Liverpool & London & Globe Ins. Co., Limited, of England v. McCree

• Decision Date: 15 October 1925
• Docket Number: 6 Div. 301
• Citation: 213 Ala. 534,105 So. 901
• Parties: LIVERPOOL & LONDON & GLOBE INS. CO., LIMITED, OF ENGLAND v. McCREE.
• Court: Alabama Supreme Court

105 So. 901

213 Ala. 534

LIVERPOOL & LONDON & GLOBE INS. CO., LIMITED, OF ENGLAND v. McCREE.

6 Div. 301

Supreme Court of Alabama

October 15, 1925

Appeal from Circuit Court, Jefferson County; S.F. Hobbs, Judge.

Action on contract of insurance by J.C. McCree against the Liverpool & London & Globe Insurance Company, Limited, of England. Judgment for plaintiff, and defendant appeals. Affirmed.

Coleman Coleman, Spain & Stewart, of Birmingham, for appellant.

Black &amp Harris and J. Potts Barnes, all of Birmingham, for appellee.

THOMAS J.

The first appeal is reported as Liverpool, etc., Co. v McCree, 210 Ala. 559, 98 So. 880. The second trial was had on count D, declaring on a verbal contract of insurance.

There was no error in sustaining demurrer of plaintiff to pleas Z and Z-1, setting up the defense that the contract was void, or not binding, without ratification, because Acree, with whom it is alleged plaintiff made the contract of insurance, was, without the knowledge of the defendant company, the agent of the bank holding a mortgage on the cotton, and to whom the contract was made payable. The pleas do not aver an agency of the mortgager or insured. There is no such conflict of interests in such a dual capacity of Acree representing assured and mortgagee as to defeat the policy or require ratification of the acts of the agent; that is to say, a contract of fire insurance is held not avoided as to the owner of the policy by the fact that the agent through whom the insurance was procured was also, without the company's knowledge, acting as agent for the mortgagee of the property to whom the policy was payable as its interest may appear. Fiske v. Regal Exchange Ins. Co., 100 Mo.App. 545, 75 S.W. 382; 32 C.J. 1071.

Demurrers, to replications 1, 2, 3, and 4, directed to pleas 2, 3, 10, A, B, and D, were overruled. Said pleas, in a word, set up (3, B, and D) a failure by plaintiff to render a sworn statement of the loss within 60 days, and (2, 10, and A) the failure to give immediate notice of the loss. Replications 1 and 3 set up facts that amounted to estoppel, and 2 and 4 excused by way of waiver of notice. The respective averments of the replications, after setting up the facts, are:

"And plaintiff further avers that he did rely upon said statement of defendant's said agent, Acree, and did, acting in reliance thereon, refrain from giving the information and notice and proof as required by the terms and provisions of the policy as set up in said plea of the defendant. Wherefore plaintiff says that the defendant is estopped to plead and get the advantage of the matters and things set up in said plea. Wherefore plaintiff says that the defendant has waived the provisions of the policy as set up in said plea, and that the same are of no effect and have no force and application in this cause."

This averment is sufficient answer by way of estopel and waiver to the pleas that excuse the failure of immediate notice, as well as notice within 60 days of the loss. The evidence supports the replication, and shows that the plaintiff made immediate and sufficient effort to give the notice of the loss and proof thereof by application for blanks, and was informed that no policy was found, and that he had no insurance. Thereafter he had the right to rely on these representations, and the same was a justifying cause for his failure to give immediate notice of the loss and to make proof of loss within 60 days. Thus was the question of estoppel averred by way of replication and proved, as to the respective failures to give immediate notice of the loss (pleas 2, 10, and A) and the required proof of loss within 60 days, as set up in pleas 3, B, and D.

The question recurs, Was there sufficient averment of facts in the replications of waiver as answer to the several pleas? The ground of denial of plaintiff's request for blanks, etc., was specific--"You have no contract of insurance." That is to say, the legal effect of the averred facts was that of a denial of the existence of an insurance contract that covered the subject-matter destroyed by the fire. This was a waiver of other defenses and estoppel to set up any other defense but the specific defense or ground on which the refusal of plaintiff's request for blanks for notice and proof of loss was rested--the denial of the existence of the insurance contract. Honesdale Ice Co. v. Lake etc., Co., 232 Pa. 293, 81 A. 306; Second Nat Bank v. Lash Corp. (C.C.A.) 299 F. 371; Railway Co. v. McCarthy, 96 U.S. 258, 24 L.Ed. 693; Littlejohn v. Shaw, 159 N.W. 188, 53 N.E. 810; Bank of Taiwan, Ltd., v. Union Nat. Bk. of Philadelphia (C.C.A.) 1 F. (2d) 65 The pleas of waiver and estoppel can be predicated on this definite denial of the existence of the contract. The refusal under the averred facts to give, at plaintiff's request, the usual "papers" on which to give the required notice, and to make the proof of loss within the required time, is but evidence or confirmation of the specific denial of the existence of the contract. Fireman's Ins. Co. v. Crandall, 33 Ala. 9; Strong v. Cathin's Adm'r, 37 Ala. 706; Montgomery v. M.W.W. Co., 77 Ala. 248; Cent. City Ins. Co. v. Oates, 86 Ala. 558, 568, 6 So. 83, 11 Am.St.Rep. 67; Taber v. Royal Ins. Co., 124 Ala. 681, 26 So. 252; Ray v. Fidelity-Phoenix Ins. Co., 187 Ala. 91, 65 So. 536; Const. Ins. Co. v. Parkes, 142 Ala. 650, 39 So. 204; Tayloe v. M.F. Ins. Co., 9 How. 390, 13 L.Ed. 187; 4 Cooley's Briefs 3535C; 22 A.L.R. 408, note.

The case of Cassimus Bros. v. Scottish U. & N. Ins. Co., 135 Ala. 256, 33 So. 163, is cited as supporting the view that a replication of waiver must aver that the insured was misled to his injury. The present replications contained sufficient averment as to this if such is required of a waiver. When the replication and the plea are considered together a case of waiver is averred (Southern States Co. v. Kronenberg, 199 Ala. 164, 167, 74 So. 63), and the estoppel supporting the same (Ivy v. Hood, 202 Ala. 121, 123, 79 So. 587). The later cases hold that "misreliance causing injury is not an essential element of waiver." The Cassimus Case has not been followed. Travelers' Ins. Co. v. Plaster, 210 Ala. 607, 610, 98 So. 909. If such was not the rule, estoppel and waiver would be the same. "A waiver may be founded on an estoppel, but it is not necessarily so." The distinction has been preserved by this court. Manhattan Life Ins. Co. v. Parker, 204 Ala. 313, 317, 85 So. 298; Washburn v. Union Cent. Life Ins. Co., 143 Ala. 485, 488, 38 So. 1011; Alabama State Mut. L. Ins. Co. v. Long Clothing & Shoe Co., 123 Ala. 667, 675, 26 So. 655; Nat. Life & Accident Ins. Co. v. Jackson, 18 Ala.App. 347, 92 So. 201. The replications are not subject to grounds of demurrer urged and argued.

In the present issue the contract is repudiated, the relationship of assured and insurer denied, the plaintiff is informed that there is no policy or contract or liability of insurance. Thus the relationship out of which other defenses arise is denied, and all other grounds of defense are waived in the denial of contractual relations of the parties. Stated in other words, by the denial of the existence of the contract of insurance, the insurer not only waived any defense it may have had under the contract, but is estopped to set up the defenses sought to be presented by said pleas as to contract provisions for notice and proof of loss. This results from the inconsistency of permitting the insurer to unequivocally inform the insured that no contract of insurance exists, and, when suit is brought, plead as a defense under that contract the failure of such notice or proof. Having deliberately assumed one position on which plaintiff relied, and which was the efficient cause of assured's failure to carry out the provisions of the policy as to notice and proof of loss, such assumption is sufficient on which to base a plea of estoppel, as set out in the replication. Ivy v. Hood, 202 Ala. 121, 79 So. 587. In Ohio & Miss. R. Co. v. McCarthy, 96 U.S. 258, 24 L.Ed. 693, the Supreme Court of the United States said:

"Where a party gives a reason for his conduct and decision touching anything involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration. He is not permitted thus to mend his hold. He is estopped from doing it by a settled principle of law."

The case of Bank of Taiwan v. Union Bank of Philadelphia (C.C.A.) 1 F. (2d) 65, followed the above case, and indicates that the rule is not applicable only where the second party has been misled to his injury by the defense set up by the first party before litigation. There the bank refused to honor a draft, on the ground that the terms of the letter of credit had not been complied with. The Circuit Court of Appeals held that on trial the bank could not set up that plaintiff was not a bona fide purchaser for value, and nothing was said about the plaintiff being misled to his detriment by the ground assigned before litigation. Littlejohn v. Shaw, 159 N.Y. 188, 53 N.E. 810; Honesdale Ice Co. v. Lodore Imp. Co., 232 Pa. 293, 81 A. 306; Schillinger Bros. & Co. v. Bosch-Ryan Grain Co., 145 Iowa, 750, 122 N.W. 961.

There was no reversible error in ruling on demurrer to replications, for reasons we have indicated. Aside from the foregoing, as to all the pleading, the jury found specifically as to all the issues for the plaintiff. Raney v. Raney, 80 Ala. 157; Foster v. Johnson, 70 Ala. 249; Morton v. Bradley, 30 Ala. 683; Jesse v. Carter, 28 Ala. 475; State v. Brantley, 27 Ala. 44; Tuscaloosa Belt R. Co. v. Maxwell Bros., 171 Ala. 318, 54 So. 620.

Defendant admitted, to interrogations propounded under the statute that it did issue a certificate...