Hight v. Maryland Ins. Co.

Decision Date03 July 1943
Docket Number8581.
CourtSouth Dakota Supreme Court

Bailey, Voorhees, Woods & Bottum and M. T Woods, all of Sioux Falls, for appellant.

H F. Fellows, of Rapid City, and H. P. Gilchrist, of Kadoka for respondent.


This as an action commenced in Jackson County to recover for a loss by fire on a South Dakota standard valued fire insurance policy the full amount of $1,000 covering a one and one-half story shingle and composition roof, frame building occupied as a general merchandise store and cream station on Lots 17 and 18 in block 5 of the Town of Interior, S.D. The action was tried in the circuit court. Findings of fact and conclusions of law were in favor of plaintiff and against defendant for the full amount claimed, together with interest and $100 attorneys' fees. Defendant has appealed from the judgment.

Appellant contends that the policy was void because the subject of insurance was a building on ground not owned by the insured in fee simple; that the express terms of the policy could not be varied by parol evidence as to transactions had with the soliciting agent, even though a letter had been written to the general agency before issuance of the policy, and that there could not be a recovery of any more than the amount of plaintiff's interest in the property which would be limited to the amount paid for tax sale certificates thereon. It would appear from the record that at the time respondent made application for insurance, the interest of the insured was not unconditional and that he was not the sole and fee simple title owner of the property to be insured.

Respondent claims that at the time the application for insurance was made, he communicated all the facts concerning the title to the appellant, who therefore had full knowledge and thereafter issued the policy. The letter to the general agency sheds some light concerning the title and reads:

"December 31, 1940.
"Regan General Agency
"Sioux Falls, S Dak
"Dear Sirs:

"Mr. Frank Hight, of Interior, has bought an assignment of taxes from Jackson County covering the buildings located on Lots 17 and 18, Block 5, O. T. Interior. The party in whose name this property is, is an Old Age Assistant client and arrangements are being made by the Social Welfare Board of the State for them to release their interests in the matter.

"Mr. Hight will also obtain a quit claim deed from the original owner of the property.

"In the meantime, he would like his interests protected in the amount of $1000.00 covering fire and extended coverage. He would like to have the coverage date from December 30, 1940.

"It is Mr. Hight's intention, when he gets this title cleared up, to cancel the present policy and rewrite for five years.

"Thanking you for immediate attention to this matter I am yours truly, E. W. Reeves."

The trial court found that the property was totally destroyed by fire and that the respondent owned and held an interest therein. We insert the following findings which we deem of value as a factual statement:

"V. At the time of the application for and issuance of the policy of fire insurance described in the complaint herein, the plaintiff was in exclusive, peaceable and valid possession of Lots 17 and 18 of Block 5 of the Town of Interior, Jackson County, South Dakota, upon which the structure covered by the insurance herein was located; and he then owned and held two certain valid tax sales certificates duly issued by the County Treasurer of Jackson County, South Dakota, upon the sale of said property for the non-payment of taxes by the then fee owners of said property; that plaintiff had paid for such tax sale certificates the sum of $390.93; and that they were purchased by him pursuant to an oral agreement with L. A. Johnson, whose wife was the owner of a one-half interest in the property.

"VI. That at the time of the application for and issuance of such policy of insurance, plaintiff had an oral, pending and uncompleted contract with L. A. Johnson, whose wife was one of the joint owners of said property, for the sale to plaintiff of said Johnson's entire interest in said property; and that a part of the consideration was the purchase by plaintiff of the outstanding tax sale certificates thereon; and at said time plaintiff had made a due bid, which had been accepted, for the purchase of the balance of the interest of said property from the estate of Jennie Johnson, deceased, whose estate was then being probated in Jackson County, South Dakota, but that such sale had then not been reported, confirmed or consummated.

"VII. That neither the said oral contract for purchase of a portion of said property nor the purchase of the balance of the interest therein from the estate of Jennie Johnson had been consummated by reason of the fact that certain social security liens upon said property had not been compromised or settled, although negotiations for the compromise or settlement of them were actively pending at all times since July or August, 1940."

An examination of the policy and the various indorsements by way of printed forms attached thereto does not disclose any agreement in writing in the policy, itself, or in attached forms, changing the terms and provisions of the policy so as to permit insurance upon the building on ground not owned by the insured in fee simple.

We are mindful of the line of authorities which hold that no stipulations and conditions, changes or waivers may be made in the provisions of a standard policy unless in writing and attached to the policy. This court has and does recognize that rule of law in cases wherein the changes in stipulations or agreements occurred after the issuance of the policy and not prior thereto. In Lummel v. National Fire Insurance Co., 50 S.D. 502, 210 N.W. 739, 741, we had occasion to deal with facts pertaining to incumbrances on property existing before and at the time the policy was issued and said:

"*** This court has definitely adopted the rule that, where the general agent of the insurer knows at the time of the application that the property is subject to a chattel mortgage, the insurer is estopped from asserting the invalidity of the policy under a stipulation that the policy should be void if the property should be incumbered. ***

"These cases cite abundant authority for the rule adopted, and establish the law of this state to be that, when an agent vested with authority to solicit insurance, accept...

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