J.I. Kelly Co. v. St. Paul Fire & Marine Ins. Co.

• Decision Date: 27 October 1908
• Court: Florida Supreme Court
• Parties: J. I. KELLY CO. v. ST. PAUL FIRE & MARINE INS. CO.

47 So. 742

56 Fla. 456

J. I. KELLY CO. v. ST. PAUL FIRE & MARINE INS. CO.

Florida Supreme Court

October 27, 1908

Rehearing Denied Dec. 8, 1908.

Headnotes Filed Dec. 14, 1908.

In Banc. Error to Circuit Court, Walton County; J. Emmet Wolfe Judge.

Action by the J. I. Kelly Company against the St. Paul Fire & Marine Insurance Company. Judgment for defendant, and plaintiff brings error. Affirmed.

Syllabus by the Court

SYLLABUS

The following clause in policies of fire insurance: 'This entire policy, unless otherwise provided by agreement indorsed 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'--held to be a wise and proper safeguard to the insurer against the greatly increased risk consequent upon the circumstances provided against therein. And that, where an insured mortgagor endeavored to make arrangements to postpone the institution of proceedings to foreclose the mortgage upon the insured property, and was notified of the commencement of the foreclosure proceedings the day they were commenced, a failure to procure from the insurer an agreement to be indorsed on or added to the policy of insurance giving the consent of the insurer to a continuation of the risk notwithstanding the foreclosure proceedings renders the policy void as provided therein, in the absence of a waiver.

COUNSEL

E. C. Maxwell and W. W. Flournoy, for plaintiff in error.

Blount & Blount & Carter and Cockrell & Cockrell, for defendant in error.

The plaintiff in error, hereinafter referred to as the plaintiff, sued the defendant in error as defendant below in the circuit court of Walton county upon a fire insurance policy; the declaration being as follows:

'Now comes the J. I. Kelly Company, a corporation, incorporated and doing business under the laws of Florida, said plaintiff, and sues said defendant in the above-entitled cause:

'For that in consideration of $75.30 to it paid, and payment thereof acknowledged, the said defendant issued to said plaintiff its policy of insurance, and thereby promised the plaintiff in the terms of said policy and upon the conditions thereto annexed to insure the said plaintiff against all loss or damage by fire to the amount of $1,500, and to make good unto said plaintiff all loss or damage that should happen by fire, not exceeding the sum of $1,500, for the term of one year from the 31st day of January, A. D. 1906, to the 31st day of January, A. D. 1907, on that certain property used in and connected with their sawmill plant at Whitefield, county of Walton, state of Florida, a more particular description of which will appear by reference to the original policy and the schedules thereto attached, which by reference thereto is made a part hereof for every necessary and legitimate purpose and to have the same force and effect as if the same were copied herein, the loss by the terms of said policy to be paid in 60 days after due notice and proof made by the plaintiff and received by said defendants, and in the said policy sundry provisions, conditions, prohibitions, and stipulations were and are contained, and thereto annexed as by the original policy filed herewith, marked 'Exhibit A,' and made a part of this declaration, for every necessary and legitimate purpose and with like force and effect as though the same were copied herein, will more fully appear; that afterwards, to wit, on the morning of the 4th of August, A. D. 1906, that part of said property as is particularly described on Exhibit B attached hereto and made a part hereof for every necessary and legitimate purpose was burned and destroyed by fire, and damage and loss was thereby occasioned to said plaintiff to the amount of $33,263.20 in such circumstances and conditions as to come within the promise and undertaking of said policy, and to render liable and oblige the said defendant to insure said plaintiff to the amount of $1,500 on the property aforesaid, of which loss the defendant has had due notice on, to wit, --- day of -----, A. D. 1906, and although all conditions have been performed and fulfilled, and all events and things existed and happened and all periods of time have elapsed to entitle the plaintiff to a performance by the defendant of said contract, and to entitle the plaintiff to said sum of $1,500, and nothing has occurred to prevent the plaintiff from maintaining this action against said defendant, yet said defendant, though often requested so to do, has not paid, or made good to said plaintiff, the said amount of the loss and damages aforesaid, or any part thereof, but has refused and still refuses so to do, to the damage of said plaintiff in the sum of $1,900.

'Wherefore, and because of the premises, the said plaintiff claims the sum of $1,500 damages for the insurable value of said property so destroyed by fire as aforesaid; that, by reason of the failure of said defendant to perform its promises and obligations aforesaid, it has become necessary for said plaintiff to bring this its suit against said defendant and necessary for said purpose to employ an attorney, which it has done, and, therefore, claims the further sum of $----- as reasonable attorney's fees in this behalf incurred.'

The policy sued upon was also exhibited as a part of the declaration. To this declaration the defendant filed the following pleas:

'The defendant for pleas to the declaration says:

'(1) That in and by the contract of insurance mentioned in and made a part of the declaration it was provided that if, with the knowledge of the insured, foreclosure proceedings should be commenced upon any property covered by the said policy by virtue of any mortgage or trust deed, the said entire policy, unless otherwise provided by a written agreement indorsed thereon or added thereto, should be void. That prior to said alleged loss by fire there was begun a suit in chancery in the circuit court of Walton county, Fla., a court having jurisdiction of the said suit, to foreclose a then valid and subsisting and unpaid mortgage theretofore made by the Jernigan Lumber Company, a corporation, from which the plaintiff derived title to the said property insured. That in the said suit the said Jernigan Lumber Company and the plaintiff were made parties defendant. That due and legal service of process of subpoena was made in the said suit upon plaintiff before the said alleged fire, and that the said foreclosure proceedings were with the knowledge of the plaintiff, and were instituted, had, and continued without any written agreement of the defendant indorsed on the said policy or added thereto.

'(2) That in and by the contract of insurance mentioned in and made a part of the declaration it was provided as follows, to wit: 'This entire policy shall be void, if the insured has concealed or misrepresented in writing or otherwise, any material fact or circumstance concerning this insurance or the subject thereof'--and that the plaintiff did at and before the making of said policy and the contract contained thereon conceal from the defendant a material fact concerning the said insurance and the subject thereof, to wit, the fact that the property so insured was at the time of the making of the said contract, and had been for a long time prior thereto, incumbered by a valid and subsisting mortgage securing the sum of twenty-five hundred ($2,500) dollars, made to one Frances Matthews by the said Jernigan Lumber Company, from which plaintiff derived title to the said property.'

To these pleas the plaintiff interposed the following demurrer and amendments thereto:

'Now comes said plaintiff, and demurs to plea numbered 1 of said defendant, and for cause of demurrer says:

'(1) Said plea sets forth no defense to plaintiff's action.

'(2) It is not alleged by said plea that plaintiff has violated any representations which were made to said defendant at the time defendant contracted to insure said plaintiff in such a manner as to avoid the payment of the policy sued upon.

'(3) It is not alleged by said plea that the mortgage upon which foreclosure proceedings were had was a mortgage executed by said plaintiff.

'And for demurrer to plea numbered 2 plaintiff says:

'(1) Said plea sets forth no defense to plaintiff's action.

'(2) It is not alleged by said plea that plaintiff has violated any representations which were made to said defendant at the time defendant contracted to insure said plaintiff in such a manner as to avoid the payment of the policy sued upon.

'(3) It is not alleged by said plea that the defendant did not know that said mortgage was subsisting upon said property at the time of the issuance of the policy.

'(4) It is not alleged by said plea that said plaintiff executed said mortgage, or that said plaintiff was legally bound to pay the same.

Amendments to demurrer:

'Now comes said plaintiff by leave of the court first had and obtained, and amends its demurrer herein by adding the following additional grounds and causes of demurrer, to wit:

'As to plea No. 1:

'(1) It is not alleged that the defendant at the time of issuing the policy, or at any time subsequent thereto and prior to the loss, advised or notified the plaintiff that the institution of foreclosure proceedings would vitiate the policy.

'(2) It is not alleged that the plaintiff knew prior to the loss sustained by fire that the beginning or institution of foreclosure proceedings would in any manner affect its insurance or vitiate the policy.

'(3) It is not alleged that defendant solicited or asked any information of plaintiff relative to any mortgage or trust deed existing at the time of the...