Gerringer v. North Carolina Home Ins. Co.

• Decision Date: 17 November 1903
• Citation: 45 S.E. 773,133 N.C. 407
• Parties: GERRINGER et al. v. NORTH CAROLINA HOME INS. CO.
• Court: North Carolina Supreme Court

45 S.E. 773

133 N.C. 407

GERRINGER et al. v. NORTH CAROLINA HOME INS. CO.

Supreme Court of North Carolina

November 17, 1903

Appeal from Superior Court, Alamance County; O. H. Allen, Judge.

Action by C. D. Gerringer and others against the North Carolina Home Insurance Company. From a judgment for defendant, plaintiffs appeal. Reversed.

Denial of liability by insurer dispenses with the necessity of insured filing proof of loss.

Parker & Parker, for appellants.

Scales Taylor & Scales and Chas. M. Stedman, for appellee.

CONNOR J.

This is an action on an insurance policy issued by defendant company to the plaintiff Chas. D. Gerringer, "loss, if any payable to John H. Gerringer and the assured as their interests may appear." The policy is in the form prescribed by the insurance law of the state, known as the "Standard Fire Insurance Policy." It was shown by competent testimony that the lot upon which the dwelling house covered by the policy was located was conveyed to plaintiff Chas. D. Gerringer by N. L. Gerringer by deed duly proven, but not recorded until after the fire. Chas. D Gerringer executed two mortgages on said property, which were duly recorded. Joshua Gerringer, a witness for the plaintiff testified that Charles D. was his son. That he left home, and for several months witness did not know where he was. In March and February, 1902, witness represented him. That the house was insured, and witness had found policy among his son's papers. Mr. Albright was agent of the defendant company. The mortgagees demanded their money. John H. Gerringer, an uncle of Chas. D., furnished the amount, $260, with which to pay the mortgage debts, and they were assigned to the witness. Witness got N. L. Gerringer to execute a deed to John H. Gerringer to secure payment, and he gave to witness a bond obligating himself to convey to him the property upon payment of the amount advanced. This deed was recorded March 21, 1902, and on same day the bond was executed. Witness on same day notified the agent how the matter had been arranged; told him all about the arrangement; and he, the agent, wrote across the policy, "Loss, if any, in absence of C. D. Gerringer, to be paid to J. H. Gerringer," and signed it. During the month of June, 1902, Albright came to witness while at work in cornfield, and brought the policy sued on, and said it was just like the other policy, asking witness to take it in place of and surrender the first policy, which witness did, paying the small amount which Albright said was due on the premium. Albright said that it was all right. This was after witness had told him about condition of the title to the property. The house was built on the lot after the first deed was made, costing about $1,500. It was burned July 22, 1902. Witness in the entire transaction was acting for his son, Chas. D. Gerringer. He had a conversation with Albright two or three weeks after the fire. Albright said that Chas. D. Gerringer had the house insured when he had no title to the property. Witness told him that he had the deed, and asked him what the company was going to do. Albright said that he had sent a man to investigate, and did not know what the company would do. Witness had other conversations with Albright--a "half a dozen or more"--in which he said that he hoped they would get the matter adjusted. About two months prior to the bringing of this action in April, 1903, Albright told witness that he understood the company would not pay the loss. J. H. Gerringer testified for the plaintiff that immediately after the fire he had notice written and sent to Albright, notifying him of the fire. In about a week he saw Albright, who said that he had received the notice, and sent it to the company; that he had not heard from it, but would write again. No proof of loss was ever filed. His honor, upon the foregoing evidence, sustained a demurrer, and the plaintiff excepted, and from a judgment dismissing the action appealed.

The appellant contends that Chas. D. Gerringer had an insurable, equitable interest in the property, and that, the condition of the title being known to the agent of the defendant, his knowledge was the knowledge of the company. The case comes clearly within the principle announced by this court in Grabbs v. Insurance Co., 125 N.C. 389, 34 S.E. 503, in which Douglas, J., says, "Having thus an equitable, if not a legal, title to the land, they had an insurable interest therein." The opinion is amply sustained by the authorities cited. We do not think it necessary to do more than cite with approval the unanimous opinion of the court in that case. There can be no question that as J. H. Gerringer was, in the entire transaction, acting for his son, the status of the title to the lot is the same as if the son in his own proper person had conducted the negotiation. Joshua Gerringer holds the legal title in trust, first, to secure the amount advanced by him to pay the mortgage debts, and then to convey to J. H. Gerringer, who would hold in trust for Chas. D. Gerringer. This vests in both Chas. D. and Joshua an insurable interest. If the jury believe the evidence, and find that these facts were known by the agent of the company, it will not be permitted to deny its liability on the contract. We cite with approval the language of Mr. Justice Douglas in Grabbs v. Insurance Co., supra: "We think the rule is well settled that where an insurance company--life or fire--issues a policy with full knowledge of existing facts, which by its terms would work a forfeiture of the policy, the insurer must be held to have waived all such conditions at least to the extent of its knowledge, actual or constructive. It cannot be permitted to knowingly issue a worthless policy upon a valuable consideration. An implied waiver is in the nature of an estoppel in pais, which might well be enforced by any court of equity under such circumstances." It would seem that common fairness would demand that upon a full, frank disclosure of the condition of the title to the property made to the agent of the company at the time of or before the issuing of the policy, and as the basis therefor, the agent should inform the applicant that he had no insurable interest, if such was the case, or, in default thereof, bind his principal to perform its contractual obligations. This is nothing more than the application to the contract of insurance of the well-settled elementary principle that, if one fails to speak when it is his duty, he shall not thereafter be permitted to do so for the purpose of avoiding a liability assumed at the time of such failure. If there be any concealment or fraudulent representation of material facts by the insured, the same principle relieves the insurer from liability. The contract of insurance must be the result of fair, honest disclosures of all facts material to the risk assumed. These principles are recognized and enforced by all of the courts, both state and federal. That notice to the agent of all matters affecting the risk is notice to the company is well settled by abundant authority. Horton v. Ins. Co., 122 N.C. 499, 29 S.E. 944, 65 Am. St. Rep. 717.

The defendant, however, says that by the terms of the policy it was the duty of the insured within 60 days after the fire to file proofs of loss, and that a failure to do so constitutes a complete defense to this action. The plaintiff contends first, that by a proper construction of the language of the policy the failure to file proofs of loss within 60 days does not work a forfeiture of the policy; and, second, that, if it should be held to do so, such requirement was waived by the action of the agent. This contention presents to this court for the first time the question as to what effect a failure to file proofs of loss within 60 days will have upon the right of the insured to enforce the payment of the policy. It will be observed that in certain respects and upon certain contingencies the policy is declared to be void, whereas in other respects the assured assumes the discharge of certain duties; for instance, "this entire contract shall be void if the insured has concealed or misrepresented," etc. Again, "this entire policy, unless otherwise provided, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance," etc. "If fire occur, the insured shall give immediate notice of any loss thereof in writing to this company, protect the property from further damage, etc., and within 60 days after the fire, unless such time is extended in writing by this company, shall render a statement to this company," etc. "The insured, as often as required, shall exhibit to any persons designated by this company all that remains of any property herein described," etc. "No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity until after full compliance by the insured with all the foregoing requirements, nor unless commenced within twelve months next after the fire." This court has uniformly held that, where it is expressly provided that the policy upon certain contingencies shall be void, effect will be given to such language. Hayes v. Insurance Co., 132 N.C. 702, 44 N.E. 404; Briggs v. Insurance Co., 88 N.C. 141; Sossamon v. Ins. Co., 78 N.C. 145; Sugg v. Ins. Co., 98 N.C. 143, 3 S.E. 732. Mr. Ostrander, in his work on Fire Insurance (section 223), says: "The requirement that the proof of loss shall be furnished within a stated time is not in the form of a condition or of an express warranty. Failure to comply will not prevent a recovery under the policy." A distinction is made between...