Home Insurance Co. v. Westerfield

• Decision Date: 08 December 1936
• Parties: Home Insurance Co. v. Westerfield.
• Court: United States State Supreme Court — District of Kentucky

Page 494

266 Ky. 494

Home Insurance Co. v. Westerfield.

Court of Appeals of Kentucky.

Decided December 8, 1936.

1. Insurance. — Policy provision that insurer is not liable for loss occurring while installment of premium is past due and unpaid is valid and binding on insured, so that, if loss occurs during default and while policy is in suspense, insurer is not liable in absence of waiver or estoppel.

2. Insurance. — Letter from fire insurer to insured stating that past-due premium installment had not been received and requesting remittance without delay without referring to suspension of liability during time premium was unpaid would be sufficient unconditional demand for payment to waive condition of policy and note that company should not be liable for loss occurring while premium payments were due and unpaid.

3. Evidence. — Before evidence as to existence and contents of lost letter can be introduced, it must be satisfactorily shown that letter has been lost without fault of party desiring to prove its contents.

4. Evidence. — In action on fire policy wherein insured relied on waiver of provision of policy that insurer should not be liable for loss occurring during default in premiums by letter from insurer unconditionally demanding payment of premiums, insured's testimony as to contents of letter held inadmissible, in absence of testimony of person in whose possession insured testified that he had last seen letter, or satisfactory explanation of absence of such person.

Appeal from Daviess Circuit Court.

GORDON, LAURENT, OGDEN & GALPHIN and CLEMENTS & CLEMENTS for appellant.

CLAUDE E. SMITH and W.H. BARNES for appellee.

OPINION OF THE COURT BY JUDGE REES.

Reversing.

This is a suit on a farm installment fire insurance policy issued by the Home Insurance Company of New York to Hondy Westerfield August 14, 1934. The policy was for a term of five years, and covered the insured's dwelling house, its contents, and a barn. The total premium was $68.10, and was payable as follows: $13.62 when the policy was delivered, and the balance in four equal installments on September 1 of each of the next succeeding four years. The insured made the first payment when the policy was delivered, and executed a note for the four annual installments. The first installment of the premium note due September 1, 1935, was not paid when due, and had not been paid September 10, 1935, when the dwelling house and its contents, which were insured for $750, were entirely destroyed by fire. The policy contained a provision suspending the insurance during the time the payment of an installment of the premium was in default. This provision reads:

"But it is expressly agreed that this Company shall not be liable for any loss or damage that may occur to the property herein mentioned while any promissory note or obligation, or part thereof, given for the premium remains past due and unpaid. Payments of notes and installments thereof must be made to the said Home Insurance Company, at its Farm Department office in Chicago, Illinois, or to an authorized person having possession of such note for collection, and a receipt from the Farm Department office of this Company in Chicago, Illinois, must be received by the assured before there can be a revival of the policy, such revival to begin from the time of said payment only, and in no event to extend this policy beyond the original date of expiration."

The installment note and the application signed by the insured each contained a similar provision. These provisions were pleaded as a defense by the insurance company in its answer. The plaintiff, in a reply, alleged that, between the date when the installment was due and the day of the fire, the insurance company had made an unconditional demand for payment of the past-due installment, and had thereby waived this defense. In a rejoinder, the insurance company denied that it had made an unconditional demand for the payment of the installment due on the premium note September 1, 1935, or treated the policy as being in full force or effect until it was notified of the destruction of the plaintiff's property. On the trial, the defendant moved for a directed verdict in its favor at the conclusion of the plaintiff's evidence, and again at the conclusion of all of the evidence, but each motion was overruled and the case was submitted to the jury, which returned a verdict in favor of the plaintiff for the sum of $750.

A provision in a policy that no liability shall occur while an installment of the premium is past due and unpaid is valid and binding on the insured, and, if a loss occurs during the default and while the policy is in suspense, and no waiver or estoppel appears, the company is not liable. Lindsey v. Home Insurance Co., 244 Ky 580, 51 S.W. (2d) 924; Boggess v. Insurance Company of North America, 235 Ky. 529, 31 S.W. (2d) 899; Fidelity-Phenix Fire Insurance Co. v. Flora, 235 Ky. 439, 31 S.W. (2d) 699; Hartford Fire Insurance Co. v. Johnson, 217 Ky. 826, 290 S.W. 673; Continental Insurance Company v. Stratton, 185 Ky. 523, 215 S.W. 416, 8 A. L.R. 391, and annotation at page 395. Appellee concedes this to be the rule, but argues that appellant, after the premium installment was due and before the loss, made an unconditional demand for payment of the past-due installment and thereby waived the suspension provisions of the policy. His contention is based upon an...