Modlin v. Atlantic Fire Ins. Co.

• Decision Date: 22 September 1909
• Parties: MODLIN v. ATLANTIC FIRE INS. CO.
• Court: North Carolina Supreme Court

65 S.E. 605

151 N.C. 35

MODLIN v. ATLANTIC FIRE INS. CO.

Supreme Court of North Carolina

September 22, 1909

Appeal from Superior Court, Bertie County; Guion, Judge.

Action by J. A. Modlin against the Atlantic Fire Insurance Company. From a Judgment for plaintiff, defendant appeals. Affirmed.

The plaintiff alleged that he was the sole beneficial owner of the property insured; that defendant on July 5, 1906, issued its policy of insurance for $500; that the property was destroyed by fire May 24, 1907, the policy being in force that proof of loss was made, the loss adjusted, and defendant promised to pay full amount of policy and issued its check therefor, but the same was recalled before delivery to plaintiff; that the policy had not been assigned, but was held simply as collateral security. The defendant denied plaintiffs ownership of the property insured; alleged that the title was in one Wilmer Modlin; admitted it issued the policy of insurance, using the standard form prescribed in section 4760, Revisal 1905; admitted destruction of property but denied liability; alleged the execution of the following nonwaiver agreement by plaintiff and defendant "Nonwaiver Agreement. May 29, 1907. It is hereby mutually stipulated and agreed by and between J. A. Modlin, party of the first part, and the insurance company or companies whose name or names are signed hereto, each acting for itself, party of the second part, that any action taken, request made or information received by said party of the second part in or while investigating or ascertaining the cause of fire, the amount of loss or damage, or other matter relative to the claims of said party of the first part for property alleged to have been lost or damaged by fire on the 24th of May, 1907, shall not in any respect or particular change, determine, waive, invalidate or forfeit any of the terms, conditions or requirements of the policy of insurance of the second part held by the party of the first part or any of the rights whatever of any party hereto. The intent of this agreement is to save and preserve all the rights of all the parties hereto and permit an investigation of the claim and the determination of the amount of the loss or damage, in order that the party of the first part may not be unnecessarily delayed in his business, and that the amount of his claim may be ascertained and determined without regard to the liability of the party of the second part, and without prejudice to any rights or defenses which said party of the second part may have. Atlantic Fire Insurance Co., by W. B. Swindell. J. A. Modlin." He alleged that the policy was avoided: (1) Because the assured swore falsely, in that he swore in the proof of loss that the property described in the policy belonged at the time of the fire to insured, and no other person or persons had any interest therein, thereby violating an express provision of the policy. (2) That the plaintiff was not the sole and unconditional owner of the property insured. (3) That the plaintiff violated the following stipulation in the policy: "If any change, other than by the death of the insured, take place in the interest, title or possession of the subject of insurance (except change of occupants without increase of hazard), whether by legal process or judgment, or by voluntary act of insured or otherwise," the policy shall be void, in that two mortgages were placed on the property, one before and the other after the policy was issued, and both without the knowledge of the defendant. (4) That this action was not brought within the time specified in the policy contract, to wit, one year. The evidence established the following facts: (1) That the plaintiff was the sole beneficial owner of the property; the naked legal title being in Wilmer Modlin. (2) That two mortgages were placed on the property, one before and the other after the policy was issued. (3) That the defendant had no knowledge of either until after the fire, the existence of the mortgage being discovered by defendant's adjuster during the investigation of the causes of the fire and the adjustment of the loss. (4) That the mortgages were unpaid at the time of the fire. (5) That proof of loss was filed on June 5, 1907, and that on June 6th defendant sent draft to its agents at Tarboro, who placed the insurance, for the amount of adjustment, and so notified plaintiff and the holder of the first mortgage and the assignee of the policy of insurance. That the draft was recalled before delivery and the plaintiff and his assignee so notified, and the plaintiff informed that the matter of payment of loss was postponed until a meeting of directors of defendant on July 15, 1907. No further correspondence passed between plaintiff and defendant after June 25, 1907. (6) Summons was issued June 22, 1908.

His honor submitted the following issues, which under his direction were answered in favor of the plaintiff, to wit: Is the defendant indebted to plaintiff, as alleged in the complaint? Is the action of plaintiff barred? The defendant in apt time moved both to dismiss the action and for judgment of nonsuit; also requested his honor, by specific prayers, to instruct the jury that the plaintiff could not recover and to answer each issue in its favor. It was agreed that, if plaintiff was entitled to recover, the amount was $495 less $45.40, premiums unpaid on the policy. At the end of the case on appeal his honor makes this statement: "The case was tried by the court upon the theory that, after the loss by fire and after the adjustment of such loss, the agent and adjuster, with admitted knowledge of the mortgages upon the property, thereafter sent check in payment.

Winston & Matthews, Murray Allen, and Womack & Pace, for appellant.

Pruden & Pruden, Shepherd & Shepherd, T. H. Calvert, and Gilliam & Davenport, for appellee.

MANNING J.

The defendant during the trial took several exceptions which we will dispose of before considering the principal questions presented by the record. The defendant moved to strike out the order allowing the plaintiff to sue in forma pauperis and to require a prosecution bond or deposit. The motion was heard by his honor upon affidavits, and he disallowed it. This exception cannot be sustained under the decision of this court in Christian v. Railroad Co., 136 N.C. 321, 48 S.E. 743, 68 L. R. A. 418.

The defendant's second exception was to the ruling of his honor in permitting plaintiff to offer in evidence a part of paragraph 4 of the answer and the corresponding paragraph of the complaint. The part of paragraph 4 of the answer offered by plaintiff was as follows: "As to the allegations contained in article 4, defendant admits the loss of the said property by fire." The excluded portion was: "But denies liability therefor." Article 4 of the complaint alleged a total loss by fire, and that the full amount of insurance became due.

The third exception is of the same character. These exceptions cannot be sustained. Lewis v. Railroad Co., 132 N.C. 382, 43 S.E. 919; Hedrick v. Railroad Co., 136 N.C. 510, 48 S.E. 830; Stewart v. Railroad Co., 136 N.C. 385, 48 S.E. 793; Thaxton v. Railroad Co., 143 N.C. 33, 55 S.E. 419; Hochfield v. Railroad Co., 150 N.C. 419, 64 S.E. 181.

Defendant's fifth exception is thus stated in the record: "The following question is asked J. A. Modlin, plaintiff: 'You have heard the deed read from manufacturing company to Wilmer Modlin; for whose benefit was that deed made?' To this defendant objects. The purpose of this question is to establish a trust in the hands of Wilmer Modlin for the use of the plaintiff for the purpose of showing a beneficial interest in plaintiff at the time of the contract of insurance and for the purpose of showing that he had the sole beneficial interest, and to show that Wilmer Modlin agreed to take the legal title to himself and to hold it solely in trust for the benefit of J. A. Modlin, and to convey it to such person as he might direct at any time. (Defendant objected. Overruled and witness answered as above. Defendant excepted.)" The defendant had prior to this question and answer offered in evidence a deed from the manufacturing company to Wilmer Modlin covering the property insured for the purpose of proving a breach of the conditions of the policy, in that plaintiff was not the sole and unconditional owner of the property insured, in that the plaintiff had concealed a material fact concerning the subject of insurance, in that the interest of the insured in the property was not truly stated in the policy, and in that plaintiff falsely swore after the loss touching his title to the property. In this situation it was competent for the plaintiff to show the quantity and quality of his title and estate. There was no application filed for this policy. The plaintiff testified there was nothing said or inquiry made about the character of his title to the property. "An equitable owner is an entire and sole owner." 13 Am. & Eng. Enc. n. 6, p. 231, and cases cited; Ostrander on Fire Ins. § 63, p. 217; Wainer v. Milford Ins. Co., 153 Mass. 335, 26 N.E. 877, 11 L. R. A. 598; Franklin Ins Co. v. Crockett, 7 Lea (Tenn.) 725. In Lebanon Mutual Fire Ins. Co. v. Erb, 112 Pa. 149, 4 A. 8, the facts were these: "The property insured was a tannery, situated at Port Matilda in Centre county. The title, it is conceded, had been in one Dr. Myer, from whom on the 25th of April, 1882, it was sold by the sheriff and purchased by John G. Love. Before the sheriff's return of the sale, Love agreed to sell the property to John Erb, the plaintiff below, but by some blunder the sheriff returned the property as sold to Elizabeth J. Erb, instead of John Erb, and made the deed to her." There was evidence supporting this statement, and ...