Morris v. American Fidelity Fire Ins. Co.

• Decision Date: 05 April 1965
• Docket Number: No. 43393,43393
• Citation: 173 So.2d 618,253 Miss. 297
• Parties: Ed MORRIS, d/b/a Magnolia Trucking Co. v. AMERICAN FIDELITY FIRE INSURANCE CO.
• Court: Mississippi Supreme Court

Page 618

173 So.2d 618

253 Miss. 297

Ed MORRIS, d/b/a Magnolia Trucking Co. v. AMERICAN FIDELITY FIRE INSURANCE CO.

No. 43393.

Supreme Court of Mississippi.

April 5, 1965.

Thomas W. Crockett, Jr., Overstreet, Kuykendall, Perry & Phillips, Jackson, for appellant

Lipscomb & Barksdale, Jerome Steen, Jackson, for appellee.

JONES, Justice:

Appellant, Morris, sued appellee, American Fidelity Fire Insurance Company, on an insurance policy for the loss of a trailer and tractor allegedly by theft or embezzlement. The case was tried in the Circuit Court of the First Judicial District of Hinds County, Mississippi, before the judge without a jury. He rendered a verdict for the insurance company and Morris appeals here.

The facts are these: In August 1961 the appellee insurance company issued a policy to James P. Bailey and Ed Morris, doing business as Magnolia Trucking Company, the pertinent provisions of which for this inquiry were:

'INSURING AGREEMENTS

Coverage D--Theft (Broad Form)

To pay for loss of or damage to the automobile, hereinafter called loss, caused by theft, larceny, robbery or pilferage.

EXCLUSIONS

This Policy does not apply * * *

(b) under any of the coverages, if the automobile is or at any time becomes subject to any bailment lease, conditional sale, purchase agreement, mortgage or other encumbrance not specifically declared and described in this policy;

* * *

* * *

(g) under coverages A and D, to loss due to conversion, embezzlement or secretion by any person in possession of the automobile under a bailment lease, conditional sale, purchase agreement, mortgage or other encumbrance.'

In September 1961 Morris and Bailey executed a conditional sales contract, covering the trailer and tractor in question, in favor of one Frank Herndon. This transfer or conditional sales contract was not noted upon the policy. Later Bailey was deleted from the policy and it remained in the name of Ed Morris.

Herndon in pursuance to his conditional sales contract operated the tractor and trailer until about January 1962, at which time, desiring to be at home with his wife, who was pregnant, until after the advent of the child, he agreed with one Frank Peters that Peters would operate the tractor and trailer until he, Herndon, could return to work. Peters was to pay all of the expenses of operation and if there should be any profit, it was to be divided between him and Herndon. As stated, this was a temporary agreement. Peters never agreed to buy the truck, nor did Herndon agree to sell him the truck.

Morris knew about Herndon's arrangements with Peters and received checks from him (Peters) to apply on the installment payments due under the conditional sales contract and also on the insurance premium.

When the policy was issued, a down payment was made on the premium and the balance financed through a local bank.

Peters operated the truck from the first part of January 1962 until sometime in March of that year. In March 1962, Herndon received a telegram from Peters which read: 'Lost truck and trailer on Route 66, owner had cargo. Lucky--will see you when doctor releases me.' This telegram came from Jacksonville, Florida.

Since the receipt of said telegram, nobody connected with the case has seen or heard of Peters or the tractor. The proof showed the telegram was dated the first part of March, but not the exact date. On or about March 15 near Raleigh, Mississippi, Morris found the trailer which had been abandoned, and parts of which had been removed. The nameplate on the trailer had been changed; the serial number had been removed, and someone had put a different nameplate apparently in an effort to change the identity. However, there was a number stenciled on the frame that was not altered nor marred, by which the plaintiff could identify it as his trailer.

Mississippi Truckers Insurance Agency signed the policy and was state agent for the appellee. Appellee had no other agency in the state holding written appointments.

However, the Mississippi Truckers Insurance Agency had circularized the licensed insurance agents in the state of Mississippi, advising that the Truckers Insurance Agency could issue these specific kinds of policies and requesting that those agents who were unable to issue same, forward such business to the sender, Truckers Insurance Agency. In compliance therewith, Mr. Joe Ellis Joseph of Jackson, Mississippi, a duly authorized insurance agent, worked with the said state agents. He took the application for this policy, as well as applications for other policies. He did not sign the policies for the company, but he handled them under a brokerage arrangement whereby he received half of the commission which was payable to the said Truckers Agency. He had a number of these policies issued, had delived them, had delected tractors and trailers from a policy when requested and substituted others for them, and had had same cancelled. He also collected premiums. In other words, all the dealings that the insured had regarding said policies so issued, and the policy here involved, were had with Joseph who in turn handled them with the state agency of the insurance company. There had been numerous policies so issued. The policy here in question was issued and delivered in that manner and when delivered, bore on it a notation reading: 'In case of loss or any change in this policy, notify Joe Ellis Joseph, Inc., General Insurance, Bonds, Deposit Guaranty Bank Building, P. O. Box 822, Phone--FL 2-0801.'

The policy had other coverages than the theft coverage hereinabove mentioned. It was shown that the said Joseph submitted the application to the state agency who signed the policy and Joseph himself delivered it. None of the companies he represented under written appointment wrote this particular kind of insurance. He also collected the initial payment on the premium, and after the policy was written, had a conversation with one of the insured under which he learned of the sale of the truck here insured to Mr. Herndon. Mr. Bailey talked to him about it and he said that at that time, he, Joseph, told him they should take the truck off of the policy or change the policy to cover the transaction they had made. Bailey advised him to come to his office that afternoon where he went, and Bailey told him they had sold on a lease purchase agreement. The agent asked to see the contract and Bailey said he would show it to him later. The agent said he never saw the contract, but he did know that one of the tractors and trailers had been sold. He advised Mr. Bailey that there should be a change made in the policy to protect them under liability and on the cargo and other matters. He was requested, he said, by Mr. Bailey not to change it because of the bank who was the loss payee under the policy, and the agent assumed they didn't want to make a change because they didn't desire the bank to know they were selling mortgaged property. He denied he had any authority to bind the company, but said he had to turn to someone in Mississippi Truckers Agency. He claimed he was acting for Mr. Bailey and Mr. Morris and not the company.

However, he admitted he transmitted the application, delivered the policy, accepted premiums and the proof of loss in the case; and that shortly after March 15 he called the Truckers Agency, told them of the loss, and asked that they send the adjusting form, and that they did transmit the proof of loss. Prior to that time and after the knowledge of the conditional sales contract, he was issued checks to apply on the balance of the premiums on the policy and accepted those checks. Also the agent testified that sometime after the trailer was found, he advised Mr. Morris to put it on the road or sell it because the company up to that time had ddnied liability, and he, Joseph, stated to them that he would verify its condition. The agent testified that he had done business in this manner with the Truckers Agency for quite a length of time and still does business with them under that arrangement. He stated that the premium payment could be directed to the Truckers Agency or to himself--that it could be paid to him personally and he would remit it on a monthly basis. Some policies secured by him had been can-celled and returned to the Mississippi Truckers with his, Joseph's, stickers on them and he had never received any complaint about the stickers.

The insured did not know the Mississippi Truckers and the Mississippi Truckers did not know him. All changes in the policy had to come through Joseph to the Mississippi Truckers. With reference to exclusion (b) of the policy hereinbefore copied, the circuit judge, trying the case without a jury, said:

'The plaintiff contends that the transaction with Herndon (sale by Morris to Herndon) was known and acquiesced in by the insurance agent. Therefore, there was a waiver of the exclusive (sic) provisions. Te proof seems to support this contention. However, the property when it disappeared, was not in the possession of Herndon, but was in the possession of Peters. According to the declaration and proof in the case unquestionably Peters was a simple bailee.

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* * *

'It appears that what we have here is a clear case of embezzlement or conversion by a simple bailee, to whom possession of the property had been voluntarily let by the conditional sales purchaser.'

He held that the waiver or estoppel claimed by the plaintiff did not extend beyond the transaction of the sale by Morris to Herndon, and that there was therefore no liability.

Under the judge's ruling, it was held by him that the evidnece was sufficient to sustain a waiver of the said exclusion (b).

It is contended by appellee that exclusionary clause (b) was a provision that could not be waived under our Mississippi decisions which hold that an agent cannot waive those things which extend the coverage of the policy or extend or change the risk thereof.

In the opinion of this Court,...