National Union Fire Ins. Co. v. Nevils

• Decision Date: 01 July 1925
• Docket Number: No. 3643.,3643.
• Citation: 274 S.W. 503
• Parties: NATIONAL UNION FIRE INS. CO. v. NEVILS et al.
• Court: Missouri Court of Appeals

274 S.W. 503

NATIONAL UNION FIRE INS. CO. v. NEVILS et al.

No. 3643.

Springfield Court of Appeals. Missouri.

July 1, 1925.

Appeal from Circuit Court, Christian County; Fred Stewart, Judge.

Action by the National Union Fire Insurance Company, a corporation, against J. E. Nevils and two others. Judgment for defendants, and plaintiff appeals. Reversed and remanded, wits directions.

Alfred Page and Val Mason, both of Springfield, for appellant.

J. S. Clarke, of Ava, for respondents.

COX, P. J.

J. E. Nevils was agent for plaintiff in writing insurance, and executed to plaintiff his bond in the sum of $500 with the other two respondents as sureties. Nevils' agency was terminated by appellant, and this suit was brought upon the bond to recover the full amount thereof; the petition alleging that Nevils was indebted to plaintiff in the sum of $524.26. A demurrer to the petition was filed and overruled. Answer was then filed. On motion of plaintiff the case was referred to a referee. The referee heard the evidence and filed a report in which he recommended that judgment be entered in favor of plaintiff for $500, the penalty of the bond. Exceptions to the report of the referee were filed by the sureties, Singleton and Yeoman. The exceptions were sustained, but upon what ground does not appear of record. The defendants, Singleton and Yeoman, then reified the demurrer to the petition without withdrawing the answer. The court then sustained the demurrer, and, plaintiff refusing to plead further, judgment was entered against it and it then appealed.

The petition alleged the employment of Nevils as agent for plaintiff and the execution of the bond sued on, and alleged the condition of the bond to be in part that Nevils should pay all sums collected, by him, and pay unearned premiums on policies of insurance that might be canceled. The petition then alleged as a breach of the bond that Nevils had failed to return and pay to plaintiff the unearned commissions on canceled policies to the amount of $524.60, and asked judgment for $500, the penalty of the bond.

The demurrer to the petition specified three grounds: First, that the petition did not state any cause of action against defendants; second, because the petition is based upon a contract between the plaintiff and J. K. Nevils and the contract or a copy thereof was not filed; third, that the bond is so indefinite, uncertain, and ambiguous in its terms that it could not be binding upon defendants, as alleged in the petition.

Of these in inverse order. It is contended that the terms of the bond do not cover liability for failure to return to plaintiff unearned commission resulting from the cancellation of policies. The condition of the bond is not copied in the petition, but the allegation in the petition which pleads the terms of the bond specifically states that it covers unearned commissions on canceled policies, and hence the petition is not open to that objection. Whether the bond in fact covers unearned commission on canceled policies is a question to be determined when the court is called upon to construe the bond, and, since the bond is not copied in the petition, its construction is not involved in considering a demurrer to the petition. The allegations of the petition determine its sufficiency, and we hold this petition good as against the third ground of the demurrer.

The second ground is based on the fact that the agency contract between plaintiff and J. E. Nevils, or a copy thereof, is not filed with the petition. This suit is on the bond, and a copy of it is filed. While the agency contract between plaintiff and Nevils would be competent evidence in determining whether or not Nevils was indebted to plaintiff, the suit was on the bond and not on that contract; hence the bond was the only written instrument that plaintiff was required to file with its petition.

As sustaining our position on the two propositions just discussed, we may say further that, when a suit is based on a written instrument executed by the party sued, the statute (section 1270, Stat. 1919) requires that the instrument or a copy thereof be filed with the petition. A failure to file it, however, can only be taken advantage of by motion to dismiss or require it to be filed, and cannot be considered on a demurrer to the petition. On demurrer the petition must be judged by what appears on its face, and an exhibit is no part of the petition, and cannot be used to either aid or condemn it. Burdsal v. Davies, 58 Mo. 138; The Hann. & St. Joe B. R. Co. v. Knudson, 62 Mo. 569; Peake v. Bell, 65 Mo. 224; Pomeroy v. Fullerton, 113 Mo. 440, 453, 21 S. W. 19; Hickory County v. Fugate, 143 Mo. 71, 79, 44 S. W. 789; Hubbard v. Slavens, 218 Mo. 598, 622, 117 S. W. 1104; Lackawanna Coal & Iron Co. v. Long, 231 Mo. 605, 611, 133 S. W. 35; State ex rel. Greene County v. Lydy, 242 Mo. 316, 146 S. W. 789; Pac. Lime & Gypsum Co. v. Mo. Bridge & Iron Co., 286 Mo. 112, 118, 226 S. W. 853.

The first ground of demurrer, to wit, that the petition does not state facts sufficient to constitute a cause of action, against defendants rests on the contention that the plaintiff could not cancel policies arbitrarily and require the agent to refund unearned commission, but, in order to require the agent to return unearned commission on policies canceled by plaintiff, it must appear that the plaintiff had a good and sufficient reason for canceling the policies, and that the reason for the cancellation must be alleged in the petition and the burden of proof was on the plaintiff to sustain that allegation. If that contention were sound, this petition is not open to that objection, because it does not allege that the policies were canceled by plaintiff. It is common knowledge that the insured as well as the insurer may cause an insurance policy to be canceled, or it may be done by mutual consent. This petition does not allege at whose instance the policies were canceled, and hence IS not open to the objection made against it. We are of the opinion, however, that, if plaintiff did, of its own volition, cancel the policies, it is not necessary for plaintiff to allege or prove a reason for so doing, unless the terms of the policies are such as to make it necessary. The terms of the policies which govern the question of the right to cancel are not set out in the petition, and, if defendants desire to reach that question, they should have asked that the petition be made more specific in that regard. It occurs to us that, unless there is some provision of the policies canceled that controls, the question of an arbitrary cancellation, which means a cancellation without reason and for some sinister purpose, could only be raised by special plea in the answer, and the burden of proof on that question would be on defendants. We do not think the petition open to the objections raised against it, and hold that the court erred in sustaining the demurrer to it.

It is insisted by appellant that the judgment should be reversed and the cause remanded, with directions to enter judgment on the report of the referee. This upon the alleged ground that there was no substantial conflict in the evidence, and that judgment for plaintiff as recommended by the referee is the only judgment that could properly be entered on the...