Fireman's Fund Ins. Co. of San Francisco v. Standridge, s. 38721

• Decision Date: 04 April 1961
• Docket Number: Nos. 38721,No. 2,38722,s. 38721,2
• Citation: 119 S.E.2d 585,103 Ga.App. 442
• Parties: FIREMAN'S FUND INSURANCE COMPANY OF SAN FRANCISCO v. Annie F. STANDRIDGE. CONTINENTAL INSURANCE COMPANY OF NEW YORK v. Annie F. STANDRIDGE
• Court: Georgia Court of Appeals

Page 585

119 S.E.2d 585

103 Ga.App. 442

FIREMAN'S FUND INSURANCE COMPANY OF SAN FRANCISCO v. Annie F. STANDRIDGE.

CONTINENTAL INSURANCE COMPANY OF NEW YORK v. Annie F. STANDRIDGE.

Nos. 38721, 38722.

Court of Appeals of Georgia, Division No. 2.

April 4, 1961.

Syllabus by the Court

1. A policy of fire insurance containing a provision that it shall be suspended if the insured shall have other insurance on the same property, unless permitted by the insurer under proper endorsement, will not operate to void the policy where a subsequent policy of insurance on the same property issued by another company was not issued to the insured but to another, and without the knowledge or consent of the insured.

2. A provision in a policy of insurance that 'no waiver of any provision shall be valid unless granted therein or expressed in writing added hereto' does not relate to conditions affecting the validity of the policy and known to the insurer prior to issuance thereof, but is only applicable to the power of an agent to waive policy provisions after the inception of the contract and before loss occurs.

3. An insurer may, however, be estopped from relying upon such provision, even after the inception of the contract, where an agent authorized by the insurer to add policy endorsements covering 'other insurance', and who has access to the policy of insurance for this purpose, and upon whose promise the insured relies and acts, fails to make the indorsement through mistake, oversight, or neglect. This is especially true where the insured left all details of procuring additional insurance to the discretion of the agent, and such agent, being the agent of both companies and with authority from both of them to make and enter such indorsements, chose to place the insurance with a second company and failed through oversight to complete the proper indorsements on either policy.

4. The evidence in this case being undisputed, and questions of law only being involved, errors in the charge of the court favorable to the party entitled to recover as a matter of law are in any event harmless.

5. The questions of law involved in this case being intricate and difficult of solution, both defendants had a right to contest the payment of the claims because of the 'other insurance' provisions of the policies. The plaintiff showed no such bad faith on the part of the defendants as would entitle her to penalties and attorney fees.

6. Where an insurer refuses to pay a claim of the insured after loss occurs, but nevertheless recognizes the incontestability of the mortgagee provision of the policy and pays its pro rata share of the loss to the loan deed holder, takes an assignment of the note and loan deed and becomes subrogated to the rights of the original holder, and where thereafter the insured in an action at law recovers a judgment against the insurer for the full policy amount, the legal effect of such judgment is that each party has a complete defense against any action by the other to recover that sum represented by the payment of the insurer to the mortgagee. Direction is accordingly given in accordance with the stipulation of the plaintiff that upon surrender to her of such notes and loan deed, she write off from each judgment the amount paid by the defendant therein to the holder of the security instruments.

The plaintiff, Mrs. Annie F. Standridge, was the owner of a farm house in Jefferson County which was destroyed by fire on September 27, 1959, on which the defendant in each of these cases had issued a policy of fire insurance containing a mortgagee clause payable to Northeastern Banking Co. to the extent of its loan deed against the property. The undisputed evidence reveals that at the time of the loan, and presumably at the bank's instance, the plaintiff instructed R. M. Davidson, executive vice president of the bank and also owner of a local insurance agency to procure insurance. Mr. Davidson wrote and had issued in 1955, a five-year policy with the defendant Fireman's Fund Insurance Co. in the amount of $1,000. In 1959 the coverage was increased by proper indorsement. Mr. Davidson also in 1959, wrote and had issued with the defendant Continental Insurance Co. a five-year policy of fire insurance for $3,000. Later that year another insurance salesman approached the plaintiff's husband, who, after discussing the matter with his wife, authorized a $2,000 policy to be placed on the furniture only, but this salesman had issued by Cotton States Mutual Insurance Co. a policy of $2,000 on the house, payable to the plaintiff's husband. This policy was sent to Northeastern Banking Co., and came to the attention of Mr. Davidson in his capacity of vice president of that institution, but was never delivered to the plaintiff and her husband. The combined coverage of the three policies was less than the value of the destroyed house. By agreement among themselves the debt to the bank was paid off, Cotton States paying approximately one half of the $4,400 indebtedness; Continental Casualty one third and Fireman's Fund one sixth. The two defendants took an assignment of the bank's notes and loan deed against the property, and both defendants refused to pay the remaining proceeds of the policy to the plaintiff. The plaintiff's actions against each defendant, based on the respective policies of insurance, were consolidated for trial and resulted in verdicts in her favor. Each defendant has filed a motion for a new trial based on the general and various special grounds and a motion for judgment notwithstanding the verdict. The overruling of these motions is assigned as error.

H. A. Stephens, Jr., Smith, Field, Ringel, Martin & Carr, Atlanta, for plaintiffs in error.

John A. Darsey, Commerce, Davis & Davidson, Jefferson, for defendant in error.

TOWNSEND, Presiding Judge.

1. Each policy contained the following provision: 'Unless otherwise provided in writing added hereto, other insurance covering any building which is covered under this policy is prohibited. If, during the term of this policy, the insured shall have any such other 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.'

This provision did not void the insurance of either defendant on the ground that insurance was subsequently issued as to the same property by Cotton States Mutual for two reasons. The undisputed evidence on the trial was that the plaintiff was the owner of the house and did not authorize further insurance to be issued covering the house, although she did authorize insurance covering the furniture. Further, the Cotton States Mutual policy was not a contract between the plaintiff and the insurance company, but was a contract between her husband and that company. The forfeiture provision in the defendants' policies provides only that if the insured shall have other insurance the policy will be suspended. The Cotton States Mutual policy therefore has no relevancy to the defense in this case, based on the refusal to pay on the part of each defendant on the ground that the insured, at the time of loss, had other insurance on the building destroyed by the fire.

2. Each of the defendants' policies also contained the following provision: 'No permission affecting this insurance shall exist, or waiver of any provision be valid unless granted herein or expressed in writing added hereto.' The plaintiff contends that the defendants are estopped to rely upon this provision of the policy because of the following undisputed facts: The plaintiff at no time authorized Mr. Davidson, who was engaged in a general insurance business, to take out additional insurance with another company or requested such insurance but merely stated that more coverage was needed. Davidson testified that he personally decided to place the additional insurance with Continental Casualty because he considered it more liberal in regard to farm property; that he was chargeable with the knowledge that such other insurance, in the absence of written waiver or endorsement, would void the policy, but he simply did not realize those provisions were in the policies; that as to each company he was the local agent, that this authority included the writing of fire insurance policies, the authority and obligation to make appropriate indorsements upon such policies, to cancel policies, to accept premiums, and to countersign policies as agents. He further testified that his office would have placed an indorsement upon the policy permitting the insurance if they had thought it necessary, that the decision to divide the insurance between two companies was his own; that if he had realized these two policies were prejudiced there would have been some action taken, that 'you hate to admit you got your hand in the cooky jar but I reckon that is right.'

It is important to note at the outset that Code § 56-830 (prior to Ga.L.1960, p. 289) was apparently in effect at all times when the various opinions hereinafter discussed were issued.

One of the very first cases to consider the effect of the 'other insurance' clause as applied to facts similar to the one in the instant case is Carrugi v. Atlantic Fire Ins. Co., 40 Ga. 135, in which the court held that an authorized agent's consent to the insured to procure additional fire insurance upon his property operated as a waiver of the insurance company's provision against other insurance. However, when the insurance company added to their policies a clause against waiver unless there is a written indorsement, the courts have held the insured strictly bound by such provision. Western Assurance Co. v. Williams, 94 Ga. 128, 21 S.E. 370; Morris v. Orient Ins. Co., 106 Ga. 472, 33 S.E. 430. The effect of these holdings sharply restricted the holding of the Carrugi case, supra. In...