of which there were visible marks on the exterior of such inner door.

The appellee argues if the insurance company did not intend to pay for loss of money by safe burglary under the facts in this case, it should have had another item under its 'Exclusions,' stating in substance 'that the company will not pay for any loss if a combination to a safe has been worked by manipulation.'(See the policy provisions in Prothro v. Com. Cas. Ins. Co., [1942], 200 S.C. 432, 21 S.E.2d 1;andGeneral Acc. Fire & Life Assurance Corp. v. Heller, [1953], 127 Colo. 64, 253 P.2d 966.)

It is a generally accepted rule that insurance policies are to be construed in favor of the insured and against the company.This rule, however, is to be invoked only where there exists rational grounds for construction of the policy.That is, the contract must contain provisions or language of doubtful, ambiguous or conflicting meaning, as gathered from a natural interpretation of its language.(Knouse v. Equitable Life Ins. Co., 163 Kan. 213, 181 P.2d 310;Sebal v. Columbian Nat. Life Ins. Co., 144...