Glens Falls Ins. Co. v. Elliott

• Decision Date: 07 February 1928
• Citation: 223 Ky. 205,3 S.W.2d 219
• Parties: GLENS FALLS INS. CO. v. ELLIOTT et al. and three other cases.
• Court: Kentucky Court of Appeals

3 S.W.2d 219

223 Ky. 205

GLENS FALLS INS. CO. v. ELLIOTT et al. and three other cases.

Court of Appeals of Kentucky

February 7, 1928

Rehearing Denied March 23, 1928.

Appeal from Circuit Court, Pike County.

Actions by W. K. Elliott and others, a partnership under the name of the Bent Branch Lumber Company, against the Glens Falls Insurance Company, the National Fire Insurance Company, the Granite State Fire Insurance Company, and the Sun Insurance Office. Judgment for plaintiffs, and defendants appeal. Affirmed.

Hite H Huffaker, of Louisville, J. R. Johnson, of Pikeville, and Kirk, Kirk & Wells, of Paintsville, for appellants.

Moore &amp Childers and O. A. Stump, all of Pikeville, for appellees.

HOBSON C.

W. K Elliott, etc., a partnership, owned and operated a sawmill and lumber yard in Pike county under the name of the Bent Branch Lumber Company. They took out policies of insurance on the lumber. The lumber burned, and they brought these actions against the insurance companies on the policies. The companies defended the actions on the ground that it was a condition of the insurance that a continuous clear space of not less than 100 feet or 200 feet should at all times be maintained between the lumber and the mill. On the trial, it appeared that six or seven thousand feet of green stuff, consisting of railroad ties and the like were piled within about 70 feet of the mill at the time of the fire. Appellees insisted that this pile of ties, etc., was properly there under a clause in the policies, in substance as follows:

"This shall not be construed to prohibit loading or unloading within or the transportation of timber products across such clear space."

On a trial of the case in the circuit court, plaintiffs recovered. On appeal to this court, the judgment was reversed, the court holding the pile of green lumber a violation of the condition of the contract. Concluding its opinion, the court said:

"No question of waiver or estoppel being presented, it follows that appellants were each entitled to a peremptory instruction." Glens Falls Insurance Co. v. W. K. Elliott, 218 Ky. 327, 291 S.W. 705.

On the return of the cases to the circuit court, the plaintiffs filed an amended reply and also an amended petition, pleading that the companies, by their agents, came upon the premises and saw how the business was done, saw the pile of ties, and issued the policies with full notice that the pile of ties was maintained as it was, and with like knowledge afterwards collected the premium on the policies with full notice of all the facts, and so waived this provision of the policies; the cases were tried again; the jury found for the plaintiffs; the defendants appeal.

The proof for the plaintiffs shows that the agents of all four companies came to the mill. They took a tape line and measured from the mill to the stacks of lumber. They found one stack a little within a hundred feet. They directed this to be set back, and this was done. They passed right by the pile of ties and made no objection to it. One of them objected to the hood around the smokestack, and this was fixed as directed by him. They accepted the risk when these changes were made. The business was afterwards carried on just as it was then. The premium was collected some time later. These were not mere soliciting agents. They were resident agents, who issued the policies, collected the premiums, and were the only representatives of the company that the insurer knew anything about. The testimony of the agents contradicted in some respects the testimony for the plaintiffs, but on the whole case the weight of the evidence is with the plaintiffs. The chief ground for reversal relied on is that a peremptory instruction should have been given the jury to find for the defendants. In 32 C.J. p. 1343, § 618, the rule is thus stated:

"The issuance of the policy by the company is, according to the generally accepted rule, a waiver of a known ground of invalidity, and equivalent to an assertion that the policy is valid at the time, although the facts known to the company would, under the express terms of the agreement, render it void or voidable, at least where the acts of insured are not fraudulent or insured does not know that the agent has exceeded his authority."

To same effect, see 14 R. C. L. pp. 1155-1158.

A number of Kentucky cases are cited in the notes which fully sustain the texts, and, although there is some conflict of authority on the subject, the weight of authority is with the Kentucky rule. If one of two innocent parties must suffer the principal, whose agent was acting within the apparent scope of his authority, should bear the loss rather than an innocent third person who dealt with the agent as the representative of the principal. This is peculiarly true of insurance matters, for the reason that they involve technical terms, and the average insured knows very...