Foster v. Illinois Travelers' Home Fire Ins. Co. of Chicago
Decision Date | 17 December 1927 |
Citation | 300 S.W. 7,156 Tenn. 436 |
Parties | FOSTER v. ILLINOIS TRAVELERS' HOME FIRE INS. CO. OF CHICAGO. [a1] |
Court | Tennessee Supreme Court |
Appeal from Chancery Court, Shelby County; D. W. De Haven Chancellor.
Bill by T. J. Foster against the Illinois Travelers' Home Fire Insurance Company of Chicago. Decree for defendant, and complainant appeals. Affirmed.
R. O Valley, of Memphis, for appellant.
Robt. Lee Bartels, of Memphis, for appellee.
On May 11, 1926, complainant, Foster, made a loan of $6,500 to Oliveri, which was secured by a deed of trust on a frame store building located on the corner of Lyceum and Grand Opera streets, near the city of Memphis.
About July 2, 1926, Foster applied to Cleveland & Hughes, insurance agents and brokers, in the city of Memphis, for insurance on said building, and on said day Hughes, accompanied by Foster made a personal inspection of said property. Foster disclosed to Hughes the true state of title to said property. Hughes advised Foster "that he was insured."
On July 5, 1926, Foster left for California.
Later the company in which Hughes had insured said property ordered the policy canceled. Thereupon Hughes called up Smith, local agent for the defendant company, and asked if he could place insurance upon said building. He was told that he could Smith agreeing to accept Hughes' inspection of the property, and requested that Hughes furnish him a description of the property. An erroneous description was furnished by some employee in Hughes' office, upon which the policy was issued to Foster covering a similar building owned by Oliveri in the middle of the block, and which was already covered by a policy issued by defendant. None of the agents or employees of defendant undertook to locate or inspect said building, but relied upon the inspection made by Hughes. The policy in question was for $3,000, was issued on July 24, 1926, and the premium of $90 was paid by Foster, who deposited the policy in his lock box without having read it. The building was destroyed by fire on October 28, 1926.
No written application for the insurance was made by Foster, and the policy was payable to him without disclosing the fact that he was only a mortgagee and not the owner. The purpose of the bill was to reform the policy with respect to the description of the property and to recover a decree for the face value thereof.
The bill was demurred to and the demurrer sustained and the bill dismissed.
The third ground of the demurrer is as follows:
It is generally held that stipulations of this character are reasonable and valid, and a breach thereof will avoid the policy. 26 C.J. 170, and cases cited in notes.
On page 171 of the same book, it is said:
By referring to the cases in the notes it will be seen that the decided weight of authority supports the rule, while the exception is sustained by the courts of Illinois, Indiana, Nebraska, and Washington. It seems that Illinois adopted the majority rule in Crikelair v. Citizens' Insurance Co., 168 Ill. 309, 48 N.E. 167, 61 Am. St. Rep. 119.
The purpose of the condition is thus stated in Phenix Ins. Co. v. Hilliard, 59 Fla. 590, 52 So. 799, 138 Am. St. Rep. 171:
"The just and reasonable purpose of insurance policies in requiring the insured to have the 'unconditional and sole ownership' of the property insured is to give protection to only those upon whom the loss insured against would inevitably fall but for the insurance, and to avoid taking risks for those whose lack of interest or whose contingent interest in the...
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