Home Mut. Fire Ins. Co. v. Riley

• Decision Date: 05 June 1972
• Docket Number: No. 5--5894,5--5894
• Citation: 252 Ark. 750,480 S.W.2d 957
• Parties: HOME MUTUAL FIRE INSURANCE CO., Appellant, v. Edward N. RILEY, Appellee.
• Court: Arkansas Supreme Court

Page 957

480 S.W.2d 957

252 Ark. 750

HOME MUTUAL FIRE INSURANCE CO., Appellant, v. Edward N. RILEY, Appellee.

No. 5--5894.

Supreme Court of Arkansas.

June 5, 1972.

Estes & Storey, Fayetteville, for appellant.

Tinnon & Crain, Mountain Home, for appellee.

BROWN, Justice.

Appellant Home Mutual Fire Insurance Company denied liability under a fire policy by virtue of a nonoccupancy clause. The appellee, insured, was awarded judgment, apparently on the grounds of waiver and estoppel. The principal point for reversal is that the court erred in refusing to grant appellant's motion for a directed verdict.

Appellee is a veterinarian in Mountain Home and he owned a rent house which was next door to his clinic. Home Mutual insured the house against loss by fire in the amount of $3,500. One of the standard provisions in the policy was that there would be no liability for loss if the described property remained unoccupied for a period beyond thirty days. The tenant moved from the house on May 29, 1970, and the house burned on July 3, or thirty-four days after being vacated.

Some events transpired in June which give rise to appellee's claim of waiver. In early June 1970, Dr. Riley moved some x-ray equipment into the house, anticipating that he would use the house henceforth as a part of his clinic. On or about June 14 Dr. Riley made known to appellant's local agent in Mountain Home that he wanted to insure the equipment in the sum of $3,000. Dessie Pitts, the local agent, addressed a memorandum to appellant's Paul Peevy at the home office in Springdale:

Please issue endorsement to the above captioned policy adding the following: $3,000 on x-ray equipment. Dr. Riley has moved his tenant out of this house and it is adjacent to his clinic and he needs $3,000 on the x-ray equipment he has in the house. The house will be used as a part of his clinic now if you need to re-rate this.

Paul Peevy replied under date of June 26 that Home Mutual would not be able to furnish the desired coverage on the x-ray equipment. Dessie Pitts notified Dr. Riley, appellee, of the decision of the home office. She was instructed to get the coverage on the machinery from some other company and, if necessary, to transfer the existing insurance on the building to the company which issued the machinery insurance. Mrs. Pitts was in the process of carrying out those instructions when a family emergency arose that required her presence in Fayetteville. Before she was able to procure the needed insurance the house burned. The house and contents were a total loss.

Mrs. Pitts testified that, being in charge of a general insurance agency at Mountain Home, she was agent for Home Mutual and also a general agent for them. 'I did have authority to bind the company. I have always had it, . . . binding authority. Mr. Peevy advised me of my authority.' She testified that when she received notice from Home Mutual that coverage on the machinery was denied, she got in touch with appellee. 'I told him that he had insurance on the building, period, but that they denied it on the equipment.' That was only a matter of days before the house burned.

Paul Peevy, president of Home Mutual, testified that upon receipt of proof of loss of the fire he went to Mountain Home. He admitted that he told appellee he would be in receipt of a check in about two weeks. However, he said further conversation revealed that the house had been vacant for more than thirty days and that is when 'I decided that I had better look into it.'

The nonoccupancy clause, being for the benefit of the insurer, may be waived by it. Aetna Life Ins. Co. v. Duncan, 165 Ark. 395, 264 S.W. 835 (1924); Webster v. Telle, 176 Ark. 1149, 6 S.W.2d 28 (1928); Bank Credit Life Ins. Co. v. Pine Bluff Nat. Bank, 247 Ark. 922, 448 S.W.2d 333 (1969).

This court will grasp any circumstances which indicate an election to waive a forfeiture. In American Life Ass'n v. Vaden, 164 Ark. 75, 261 S.W. 320 (1924), we said:

The doctrine is firmly established by the highest courts in this country, and approved by us in numerous cases, that 'forfeitures are not favored in the law,' and that 'courts are always prompt to seize hold of any circumstances that indicate an election to waive a forfeiture, or an agreement to do so, on which the party has relied and acted. Any agreement, declaration, or...