Home Ins. Co. of New York v. Scharnagel

• Decision Date: 11 May 1933
• Docket Number: 8 Div. 493.
• Citation: 227 Ala. 60,148 So. 596
• Court: Alabama Supreme Court
• Parties: HOME INS. CO. OF NEW YORK v. SCHARNAGEL.

148 So. 596

227 Ala. 60

HOME INS. CO. OF NEW YORK v. SCHARNAGEL.

8 Div. 493.

Supreme Court of Alabama

May 11, 1933

Rehearing Denied June 9, 1933.

Appeal from Law and Equity Court, Franklin County; B. H. Sargent Judge.

Action on a policy of automobile theft insurance by W. C. Scharnagel against the Home Insurance Company of New York. From a judgment for plaintiff, defendant appeals. Transferred from Court of Appeals.

Affirmed.

Lange Simpsin & Brantley, of Birmingham, for appellant.

J. Foy Guin, of Russellville, for appellee.

THOMAS Justice.

The court, sitting without a jury, rendered a judgment for the plaintiff.

The suit was upon a policy insuring plaintiff's automobile against loss "by theft or other perils in the policy of insurance mentioned," and alleging the theft of the car by the party named and on the day specifically indicated.

The first assignment of error challenges the action of the trial court in overruling defendant's demurrer to plaintiff's replications (Nos. 5, 6, 7, 8, 9, and 10) to plea 3.

The pleas averred a proviso of nonliability under the policy. to the effect that "plaintiff ought not to recover * * * where the loss of said automobile was suffered by the assured from voluntary parting with title and/or possession of said automobile, whether or not induced so to do by any fraudulent scheme, trick, device, or false pretense. Defendant avers that the loss of said automobile by the plaintiff as described in said count was suffered by the plaintiff from the voluntary parting of the possession of said automobile by the plaintiff to the said John Carter"; or "ought not to recover * * * for any loss or damage to the said automobile while said automobile was subject to any [other] lien, mortgage, or other encumbrance" than that of the Universal Credit Company and it is alleged the same was subject to a purchase mortgage to C. R. Wilson, contrary to the contract provisions of the policy.

The issues on which the trial was had are: (1) Did Carter steal the car, or did the plaintiff lend it to him? (2) Were there valid incumbrances on the car, other than that permitted by the policy-to the Universal Credit Company? (3) If so, did Wilson, the agent procuring the insurance, have knowledge thereof at the time of his issuance of the policy, and was that knowledge obtained in the negotiations leading up to and affecting the insurance contract chargeable to the defendant?

The evidence shows that the Wilson Motor Company, a partnership, was composed of Charles R. and Charles E. Wilson, dealers in automobiles and from whom the car was purchased; that the title was retained for the balance of the purchase price; that the sellers procured the issue of the insurance policy on the car against its loss by theft, and said policy was procured by Wilson and mailed to plaintiff from without the state; that the balance of the money was borrowed from Universal Credit Company and from Wilson's guardian account, on the date of the issue of the policy, and on the date of the renewal thereof was discounted to the Citizens' Bank & Savings Company as a "promissory note"; that the "financial sales contract" that purchaser gave in the first instance was fully paid before the loss of the car. The written notice of loss offered in evidence by the defendant contained the statement of the fact that the renewal note, the obligation at the time of the loss, was only the personal "note to Wilson Mtr. Co. and Mortgage to the U. C. C." (meaning Universal Credit Company).

There were conflicting tendencies in the testimony. The officials of the Citizens' Bank & Savings Company, the cashier and assistant cashier with whom the renewal note was discounted, testified as to whether or not there was a retention of title to the car. These officials said there was such lien; the plaintiff and the discount records of that bank showed and stated that there was only a note on which was written, as "indorser" or "security and indorsers," the name of "Wilson Motor Company." The burden was upon the defendant, under the pleas, to establish the existence of a lien or mortgage that would vitiate the policy.

The evidence further shows that the installment contract for the purchase price was immediately transferred to Universal Credit Company by the Wilson Motor Company, and that, as we have indicated, or according to plaintiff's testimony, it was fully paid by plaintiff.

We may advert to several of the provisions of the contract, which read as follows:

"The Home Insurance Company, New York-stock company-in consideration of the warranties and the premium hereinafter mentioned does insure the Assured named herein, for the term herein specified, to an amount not exceeding the actual cash value of the property at the time any loss or damage occurs. * * * [Italics supplied.]

"The automobile described is fully paid for by the assured and is not mortgaged or otherwise encumbered, except as follows:

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"Lien of the Universal Credit Company. * * *

D. Schedule of Perils"Limits of Liability"Net Rates and Premiums

Perils"Limit of Liability"Net Rates"Premiums

Name of assured, W. C. Scharnagel, Fire

Lightning

Transportation 200 2.20 4.40

E.

Spruce Pine, Alabama. Theft

Robbery

And Universal Credit Company, loss, if any, to Pilferage 200 .60 1.20

be adjusted with the purchaser, though to be

paid, subject to the conditions of this

policy, only to the Universal Credit Company

for the account of all interests.

* * * [Italics supplied]

----

Total Premiums 5.60

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"This policy is made and accepted subject to the provisions, exclusions, conditions and warranties set forth herein or endorsed hereon, and upon acceptance of this policy the Assured agrees that its terms embody all agreements then existing between himself and the Company or any of its agents relating to the insurance described herein, and no officer, agent or other representative of this Company shall have power to waive any of the terms of this policy unless such waiver be written or attached hereto; nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the assured unless so written or attached."

The several conditions or exceptions are set up in defendant's pleas as we have indicated, and clause L of the policy stipulates an exception where "any one acting under express or implied authority of the assured, voluntarily parts with title and/or possession, whether or not induced so to do by any fraudulent scheme, trick, device or false pretense."

The evidence fails to show that any written application was executed to procure the policy by and through the Wilsons, etc. The record further discloses the "Conditional Sale Contract," "Dealer's Representations, Assignment and Guaranty to Universal Credit Company," containing, among other things, that the "Undersigned warrants that down payment made by purchaser as stated above was in cash and not its equivalent, unless written notice otherwise was given Universal Credit Company, and that no part thereof was loaned directly or indirectly by undersigned to purchaser." The "Purchaser's Statement" authorized Wilson Motor Company or Universal Credit Company to purchase insurance for "mutual protection, and such other insurance as may be required to cover our respective interests and to execute applications for such insurance," etc. The "Dealer's Work Sheet" and "Statement of Transaction" to Universal Credit Company of "3/4/31" were also exhibited by the evidence.

Did the trial court err in overruling demurrers to plaintiff's replications numbered 5, 6, 7, 8, and 9, as interposed to defendant's plea 3. The substance of that plea was, that plaintiff voluntarily parted with the possession of the car to said Carter, contrary to contract provisions and limitation of liability contained in the policy. The replications (Nos. 5 and 6 for example), to which demurrers were overruled, were to the effect that an adjuster, engaged in the investigation of the loss in oral conversation with the plaintiff before the filing of the suit, denied liability for the theft of the car on the one ground (stated by him to plaintiff) that the policy was void because of an alleged untrue statement contained in the application for the policy of insurance, namely, that the application contained, or the adjuster claimed that it contained, a statement to the effect that plaintiff had paid Wilson Motor Company, from whom he bought the automobile, $100 in cash, as a part of the purchase price; that defendant thereby waived the defense asserted in the plea; and replication 6 concludes with the averment: "And the plaintiff relied on such statement by the adjuster, and was misled thereby, and filed his suit on such asserted defense and that such defense was the only defense claimed by the defendant. Wherefore the defendant is now estopped to set up the defense asserted in the plea." Replication 7 is to the effect: "That the policy sued on has written or printed or stamped thereon, as one of the terms of the policy, the following words, towit: 'All losses under this policy should be reported immediately to Motor City Agency, Inc., Sterick Building, 8 North Third Street, Memphis, Tennessee.' The plaintiff alleges that said Motor City Agency was the agent of the defendant with authority to receive notice of the loss and deny liability thereon; that shortly after his loss by theft he did notify Motor City Agency through Wilson Motor Co. from whom he had bought the automobile and the insurance policy; that shortly thereafter he received from Motor...