Merchants' Fire Insurance Co. v. McAdams

• Decision Date: 21 December 1908
• Citation: 115 S.W. 175,88 Ark. 550
• Parties: MERCHANTS' FIRE INSURANCE COMPANY v. MCADAMS
• Court: Arkansas Supreme Court

115 S.W. 175

88 Ark. 550

MERCHANTS' FIRE INSURANCE COMPANY v. MCADAMS

Supreme Court of Arkansas

December 21, 1908

Appeal from Saline Circuit Court; W. H. Evans, Judge; reversed.

Reversed and remanded.

J. W. & M. House, for appellants.

1. By the terms of the application and the policy sued on the answers to the questions in the application were made warranties; and it is expressly stipulated in the policy that it should become void if the insured at the time had, or should thereafter procure, any other insurance, whether valid or not, on the property covered in whole or in part by this policy. If appellee's testimony that he mailed the policies of the other insurance companies be true, and if it be conceded that he thought they had been cancelled, his case is not strengthened. Though an assured may honestly believe what he said to be true, still, if such statement is made the basis of a warranty, and it be in fact not true, the insurance is vitiated. 14 N.W. 792; 5 F. 674; 12 Am. St. Rep 807-8; 31 S.W. 566; 98 Pa. 45.

2. It is obvious from the application made to the Queen of Arkansas Insurance Company that appellee understood that that company was not expected to take the entire amount of the application. When the application was given to that company and it sought insurance in other companies, it was a mere broker acting for him, which agency ceased when the policies were issued by the other companies and were returned to and accepted by appellee. These policies were issued subject to appellee's approval, and when they were received and retained by him without objection they were approved, and thereafter the Queen of Arkansas company had nothing further to do with, nor any control over, them. 1 S.W. 689; 83 Md 22; 36 Mich. 502; 63 N.W. 784; 1 Cooley's Briefs on Ins. 68; 105 Ala. 282.

3. The policies of the Capital and American Fire Insurance companies both provided the manner in which they should be cancelled. When a contract provides how it may be cancelled, its terms must be pursued, or there can be no cancellation, and the court's instruction to the effect that if appellee mailed the policies to the Queen of Arkansas Insurance Company this was a cancellation of the policies, is contrary to this court's declaration of the law. 72 Ark. 305.

4. The second and fourth instructions given by the court are both peremptory instructions to find for the plaintiff, and are erroneous.

C. P. Harnwell, for appellee.

OPINION

MCCULLOCH, J.

Appellee, McAdams, instituted separate actions against appellants, Merchants' Fire Insurance Company and Planters' Fire Insurance Company, to recover the amount of the several insurance policies, each for $ 1,000, issued to him by said respective companies on his frame store building, stock of merchandise and store furniture and fixtures. The court made an order consolidating the two actions as involving the same issues, and a trial resulted in a judgment in appellee's favor against each company for the full amount of its policy and for damages and attorney's fees under the statute. The insurance companies appealed.

The defenses offered by each appellant were that there were breaches by appellee of his warranty contained in the "iron safe clause" of the policy with reference to the preceding itemized inventory and the keeping of books, and of his warranty concerning other insurance on the property. The facts upon which the latter defense is based are as follows: In June, 1906, he applied to the Queen of Arkansas Company for insurance in the sum of $ 2,500 on this property, and paid a part of the premium and executed his note to that company for the balance, which note he afterwards paid. That company accepted and approved the application, but, not desiring to carry insurance in that amount on the property, issued to appellee a policy for $ 900, but procured for him on the application two policies each for $ 800 from the Capital Fire Insurance Company and the Peoples' Fire Insurance Company, thus making the total amount of insurance asked for in the application. All of the policies were for one year, expiring on June 21, 1907, and the Queen of Arkansas Company accounted to the other two companies for the premiums. The People's Fire Insurance Company afterwards passed into the hands of a receiver, and the American Insurance Company issued a policy in lieu of the one issued by the People's Company.

In March, 1907, the managing officers of the Queen of Arkansas Company decided to cancel its policy, and sent its agent to see appellee to demand the surrender of the policy, but appellee refused to do so except on condition that all of the premium be returned. On March 28, 1907, that company sent appellee a check for the unearned premium on its policy and again demanded a surrender of the policy, and on the day appellee received the check he mailed to the Queen of Arkansas Company, postage prepaid, all three of said policies with a letter stating that he surrendered same. The envelope containing this letter and the policies was never received by the company, and this warrants the conclusion from the evidence that it was lost in the mail. The officers of the other two companies testified that they never received the policies nor cancelled them, but considered them in force until the date of expiration on June 21, 1907.

The two policies in suit were both issued to appellee on April 2, 1907, and the fire occurred on June 27, 1907. They were issued on appellee's application made to the Planters' Fire Insurance Company through one of its solicitors.

Appellee testified that when he made application to the soliciting agent he informed the latter that he had returned all the policies for cancellation, and had no insurance on the property, and that he showed him the letter received from the Queen of Arkansas Company concerning the cancellation.

The written application upon which the policies were issued contained the following among other questions and answers, the truth of which answers are by the express terms of the policies, warranted:

"Q. What other insurance on property? (Give companies and amounts.) Answer. No. * * * * * *

"Q. Has any company cancelled or refused insurance on the property? Answer. Insured in the People's when it made assignment."

Each of the policies sued on contained the following clause

"This entire policy, unless otherwise provided by agreement indorsed thereon or added thereto, shall be void if the insured now has or shall hereafter make and procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy."

The court, over the objections of appellant, gave the following instruction, viz:

"2. The court now instructs you that if you find from the evidence the plaintiff, L. C. McAdams, made application to the...