Johnson v. Aetna Ins. Co.

• Decision Date: 16 June 1905
• Citation: 51 S.E. 339,123 Ga. 404
• Parties: JOHNSON v. AETNA INS. CO.
• Court: Georgia Supreme Court

51 S.E. 339

123 Ga. 404

JOHNSON v. AETNA INS. CO.

Supreme Court of Georgia

June 16, 1905

Syllabus by the Court.

Where a policy of fire insurance contained a stipulation that it should be void "if the subject of insurance be a building on ground not owned by the insured in fee simple," but, at the time the application for insurance was made, the company, through its agent, knew that the applicant did not own the land on which the building sought to be insured was situated, it will not be heard, in defense to an action on the policy, to set up the noncompliance of the plaintiff with this condition of the contract.

Limitations in an insurance policy upon the authority of the agent of the company to waive the conditions of the contract of insurance are to be treated as referring to waivers made subsequently to the issuance of the policy. Mechanics' Ins. Co. v Mutual Bldg. Ass'n, 25 S.E. 457, 98 Ga. 266 approved and reaffirmed.

Error from Superior Court, Colquitt County; R. G. Mitchell, Judge.

Action by W. A. Johnson against the Aetna Insurance Company. Judgment for defendant, and plaintiff brings error. Reversed.

Humphreys & Humphreys, Park & Payton, and Z. D. Harrison, for plaintiff in error.

T. H Parker and Shipp & Kline, for defendant in error.

CANDLER J.

This was an action on a policy of fire insurance. The court below sustained a demurrer to the plaintiff's petition, and he excepted. From the petition as amended it appeared that one of the conditions of the policy was as follows: "This entire policy, unless otherwise provided for by agreement endorsed hereon or added hereto, shall 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." The policy also provided that "no officer, agent or other representative of this company 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 endorsed hereon or added hereto. 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 provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any provision or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached." The building insured belonged to the plaintiff, but the land on which it was situated did not. It was alleged, however, that when he made application for insurance he expressly informed the agent of the defendant company as to the character of his ownership of the property sought to be insured; "that when he [plaintiff] signed said application, in answer to the question as to the ownership of the land, neither 'No' nor 'Yes' was written in said application"; and, "if said question was answered in the affirmative, *** it was inserted after petitioner had signed said application, without his knowledge, consent, or authority"; and that "said application was signed at the request of the agent of defendant company, who filled out the answers to all questions that were filled out."

It will be seen that the controlling question for decision is whether, under the allegations of the petition as amended the defendant, by reason of the knowledge of its agent as to the real character of the plaintiff's ownership of the property, is estopped to defend on the ground of the plaintiff's noncompliance with the conditions of the contract of insurance, or whether the plaintiff, by accepting the policy on those conditions, and with notice of the limitation on the power of the agent to make a waiver for the company, is precluded from recovering on the policy. There is no principle of law more firmly established than that, in general, the knowledge of an agent as to a material fact bearing upon the validity of a contract made on behalf of his principal is imputable to the principal, and this principle has uniformly been applied by our court in actions on contracts of insurance. Carrugi v. Atlantic Ins. Co., 40 Ga. 135, 2 Am.Rep. 567; City Fire Ins. Co. v. Carrugi, 41 Ga. 660; Greenwich Ins. Co. v. Sabotnick, 91 Ga. 719, 17 S.E. 1026; Swain v. Macon Ins. Co., 102 Ga. 96, 29 S.E. 147. It has also been held that where a policy contained a stipulation identical with the one in the present case, limiting the power of any agent of the company to make a waiver for the company, and providing that any waiver, to be valid, must be indorsed in writing on the policy, the insured cannot, in an action on the policy, excuse his failure to comply with the conditions of the contract. Lippman v. Aetna Ins. Co., 108 Ga. 391, 33 S.E. 897, 75 Am.St.Rep. 62; Id., 120 Ga. 247, 47 S.E. 593; Reese v. Fidelity Life Ass'n, 111 Ga. 482, 36 S.E. 637; Mutual Life Ins. Co. v. Clancy, 111 Ga. 865, 36 S.E. 944; Mutual Reserve Ass'n v. Stephens, 115 Ga. 192, 41 S.E. 679. In the Lippman Case, the policy provided that it should be void "if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on the property covered in whole or in part by this policy"; and the plaintiff sought to set up a waiver of this condition by showing that, subsequently to the issuance of the policy, an agent of the company had given him oral permission to procure other insurance on the property.

In the Reese, Clancy, and Stephens Cases, which were actions on policies of life insurance, the waiver sought to be set up was as to a provision that the policy should not become binding upon the company until the first premium had been paid during the good health of the insured. Unquestionably as to a matter concerning the time when the contract is to become of force, or as to the waiver of the conditions of the policy subsequently to its issuance, the insured, by accepting the policy, would be bound by its terms, and could not set up a waiver which he was bound to know the company's agent had no power to make. But that is not this case. Here the insured made written application for a policy of fire insurance. Upon being asked the question as to the character of his ownership of the property, he frankly informed the agent with whom he was dealing that he owned the building, but did not own the land. There is no intimation in the petition that the insured was on notice before receiving the policy that the agent had no power to write the insurance with the title to the property held as it was. There is nothing from which an inference can be drawn that the agent and the insured colluded to defraud the insurance company by concealing the truth as to the ownership of the property. On the contrary, the pleader is emphatic in his declaration of his entire good faith and candor throughout the transaction. The knowledge of the agent being imputable to the company, and the company having, notwithstanding the provision of the policy that it should be void if the building was situated on land not owned by the insured in fee simple, entered into a contract with the plaintiff with its eyes open as to his ownership of the property, should it not be estopped, in a suit on the policy, to take advantage of a fact which it well knew when the contract was executed? To answer this question in the negative, it seems to us, would be to permit one party to a contract to receive all the benefits of the instrument, with full knowledge on his part from the beginning that it could not be enforced against him, and...