Kisow v. Nat'l Liberty Ins. Co. of Am.

• Decision Date: 03 March 1936
• Citation: 265 N.W. 569,220 Wis. 586
• Parties: KISOW ET UX. v. NATIONAL LIBERTY INS. CO. OF AMERICA.
• Court: Wisconsin Supreme Court

220 Wis. 586

265 N.W. 569

KISOW ET UX.

v.NATIONAL LIBERTY INS. CO. OF AMERICA.

Supreme Court of Wisconsin.

March 3, 1936.

Appeal from a judgment of the Circuit Court for Racine County; E. B. Belden, Judge.

Reversed.

In this action, commenced on October 18, 1933, the plaintiffs, William F. Kisow and Alma H. Kisow, sought to recover from the defendant, National Liberty Insurance Company of America, the full amount of a fire insurance policy. The defendant, among other things, denied that it was liable to the plaintiffs for more than the proportion of the loss which the amount of its policy bore to the total amount of insurance covering the property at the time of the fire, whether valid or not or whether collectible or not. Trial was had to the court without a jury. The court found for the plaintiffs in the full amount of the policy. From that judgment, entered August 17, 1935, the defendant appealed. The material facts will be stated in the opinion.

Wolfe & Hart, of Milwaukee, for appellant.

Potter & Smith, of Racine, for respondents.

NELSON, Justice.

On January 18, 1930, the defendant issued to the plaintiffs a policy of insurance wherein and whereby, for a term of three years from that day, it insured the plaintiffs' dwelling house against loss or damage by fire in the sum of $1,500. As a result of a loss which occurred a short time before the loss here in controversy, the coverage of the policy was reduced to $1,402.19.

On October 20, 1932, both plaintiffs were stockholders and officers in the Kisow-Fowler Agency, a Wisconsin corporation. The plaintiff William F. Kisow was the president of that agency. At that time the Kisow-Fowler Agency was the local agent of the Standard Fire Insurance Company of Hartford, Conn. The agency had no authority from the Standard Company to insure its own property or property belonging to its stockholders or officers without the consent of that company. On October 20, the plaintiffs, as agents of the Standard Company, issued to themselves a fire insurance policy of $5,000 covering their dwelling house hereinbefore mentioned. On the same day, or within a day or two thereafter, the plaintiffs, as officers of the local agency, mailed to the Standard Company a daily report of said policy. The report was sent to the Wisconsin Credit Bureau at Milwaukee, which was the regular channel for it to go through. The credit bureau in due course mailed the report to the Standard Company at Hartford, Conn. It was received by the Standard Company on the morning of October 28, 1932, upon the opening of its offices on that day.

On October 28, 1932, at about 1 o'clock in the morning (being a number of hours prior to the actual receipt of the notice by the Standard Company) the plaintiffs' dwelling house was damaged by fire to the extent of $2,180.34. The plaintiffs reported the fire to both the Standard Company and the defendant company and made claim against both companies for the loss. On February 15, 1933, the Standard Company denied liability on the ground that the agency had no authority as an agent of that company to issue insurance policies covering property belonging to the agency or its officers which would be binding upon the company, without its consent or ratification. The Standard Company had no notice or knowledge that the policy had been issued until after the fire had occurred. It was the custom of the Standard Company to write a letter of acknowledgment and ratification when agents issued policies in that company to themselves. The plaintiffs believed that they were insured under the Standard Company policy until February 15, 1933, when the Standard Company denied liability. From that time on they had doubts as to the validity of the insurance. However, in May, 1933, the plaintiffs commenced an action in the circuit court of Racine county against the Standard Company. The action was removed to the District Court for the Eastern District of Wisconsin on motion of the defendant, where it was tried by said court, the trial resulting in a dismissal of the complaint and a judgment in favor of the Standard Company. This action was then pending in the circuit court for Racine county. The plaintiffs thereafter amended their complaint in this action and alleged upon information and belief that they had no other insurance on their dwelling house property except that of the defendant.

Upon the trial of this action the court concluded that the policy issued by the agency to the plaintiffs was a nullity ab initio and of no effect, and that therefore, on October 28, 1932, the date of the fire, the policy issued by the defendant was the only “insurance covering the property, whether valid or not and whether collectible or not.” Section 203.01, 1931, Stats.

The defendant contends that the court erred in finding and concluding that defendant's policy was, at the time of the loss, the only insurance which covered the property, whether valid or not and whether collectible or not, and in refusing to prorate the liability of the defendant under its policy.

The sole question which, in our view, requires determination, is whether, under the undisputed facts of this case, the court erred in finding and concluding that the Standard policy was a nullity ab initio and of no effect.

Each of the policies was written on the statutory Wisconsin standard fire insurance company form as required by law, section 203.01, Stats, 1931, and each of them contained the following clause which the Legislature had provided should be written in every fire insurance policy issued in this state, to wit: “Pro rata liability. This company shall not be liable for a greater proportion of any loss or damage than the amount hereby insured shall bear to the whole insurance covering the property, whether valid or not and whether collectible or not.”

Was the court correct in holding that the Standard policy issued under the circumstances was a nullity ab initio and of no effect? While there are some cases which might be considered as lending support to the opinion of the trial court, Henshaw v. Globe & R. F. Ins. Co., 109 W.Va. 235, 153 S.E. 512, according to the great weight of authority, in cases in which the question was actually presented and considered, a policy issued by an insurance agent covering property of his own or property in which he has an interest is voidable, not void, and is therefore susceptible of ratification. Fireman's Fund Ins. Co. v. McGreevy, 55 C.C.A. 543, 118 F. 415;Twin City F. Ins. Co. v. Stockmen's National Bank (C.C.A.) 261 F. 470;Arispe...