Fidelity-Phoenix Fire Ins. Co. v. Hyden

• Decision Date: 13 November 1928
• Citation: 10 S.W.2d 829,226 Ky. 246
• Parties: FIDELITY-PH×NIX FIRE INS. CO. v. HYDEN.
• Court: Kentucky Court of Appeals

10 S.W.2d 829

226 Ky. 246

FIDELITY-PH×NIX FIRE INS. CO. v. HYDEN.

Court of Appeals of Kentucky

November 13, 1928

Appeal from Circuit Court, Pulaski County.

Action by Bate Hyden against the Fidelity-Phoenix Fire Insurance Company. From a judgment for plaintiff, defendant appeals. Affirmed.

Thomas Logan, and Rees, JJ., dissenting.

W. B Morrow, of Somerset, and T. M. Galphin, Jr., and Gordon &amp Laurent, all of Louisville, for appellant.

Kennedy & Jones, of Somerset, for appellee.

WILLIS, J.

Bate Hyden owned and operated a general store in Pulaski county. He insured the stock of goods for $1,000 and the furniture and fixtures for $250 in a single policy issued by the Fidelity-Ph nix Fire Insurance Company. The property was totally destroyed by fire while the policy was in force. The company declined to pay the loss, and this action was instituted to recover the full amount of the insurance. The defense was rested on the ground that the inventory and iron-safe clause of the policy had been violated by the assured. That clause in the policy in question was as follows:

"It is made a condition of this insurance: (1) that the assured under this policy shall take an inventory of the stock and other personal property hereby insured at least once every twelve months during the term of this policy, and unless such inventory has been taken within one year prior to the date of this policy, one shall be taken in detail within thirty (30) days thereafter; (2) that the assured shall keep a set of books showing a complete record of business transacted, including all purchases and sales both for cash and credit; (3) that the assured shall keep such books and inventory securely locked in a fireproof safe at night and at all times when the store mentioned in the within policy is not actually open for business, or in some secure place not exposed to a fire which would destroy the building where such business is carried on; (4) that in case of loss the assured shall produce such books and last inventory."

The circuit court sustained a demurrer to the answer, and, upon refusal of the defendant to plead further, rendered judgment for the plaintiff for the total amount of the insurance specified in the contract. The insurance company appeals. The sole question presented is whether the court erred in sustaining the demurrer to the defense interposed. Appellant concedes that the ruling of the lower court was in accord with a long line of cases decided by this court. Ph nix Ins. Co. v. Angel, 38 S.W. 1067, 18 Ky. Law Rep. 1034; Sun Mutual Ins. Co. v. Crist, 39 S.W. 837, 19 Ky. Law Rep. 305; Citizens' Ins. Co. v. Crist, 56 S.W. 658, 22 Ky. Law Rep. 47; Niagara Fire Ins. Co. v. Heflin, 60 S.W. 393, 22 Ky. Law Rep. 1212; Mechanics & Traders Ins. Co. v. Floyd, 49 S.W. 543, 20 Ky. Law Rep. 1538; Germania Ins. Co. v. Ashby, 112 Ky. 303, 65 S.W. 611, 23 Ky. Law Rep. 1564, 99 Am. St. Rep. 295; Springfield Fire & Marine Ins. Co. v. Shapoff, 179 Ky. 813, 201 S.W. 1116; London Guarantee & Accident Co. v. Massman, 214 Ky. 688, 283 S.W. 1051.

It is insisted, however, that these cases were rested upon unsound principles and should be definitely overruled. The same insistence was made and met in the Massman Case, supra, where this court said in substance that, after business has been conducted and contracts made in reliance upon decisions, it is too late to establish a new rule, and this court ought not to disregard decisions which define a rule of property when the considerations impelling it are not overwhelming. The Legislature for many years has acquiesced in the rule announced and applied, although that body could change it without affecting current contracts. If this court should change the law, it would defeat many contracts now valid, deprive persons of protection for which they have paid, and relieve the insurance companies of risks they have incurred. Insurance is a voluntary business, and no insurance company is required to insure property unless it is satisfied with the conditions under which the insured property is kept. Persons desiring insurance are not hurt, as they may readily provide the conditions which will enable them to obtain and keep it. The considerations entering into the matter have been ably presented and fully considered, and we are persuaded that the decisions on the point should not be disturbed. We are admonished by a long line of authority that caution should govern our steps, and a course of decision well understood and long followed should not be departed from unless required by the imperious demands of justice. Tribble v. Taul, 7 T. B. Mon. 456; Home Ins. Co. v. Smither, 199 Ky. 344, 251 S.W. 169.

No such demand is presented by the complaint of the decisions in question. It is probable that all fire insurance now in force in this state has been written since the decisions now criticized were announced, and the question should, after such a history, be regarded as at rest. If relief from the operation of the rule is desired, the application should be addressed to the General Assembly.

The judgment is affirmed.

Whole court sitting.

THOMAS, REES, and LOGAN, JJ., dissenting.

THOMAS J. (dissenting).

I find myself so much out of harmony with the opinion of the majority members of the court that I feel impelled to not only dissent from it, but also to as briefly as possible register my reasons therefor. The reason for such disagreement on my part grows out of a desire, and what I also conceive to be my duty, to strive to make the opinions of this court to not only harmonize with the great body of the declared law upon any given subject, but also that they be supported by reason and logic, and that they should never be rested upon an unfounded ipse dixit of the judge writing the opinion or upon pure dictum of a prior opinion.

The doctrine of the majority opinion was first promulgated by this court in the case of Ph nix Insurance Co. of Brooklyn v. Angel, 38 S.W. 1067, 18 Ky. Law Rep. 1034, wherein it was said in the opinion that what is commonly termed the iron-safe clause in insurance policies was "without consideration." Not a case was cited in support of that statement, and I am confident that no amount of industry on the part of counsel in that case, or on the part of the writer of that opinion, would have discovered any authority to sustain it. In point of fact, as I shall later endeavor to show, every court of last resort in the Union, and every textwriter upon the subject, are of one accord that such promissory warranties in insurance policies are not only valid, but that they are also supported by the same consideration that passes between the parties for all other obligations and promises that they each assume and make under the terms of the insurance contract. I cite no cases in support of that statement in this dissenting opinion, because the wide search that I have made in this, and other recent cases coming before this court involving the same question, has convinced me that no court has ever held to the contrary. Moreover, the ipse dixit, to which I have referred, was unnecessary in that particular case, since it appeared that the provision with reference to the "iron-safe clause" was waived by the agent who issued the policy, because he knew at the time of delivering it that the insured had no iron safe, and which a respectable number of courts hold is sufficient to constitute a waiver on the part of the company, if the particular agent had authority to make it.

For some considerable time insurance policies provided for no substitute action in lieu of the required iron safes, but latterly there has been added to that clause, in policies containing them, these words, "or in some secure place not exposed to a fire which would destroy the building where such business is carried on," and which requirement, like the provision for the iron safe, is for the purpose of securing the preservation of the books containing the required inventories "at night and at all times when the store mentioned in the within policy is not actually open for business." In other words, the requirement in more modern policies is simply one to preserve the evidence of the value of the property insured and to prevent it from being destroyed by the same fire that destroyed the property. That promissory warranty may be complied with, either by providing an iron safe and keeping the evidence therein at night and when the store is not open for business, or by removing the evidence to another building that would not be exposed to a fire that destroyed the insured one, and the courts everywhere have exacted no more than a substantial compliance with such provisions. With the policy in the Angel Case providing for no substitute method of preservation other than the keeping of an iron safe, and with knowledge on the part of the agent that the insured had none at the time the policy was issued and delivered, it might well have been said that the provision was waived, instead of tearing it out of the policy upon the ground that it was "without consideration," and it was in effect so held in that opinion.

That opinion was followed by the cases of Sun Mutual Insurance Co. v. Crist, 39 S.W. 837, 19 Ky. Law Rep. 305, and Citizens' Insurance Co. v. Crist, 56 S.W. 658 22 Ky. Law Rep. 47. In the first one the court does not refer to or mention the Angel Case, but plants its decision upon the conclusion that the promissory warranty contained in the iron-safe clause was included in and governed by the provisions of section 639 of our present statutes, enacted in 1874, with reference to statements contained in an application for a policy of insurance, and which this and other courts now hold has no reference to promissory warranties contained in...