Jackson v. American Eagle Fire Ins. Co.
| Decision Date | 04 April 1936 |
| Parties | JACKSON et ux. v. AMERICAN EAGLE FIRE INS. CO. et al. |
| Court | Tennessee Supreme Court |
Appeal from Chancery Court, Maury County; Thos. B. Lytle Chancellor.
Action by Waverly H. Jackson and wife, for the use and benefit of themselves and the Jefferson Standard Life Insurance Company mortgagee, and another, against the American Eagle Fire Insurance Company, wherein the Jefferson Standard Life Insurance Company filed a cross-bill. From an adverse judgment, the American Eagle Fire Insurance Company and the Jefferson Standard Life Insurance Company appeal.
Reversed and remanded.
Hugh Lee Webster, of Columbia, and Thos. G. Watkins, of Nashville for appellants.
Trabue Hume & Armistead, of Nashville, and J. Shelby Coffey, of Columbia, for appellees.
This is a suit by Jackson and wife for the use and benefit of themselves and the Jefferson Standard Life Insurance Company mortgagee, and George E. Farmer, receiver, to recover on a fire insurance policy issued by the American Eagle Fire Insurance Company on a dwelling house located in Columbia, Tenn.
The policy was issued to Waverly H. Jackson as the sole and unconditional owner of the property insured. There was attached to the policy a standard mortgage clause in favour of the Jefferson Standard Life Insurance Company and Julian Price, trustee.
The insured premises were destroyed by fire on January 2, 1933. The insurer denied liability for the loss on the ground that Jackson was not the sole and unconditional owner of the property. The policy provided that it would be void "if the interest of the insured be other than unconditional and sole ownership; or if the subject of insurance be a building on ground not owned by the insured in fee-simple."
Mrs. Jackson, in 1914, purchased two vacant lots and took title thereto in her own name. Later, on August 29, 1925, Mrs. Jackson executed an instrument evidencing her intent to stand seized of the two lots for herself and husband as tenants by the entirety. Thereafter they erected a residence on the lots, and on May 30, 1927, the American Eagle Fire Insurance Company issued its policy of fire insurance thereon to Waverly Jackson.
On October 26, 1927, Jackson and wife borrowed $2,500 from the Jefferson Standard Life Insurance Company. This indebtedness was evidenced by note secured by a mortgage deed of trust on said property, both executed by Jackson and wife.
One of the conditions of the trust deed was that the property should be insured to the amount of $2,500 against loss by fire, at the cost of the mortgagors, and that a standard mortgage clause in favor of the mortgagee, Jefferson Standard Life Insurance Company, be attached to the policy. Such standard mortgage clause was issued on December 24, 1927, and attached to the policy of date May 30, 1927.
On the expiration of the policy, on May 30, 1928, the American Eagle Fire Insurance Company issued another policy, covering said property, to Waverly H. Jackson, for the period of one year, and continued to issue its policies, year by year, until May 30, 1932, when it issued the policy here sued on, which, like all the preceding ones, was to Waverly H. Jackson as unconditional and sole owner of the property insured, and carried a standard mortgage clause in favor of the Jefferson Standard Life Insurance Company.
When the original policy was issued on May 30, 1927, the American Eagle Fire Insurance Company was represented at Columbia, as agent, by the partnership of Fields, Latta & Jackson, of which Waverly H. Jackson was a member. On September 7, 1927, the partnership sold its insurance business to Norman Dale, who thereafter operated it under the name of Dale Insurance Agency, and all of the policies covering the property in question, except the first, were issued by this agency, on instructions of Jackson.
By cross-bill the Jefferson Standard Life Insurance Company sought a recovery against Jackson and wife and the American Eagle Fire Insurance Company, for the amount of the mortgage indebtedness due it, with a reasonable attorney's fee, and, in the alternative, if the insurance should not be paid it under the standard mortgage clause, that the property be sold under the deed of trust according to its terms.
The chancellor held that Jackson and wife owned said property as tenants by the entirely, and that Jackson was the unconditional and sole owner thereof, within the meaning of the policy. He gave a decree against the insurer for the amount of the policy, together with interest and an attorney's fee.
On appeal, the Court of Appeals, while affirming the chancellor's decree, held that Jackson, as tenant by the entirety, was not the unconditional and sole owner of the property, but that the American Eagle Fire Insurance Company had knowledge of that fact at the time of the issuance of the policy, and was therefore estopped to set up that defense to the bill. The court further held that the Jefferson Standard Life Insurance Company could not recover on the standard mortgage clause, because of its knowledge of the state of the title to the property, but for the fact that the American Eagle Fire Insurance Company had issued the policy to Jackson knowing he was not the sole owner of the property. The court declined to increase the amount of the attorney's fee allowed to counsel for the Jefferson Standard Life Insurance Company by the chancellor.
Both the American Eagle Fire Insurance Company and the Jefferson Standard Life Insurance Company petitioned this court for writs of certiorari. These writs were heretofore granted and the cause set down for argument.
Assuming, but not deciding, that Jackson was tenant by entirety of the insured premises, such interest was not that of sole and unconditional ownership within the provisions of the policy. In Alfred v. Bankers' & Shippers' Ins. Co., 167 Tenn. 278, 68 S.W.2d 941, 942, it was held that a tenant by entirely cannot recover on a fire policy issued on his representation that he was sole and unconditional owner. The policy, then, issued to Jackson was void under its express provisions because he was not sole and unconditional owner. Catron v. Tennessee Ins. Co., 25 Tenn. (6 Humph.) 176; Standard Groc. Co. v. National Fire Ins. Co., 161 Tenn. 640, 32 S.W.2d 1023; Foster v. Ill. Trav. H. Ins. Co., 156 Tenn. 436, 300 S.W. 7.
It is generally held that stipulations similar to the provisions of the policy herein question, with respect to the sole and unconditional ownership of the insured property by the insured, are valid, and a breach thereof will avoid the policy. 26 C.J. 170. The policy issued to Jackson was void ab initio and no valid contract of insurance came into existence.
It is earnestly insisted, however, that the knowledge of the agent of insurer of the state of the title to the property was the knowledge of the insurer, and that it is estopped by such knowledge from denying liability on the ground of want of sole and unconditional ownership of the insured.
The agent's knowledge of matters affecting the risk will ordinarily be imputed to the company. Cooley v. East & West Ins. Co., 166 Tenn. 405, 61 S.W.2d 656; Insurance Co. v. National Bank, 88 Tenn. 369, 12 S.W. 915; Life & Casualty Ins. Co. v. King, 137 Tenn. 685, 195 S.W. 585. And such knowledge...
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