Gibson's Tri-State Wholesale, Inc. v. Scottish Union & Nat. Ins. Co.
| Decision Date | 02 January 1963 |
| Docket Number | No. 9834,TRI-STATE,9834 |
| Citation | 149 So.2d 123 |
| Court | Court of Appeal of Louisiana — District of US |
| Parties | GIBSON'SWHOLESALE, INC., Plaintiff-Appellant, v. SCOTTISH UNION & NATIONAL INSURANCE COMPANY et al., Defendants-Appellees. |
Hayes, Harkey & Smith, Monroe, for appellant.
Lemle & Kelleher, New Orleans, for Scottish Union Nat. Ins. Co.
Davenport, Farr & Kelly, Monroe, for James C. Fortner.
Before GLADNEY, AYRES and BOLIN, JJ.
This suit was instituted by plaintiff, Gibson's Tri-State Wholesale, Inc., to recover upon a policy providing insurance for fire and extended coverage issued on November 1, 1959 by the defendant, Scottish Union & National Insurance Company, through James Fortner, its local agent. James Fortner was named as a co-defendant. After issue was joined the case was tried on its merits with the question of liability involving two principal issues, the first being whether the policy was in effect at the time of a fire which caused plaintiff's business a severe loss on July 11, 1960, and the second, assuming the policy to be effective at the time of the fire, being whether the insured violated the provisions of the 'iron safe clause' and thereby forfeited its right of recovery. The trial judge did not pass on the first issue, but rested his decision upon the second issue, holding that plaintiff violated the provisions of the 'iron safe clause' and such violation was a bar to recovery under the policy. Accordingly, plaintiff's demands were rejected in toto and it has lodged an appeal in this court.
During the latter part of 1959 plaintiff established a mercantile business in West Monroe, and on November 1, 1959, caused James Fortner to issue to it two fire and extended coverage insurance policies, each providing for a maximum liability of $42,500.00. Coverage was granted by Scottish Union & National Insurance Company and by the Birmingham Fire & Marine Insurance Company. This suit is only concerned with the policy issued by the defendant company. The policy in question contained a 'value reporting clause' which required the insured to report in writing to the company not later than thirty days after the last day of each calendar month, the exact locations covered thereunder, the total cash value at each location, and all specific insurance in force at each of such locations on the last day of each calendar month.
George S. Kausler, Ltd. of New Orleans, the general agent for Scottish Union & National Insurance Company, on December 1, 1959, sent James Fortner a telegram notifying him that his agency was suspended and advising him not to commit the company to further liability 'in any form or under any condition'. During the trial Fortner testified he did not remember receiving the telegram but that he did know that his employment as local agent for the company was terminated.
In February 1960, James Fortner ceased operating as a local insurance agent, withdrew from the insurance exchange in Monroe, and began working for the Indiana Lumbermen's Mutual Insurance Company as a full time fieldman or state agent. Fortner no longer had authority to solicit business and execute policies for the Scottish union & National Insurance Company but he continued to collect premiums on insurance policies which he had previously sold, and in the case of plaintiff's policy, he continued to secure periodic inventory reports. Fortner apparently obtained six reports from Alton Howard, the directing head of plaintiff corporation, which Fortner mailed to the insurance company's general agency in New Orleans. George S. Kausler, Ltd., however, became concerned about the delinquency of these reports and the obvious inaccuracy of the values represented and sent two letters to Fortner, dated June 2 and June 21, 1960, in which it complained about the reports and threatened to cancel the policy with plaintiff unless accurate reports were received promptly. Fortner telephoned Howard and conveyed to him the company's concern about the reports and Howard immediately gave Fortner information which was mailed to the company within two or three days from receipt of the last letter. On June 24, 1960, the general agents for Scottish Union & National Insurance Company mailed to plaintiff a notice of cancellation of the policy. In this notice, on a line which states, 'per * * * agent,' the following appears: 'Jim Fortner Insurance Agency, George S. Kausler, Limited--General Agents.' This notice provided that at the expiration of five days from its receipt the policy would terminate and cease to be in force. Alton Howard testified this notice was probably received by his office Saturday, June 25th, but that he did not read it until Monday. Howard telephoned Fortner, who was out of town at that date but returned the call on Friday, July 1st. Fortner testified that he received no notice of the cancellation of Howard's policy, did not recall that Howard mentioned to him that he had received a notice of cancellation, and that he, Fortner, assumed Howard was inquiring about the periodic reports. Fortner assured Howard his policy was still in effect.
On July 11, 1960, a fire destroyed substantial quantities of the merchandise in plaintiff's West Monroe store. Plaintiff made demand upon Scottish Union & National Insurance Company for payment under the policy and the insurance company denied liability, contending that the policy was no longer in effect. The present litigation resulted.
It is the contention of plaintiff that the effect of the cancellation notice was waived by Fortner, who was apparently the agent of the insurer at the time, and, alternatively, plaintiff asserts that if Fortner was not, in fact, the agent of the insurer at the time of the waiver, then he was its apparent agent clothed with apparent authority to represent it, and for this reason the Scottish Union & National Insurance Company is estopped to deny his agency.
The principal defense tendered by the defendant is that the insured violated the 'iron safe clause' as contained in the policy. The judge a quo, Barham, predicated his opinion upon plaintiff's failure to comply with the requirements of the 'iron safe clause', and denied recovery to plaintiff. After a careful examination, his opinion meets with our full approval and we adopt with approval the following reasons advanced by the court:
'The Scottish Union and National Insurance Company policy sued upon herein by plaintiff contains a standard iron safe clause which provides as follows:
'Both defendants have alleged that plaintiff violated the 'iron safe clause' in the following particulars:
'As to the contention that no inventory is required, it is well settled law within this State and fairly generally followed throughout the United States, that an inventory must have been taken within a twelve-month period preceding the issuance of the insurance policy or within (30) thirty days after the issuance of the policy if no previous inventory within the twelve calendar months has been made.
'In the suit of Lucille Ladies' Ready-to-Wear, Inc. v. Glens Falls Ins. Co., 168 La. 696, 123 So. 295 (1929) in the Supreme Court, the plaintiff had opened a business in the month of August. The policy was issued on the 13th day of August and the fire occurred nearly five months afterward on the 10th of February. No inventory was taken before the date of the policy nor within thirty days after the issuance of the policy. In that case, however, a complete inventory answering requirements of the policy contract was made on October 22nd, more than two months after the issuance of the policy. And further, in that case, it was admitted that the loss was greater than the total amount of insurance. But Chief Justice O'Niell found:
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Gibson's Tri-State Wholesale, Inc. v. Scottish Union and National Insurance Co.
...Gibson's Tri-State Wholesale, Inc., applying for certiorari or writ of review to the Court of Appeal, Second Circuit, Parish of Ouachita. 149 So.2d 123. Writ refused. On the facts found by the Court of Appeal, there is no error of law in its ...