Insurance Co. of North America v. Williams

• Decision Date: 15 November 1917
• Docket Number: 8 Div. 944.
• Citation: 200 Ala. 681,77 So. 159
• Parties: INSURANCE CO. OF NORTH AMERICA v. WILLIAMS.
• Court: Alabama Supreme Court

77 So. 159

200 Ala. 681

INSURANCE CO. OF NORTH AMERICA v. WILLIAMS.

8 Div. 944.

Supreme Court of Alabama

November 15, 1917

Appeal from Law and Equity Court, Morgan County; Thomas W. Wert Judge.

Action by P.W. Williams against the Insurance Company of North America. From judgment for plaintiff, defendant appeals. Reversed and remanded.

Steiner Crum & Weil, of Montgomery, and Callahan & Harris, of Decatur, for appellant.

Deedmeyer & Birch, of Birmingham, E.W. Godbey, of Decatur, and John R Sample and Porter M. Brindley, both of Hartsells, for appellee.

THOMAS J.

The complaint, in code form, is based on two policies of insurance, issued jointly by the Insurance Company of North America and the Fire Association of Philadelphia, under the name Philadelphia Underwriters. By the terms of these policies said companies are each liable for one-half of the insurance. Both cases are submitted together. The questions involved are identical.

Appropriate assignments of error challenge the right of recovery of the statutory penalty provided in suits on policies issued by companies belonging, at the time of the issuance of the policy, to a tariff association. The statutory right of recovery of 25 per cent., in addition to the face of the policy, is given by sections 4594 and 4595 of the Code of 1907, as amended by the act of April 7, 1911 (Gen. Acts 1911 p. 316). The right of the assured to recover the penalty as prescribed by the statute was upheld in Southern States Fire Insurance Co. v. Kronenberg, 74 So. 63.

To the complaint, containing two counts, the defendant pleaded the general issue and several special pleas, setting forth, in varying phrase, a breach of the "iron-safe clause." To these pleas the plaintiff replied (2 and 3) by setting up substantial compliance with the terms of the policy, and (5, 6, 7, 8, and 9) by averring that after the fire, and after being fully informed as to how and when and in what particulars the plaintiff had violated the terms and conditions of the policy, defendant promised plaintiff that the full amount of the policy sued on should be paid.

Demurrers to these replications being overruled, the defendant rejoined. The second rejoinder averred that, as a part of the contract, it was stipulated:

"No officer or agent or other representative of this company shall have power to waive any provision or condition of the policy except such as by the terms of this policy may be the subject of agreement indorsed hereon or added to; and as to such provisions and conditions no officer, agent, or representative shall have such power or be deemed or held to have waived such provision or condition, unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached."

And it further averred that the waiver set forth in the replication was not indorsed on said policy or attached thereto.

Forfeitures provided in a policy of insurance may be waived by an agent with authority and with full knowledge of the facts of the forfeiture. It is not every agent of the assurer, however, who may waive such important contract provisions. Southern States Fire Ins. Co. v. Kronenberg, supra. Where the fact of agency rests in parol, or is to be inferred from the conduct of the principal, and there is evidence tending to show the agency, the agent's acts or declarations are admissible in evidence on the question of waiver vel non of the contract provisions (Roberts & Son v. Williams, 73 So. 502), notwithstanding the provision to the contrary set out as a part of the rejoinder. This rejoinder was not a full answer to the replication to which it was directed, that the assurer held out an actor as being its agent, or as possessing the authority assumed by such agent within the scope of its business, and that the adjustment of the loss under the policy, with full knowledge of the forfeiture, waived the same, and that the plaintiff had been misled to his detriment by the apparent authority of such agent. Day v. Home Ins. Co., 177 Ala. 600, 58 So. 549, 40 L.R.A. (N.S.) 652. The demurrer was properly sustained to the second rejoinder.

The fifth and sixth rejoinders set up a "nonwaiver agreement" entered into and executed by the plaintiff and the defendant immediately upon the adjuster's being informed of the breach of the condition of the "iron-safe clause." Demurrers to such rejoinders were improperly sustained. To this ruling we shall refer later.

Defendant filed a further plea, A, to the second count of the complaint, averring:

That the policy sued on contained the following provisions, viz.: " 'This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by the policy.' The said policy contained the further provision: 'No additional insurance permitted unless the amounts are inserted by agents of the company in the blank spaces noted below, viz.' And defendant avers that following such provision there was noted on the policy, '$10,000.00 on stock.' At the time of the issuance of the policy the defendant carried on the stock of goods covered by said policy $8,500 of insurance, and on, to wit, the 4th day of December, 1914, the defendant procured another policy of insurance on said stock of merchandise for $2,000 with the Philadelphia Underwriters, which made the defendant's total insurance in said policy in addition to the policy sued on $10,500, and permission for such additional insurance was not by the defendant or any one authorized to bind it indorsed on or attached to the policy sued on."

The plea is self-correcting. Clinton Min. Co. v. Bradford, 76 So. 74, 77, 78.

The theory of plaintiff's demurrer to this plea was that the policy contemplated the procurement of additional insurance, under the circumstances therein indicated, and this consent was given by a "rider agreement," and, when attached to the policy, became the governing agreement as to concurrent or subsequent insurance, and was substituted for the original policy stipulation relating to the procurement of additional insurance; that is, if the "rider agreement," or indorsed or written consent, allowed additional insurance in a certain designated sum, but contained no penalty in the event of the breach of the provisions of such "rider" or indorsed or written consent, then, notwithstanding such penalty was contained in and provided for by the original policy, such forfeiture clause of overinsurance would not have application to the consent finding expression in the subsequent "rider" or indorsement attached to or written on the policy.

It is declared of a "rider agreement" attached to a policy of insurance that it is a part of the contract ( Scharles v. Hubbard & Co., 74 Misc. 72, 131 N.Y.Supp. 848, note 30 L.R.A. 636-642), to the same extent and with a like effect as if embodied in the policy ( Farmers' Bank v. Manchester Co., 106 Mo.App. 114, 80 S.W. 219), and that it supersedes its original conditions, exceptions, and provisos where it is obvious that such was the intention of the parties (N.Y., etc., Co. v. AEtna Ins. Co. [ D.C.] 192 F. 212, affirmed, Id., 204 F. 255, 122 C.C.A. 523). See, also, 1 Joyce, Law of Insurance (2d Ed.) §§ 191b, 223, 224; volume 1, Cooley's Briefs, Law of Insurance, 640; volume 2, Cooley's Briefs, Law of Insurance, 1476. On the subject of giving the written provisions in or on policies of insurance a controlling effect over the printed portions thereof, this court has said:

"In Bolman v. Lohman, 79 Ala. 67, it was held that, in interpreting instruments partly written and partly printed, the greater weight should be given to that which is written, for the presumption is that greater attention was bestowed on the written parts; that a printed form is intended for general use, without reference to particular objects and aims, and that which is written is supposed to be dictated by the particular intention and purpose of the parties contracting." Tubb v. Liverpool & London & Globe Ins. Co., 106 Ala. 651, 659, 17 So. 615, 617.

The complaint, however, does not set out as a part thereof the policies of insurance sued on, nor are they made a part of plea A. The plea only avers the contract provisions as to overinsurance, and a consent that a designated amount of other or subsequent insurance might be taken, without stating how the assent for the taking of the stipulated amount of other or subsequent insurance was given. Whether this consent for such other or additional insurance was a modification of the original policy by way of a "rider agreement," or by a written indorsement thereon or therein, is immaterial to the question presented for decision.

The purpose of overinsurance limitations in policies is to prevent fraud. The public, as well as the assurer, is interested in preventing a situation in which a fire would be profitable to the assured. Such clauses in insurance policies ought to receive a fair and reasonable interpretation, according to their terms and obvious import. Judge Story said:

"But, be these considerations as they may, we see no reason why, as these clauses are a known part of the stipulations of the policy, they ought not to receive a fair and reasonable interpretation, according to their terms and obvious import. The insured has no right to complain, for he assents to comply with all the stipulations on his side, in order to entitle himself to the benefit of the contract, which, upon reason or principle, he has no right to ask the court to dispense with the

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