Merrill v. Farmers' Alliance Ins. Co.

• Decision Date: 07 March 1942
• Docket Number: 35313.
• Citation: Merrill v. Farmers' Alliance Ins. Co., 155 Kan. 31, 122 P.2d 776 (Kan. 1942)
• Parties: MERRILL v. FARMERS' ALLIANCE INS. CO.
• Court: Kansas Supreme Court

122 P.2d 776

155 Kan. 31

MERRILL v. FARMERS' ALLIANCE INS. CO.

No. 35313.

Supreme Court of Kansas

March 7, 1942

Syllabus by the Court.

Under provision in fire policy covering three buildings on farm reserving right of insurer to cancel policy or any part thereof, by giving five days' notice to insured, if premises described should be occupied for other than farm purposes, proof that one of buildings was used for other than farm purposes would not void entire policy, regardless of meaning of word "premises" as used in policy especially where it was clear that insurer never so construed policy.

In proper usage, the word "premises" has come to mean land and tenements, land and its appurtenances, the ground immediately surrounding a house, or a piece of realty, but it has been used to mean a building, or a part of a building, a distinct locality.

In action on fire policy covering three buildings on farm and the contents of one, where defendant's answer, seeking to plead defense that policy was void because of a mortgage insured placed on property after policy was written, failed to allege lack of knowledge or consent of such encumbrance and defendant, after securing permission to amend its answer in such respect, failed to do so, the defense was "abandoned" at the trial.

In action on fire policy covering three buildings on farm and the contents of one, where defense relied upon by insurer was that policy was cancelled upon building which later burned prior to date of burning because building was being used for other than farm purposes, pursuant to provision of policy reserving right of insurer to cancel policy or any part thereof, by giving five days' notice to insured, evidence supported jury's finding that insurer did not mail to insured a notice cancelling the policy on the building which burned.

In action on fire policy covering three buildings on farm and the contents of one, the statute relating to withdrawal of members of mutual fire and tornado companies and for cancellation of the policy was not applicable, where there was no evidence that insurer was a mutual fire and tornado company.Gen.St.1935, 40-1015.

The provision in fire policy authorizing insurer to cancel policy by giving notice to the insured "in person or by mail" did not mean that if notice was mailed it became effective even though it was never received by the insured.

In an action on a fire insurance policy covering three buildings and the contents of one it is held, under the facts stated and for the reasons given in the opinion: (1) The insurer's claim that the policy was void because of a change in the use of one of the buildings after the policy was written cannot be sustained.(2) The pleaded defense that the policy was void because of a mortgage the insured placed on the property after the policy was written was abandoned at the trial.(3)The trial court did not err in refusing to set aside the jury's answer to a special question in which it was found the insurer did not mail to the insured a notice cancelling the policy on one of the buildings; and (4)G.S.1935, 40-1015, applies to the cancellation of policies written only by mutual fire and tornado companies.

Appeal from District Court, Finney County; Fred J. Evans, Judge.

Action by Nick Merrill against the Farmers' Alliance Insurance Company on a fire policy.From a judgment for plaintiff, the defendant appeals.defendant, after securing permission to amend its answer in such respect, failed to do so, the defense was "abandoned" at the trial.

Otis S Allen and George S. Allen, both of Topeka, for appellant.

Wm Easton Hutchison, C. E. Vance, and A. M. Fleming, all of Garden City, for appellee.

HARVEY Justice.

This was an action upon a fire insurance policy.A trial by jury resulted in judgment for plaintiff.Defendant has appealed.

The pertinent portions of the pleadings may be summarized as follows: Plaintiff in his petition, filed October 20, 1940, alleged that defendant, the Farmers' Alliance Insurance Company of McPherson, Kansas, is a corporation organized and existing under the insurance laws of this state; that about February 24, 1937, in consideration of the payment of a stipulated premium, plaintiff and said defendant entered into a contract in writing whereby defendant insured plaintiff against loss or damage by fire of a certain shingle-roof frame produce barn, situated on a described thirty-acre tract of land in Finney county, to the amount of $750, for a term ending February 24, 1942; a copy of the insurance contract was attached; that about July 27, 1940, while the contract of insurance was in force, the building was completely destroyed by fire, without criminal fault on the part of the plaintiff; that immediately thereafter plaintiff notified defendant insurer of such loss and demanded payment of the sum of $750, but the defendant insurer denied all liability as the result of such loss, claiming that the contract of insurance was cancelled July 6, 1940, by virtue of a written notice which the insurer claimed was mailed to plaintiff, which purports to read as follows:

"Policy Endorsement

"PolicyNo 322376 Insured Nick Merrill

"This endorsement issued on condition that said policy is in full force and does not waive any of the provisions, conditions or stipulations of said policy, except as expressed hereon.

"Conformable with the request of our Inspector we hereby cancel the $750.00 fire and the $693.70 wind and hail coverage on the Produce House.

"Return premium $3.68

"Effective date July 6, 1940

"Farmers Alliance Insurance Co

"By H. J. Ferguson(signed)

"Secretary."

"Plaintiff alleges that no such notice was ever mailed to him and no such notice of such import was ever at any time or in any manner by plaintiff received"; that plaintiff has performed all conditions encumbent upon him to be preformed; that the reasonable value of the building was in excess of the amount of the insurance, and the prayer was for judgment for $750 and cost of suit, including a reasonable attorney's fee.

Defendant in its answer admitted plaintiff's residence and its corporate existence as alleged, and that it executed a policy of insurance on a certain shingle-roof produce barn, situated upon the tract of land described, in the amount of $750, and alleged that at the time the building burned plaintiff was not insured under the policy against loss by fire, for the reason the policy provides: "It is stipulated and agreed *** if the premises described shall be occupied for other than farm purposes *** this policy shall be null and void," and alleged that at the time the insurance policy was issued the building was represented to be and was occupied as a farm produce barn, and that at the time of the fire the building was occupied as a road house where bottled goods, sandwiches and other things were served and sold; that the policy further provided:

"This company reserves the right to cancel this policy, or any part thereof, by giving five days notice to that effect to the insured, and if the premium has been paid, making a tender of the unearned premium such notice of cancellation and tender of unearned premium to be made in person or by mail addressed to the insured's post office address"; and alleged that several days prior to July 6, 1940, defendant was advised of the change of occupancy and use of the building, and notified insured that the company did not insure buildings so occupied, and that it intended to cancel the policy insofar as that building was concerned, and that on July 6, 1940, defendant sent by United States mail, in an envelope addressed to the insured at his post office address as shown in his application, said envelope being duly stamped with the required amount of United States postage, a notice of cancellation of said policy in words and figures as set out in the petition; that defendant also enclosed therewith the unearned premium on the policy in the amount of $3.65, being the amount of the premium for the unexpired term of the policy, insofar as it insured that building.A copy of the application on which the policy was issued was attached to the answer.It was alleged that the policy further provided:

"If the property or any part thereof shall hereafter become mortgaged or encumbered *** this policy shall be null and void"; and "that on March 3, 1938, the plaintiff executed a mortgage on said premises in the amount of $720.00.Said mortgage being given to J. W. Brennaman."

The prayer was that defendant have judgment for costs.

In his reply plaintiff admitted he executed a mortgage to one J. W Brennaman mentioned in the answer, but alleged the indebtedness evidenced by the mortgage was a lien upon the property at the time the application for insurance was made; denied generally and specifically all other allegations of the answer and alleged the application for insurance was prepared by a duly authorized agent of the insurer, and if plaintiff failed to answer any material question in the application it was because the same was not called to his attention by the agent of the insurer, and if he violated any of the provisions of the insurance policy in any way it was unintentional on his part; that the policy was never delivered to plaintiff by the insurer nor was he given an opportunity to examine it, but that the same was delivered to the Federal Land Bank at Wichita; and further alleged that about the month of May or June, 1940, the defendant insurer paid plaintiff a hail loss under the policy, and at that time the duly authorized agents of defendant were fully informed of the use made of the premises in question, and at that time orally stated that if the insurer saw fit to change the insurance contract the...