Fore v. United States Fire Ins. Co.

• Decision Date: 10 July 1922
• Docket Number: 22726
• Citation: 92 So. 628,129 Miss. 497
• Court: Mississippi Supreme Court
• Parties: FORE v. UNITED STATES FIRE INS. CO

92 So. 628

129 Miss. 497

FORE v. UNITED STATES FIRE INS. CO

No. 22726

Supreme Court of Mississippi

July 10, 1922

1 INSURANCE. Failure to cancel does not waive breach.

On the receipt of information by an agent of insurer who is authorized to issue and to cancel policies of insurance that one of the provisions of a policy issued by him, a violation of which renders the policy void, has been violated, he is not called on to either cancel the policy or return the unearned premium until requested so to do, in the absence of a provision in the policy so requiring, and in the absence of any affirmative act by him in recognition of the continued existence of the policy or that would mislead the insured into believing that he intended to waive the forfeiture, the insurer may plead the breach of the condition as a defense to liability when sued on the policy.

2 INSURANCE. Insured may plead breach of condition avoiding policy without tendering unearned premium in absence of provision to contrary.

When sued on an insurance policy the insurer may plead the breach of a condition in the policy which avoids it without tendering the unearned portion of the premium with his plea in absence of a provision in the policy requiring the unearned portion of the premium to be returned by the insurer before the forfeiture becomes effective.

HON. W H. POTTER, Judge.

APPEAL from circuit court of Madison county, HON. W. H. POTTER Judge.

Action by O. R. Fore against the United States Fire Insurance Company. From judgment for defendant, plaintiff appeals. Affirmed.

Affirmed.

Robert Powell and R. S. Powell, for appellant.

In the Western Insurance Co. v. Ashby (Ind. App.), 102 N. E., 45, the court says: "Where the policy upon which suit was instituted provided that it should be void if the insured obtained further insurance and there was a breach of this provision, the court held that the evidence showed knowledge of the breach before the loss occurred and the lower court was warranted in finding a waiver saying: "The doctrine is well established in this state that the provision in such policy rendering it void upon certain conditions, means voidable at the option of the insured; and that to render it void, upon discovery of the facts by which liability may be avoided, it must act with reasonable promptness, must notify the insured of its election to avoid the policy, tender back, or in some appropriate way restore or offer to restore the unearned premium received, and upon failure so to do be deemed to have waived the right to so declare the policy void, and to have elected to treat it as a valid contract of insurance. A like result was reached in the case of State L. & Ins. Co. v. Jones, 48 Ind.App. 186, 92 N.E. 879.'"

In Shutts v. Milwaukee Mechanics Insurance, 159 Mo.App. 436, 141 S.W. 15, the court held the change of location of the insured property without the insurer's consent was held merely to render the contract voidable and the insurer's right to declare a forfeiture are held to have been waived, where after knowledge of the removal by its agent, it retained the premium and remained silent until a loss occurred.

So where a policy stipulates that it should become void if the property is subsequently incumbered, it has been held that the provision is waived and a policy continued in force where the insurer, before loss, has notice of the breach of the condition but fails to cancel the policy. See Kelly v. Peoples National Ins. Co., 104 N.E. 188, and so in Hollstron v. Forrest City Ins. Co., 168 Ill.App. 214, it was held where the policy provided that if any incumbrances were executed on the insured property or any change of title take place, the contract would be void; a breach of this condition by the insured in mortgaging the property was held to be waived where the insurer's agent had notice of the fact before loss, but took no action to avoid the policy. To the same effect is the case of Metropolitan Life Ins. Co. v. Johnson, 49 Ind.App. 233, 94 N.E. 785, 11 Am. & Eng. Ency. of Law, p. 342, sec. 7, and numerous cases cited thereunder. Also page 336, sec. 2, 67 Kansas, page 71, Amer. State Reports, page 382.

Our own supreme court has in effect held that the breach of an insurance policy does not render it void but only voidable. See Insurance Co. of North America v. Daniel W. Pitts, 88 Miss. 587, in which this court says: "If a house be occupied, at the time it is burned, an insurance company cannot escape liability because of a provision that its policy was to be void should the house become vacant and remain unoccupied for ten days, although it became vacant and remained unoccupied for ten days during the life of the policy."

"ADDITIONAL INSURANCE CLAUSE MAY BE WAIVED: A PAROL WAIVER AND BY ASSENT. We have conclusively shown that there can be a parol waiver or the company may be estopped from claiming non-liability under a policy because the waiver of the terms is not endorsed on the policy as it requires. Now let us see if this applies to the additional insurance clause. The Mississippi Supreme Court has said:

In Insurance Co. v. Sheffy, 71 Miss. 925: "It has formerly been held, that not only notice of the other insurance, prior or subsequent, must be given, but also that it must be indorsed upon the policy when so provided therein. But the tendency of the courts laterly is towards a more liberal construction in favor of the assured, and there is now no question but that oral notice and an oral assent, or acts amounting to an assent, without an indorsement upon the policy, is sufficient." See, also, Insurance Co. v. Smith, 117 Miss. 338. Following the same line of thought as expressed by our court, we find that Mr. Cooley in his Briefs of Insurance Law, Vol. 3, page 2665 (so.) says: "The weight of authority supports the proposition that an insurance company waives or is estopped to assert a violation of the terms of an insurance contract if the company, on being notified of the violation, remains silent and fails to object or to declare a forfeiture, or cancel or rescind the contract, within a reasonable time," and see Vol. III, page 2666, for mass of supporting authorities. Also 51 L. R. A. (N. S.) p. 262, note and numerous cases cited.

This idea is the only just and equitable one, and the one that this court will adopt in order that full and exact justice may be done to all. The idea presented by the defendant cannot possibly be adopted for in substance they say, you must release us from liability because our contract said so. It does not matter that by our actions we restrain this plaintiff from adequately protecting his property. Surely so unjust a plea will not be sustained, but rather will the idea be adopted that was advanced by the Alabama court in Alabama State Mutual Insurance Co. v. Long Clothing & Shoe Co., 123 Ala. 667, 26 So. 658. See, also, Phenix Insurance Co. v. Groves, 215 Ill. 299, 74 N.E. 142; Swedish Am. Insurance v. Knutson, 67 Kan. 71, 72 P. 526.

Retention of premiums after notice of additional insurance, is a waiver of breach. Miss. Home Insurance Co. v. Dobbins, 81 Miss. 627, 631. In the first of the above cases, the court quotes Joyce on Insurance, Vol. 3, sec. 2486, and makes part of its opinion the following, to-wit: "If the policy provides that it shall be void in case of other insurance upon the property, unless notice has been given and the company's consent be compelled to return the premium for the remainder of the term which the policy would have to run, unless the policy provides that the insurer may cancel upon returning the premium for the unexpired term. In such case the insurer must either cancel the policy and return the premium, or else the policy will continue in full force and effect."

The policy in the case at bar contained such a clause. Robers v. Homes Ins. Co., 155 Mo.App. 276, 136 S.W. 743; Swedish American Ins. Co. v. Knutson, 67 Kan. 71, 100 Am. St. Rep. 382, 72 P. 526.

Under the Nebraska decisions, the fact of vacancy does not, per se, annul the policy, but merely gives to the company the right to treat it as void. On notice of the vacancy, it may decline to take advantage of the forfeiture, and in that event the policy will remain in force. Home Fire Ins. Co. v. Kuhlman, 58 N.E. 488, 76 Ann St. Rep. 111, 78 N.W. 936; Slobodisky v. Phenix Ins. Co., 52 Neb. 395, 72 N.W. 483. But it is at most, only voidable.

Due notice being established, a waiver was held, the only inference properly to be deduced from the fact that the company, for more than ten months after notice of additional insurance, made no attempt to cancel its policy. Phenix Ins. Co. v. Holcombe, 57 Neb. 622, 73 Am. St. Rep. 532, 78 N.W. 300.

Where a policy provided that if a premium was not paid at maturity, the company should have the right to cancel the policy, and at its option, might revive it after full payment of the principal, interest, and charges had been paid, it was held that affirmative action was necessary to constitute a forfeiture, and where the policy was not cancelled until after loss, the right to cancel was waived. Western Horse & Cattle Ins. Co. v. Scheilde, 18 Neb. 495, 24 N.W. 620, 25 L. R. A. (N. S.) .

In Appleton Iron Co. v. British American Assur. Co., 46 Wis. 23, 1 N.W. 9, 50 N.W. 1100, it is said to be well settled in Wisconsin that forfeiture because of change of title, the policy becomes voidable and at the election of the insurance company, not void, and that an insurance company cannot sleep upon its intent to avoid the, policy to the prejudice of the insured. That the forfeiture may be waived by the laches of the insurance company misleading persons interested in the policy, to their prejudice. Phenix Ins. Co. v. Boyer, 1 Ind.App. 329, 27 N.E 628. If the...