Insurance Company of North America v. Williams

• Decision Date: 23 October 1933
• Docket Number: Civil 3350
• Citation: 42 Ariz. 331,26 P.2d 117
• Parties: INSURANCE COMPANY OF NORTH AMERICA, a Corporation, Appellant, v. PAT H. WILLIAMS, as Trustee of REED LUMBER COMPANY, a Corporation, SOUTHWEST SASH, DOOR & GLASS COMPANY, a Corporation, and CRANE COMPANY, a Corporation, Appellees
• Court: Arizona Supreme Court

26 P.2d 117

42 Ariz. 331

INSURANCE COMPANY OF NORTH AMERICA, a Corporation, Appellant, v. PAT H. WILLIAMS, as Trustee of REED LUMBER COMPANY, a Corporation, SOUTHWEST SASH, DOOR & GLASS COMPANY, a Corporation, and CRANE COMPANY, a Corporation, Appellees

Civil No. 3350

Supreme Court of Arizona

October 23, 1933

APPEAL from a judgment of the Superior Court of the County of Maricopa. G. A. Rodgers, Judge. Judgment affirmed.

Messrs Frazier & Perry, for Appellant.

Mr. L J. Cox and Messrs. Phillips, Holzworth & Phillips, for Appellees.

OPINION

LOCKWOOD, J.

This is an appeal from a judgment rendered against Insurance Company of North America, a corporation, hereinafter called defendant, and in favor of Pat H. Williams, as trustee hereinafter called plaintiff, on a certain fire insurance policy. Defendant recognizes our rule that on an appeal the evidence must be construed as favorably as possible in support of the judgment, and taken thus the facts may be fairly stated as follows:

William J. Fellows and his wife were the owners of a certain dwelling-house upon which Win Wylie held a mortgage. On this building Fellows had obtained two fire insurance policies, each of which contained a mortgagee clause in favor of Wylie. Thereafter, and on February 8, 1932, he obtained from Bruce Darling, a local agent of defendant, the policy on which this action was based, which does not contain any mortgagee clause and states upon its face: "Notice is hereby accepted that this is excess insurance over amount of mortgage and policy is not required by mortgagee." The policy also contains the following provisions which are part of the New York Standard form of fire insurance policy as it existed at the time of the adoption of the Revised Code of 1928:

"This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void if . . . , with the knowledge of the insured, foreclosure proceedings be commenced or notice given of sale of any property covered by this policy by virtue of any mortgage or trust deed," and: "No one shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement added hereto, nor shall any provision or condition be held to be waived unless such waiver shall be in writing added hereto . . ."

Fellows testified that before the issuance of the policy Darling had been notified by him that Wylie was threatening to foreclose his mortgage, and that he (Fellows) wanted to protect his equity in the property, and "he asked me about a rider on there and I said, 'You are the insurance man'; I said, 'You have been handling my insurance; you do it your way to protect me.'" Shortly after the issuance of the policy Wylie did commence foreclosure proceedings and summons was properly served upon Fellows and his wife. A few days later Fellows had a conversation with Darling in which he used language, which, taken in consideration with his previous conversation, might fairly be said to give information to Darling that the foreclosure proceedings had been commenced. On March 7th a fire occurred on the premises, causing the damage which is the basis of this suit. Fellows did not pay the premium for the policy at the time it was taken out, and testified that he had taken out a number of insurance policies of various kinds with Darling which were carried by the latter in a general account, and that it was his custom to make payments on the general account without specifying any particular policy to which the payment was to be applied. Darling never, according to Fellows, asked for the payment of any particular premium before sixty days after the policy had been issued. He further testified, however, that there was always a balance due Darling on the general account, and that at some time after he had informed Darling in regard to the mortgage foreclosure the latter asked him for a payment on the general account, but did not specify payment of the premium on the particular policy involved herein. It further appears that Fellows never did pay his full indebtedness on the general account and that there is a balance still due Darling thereon. We think this states the facts of the case sufficiently so that we can consider the propositions of law raised by this appeal.

The first is whether or not the policy became void when the foreclosure proceedings were commenced, unless the insurer waived the forfeiture or is estopped from its conduct from asserting it. We have had this question before us in the case of Peterson v. Hudson Ins. Co., 41 Ariz. 31, 15 P.2d 249, and said:

". . . the policy becomes void at such time after the suit is actually filed as the insured knows of its existence, unless the insurer, with knowledge of the changed conditions, either waives the clause in question or is estopped from asserting it."

Under the foregoing statement of facts, therefore, the policy became void before the occurrence of the fire unless the insurer had either waived the forfeiture or was estopped from asserting it, nor indeed does plaintiff question this as a general rule of law; his contention being that the facts show both a waiver and an estoppel.

The second question for our consideration is: Do the foregoing facts show a waiver by the insured? It is evident on reading the many cases which discuss the question of waiver and estoppel that the courts in a great number of instances confuse the two and use the term "waiver" when the facts show an estoppel, or the term "estoppel" when the facts really show a waiver. Waiver and estoppel are two very different things. We have discussed the difference in Peterson v. Hudson Ins. Co., supra, and in Equitable Life Assur. Soc. v. Pettid, 40 Ariz. 239, 11 P.2d 833. In the former case we say: ". . . Waiver is a voluntary and intentional act. Although it is frequently confused with estoppel, the two are very different in their nature, one being based on the actual intent to give up a right, and the other, negativing such intent, being based on actual or constructive fraudulent conduct and the principles of equity. . . ." In the latter case we say: "In waiver, the essential element is an actual intent to abandon or surrender a right, while in estoppel such intent is immaterial, the necessary condition being the deception to his injury of the other party by the conduct of the one estopped."

Let us consider first the effect, if any, of the clause in the policy above quoted, to the effect that no provision or condition thereof should be held to be waived unless such waiver should be in writing and added to the policy. Similar clauses have been before the Supreme Court of the United States several times, and it has uniformly held that where the policy itself provides that a waiver must be shown by a written indorsement, an agent has no power to waive any of the provisions thereof except in the manner set forth in the policy. Penman v. St. Paul Fire & Marine Ins. Co., 216 U.S. 311, 30 S.Ct. 312, 54 L.Ed. 493; Northern Assur. Co. of London v. Grand View Building Assn., 183 U.S. 308, 22 S.Ct. 133, 46 L.Ed. 213; Sun Ins. Office v. Scott, 284 U.S. 177, 52 S.Ct. 72, 76 L.Ed. 229.

We have said in Equitable Life Assur. Society v. Pettid, supra:

". . . . An insurance policy is a contract, and in an action based thereon the terms of the policy must govern. The court cannot write a new contract for the parties in accordance with its idea of what the original one should have been . . . . But, where the provisions of the contract are plain and unambiguous upon their face, they must be applied as written, and the court will not pervert or do violence to the language used, or expand it beyond its plain and ordinary meaning or add something to the contract which the parties have not put there. . . ."

There is no contention in this case that any written waiver of the forfeiture was indorsed upon the policy, but it is urged by plaintiff that we have held in the...