L.T. Madden & Co. v. Phoenix Assur. Co.

• Decision Date: 30 November 1904
• Parties: L. T. MADDEN & CO. v. PHOENIX ASSURANCE CO.
• Court: South Carolina Supreme Court

49 S.E. 855

70 S.C. 295

L. T. MADDEN & CO. v. PHOENIX ASSURANCE CO.

Supreme Court of South Carolina

November 30, 1904

Appeal from Common Pleas Circuit Court of Laurens County.

Action by L. T. Madden & Co. against the Phoenix Assurance Company. Judgment for defendant, and plaintiffs appeal. Reversed.

Johnson & Nash and W. R. Richey, for appellants. Ferguson & Featherstone and King, Spalding & Little, for respondent.

GARY A. J.

This is an action for the recovery of $1,200 on a policy of insurance issued by the defendant to the plaintiffs 1st September 1904, on their stock of goods at Cross Hill, S. C., which was destroyed by fire on the 12th day of June, 1902. The defendant answered the complaint, denying the material allegations thereof, and interposing the following defense "That the plaintiffs violated the terms and conditions set forth in the policy of insurance in the following particulars: (1) That they failed to keep and furnish the defendant the inventories and books provided for in said policy, and to keep the same in an iron safe or other safe place, as therein provided. (2) That they took out other and further insurance on the stock of goods covered and other property covered by their contract with the defendant without defendant's consent, thereby making the contract with defendant null and void. (3) And, further, that at the time defendant's policy was issued the plaintiffs had other insurance on their stock of goods, of which fact they failed to notify defendant. (4) That the plaintiffs, in their application for insurance, made sundry false representations as to value of stock on hand when the inventory had been taken, other insurance thereon, and as to fires previously had by them, thereby rendering the policy issued to them by defendant null and void." After all the testimony for both sides in this case had been taken, the defendant moved the court to instruct the jury to write a verdict for the defendant on the following grounds: (1) Because, under the proof of this case, the undisputed proof has been a failure to furnish such proof of loss as the law required by the written contract of the insurance policy which was before the court. (2) There has been a total breach of what is known as the 'iron-safe clause' before the court. (3) There is in existence other insurance without notice within contemplation of the policy." After argument the court ruled as follows: "I am satisfied the case is fatal on all three grounds, and I will have to instruct a verdict for the defendant"--which he did. The plaintiffs appealed, assigning errors on the part of his honor the circuit judge in directing a verdict, and on other grounds set forth in the exceptions.

We proceed to the consideration of those exceptions assigning error in directing a verdict on the first ground mentioned. There was testimony introduced to establish the following facts: Immediately after the fire the plaintiff wrote to J. W. Spence, the agent of the defendant, giving him notice of the fire, and requesting him to come to Cross Hill. The plaintiffs had policies of insurance on their stock of goods in two companies. J. W. Spence came, and in the course of conversation said to P. H. Madden that he would have the whole matter adjusted; that he need not put himself to any trouble; that he would ask the agent of the other company to let one man adjust the loss under both policies. Spence told the plaintiffs to write to L. R. Warren at Richmond, Va., who was the adjusting agent of the company. On the 11th of July, 1902, the plaintiffs wrote to the defendant as follows: "Cross Hill, S. C., July 11, 1902. Phoenix Assurance Company--Gents: We send you statement what was lost on June 12th, 1902, on Policy No. 5625260. We had on September the 1, 1901, date of policy, amount of goods $2,629.47; bought since $1,800.49. We lost $2,380.85. This is correct. Yours truly, L. T. Madden & Co. P. S. How the fire started is not known." The letter was sworn to before a notary public. On the 6th of August, 1902, the plaintiffs wrote to L. R. Warren, and likewise to the company, stating that they had not heard from the defendant, and requesting a reply. On the 14th of August, 1902, the plaintiffs wrote a letter to L. R. Warren, the adjusting agent, giving the same information in the same words as was contained in their letter of July 11, 1902, and stating that the Piedmont Insurance Company had a policy for $500 on the same property. Neither Warren nor the company replied until the 11th August, 1902. Wrote to the assured on the 27th of August, 1902, declining to receive the papers as proofs of loss, and stating the defects therein as such. They expressly advised the plaintiffs that the company waived none of its rights. This letter was inclosed with one dated 28th of August, 1902, stating that Warren would request F. M. Butt, of Augusta, Ga., to visit Cross Hill, and investigate the loss, and would suggest to him to show the plaintiffs how to fill up and execute the proofs of loss, if they so desired, but that this would be done only to facilitate them, and without waiver of any of the company's rights; that the sole authority of F. M. Butt was to investigate and report, but that any proposition made through F. M. Butt would be considered. F. M. Butt went to Cross Hill, but refused to render the plaintiffs any assistance in the preparation of the proofs of loss, and said to them that the insurance policy was null and void from the date it was issued. There was other correspondence, which we do not deem it necessary to reproduce.

Let us see to what extent the acts and declarations of J. W. Spence and F. M. Butt, the company's agents, were binding upon it. Section 1810 of the Code of Laws (Civ. Code 1902) is as follows: "Sec. 1810. Any person who solicits insurance in behalf of any insurance company not organized under or incorporated by the laws of the state, or who takes or transmits other than for himself any application for insurance, or any policy of insurance to or from such company, or who advertises or otherwise gives notice that he will receive or transmit the same, or who shall receive or deliver a policy of insurance of any such company, or who shall examine and inspect any risk, or receive, collect or transmit any premium of insurance, or make or forward any diagram of any building or buildings, or do or perform any other act or thing in the making or the consummating of any contract of insurance for or with any such company other than for himself, or who shall examine into and adjust or aid in adjusting any loss for or in behalf of any such insurance company, whether any such acts shall be done at the instance or request or by the employment of such insurance company, shall be held to be acting as the agent of the company for which this act is done or the risk is taken." This section was construed in the case of Norris v. Ins. Co., 57 S.C. 358, 365, 35 S.E. 572, 574. In that case the insurance company contended that Smith was not its agent, as far as the plaintiff was concerned. The court said: "But we are not prepared to take such subtle views of the matter of agency. These corporations act through agents. There is nothing in the policy issued by this insurance company which names any agent as such who can bind the company. This insurance company must remember that its contracts made within our state limits under our statute are taken with section 1481 (now 1810), hereinbefore quoted, as a part of such contracts, and that this section 1481 does not, in its use of the word 'agent,' place any limitations upon his powers so as to deprive any one who deals with such agent with respect to a contract of insurance made by such a one with the agent's insurance company as to the principle of the right to impute knowledge of such agent to the knowledge of the principal." When a person does any of the acts enumerated in section 1810 of the Code of Laws, the presumption is that he was the agent of the insurance company, but such presumption is subject to rebuttal. This principle does not infringe upon the doctrine announced in Young v. Ins. Co., 68 S.C. 387, 47 S.E. 681. Our conclusion is that the acts and declarations of the agents, J. W. Spence and F. M. Butt, were prima facie binding upon the defendant, and that they furnished evidence of waiver on the part of the defendant to insist upon its right to require compliance with the terms of the policy as to proofs of loss, especially when F. M. Butt refused to assist in the preparation of the proofs of loss, and declared that the policy was null and void from the time it was issued. These facts tended to show a denial of liability on the part of the defendant, and that it intended to rely upon the fact of forfeiture of the policy by the plaintiffs as a ground for refusing payment. In the case of Dial v. Life Association, 29 S.C. 560, 579, 8 S.E. 27, 38, the court uses this language: "The case of Knickerbocker Life Insurance Company v. Pendleton, 112 U.S. 696, 5 S.Ct. 314, 28 L.Ed. 866, with the authorities therein cited, shows conclusively that a distinct refusal to pay and a denial of liability upon the ground that the policy had lapsed and was forfeited is a waiver of the condition precedent requiring proof of death; and this doctrine seems to have been recognized in this state in Neve v. Charleston Insurance & Trust Company, 2 McMull. 237; Madsden v. Phoenix Fire Insurance Company, 1 S. C. 24. When, therefore, the company was notified of the death of Dial, and the necessary blank forms to make out proof of death were applied for, and refused upon the ground that the policy had been forfeited, this was a waiver of the required proof, or at least was sufficient evidence of such waiver as rendered it necessary to submit...