Georgia Home Insurance Co. v. Bennett

• Citation: 203 S.W. 279,134 Ark. 52
• Decision Date: 22 April 1918
• Docket Number: 314
• Parties: GEORGIA HOME INSURANCE COMPANY v. BENNETT
• Court: Supreme Court of Arkansas

203 S.W. 279

134 Ark. 52

GEORGIA HOME INSURANCE COMPANY v. BENNETT

No. 314

Supreme Court of Arkansas

April 22, 1918

Appeal from Clark Circuit Court; Geo. R. Haynie, Judge; affirmed.

Judgment affirmed.

Slade & Swift and McMillan & McMillan, for appellant.

1. The policy was void. Bennett was not the sole and unconditional owner. 116 Ga. 794; 77 Miss. 348; 86 Md. 130; 21 Fla. 399; 10 Cush. 446; 40 Me. 587; 6 Humph. 176; 27 U.S. 25; 28 Tex. Civ App. 409. There was also a change of title or interest. 94 Ark. 594; 10 Mich. 279; 1 Id. N. P. 118; 49 S.W 132. See also 72 Am. Dec. 705; 52 Am. Rep. 438; 85 Am. Dec 452; 11 Am. Rep. 741.

2. Hearsay testimony was admitted. 1 Greenl. Ev. (14 ed.) 135.

3. There is error in the instructions given and refused. Goodloe was plaintiff's agent. 76 Ark. 180; 127 Id. 141. He had power to cancel the policy waiving notice. 3 Cooley Briefs on Ins. 2819; 126 Mich. 626; 81 N.W. 568; 53 N.Y.S. 323; 24 Misc. 136; 82 N.Y.S. 140; 83 A.D. 436; 92 S.E. 858.

4. Goodloe and the local agent should have been made parties. There should only have been one trial. 114 Ark. 18; 95 Id. 597. Agents may be liable for losses to the principal from disregard of instructions. 137 U.S. 470; 22 L. R. A. (N. S.) 509; 142 Mass. 513; 104 Id. 152; 67 Neb. 282; 126 Ia. 274; 77 Conn. 559; 60 A. 293.

R. E. Stephenson of Hugo, Okla., W. E. Atkinson and Hardage & Wilson, for appellee.

1. The company had knowledge of appellant's title, and accepting the premiums was estopped. Bennett was really the sole owner, but he certainly had an insurable interest. 18 F. 250; 5 Wall. 512; 66 P. 249; 106 N.Y. 535; 27 N.Y. 163; 43 Id. 389; 62 Id. 47; Wood on Fire Ins. 503. This interest was made known to the company. 81 P. 1025; 88 Id. 245; 82 N.E. 1134; 21 Okla. 873. See also 72 Neb. 122; 74 N.W. 269, 270; 67 Id. 774; 62 Id. 857; 98 S.W. 693; 104 Id. 533; 66 P. 249, etc.; 55 S.W. 933.

2. There is no error in the instructions. 24 Okla. 425; 38 Kan. 482; 83 Ill. 241; 55 Ga. 633.

3. No improper evidence was admitted, but, if so, it was harmless. 81 U.S. 406; 88 Id. 105; 7 Ark. 542; 15 Id. 372; 23 Id. 535; 56 Id. 37; 13 S.W. 1098.

4. Goodloe was defendant's agent, not plaintiff's. He was not a necessary party, nor was the local agency. 30 Cal. 92.

STATEMENT OF FACTS.

On January 1, 1910, the Elk Horn Bank & Trust Company contracted to sell to T. J. Bennett and H. G. Bennett a certain house and lot for $ 5,800, upon which a cash payment was made and the balance of the purchase money was to be paid in 106 payments. It was provided in the contract of sale that when only $ 3,000 of the purchase money remained unpaid the bank would convey the property by warranty deed with lien reserved and this $ 3,000 was to be paid in annual payments of a thousand dollars each. Between the date of that contract and January 5, 1915, T. J. Bennett had Leslie Goodloe, manager of the United Fire Insurance Agency, to insure the house in the Aetna Insurance Company for $ 5,000. To that policy there was attached a mortgage clause in favor of the bank. On January 5, 1915, T. J. Bennett had Goodloe write the policy here sued on covering the house for $ 1,500 and the personal property therein for $ 500. Goodloe at the time knew that $ 3,000 of the purchase money was unpaid when this policy issued. The house and its contents were totally destroyed by fire on September 1, 1916, and judgment was recovered against the insurance company in the suit brought on the last mentioned policy. A reversal of this judgment is sought on the grounds that Bennett was not the sole and unconditional owner of the property contrary to the requirements of the policy that such should be the case, and also that the policy had been canceled prior to the fire.

The bank's contract to convey was made with T. J. Bennett and his son, H. G. Bennett; but an understanding existed between the father and the son that the deed should be taken in the name of the father alone and that the father should be the sole owner of the property. T. J. Bennett was practically blind and his son had removed to Oklahoma and had there secured permanent and profitable employment, and in 1910 or 1911 wrote his father that while he intended to assist in meeting the payments he expected to do so without thereby intending to acquire any interest in the property. This letter was destroyed in the fire, but both father and son testified to the fact that it was written.

When sufficient payments had been made to entitle Bennett and his son to a deed under their contract, Bennett wrote his son and a daughter named Lois that he had had a deed prepared by the bank to the three Bennetts. This deed recited the execution of notes by Bennett and his son for the unpaid purchase money, and the notes there mentioned were executed by the son, but in the letter to his father in which the notes were returned, there were also enclosed quitclaim deeds from the son and daughter to their father. The daughter had no interest in the transaction except such as resulted from the use of her name as a party grantee in the deed. Upon the receipt of these notes T. J. Bennett delivered them to the bank and on September 17, 1915, received the deed which named him and his son and daughter as grantees, but at the time of the delivery of this deed he had in his possession the quitclaim deeds from his son and daughter.

It is undisputed that the agent of the insurance company knew of this contract of purchase and knew that part of the purchase money had not been paid; but the company denies that its agent knew that any one was concerned in the transaction except T. J. Bennett alone and it says the policy was void because there was a change of ownership after its issuance and because T. J. Bennett was not the sole and unconditional owner, the policy imposing requirements in both these respects. It is also said that prejudicial error was committed at the trial when the court permitted T. J. Bennett to testify that he had received the letter from his son disclaiming any interest in the land and also in testifying that he had received the letter enclosing the quitclaim deeds; the basis of the objection being that this testimony was hearsay as the witness had not read the deeds and his knowledge in regard to them was based upon his recollection of what his wife had read to him. Bennett stated that he received the deeds through the mail with the accompanying letter and that his wife read them to him, and the deeds were also lost in the fire without having been recorded.

In March, 1916, the company directed Goodloe to cancel this policy and all other policies it had in force under his agency. This was not done, and on July 1 a special agent of the company was sent to Goodloe to have the policy here sued on and all other policies issued by that agency canceled, and at that time the agency of Goodloe and the United Fire Insurance Agency had been revoked and the company had withdrawn from Arkadelphia and vicinity and it had written no new business there after July 1, 1916. The policy sued on was taken up by Goodloe on July 24, 1916, and canceled and returned to the home office of the company as a canceled policy. Goodloe testified that after issuing the policy he placed it in a vault at the bank to which only representatives of the United Fire Insurance Agency had access. Goodloe also testified that Bennett had spoken to him a number of times in regard to keeping his property insured and had stated to witness that he was expecting witness to look after his interests in this respect. It is argued that this testimony constituted Goodloe the agent of Bennett to receive notice of cancellation of the policy and that the knowledge of Goodloe fulfilled the requirement of the policy that notice of an intention to cancel be given five days before the cancellation occurs. The testimony in regard to Goodloe's agency for Bennett is not undisputed, however, as it was shown by Goodloe's own testimony that he had considerable negotiation with Bennett about the issuance of this policy and only issued it at last when he received directions from Bennett to that effect. In that connection Goodloe testified that Bennett stated the cost of the building had been $ 8,500, but that he did not want any additional insurance written until some inspector of the company had stated that the property would carry additional insurance and that finally Bennett gave directions for writing the policy when Goodloe assured him that it would be satisfactory with the company to issue the additional policy without inspection. Other facts will be stated in the opinion.

OPINION

SMITH, J., (after stating the facts).

The requirements of the policy in regard to sole and unconditional ownership and change of ownership are, of course, valid and binding and are warranties, the breach of which would cancel the policy. But, inasmuch as they were inserted in the policy for the benefit of the company, they could be waived by the company, and will be held to have been waived if the agent who issued the policy had knowledge at the time that the insured's interest, which, of course must be an insurable one--was not sole and unconditional. Westchester Fire Ins. Co. v. Smith, 128 Ark. 92, 193 S.W. 275. But, if the testimony of Bennett and his son is credited, Bennett was the owner of the equitable title when he caused payments to be made on the purchase price in a sum sufficient to entitle him to a deed pursuant to the agreement with his son that such should be the effect of these payments. The only persons who could know whether such an agreement had been made were the father and the son, and they both so testified. We think no prejudicial error was committed in permitting Bennett to testify as to his...