Foster v. Scottish Union & National Insurance Co. Of Edinburgh

• Decision Date: 06 April 1920
• Docket Number: 16394
• Citation: Foster v. Scottish Union & National Insurance Co. Of Edinburgh, 127 N.E. 865, 101 Ohio St. 180 (Ohio 1920)
• Parties: Foster v. Scottish Union National Insurance Co. Of Edinburgy
• Court: Ohio Supreme Court

127 N.E. 865

101 Ohio St. 180

Foster v. Scottish Union National Insurance Co. Of Edinburgy

No. 16394

Supreme Court of Ohio

April 6, 1920

Fire insurance - Knowledge of agent imputed to company, when - Insured's title only leasehold - Fee simple policy issued - Waiver without endorsement - Change of possession Receiver in lease-forfeiture suit.

1. The knowledge of the agent of a fire insurance company as to the title by which property is held, with respect to which property the agent acting within the scope of his apparent authority procures the issuance of a policy of fire insurance, is imputed to his principal, and is in law the knowledge of such principal.

2. An insurance company is deemed to know matters pertinent to the insurability of property upon which it issues a policy of fire insurance, when such matters were in fact known to its agent at the time the latter procured the insurance.

3. As to such matters so known to such agent, the insurance company is deemed to have knowledge, notwithstanding a clause in the policy provides that "no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy except * * * by agree-ment endorsed hereon or added hereto."

4. A policy of fire insurance stipulating that it should be void "unless otherwise provided by agreement endorsed hereon or added hereto, * * * if the subject of insurance he a building on ground not owned by the insured in fee simple," is a valid obligation of the company issuing it, where the agent who caused the policy to be issued without endorsement had knowledge that the insured's title to the buildings covered was a leasehold estate only and tile insured was in fact ignorant of such provision in the policy until after a loss had occurred.

5. A provision in a policy of fire insurance that the policy "shall be void if any change * * * take place in the interest, title or possession of the subject of insurance whether by legal process or otherwise," is not breached by the mere appointment of a receiver to collect rents pendente lite in an action to declare a forfeiture of the leasehold interest of the insured, where such receiver is not, and the insured is, in actual physical possession of the property insured.

-

The parties stand in the same relation as in the trial court, and may therefore be referred to as plaintiff and defendant.

The original suit was upon two causes of action, the one seeking reformation of and the other recovery upon a policy of fire insurance, issued September 17, 1913, by defendant to the plaintiff, covering in the sum of $10,250 a certain building together with minor equipment, in the city of Cleveland.

A mortgage clause attached to the policy made a loss thereunder payable to The Union Savings & Loan Company, of Cleveland mortgagee of the property, but the mortgage was paid off prior to the fire by which the property was destroyed, March 28, 1916. The Union Savings & Loan Company had held the mortgage for twenty-five years before the issuance of the policy in suit, and through its former secretary had placed the insurance upon the building with defendant company. The latter therefore had carried the insurance upon the building for twenty-eight years, under policies of which the one in suit was a renewal.

Upon presentation of proofs of loss the defendant refused to recognize any obligation under the policy, other than to return the premiums paid, on the ground that plaintiff never had more than a leasehold interest in the ground on which the building stood by reason of which fact the policy was void under the following provision therein "This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void * * * if the subject of insurance be a building On ground not owned by the insured in fee simple."

The plaintiff's amended petition alleged the fact as to plaintiff's title, a leasehold, set forth the stipulation of the policy above quoted, and declared, "at the time that said agreement [to insure the property] was entered into and said policy prepared and delivered to plaintiff, the defendant well knew that said building, so intended to be insured, stood upon ground not owned in fee simple by the plaintiff." The amended petition further charged that the failure to add an appropriate endorsement to the policy was by mutual mistake and inadvertence not discovered by plaintiff until after the loss, by reason of the fact that the policy instead of being delivered direct to plaintiff was delivered to The Union Loan & Savings Co., which thereafter retained it in its exclusive possession.

The amended petition prayed that if the court deemed it necessary the policy should be reformed to conform with the actual agreement of the parties, and prayed further for judgment in the amount of the loss.

By its answer the defendant denied any agreement not contained in the policy, denied knowledge of plaintiff's title, or want of it, and denied any mistake in the writing of the policy. In a second defense this further stipulation of the policy is pleaded: " * * * no officer, agent, or other rep- resentative of this company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement endorsed hereon or added hereto, and as to such provisions and conditions no officer, agent, or representatives shall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, * * *"

A third defense alleged the plaintiff's loss of title, possession and control of the property by the appointment of a receiver therefor prior to the fire, and pleaded a further stipulation of the policy declaring the same void "if any change * * * take place in the interest, title, or possession of the subject of insurance."

A jury being waived, the case was tried to the court, which found against the plaintiff on the issue of reformation, but in favor of the plaintiff upon the legal issues.

The court of appeals reversed the latter finding of the common pleas, and entered judgment for the defendant, 'but, finding its own judgment in conflict with a judgment of the court of appeals of Portage county, certified the record to this court.

Messrs. Kline, Niman, Buss & Holliday, for plaintiff in error.

Mr. J. w. Mooney, Mr. A. M. Edmonds and Messrs. Orgill, Maschke & Mellen, for defendant in error.

MERRELL J. At the trial an issue of fact was raised as to whether one Grigor, claimed by the plaintiff to have been defendant's agent in obtaining and placing the insurance in question, was or was not such agent. It is conceded that Grigor knew the nature and extent of plaintiff's title before and at the time the policy was issued. The facts, so far as uncontroverted, are that Grigor at the time the policy was written was secretary of The Union Loan & Savings Company, which held a mortgage on plaintiff's property. At that time, and for some period before, Grigor held a license as agent for defendant company, issued at the latter's instance by the state insurance authorities. Agent's commissions for insurance effected upon property in which The Union Loan & Savings Company had a mortgage interest, the placing of which insurance that company in practice controlled, were nominally paid to Grigor as agent for the defendant company, and by Grigor turned over to the loan company. Grigor seems never to have written up or countersigned a policy in his company, the actual preparation of policies, including the one in suit, having been done by the insurance agency of The Leonard Parks Company, of the same city.

The ordinary course of such business was thus described by Grigor:

"The Leonard Parks Company each month would call us up and ask us for the renewals; they kept a schedule of the renewals that we had, and they would call us up and ask us which ones we still had loans on, and those we didn't have loans on they would see them themselves; the others they asked us if they were still in force, and they,, would write out the policies and send them to us.

Grigor did not recall having telephoned himself to The Leonard Parks Company with reference to the policy in suit, and the evidence tends to establish that another employe of The Union Loan & Savings Company actually did so. It is not claimed that this other employe, or The Leonard Parks Company, had any actual knowledge of plaintiff's title. It is therefore contended on behalf of defendant that Grigor had no part in the transaction concerning the insurance in question, and that his personal knowledge as to plaintiff's title could by no possibility and upon no theory be imputed to defendant company.

The point is well taken if the inference of fact is sound. Although there was no finding of facts by the trial court, its judgment implies of necessity a finding, first, as a matter of fact, that Grigor was the agent of defendant in placing this insurance, and, second, as a matter of law, that Grigor's knowledge of plaintiff's title is to be imputed to defendant.

This court cannot weigh conflicting evidence, and its sole province with respect to the issue of fact is to determine whether there was any evidence in support of the finding.

Such evidence appears clearly upon a glance at the situation viewed in its entirety. The defendant company obtained contracts of insurance upon the properties of the clients of The Union Loan & Savings Company by appointing an officer of the latter company its agent, thus securing to such officer or the loan company a sufficient financial in- ducement by way of agent's commissions. Grigor's agency was the procuring cause...