Miller v. United Pac. Cas. Ins. Co.

• Decision Date: 22 September 1936
• Docket Number: 26137.
• Citation: 60 P.2d 714,187 Wash. 629
• Court: Washington Supreme Court
• Parties: MILLER et al. v. UNITED PACIFIC CASUALTY INS. CO.

60 P.2d 714

187 Wash. 629

MILLER et al. v. UNITED PACIFIC CASUALTY INS. CO.

No. 26137.

Supreme Court of Washington

September 22, 1936

Department 1.

Appeal from Superior Court, Spokane County; Joseph B. Lindsley Judge.

Action by Eleanor Miller and another against the United Pacific Casualty Insurance Company. Judgment for defendant, and plaintiffs appeal.

Reversed with a direction.

Witherspoon Yantes & Witherspoon, of Spokane (W. V. Kelley, Jr., of Spokane, of counsel), for appellants.

Ballinger Hutson & Boldt, of Seattle, for respondent.

STEINERT Justice.

Plaintiffs brought this action upon a liability insurance policy issued by defendant. The answer disclaimed liability upon the ground that, after its issuance, the policy had been illegally and fraudulently transferred from the original holder to one of the plaintiffs. Upon a trial by the court, without a jury, judgment dismissing the action was entered. Plaintiffs have appealed.

The facts, as shown by the evidence and the admissions in the pleadings, are as follows: During the year 1934, the respondent was a Washington corporation engaged in the automobile insurance business. It maintained its principal office in Seattle and a branch office in Spokane. W. S. McCrea & Co., of Spokane, was the local agent of the respondent and had full authority to issue and deliver respondent's insurance policies. Abe Kalin was a soliciting agent and clerk in the employ of W. S. McCrea & Co.

The appellants, who are mother and son, lived, with a number of their relatives, in what is designated as the Welch home in Spokane. The family consisted ofSusan Welch, an elderly lady, who died in February, 1935, her two widowed daughters, Mabel Wilson and appellant Eleanor Miller, the four children of Mabel Wilson, the youngest of whom was Susanne Wilson, about twenty-four years of age, appellant Jack Miller, the son of appellant Eleanor Miller and about twenty-three years of age, Helen Welch, granddaughter of Susan Welch and the ward of appellant Eleanor Miller, and another child about fourteen years of age. Raymond Welch, who will be mentioned later herein, was the son of Susan Welch and the uncle of Jack Miller. He died, however, in February, 1934.

Four automobiles, of which two were Ford sedans, one a Packard coupé, and one a Packard sedan, were owned by various members of the family. The title to the Packard coupé was in Susanne Wilson, and the title to the Packard sedan was in appellant Eleanor Miller. All of the cars were used indiscriminately by the various members of the family excepting Mrs. Welch and the young child, although first call for use was reserved to the member holding title to the particular car. This action relates only to the Packard coupé, owned by Susanne Wilson, and the Packard sedan, owned by appellant Eleanor Miller.

Up to the time of her death, Susan Welch was for head of the family and paid all the expenses incident to the home and the maintenance of all the cars. After the death of Mrs. Welch, Mabel Wilson became the recognized head of the family, but the expenses were allocated proportionately among its several branches.

Raymond Welch, prior to the time of his death in 1934, was in charge of Welch Investment Company, which was located in the Welch building in Spokane and did the character of business suggested by its name. In the office with him was a stenographer and bookkeeper by the name of Dora Beach. After the death of Raymond Welch, appellant Jack Miller had charge of the office, and, with the assistance of Miss Beach, attended to all business matters, including insurance, in which the family was concerned. On account of his youth, however, he was inexperienced in business matters, particularly insurance.

The business relations between W. S. McCrea & Co. and the Welch family began with the issuance, in 1934, of one of respondent's policies, which covered plate glass insurance on the Welch building. This matter was handled by Mr. Kalin, the agent for W. S. McCrea & Co. That particular piece of business was a very attractive one, not only because of its size, but also because it gave promise of future business. There was a general understanding between the Welch family and W. S. McCrea & Co. that insurance matters in the furture would be taken care of, to a considerable extent at least, by W. S. McCrea & Co. Kalin was well acquainted with the Welch family, knew of the number of automobiles owned by its members, and was cognizant of the way in which they were being used. Certain members of the office force of W. S. McCrea & Co. and others of the respondent insurance company also had a general knowledge of these conditions.

On September 24, 1934, W. S. McCrea & Co., as agent for respondent, and at the instance of Jack Miller acting for Susanne Wilson, issued to Susanne Wilson a liability insurance policy covering the Packard coupé owned by her. This is the policy upon which this action is based. The policy covered fire and transportation, theft, guaranty collision, public liability to the extent of $100,000, and property damage to the extent of $5,000. The total annual premium amounted to $93.42.

The policy contained an acceptance clause which provided that the assured, by acceptance of the policy, represented that the statements contained in the schedule of insurance and warranties, subjoined thereto, were true, and that the policy was issued on consideration thereof. In the schedule was a provision that 'The interest of the assured is sole and unconditional ownership.' the policy further provided that no condition or provision therein should be waived or changed except by indorsement attached thereto and signed by an executive officer of the company.

Before issuing the policy, respondent made an investigation and learned that the car was to be driven by Susanne Wilson, her two sisters, and her brother.

At the time that the policy was taken out, the Packard sedan owned by appellant Eleanor Miller had been laid up and was not being used. Because of this fact, a former insurance policy which had theretofore covered the sedan, had been canceled so far as liability insurance was concerned, but retained as to fire and theft coverage.

We now come to the occasion out of which this particular controversy arose.

Shortly Before October 14, 1934, the Welch family decided to discontinue the use of the Packard coupé owned by Susanne Wilson and to resume the use of the Packard sedan owned by appellant Eleanor Miller. They discussed among themselves the matter of insurance and decided that public liability insurance on the coupé would no longer be needed, but that it would be needed on the sedan. Jack Miller thereupon phoned to Kalin regarding the matter. Kalin came to the office of the Welch Investment Company, where he was told by Jack Miller to cancel the liability insurance on the coupé and to write a similar policy with the same limits, on the sedan. He was also informed that the sedan was owned by Eleanor Miller. Kalin made a memorandum of the necessary data, according to the information given him, and turned the same into the office of W. S. McCrea & Co. for the purpose of having the necessary change of coverage made. It seems, however, that, in the meantime, Kalin had conceived the idea of merely having a transfer indorsement affixed to the original policy instead of canceling the old policy and writing a new one. At any rate, that is what was done.

According to the evidence in the case, transfers of insurance policies from one automobile to another are permissible only (1) when the owner of an insured car desires to substitute another car owned by him and to transfer the coverage from the one to the other, or (2) when the owner of an insured car sells it to another person, and the two parties and also the insurance company consent to the transfer. Neither of those alternatives applies in this case because Susanne Wilson never owned the Packard sedan. It also appears from the evidence that respondent itself could not legally, and would not, have transferred the insurance in the manner in which it was done.

When the transfer indorsement was delivered by Kalin at the office of the Welch Investment Company, it did not show upon its face that Eleanor Miller was the owner of the sedan. Reading the indorsement in connection with the policy, it would appear therefrom that Susanne Wilson was the owner. Jack Miller and Miss Beach both demurred as to the propriety of the method of transfer of coverage. Their objections were based merely upon the fact that they had never, in their experience, known of a transfer of insurance from one car to another being made by mere indorsement. Kalin assured them, however, that it was the proper method and further told them that by following that procedure they would realize a saving of premium. Not being fully satisfied with Kalin's explanation, Jack Miller took Kalin out to the Welch home for the purpose of consulting his mother, appellant Eleanor Miller. Kalin made the same representations to her, and, upon the strength of his assurances, the transfer indorsement was accepted by the appellants.

The endorsement contained a provision that it should not be binding on the respondent until it had been countersigned by its authorized agent. W. S. McCrea & Co. countersigned the endorsement as such agent. The amount of saving in premium under the method employed was $12.38.

All would have been well, under the circumstances narrated, and this case would never have arisen, except for the unfortunate fact that on November 30, 1934, which was after the time that the indorsement was made, Jack Miller, while driving the Packard sedan owned by appellant Eleanor Miller, collided with another automobile. As a...