Home Ins. Co. of New York v. Campbell Motor Co.

• Decision Date: 12 October 1933
• Docket Number: 7 Div. 205.
• Citation: 150 So. 486,227 Ala. 499
• Parties: HOME INS. CO. OF NEW YORK v. CAMPBELL MOTOR CO.
• Court: Alabama Supreme Court

150 So. 486

227 Ala. 499

HOME INS. CO. OF NEW YORK v. CAMPBELL MOTOR CO.

7 Div. 205.

Supreme Court of Alabama

October 12, 1933

Rehearing Denied Nov. 9, 1933.

Appeal from Circuit Court, Talladega County; R. B. Carr, Judge.

Action on a policy of automobile fire insurance by the Campbell Motor Company against the Home Insurance Company of New York. From a judgment for plaintiff, defendant appeals.

Transferred from Court of Appeals.

Reversed and remanded.

Lange Simpson & Brantley, of Birmingham, for appellant.

Knox Dixon, Sims & Dixon, of Talladega, for appellee.

KNIGHT Justice.

Suit by Campbell Motor Company against the Home Insurance Company of New York, upon an insurance policy issued to H. A. Nelson and the Universal Credit Company. It appears that Nelson was the purchaser of a certain described truck, under a conditional sale contract executed to the seller, the Campbell Motor Company, and that the said Universal Credit Company was the assignee or transferee of this contract. The contract of insurance, among other things, covered loss by fire.

The complaint is in Code form for suit on a policy of fire insurance, with the added averments:

"And the plaintiff alleges that it is the sole party in interest under said policy, having purchased the mortgage of the Universal Credit Company mentioned in said policy, and having also acquired and had assigned to it all the right, title and interest of said H. A. Nelson, or Howard A. Nelson, the assured under said policy; and plaintiff alleges the said Universal Credit Company and said H. A. Nelson, since said fire loss have, for a valuable consideration, assigned to it all their right, title and interest in and to said automobile and in and to said policy of insurance sued on; and plaintiff is the sole party in interest under said policy at the time of the bringing of this suit."

We have indicated above that the complaint, consisting of but a single count, is in Code form, but this statement must be taken in connection with the further statement that there is in the body of the complaint what we shall treat as a mere clerical misprision, in that the complaint, in averring the destruction of the automobile, uses the word "described" by fire, instead of the word "destroyed" by fire. However, no point was made in the court below over the question, and we think the complaint in this regard self-correcting.

The defendant demurred to the complaint, but the lower court overruled the demurrer, and amended demurrer thereto, and this action of the court is made the predicate for appellant's first three assignments of error.

The demurrer takes the point that the averment that the plaintiff is the sole party in interest is a conclusion of the pleader and not supported by the other allegations; and, further, that the averment of an assignment by the assured and the Universal Credit Company of all right, title, and interest in the insured property and in the policy is not a sufficient averment of a transfer to the plaintiff of a right to sue for the particular loss already accrued at the time of the transfer, and that, therefore, the plaintiff has not sufficiently averred a right to sue on the cause of action set out in the complaint. However, there is, as recognized by appellant's counsel, the further averment "that the plaintiff is the sole party in interest under said policy at the time of the bringing of this suit."

The transfer or assignment of the policy was made after the loss had accrued, and we are fully convinced that the averments of the complaint show that the plaintiff was the only party beneficially interested in the recovery, and, being such, was the only proper party plaintiff, and that the trial court committed no error in overruling the defendant's several demurrers, challenging the plaintiff's right to maintain the suit. Code, § 5699; Home Ins. Co. of New York v. Scharnagel (Ala. Sup.) 148 So. 596, 599; Missouri State Life Ins. Co. v. Robertson Banking Co., 223 Ala. 13, 134 So. 25; Sov. Camp, W. O. W. v. Gunn, 224 Ala. 444, 140 So. 410; Perry v. Merchants' Ins. Co., 25 Ala. 355; G. Ober & Sons Co. v. Phillips-Burtoff Mfg. Co., 145 Ala. 625, 40 So. 278; So. States Fire Ins. Co. v. Kronenberg,

199 Ala. 164, 74 So. 63; Union Ins. Society of Canton v. Sudduth, 212 Ala. 649, 103 So. 845; Norwich Union Fire Ins. Co. v. Prude, 145 Ala. 297, 40 So. 322, 8 Ann. Cas. 121; National Fire Ins. Co. of Hartford v. Kinney, 224 Ala. 586, 141 So. 350.

With its demurrers overruled, the defendant filed a plea of the general issue and three special pleas. We are not here concerned with plea 4, as it was withdrawn before the trial was concluded.

Special plea 2 was based upon a provision of the policy, which was in words as follows: "Unless otherwise provided by agreement in writing added hereto, and except as to any lien, mortgage, or other encumbrance specifically set forth and described in paragraph B of this policy, this company shall not be liable for loss or damage to any property insured hereunder, while subject to any lien, mortgage, or other encumbrance." The plea averred that at the time of the destruction of the property, it was covered or encumbered by a mortgage given to the plaintiff, which was unsatisfied, and which was not set forth and described in paragraph B of the policy.

Defendant's special plea 3 set up, as a defense to the suit, a provision of the policy which provided that if the interest of the assured in the subject of the insurance be or become other than unconditional or sole lawful ownership, etc., the entire policy shall be void. It was then averred in the plea that the assured had executed a mortgage on the property, which was then in force, to the plaintiff, and that this mortgage was not specifically set forth or described in paragraph B.

The trial court held these pleas to be good on demurrer, and the plaintiff then filed a number of replications thereto. All replications went out of the case before the trial was entered upon, except the general replications, and replications 3, 4, and 5. These replications were filed to each of the special pleas 2 and 5, separately and severally.

Replication 3 undertook to set up facts constituting a waiver of the matters charged and averred in pleas 2 and 3. It is alleged in this replication that on October 12, 1931, after the loss, defendant's adjuster, H. O. Amos, proceeded to investigate and adjust the loss, and that the said adjuster, after ascertaining all the facts pertaining to the matters and things set up in said plea as a defense, did thereafter "with full knowledge of said facts, and while acting in the line and scope of his employment as defendant's adjuster, put the plaintiff, at a time when the plaintiff was the seller of the car and the endorser on the first mortgage and owner of the second mortgage referred to in the said plea, and was the real party at interest under said policy, to the knowledge of said Amos, to the expense and trouble of holding the salvage for the defendant on said automobile and refraining from selling said salvage, and the said H. O. Amos with full knowledge of the plaintiff's interest in said automobile and with full knowledge of all said facts set out in said plea as aforesaid did induce the plaintiff to go to the expense and trouble aforesaid, whereby the defendant did waive its right to set up a forfeiture of said policy under and by virtue of the provisions of said policy which are made the subject of defendant's plea." Replications 4 and 5 appear in the report of the case.

The defendant filed demurrers to replications 3, 4, and 5 as answers to each of defendant's pleas, separately and severally. The court overruled the demurrer, and the propriety of the court's ruling in this regard constitutes the appellant's assignments of error numbered 4, 5, 6, 7, 8, and 9.

It is earnestly insisted by appellant that plaintiff's replication as answer to plea 2 is insufficient for a number of reasons pointed out and stressed in its brief. It is not insisted, however, that the adjuster, under the averments of the plea, was without authority to make the waiver, but that the replications do not show that the plaintiff had such an interest in the policy at the time the alleged waiver was made, as that putting it, the plaintiff, to the expense and trouble of keeping the property, would operate as a waiver or estoppel in its favor against the defense asserted in said plea; and that there could be no effectual estoppel in the matter of the defense set up in said plea 2 for the reason that the loss, under the averments of this plea, was not, at the time, within the coverage of the policy, by reason of said mortgage.

We are clear to the conclusion that the averments of the replication sufficiently show that the said Amos was sent to Talladega with authority from the defendant to adjust the loss; that with full knowledge of all the facts set up in the plea, and which are relied upon by defendant as a defense to the suit, and with full knowledge, as averred in the replications, that plaintiff was the real party at interest under said policy, the said Amos, as such adjuster, did recognize and treat the insurance contract as a binding obligation on the part of his principal by having the plaintiff to go to the trouble and expense of holding the "salvage on the automobile" for the defendant, and in causing the plaintiff to refrain from selling the said salvage. These acts, on the part of defendant's duly authorized agent, under the averments of the replications, are consistent only with the idea that the adjuster had recognized and treated the policy contract as a binding and legal obligation upon the part of his principal, and thereby a waiver

or estoppel was created against ...