Johnson v. American Fidelity Fire Ins. Co.

• Decision Date: 01 October 1957
• Docket Number: No. 22,22
• Citation: 88 N.W.2d 913,351 Mich. 515
• Parties: Clyde JOHNSON, Plaintiff and Appellee, v. AMERICAN FIDELITY FIRE INSURANCE COMPANY, Defendant and Appellant. ,
• Court: Michigan Supreme Court

Page 913

88 N.W.2d 913

351 Mich. 515

Clyde JOHNSON, Plaintiff and Appellee, v. AMERICAN FIDELITY FIRE INSURANCE COMPANY, Defendant and Appellant.

No. 22, Oct. Term, 1957.

Supreme Court of Michigan.

March 6, 1958.

Thomas J. Whinery, Grand Rapids, for defendant-appellant.

Benjamin W. Franklin, Brake & Miel, Stanton, for plaintiff-appellee.

Before the Entire Bench.

EDWARDS, Justice.

This is a suit by the owner of a Diesel truck against defendant fire insurance company which had issued a policy of insurance on the truck under circumstances which will be enumerated.

The truck was destroyed by fire on June 3, 1953, near Washington Courthouse, Ohio. Testimony indicates that the truck was worth $4,000 before the fire, whereas, after the fire, its value was $150. If was insured for $3,500 of the loss.

The case was tried before Circuit Judge Morris K. Davis, in Montcalm county, without a jury. Judge Davis entered judgment for plaintiff in the amount of $3,500, plus interest.

At the trial below, and on appeal here, defendant urges that plaintiff is not entitled to recover because the insurance policy was issued to a party who had no insurable interest in the vehicle. Judge Davis granted judgment on the ground that the facts pertaining to the issuance of the contract estopped defendant from presenting this defense.

We will turn now to the facts on which this dispute hinges:

Plaintiff Johnson, just prior to the issuance of the insurance contract in dispute, entered into an oral agreement with a produce trucker by the name of Willis Boozer for Boozer to buy the truck. The trial court found that under this agreement plaintiff was to retain title until Boozer had completed paying for the truck, and that the provision of the motor vehicle act requiring transfer of title was not complied with. C.L.S.1956, § 257.233 (Stat.Ann.1952 Rev. § 9.1933).

The first attempt in relation to insuring the truck after the oral agreement referred to above was made by Boozer in a telephone conversation with one Carl Mapes of the Carl Mapes Insurance Agency on October 8, 1942. No policy, however, was issued on the basis of this telephone conversation since apparently Boozer did not come in to the Mapes Agency to pay the premium which he promised.

Johnson testified that he called Mapes to check on whether or not the truck was insured and Mapes told him he hadn't sent the policy because Boozer hadn't paid the premium. At this point Johnson agreed to pay the premiums and Mapes then sent, on his stationery, a letter, which is exhibit 5a in this proceeding, addressed to the American Underwriters Agency, which is reproduced below 'Exhibit 5A

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Amos Nordman, resident agent at Grand Rapids for defendant American Fidelity Fire Insurance Company, who testified he was authorized to write insurance contracts for said company, indicated that he received this letter in the course of business and that the handwritten notations thereon were in his handwriting.

The trial judge in his opinion stated as follows:

'When the policy was issued it named Boozer as the insured with loss payable clause to the plaintiff. I am perfectly satisfied that Nordman did not follow the directions of Mapes in applying to defendant for insurance.'

It appears to us that exhibit 5A, plus Nordman's testimony, warrants the judge's conclusion.

The record further discloses that when the policy was delivered to plaintiff Johnson, he immediately called the Mapes Agency and protested the fact that it was issued in Boozer's name. He testified, 'I told him the tractor was in my name and he said that the policy was holding as it was.'

Johnson's testimony in this regard is borne out by plaintiff's exhibit 2 written to plaintiff by Mapes after the policy was issued.

'Exhibit 2

'October 16, 1952.,

'Mr. Clyde Johnson,

'Six Lakes, Mich.

'Dear Mr. Johnson:

'In accordance with our telephone conversation, we have written a policy covering fire, theft, wind and $250.00 deductible collision insurance on the 1950 Mack Diesel Tractor. Policy is enclosed together with a certificate, so you can have a copy of it.

'As per our conversation, you stated you would mail us 20% down payment at once. This will amount to $68.75, and we should have this by return mail, as we had to advance our money to the Co. in order to put the insurance in force the night that you called. We don't ordinarily do this, but we did it for you, although we would not have done it for Mr. Boozer, as he has stated several times he would see us on such a date and never showed up.

'Balance of the premium can be financed over a period of six months if desired, but we must know at once.

'Yours truly,

'Carl N. Mapes Agency

'We have facilities for writing Liability and Property Damage and cargo on a gross receipts basis, or on individual units.

'CNM'

Johnson testified further that after receipt of this letter and the policy, and after his phone call of protest had received Mapes' reassurance, he then paid the premium referred to above.

It is obvious that there was no misrepresentation of fact nor withholding of material information from the insurer shown in this record. In effect, the trial judge so found:

'With reference to the policy, it is clear that it was not issued as ordered. It is also clear that it was not so issued because of the action of Nordman, the duly authorized agent of the defendant. When plaintiff drew to the attention of Mapes that the policy was not issued to the plaintiff as insured, Mapes assured plaintiff that he was protected under the policy. Plaintiff so testified without objection. His testimony was not disputed. Plaintiff had every reason to believe that Mapes was a duly authorized agent of defendant since defendant issued the policy after an application had been made to Mapes.

'Defendant claims Mapes was merely a solicitor and had no power to vary the terms of the contract. I am not grounding my decision on the theory that Mapes had authority to vary the terms of the contract but on the ground that the action of Mapes and Nordman estopped the defendant from denying liability on the ground that Boozer had no insurable interest. It is noteworthy that Nordman made no satisfactory explanation as to why he disregarded the instructions he received when the policy was applied for.

'Defendant makes much of the fact that plaintiff did not tell defendant's agent that he (plaintiff) was violating the law in failing to transfer the certificate of title. Defendant was not prejudiced by such failure. Defendant's agents were told about the contract of sale.'

There is a long line of Michigan cases which hold...