March v. Snake River Mut. Fire Ins. Co.

• Decision Date: 27 July 1965
• Docket Number: No. 9339,9339
• Citation: 404 P.2d 614,89 Idaho 275
• Parties: U. E. MARCH, Administrator of the Estate of Joseph Bibeau, Deceased, Plaintiff-Appellant, v. SNAKE RIVER MUTUAL FIRE INSURANCE COMPANY, an Idaho corporation, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 614

404 P.2d 614

89 Idaho 275

U. E. MARCH, Administrator of the Estate of Joseph Bibeau, Deceased, Plaintiff-Appellant, v. SNAKE RIVER MUTUAL FIRE INSURANCE COMPANY, an Idaho corporation, Defendant-Respondent.

No. 9339.

Supreme Court of Idaho.

July 27, 1965.

Thomas A. Mitchell, Coeur d'Alene, for appellant.

Millar & Callister, Boise, for respondent.

KNUDSON, Justice.

Immediately prior to his death which occurred September 26, 1957, Joseph Bibeau lived in the area of Sandpoint, Idaho, and was being cared for by friends, among whom was one Claude N. Simon.

On August 31, 1957, pursuant to a request of Bibeau, Mr. Simon applied, through the Eagles Agency at Sandpoint, for a fire insurance policy covering a house, barn and a quantity of hay situate upon land owned by Bibeau. Pursuant to such application the defendant-respondent, Snake River Mutual Fire Insurance Co., under date of September 10, 1957, issued its policy numbered W 100967 F insuring said buildings and hay against loss by fire, designating 'Claude N. Simon as Guardian of Joseph Bibeau' as the insured, with an effective date of August 31, 1957. Said policy is in evidence as plaintiff's exhibit 8. The term of the policy was for five years commencing August 31, 1957, to August 31 1962, and the annual premium payments of $18.24 each were due and payable on or before the 31st day of August of each year commencing with the inception date of the policy.

At the time the policy was obtained Mr. Simon was not a legal guardian of Mr. Bibeau nor did he have any interest or ownership in the property mentioned except in some hay which was stored on the premises.

On September 26, 1957 Bibeau died. Shortly thereafter Simon filed his petition for probate of a purported will of the deceased Bibeau, which petition was contested and later denied. During the pendency of litigation which followed, the second annual premium on the policy was about to become due and on August 25, 1958 Simon paid it and at the same time requested that the named insured on the policy be changed to 'Claude N. Simon,' which was then done by endorsement attached to the original policy.

On October 12, 1958 the barn, together with hay therein, which was covered by the policy, was completely destroyed by fire. On October 24, 1958 Simon filed, with the Eagles Agency, a proof of loss wherein it was stated that at the time of the loss 'the interest of your insured in the property described therein was title vests in insured.' (emphasis supplied)

This action was commenced on April 12, 1961, by plaintiff-appellant, U. E. March, administrator of the estate of Joseph Bibeau, deceased, seeking to recover of and from defendant the sum of $3,000.00 allegedly payable under the policy herein mentioned for loss of the barn, together with interest and attorney's fee. Following a trial before the court sitting without a jury, judgment was entered for defendant. Plaintiff filed a motion to amend the conclusions of law, together with a motion for a new trial, each of which motions were denied. This appeal is from the judgment and the orders denying said motions.

Plaintiff asserts a number of errors, one of particular significance being that the court erred in 'concluding as a matter of law, if it did, that Claude N. Simon was the insured' under respondent's insurance policy No. W. 100967 F. Although the court did not make a specific finding of fact or conclusion of law wherein it is stated that Claude N. Simon was the insured under said policy at the time the loss occurred, the conclusion reached by the court permits of no other construction.

The sequence of important events leading up to the fire loss is not disputed in any substantial degree. The first of such events was the fact that Mr. Simon, pursuant to a request of Bibeau, applied for the fire insurance policy here involved at the time and in the manner hereinbefore stated. The policy was issued to provide fire insurance coverage upon the dwelling and barn belonging to Bibeau and some hay situate in the barn in which Simon claimed some interest. For some undisclosed reason Simon requested or permitted the policy to designate him 'as guardian of Joseph Bibeau' as the insured. The record shows and the court found that Simon never was the legally appointed guardian of Joseph Bibeau. It therefore becomes necessary to determine what was the intention of the parties as to the identity of the insured. In this connection the applicable general rule is stated in 29 Am.Jur., Insurance, § 247, p. 628, as follows:

'As in the case of contracts generally, the cardinal principle pertaining to the construction and interpretation of insurance contracts is that the intention of the parties should control. If the intention of the parties can be clearly discovered, the court will give effect to that intention within the sphere of its proper and legal operation and will construe accordingly the terms used in the policy, no matter how inapt, ungrammatical, or inaccurate they may appear when viewed strictly or legally. The rule is that once the intention of the parties is clearly ascertained, a policy of insurance is to be liberally construed in order to carry out that intention, especially where a liberal construction is the reasonable one and a literal construction would lead to manifest injustice.'

Throughout his testimony in this connection Simon repeatedly stated that the insurance he had so applied for and procured was for Joe Bibeau. He, Simon, advanced the insurance premium for the first year but he afterwards filed his claim against the estate of Bibeau for reimbursement of that amount, which action in effect is recognition that the coverage belonged to Bibeau. There is no doubt that the insurance was primarily for the protection of Bibeau's property and that all parties concerned therewith intended and considered Bibeau as the insured under the policy.

The next event of consequence, after the death of Bibeau, occurred on August 25, 1958, at which time Simon called at the office of defendant's agent where he tendered and paid the second annual premium which was shortly to become due on said policy. On this occasion an endorsement was made to the policy amending the policy by changing the name of the insured from 'Claude N. Simon, Guardian of Joseph Bibeau' to 'Claude N. Simon.' In this connection the trial court made the following quoted findings of fact which explain the court's conclusion as to why and how this substitution was made:

'(T)hat after the death of Joseph Bibeau and before the premium came due in 1958, the agent of the defendant, Edna M. Eagles, of Sandpoint, notified the same Claude N. Simon that the premium on said policy was coming due and he went to her office and told her he wanted protection because he had money invested out there. The agent informed him that they could insure him. She told him they would have to change the policy because Bibeau was deceased. Claude N. Simon, on his own behalf, paid the premium and by endorsement the said Edna M. Eagles, the agent for defendant, changed the name of the insured to Claude N. Simon.'

The foregoing findings are supported by the record.

Notwithstanding the fact that the court stated that plaintiff's challenge of Simon's and the agent's authority to make such a change in the policy was 'one of the main points of issue in this case,' the court did not make any specific conclusion of law regarding the validity or invalidity of the substitution thereby undertaken.

It is well settled that policies of insurance are written contracts between the parties and are governed by the same rules which are applicable to contracts generally. Boyer v. United States Fidelity & Guaranty Co. (1929), 206 Cal. 273, 274 P. 57. So also, the modification of a contract of insurance is governed by the same rules and the same elements are essential to the modification thereof. American Building Maintenance Co. v. Indemnity Ins. Co. of North America (1932), 214 Cal. 608, 7 P.2d 305.

In order that there may be a modification of a contract of insurance there must be an agreement therefor and neither party has the right to modify the contract without the consent of the other party. Liverpool & London & Globe Ins. Co. v. McLaughlin (1918), 70 Okl. 237, 174 P. 248; Grand Lodge of the Scandinavian Fraternity of America, Dist. No. 7 v. United States F. & Guar. Co. (1940), 2 Wash.2d 561, 98 P.2d 971; 44 C.J.S. Insurance § 281, p. 1120. In the instant case the modification which was undertaken on August 25th did not have the sanction or consent of both parties to the contract. No authorized representative of the Joseph Bibeau estate took any part in its planning or attempted consummation.

The trial court's finding of fact (hereinbefore quoted) indicates that the manner of accomplishing the modification was the product of defendant's agent's thinking and action. By what authority the agent acted in this undertaking is not disclosed other than by defendant's contention that she so acted at the request of the insured.

We do not agree with defendant's contention that its agent was acting pursuant to a request of the insured. The record is most convincing that initially Joseph Bibeau was the insured. It is generally recognized that in the absence of an express provision in the policy controlling or relating to the matter, a policy of insurance on property is not terminated merely by reason of the death of the insured. 29 Am.Jur., Insurance, § 321, p. 693. If a loss occurs after the death of the insured, the proceeds of the insurance go to his heirs. (See 16 A.L.R. 310.) After the death of the insured the legal representative of the estate would, with whatever approval may be required by the court, have authority to consent to a modification.

No such authority...