Graham v. Standard Fire Ins. Co.

• Decision Date: 26 April 1922
• Docket Number: 10880.
• Parties: GRAHAM v. STANDARD FIRE INS. CO.
• Court: South Carolina Supreme Court

112 S.E. 88

119 S.C. 218

GRAHAM v. STANDARD FIRE INS. CO.

No. 10880.

Supreme Court of South Carolina

April 26, 1922

Appeal from Common Pleas Circuit Court of Anderson County; George E Prince, Judge.

Action by A. K. Graham against the Standard Fire Insurance Company. From judgment for plaintiff, defendant appeals. Affirmed.

Cothran J., dissenting.

Greene & Earle, of Anderson, for appellant.

Bonham & Allen, of Anderson, for respondent.

FRASER J.

This is an action on a policy insuring an automobile. The automobile was burned, and the company refused to pay. The evidence, or so much as is proper, will be given under the decision of the various assignments of error. The judgment was for the plaintiff.

I. There was a motion made for a directed verdict; this was refused. His honor could not have directed a verdict. There were three provisions in the policy for forfeiture:

(a) The insured must be sole and unconditional owner.

(b) The property insured must not be under mortgage.

(c) The property insured must not be used in public service.

There was evidence undisputed that there was a mortgage on the machine, but there was also evidence that the agent of the defendant knew it was under mortgage. The car had been used as a public service car, but had been withdrawn from public service before the fire. There was evidence from which the jury might have inferred that the person who wrote the policy for the defendant knew this fact also--that the car was bought to be used in public service before the policy was issued. See Gandy v. Ins. Co., 52 S.C. 224, 29 S.E. 655. The defendant claimed that the policy was void ab initio, and although the premium had been paid, yet the record does not show any offer to return the premium. There was also evidence that Mr. Johnson, who wrote the policy, gave the plaintiff proofs of loss and told him to make them out and the claim would be paid.

It is true that the adjuster told the plaintiff that the company denied obligation, and it would do no good to put in a proof of loss, and this the plaintiff admitted, but said the local agent told him to put in the proof of loss, and it would be paid. The appellant claims that agency had been revoked, and the plaintiff did not show that the local agent was agent at the time. This overlooks the fact that the local agent was agent at the time the policy was issued, and, the relation once having been proven, it is presumed to have continued until there is proof of a change. The defendant's witness said he did not know when the relationship had ended. A verdict could not have been directed.

II. The second assignment of error is that his honor charged the jury that the provision as to public service has no application if they believed that the car was not in public service at the time of the loss. The appellant in argument assigns reasons for the forfeiture, stating that a car on account of accumulation of oil in the machinery would be more liable to burn. If the policy had excluded cars that had been used in public service, then the point would be well taken. The forfeiture is manifestly for the increased perils incident to public service. The provision as to chattel mortgages clearly refers to the perils of an intentional burning, while covered by a chattel mortgage. This assignment of error cannot be sustained.

III. As to sole and unconditional ownership: The record does not show that the chattel mortgage was due. The policy was taken out only a day or two after the purchase, and, if it was due, the record should have shown it.

IV. The next assignments of error are that his honor charged on the facts when he said:

(a) "Where they knew the plaintiff was using his car in a manner not permitted by the terms of the policy, it wouldn't do for them to keep quiet, say nothing, keep the plaintiff's money, and not let him know they would forfeit his policy."

This is not a charge on the facts. The word "where" is used in the sense of "if." That is, where they know, or in a case where they know.

(b) Again: "Did the company know it, or did its agent know it? Knowledge of the agent is knowledge of the company. If you are satisfied it did, make the company pay. And if you are satisfied that the public service business had nothing to do with causing the loss, why let the company pay." This is also said to be a charge on the facts. This is not a charge on the facts, and the judgment is affirmed.

GARY, C.J., and WATTS, J., concur.

COTHRAN J. (dissenting).

Action upon a fire insurance policy issued April 26, 1920, for $1,000, upon an automobile, destroyed by fire, January 18, 1921, during the term covered by the policy. The insurance company denied liability upon the ground that the policy had been forfeited for three reasons: (1) That the insured was not the sole and unconditional owner of the car; (2) that the car was subject to the lien of a chattel mortgage given by the insured; (3) that "during the term of the policy" the insured had used the car in public service. All three of these grounds are admitted by the insured to have existed; the policy shows that each is made a ground of forfeiture.

The insured seeks to avoid forfeiture on the ground of knowledge on the part of the agent of the company of the facts claimed by the company to constitute a forfeiture, and a consequent waiver thereof by the company; and also upon the ground that the company had not returned the unearned premium.

As to sole and unconditional ownership: I do not understand that there is any claim by the company that the insured was not the sole and unconditional owner of the car, except in so far as his title was affected by the chattel mortgage placed upon it by him.

It seems to be assumed in the leading opinion that, notwithstanding the execution of the mortgage, the mortgagor retained the legal title to the car until default occurred in the payment of the obligation secured by the mortgage. The expression is quite common, that upon breach of the condition of a chattel mortgage (that is upon nonpayment of the debt at maturity), the title to the mortgaged property vest in the mortgagee. This is an inaccurate statement of the law. At common law the title to mortgaged property, real or personal, vested in the mortgagee immediately upon the execution of the mortgage the right of possession remaining in the mortgagor until condition broken. By the act of 1797 (section 3460, vol. 1, Code of Laws, A. D. 1912) this rule was abrogated so far as real estate mortgages were concerned, the act declaring that as to them the mortgagor shall be deemed still the owner of the legal title and the mortgagee the owner of the debt collectible by foreclosure. There is no similar statute in reference to chattel mortgages, and therefore the common-law rule as to them remains undisturbed. Immediately upon the execution of a chattel mortgage the title vests in the mortgagee, the right to possession remaining in the mortgagor until condition broken. Upon breach of the condition the mortgagee, already having the legal title, unites with it the right to possession. A more accurate expression of the law therefore is that upon breach of condition the right of possession (not the title which had therefore vested) vests in the mortgagee.

There can therefore be no question but that at the time the policy was issued the insured was not the sole and unconditional owner of the property; and that that fact, prima facie, constituted a forfeiture under the terms of the policy.

The evidence claimed by the insured as tending to show a waiver of this ground of forfeiture is as follows: The plaintiff testifies that at the time the insurance was written the insurance agent asked him if there were any papers upon it; that he told him that he had bought the car from Shelor, paid him $500 on it, and was to pay $50 per month until it was paid for; that he had given a mortgage to Shelor to secure the unpaid portion of the purchase money. This was ample testimony to require the submission of the issue of waiver to the jury, and certainly as to this ground of forfeiture the defendant was not entitled to a directed verdict.

As to the existence of a chattel mortgage upon the car: The plaintiff testifies that he bought the car from George Shelor, on April 26, 1920, and gave him a mortgage upon the car to secure the purchase price; that the mortgage has not been satisfied. The policy was issued on the same day, necessarily after the trade had been consummated. The fire occurred on January 18, 1921. It is a settled fact, therefore, that the property insured was at the time of the fire incumbered with a mortgage, and that that fact, prima facie, constituted a forfeiture under the terms of the policy. The evidence referred to under the preceding subdivision applies equally and with like effect to this ground. Certainly as to it, the defendant was not entitled to a directed verdict.

As to the use of the car in public service: The plaintiff testifies that he took out a public service license, and commenced using the car in such service, in October, 1920; that he used it continuously up to Christmas; that he took out a new public service license for the car for the year 1921; his memory fails him as to whether or not he used it in public service between Christmas and the date of the fire January 18, 1921. It is admitted therefore that the insured violated his express warranty that he would not use the car in public service "during the term of this policy."

The plaintiff takes two positions in reference to this ground of forfeiture: (1) That the agent of the company was aware of the fact that he was engaged in public service after the policy was issued, and that that constituted a waiver of the forfeiture; (2)...