McCann v. Reeder

• Decision Date: 06 July 1934
• Docket Number: 24819.
• Citation: 34 P.2d 461,178 Wash. 126
• Court: Washington Supreme Court
• Parties: McCANN v. REEDER et al.

34 P.2d 461

178 Wash. 126

McCANN v. REEDER et al.

No. 24819.

Supreme Court of Washington, En Banc.

July 6, 1934

Appeal from Superior Court, King County; Guy C. Alston, Judge.

Action by W. W. McCann against V. H. Reeder and others doing business as the Reeder Transfer Company, wherein the Mercer Casualty Company was made garnishee. From a judgment for plaintiff against the garnishee, the garnishee appeals.

Reversed with direction.

Shank, Belt & Rode, of Seattle, for appellant.

Pearson & Potts, of Seattle, for respondents.

STEINERT Justice.

This is a garnishment proceeding wherein respondent seeks to recover from appellant, the garnishee, payment of a judgment which respondent had previously recovered in the main action against defendants for damages arising out of an automobile collision. A hearing Before the court, without a jury resulted in findings and conclusions favorable to respondent followed by a judgment against appellant in the full amount originally recovered against the defendants, with costs and interest. The garnishee has appealed from the judgment against it.

The facts are these: For some years prior to June 3, 1931 defendant Wm. Reeder had been in the trucking business. During a portion of that time he had been a member of a partnership engaged in that business and operating under the name of Hamilton Auto Freight, which was later incorporated, and in which, when incorporated, Reeder held considerable stock. In February, 1930, he appears to have severed his connection with the corporation and thereafter to have conducted the same character of business in his own name. An insurance broker by the name of Goodier had, from time to time, procured automobile insurance for the defendant Reeder and for the Hamilton Auto Freight.

On June 3, 1931, Goodier, acting for Reeder personally, procured from appellant an automobile vehicle insurance policy covering a Fageol truck. The following provisions appear on the first page of the policy:

'The Mercer Casualty Company * * *

'In consideration of a premium of Seventy Nine and 60/100 Dollars and the statements set forth in the schedule of statements attached hereto and made a material part hereof, said statements being Warranted true by the Assured, as evidenced by the acceptance of this policy, Does Hereby Insure, * * *

'Schedule of Statements

'* * *

'9. During the past three years Assured has had no accident as result of ownership or operation of any auto vehicle and no Company has refused him insurance on any autovehicle, Except, no exceptions. * * *

'11. Assured accepts this policy, (including any endorsements thereon or attached thereto) in its entirety as the contract between himself and said Company, and agrees to abide thereby.'

The insurance was placed in the appellant company on the specific request of Reeder, because that company's rates were considerably less than those of other companies. In a conspicuous place on the sectional front of the policy were the words 'Read This Policy.'

The accident out of which the main action arose occurred June 13, 1931, ten days after the issuance of the policy. On the same day, but prior to the happening of the accident, Reeder received from the appellant a five days' notice of cancellation of the policy, in accordance with the provisions contained therein. Cancellation was ordered by the company because of the information which it had obtained as to Reeder's previous loss record.

Appellant denied liability under the policy, on the ground that the schedule of statements above mentioned constituted warranties and were, in fact, untrue, in that within three years prior to the issuance of the policy Reeder had had a number of accidents as the result of ownership or operation of an auto vehicle, and that an insurance company had canceled a policy covering an automobile owned by him.

The evidence discloses that between September 3, 1929, and November 9, 1930, there had been six accidents involving automobiles or trucks either owned, or else operated, by Reeder. Two of these accidents involved collisions with other cars, apparently resulting in minor injuries only. A third involved a collision between a street car and a truck owned by Hamilton Auto Freight, Inc., and driven by Reeder; the ensuing litigation resulted in a compromise under which the owner of the truck was paid $500. A fourth accident involved the burning of a truck, for which fire loss was collected. A fifth occurred when a truck backed over an incline and was upset; as a result of the accident Reeder made claim upon the insurance company, which was one other than the appellant herein. A sixth accident involved a collision with another car, and resulted in litigation which terminated in a verdict and judgment in favor of Reeder; the expense incident to the litigation, however, which the insurance company that held the coverage had to pay, was $800. The policy was thereafter canceled by the insurance company for unsatisfactory loss record and accident frequency. In addition to these six specific accidents, Reeder admitted that there had been a number of others, all, however, of a minor nature, but for one of which, at least, damages were paid.

A blanket policy previously issued by another insurance company covered the equipment owned by Hamilton Auto Freight, Inc., and also trucks or automobiles owned by Reeder, and, was, in form, made to protect both. It was this policy under which the insurance company had been put to the expense of $800 in defending litigation consequent upon the accident. All told, there had been fourteen accidents in which trucks or automobiles of either the company or of Reeder were involved. It further appears that at least two other policies held by Reeder had been canceled by the insurance company which issued them. Goodier, who had had charge of the insurance of both Reeder and the Hamilton Auto Freight, Inc., well knew of these various accidents and at one time had complained of their frequency to Reeder.

Relying upon the provisions of Rem. Rev. Stat. § 7078, which will be noticed later, Reeder contended upon the trial, and the court found: 'That no misrepresentations were made in the negotiation of said policy of insurance hereinBefore referred to, or in said policy, with the intent to deceive or defraud the garnishee defendant, nor were any misrepresentations made to the negotiation of said policy of insurance or in said policy in any manner material to the risk.'

The construction of section 7078 in its application to the facts herein presents the vital question in this case. Preliminary to that, however, we will advert to two other features of the case that distinguish it from ordinary cases of this kind.

In the first place, as already observed, this action is not prosecuted by the assured Reeder to recover under the policy, but by one who seeks recovery against appellant through a garnishment proceeding. It is well settled that the rights of a garnishing creditor are no greater than those of the debtor, and, if the debtor may not recover, then the creditor may not. Barkely v. Kerfoot, 77 Wash. 556, 137 P. 1046; Austin v. Wallace, 117 Wash. 61, 200 P. 566; Parks v. Lepley, 160 Wash. 287, 294 P. 1020. Hence, if Reeder may not recover, then the respondent may not.

In the next place, it is also to be observed that the insurance was procured through a broker. But under the statute and our decisions, such broker is the agent of the one for whom he procures the insurance. Day v. St. Paul Fire & Marine Ins. Co., 111 Wash. 49, 189 P. 95; Hayes v. Automobile Ins. Exch., 126 Wash. 487, 218 P. 252; Lindstrom v. Employers' Indemnity Corp., 146 Wash. 484, 263 P. 953. So that any false warranty made in the policy is not alleviated by the fact that the policy was procured through another, if such other be the agent of the assured.

We now come to the main question. Rem. Rev. Stat. § 7078, in so far as it is material here, reads as follows: 'No oral or written misrepresentation or warranty made in the negotiation of a contract or policy of insurance, by the assured or in his behalf, shall be deemed material or defeat or avoid the policy or prevent it attaching, unless such misrepresentation or warranty is made with the intent to deceive.'

Under our decisions construing this statute, the beneficiary's right to recover upon the policy is not defeated or avoided merely because the representations are false. It must also be found that they were made with intent to deceive. Houston v. New York Life Ins. Co., 159 Wash. 162, 292 P. 445, and cases therein cited. The effect of the rule as prescribed by the statute is that the intent of the one making the misrepresentation or warranty is ordinarily a question of fact. If there be a conflict in the evidence touching that question, it is to be resolved by the trier of the fact; if, however, there be no conflict in the evidence, or if, from the evidence, only one conclusion can properly be reached, it must be determined as a matter of law.

Applying this rule to the present case, we are of the opinion that the evidence here presents no conflict, and that the question of intent is to be determined as a matter of law. Reeder himself directed that the particular insurance be placed with the appellant company. He patronized that company because its retes were cheaper. Both he and his agent were well aware of the numerous accidents in which trucks owned or operated by Reeder had been involved. In a prominent place on the policy was a statement, which formed a part of the consideration for its issuance, warranting that the insured had had no accidents within the previous three years all of which was untrue. When the policy was delivered to the agent, he made no correction of...