National Union Fire Insurance Co. v. Avant

• Decision Date: 26 January 1925
• Docket Number: 122
• Citation: 268 S.W. 20,167 Ark. 307
• Parties: NATIONAL UNION FIRE INSURANCE CO. v. AVANT
• Court: Arkansas Supreme Court

268 S.W. 20

167 Ark. 307

NATIONAL UNION FIRE INSURANCE CO. v. AVANT

No. 122

Supreme Court of Arkansas

January 26, 1925

Appeal from St. Francis Circuit Court; E. D. Robertson, Judge affirmed.

Judgment affirmed.

Mann & Mann, for appellant.

An insurance company has the right to fix the terms and conditions upon which it would insure property. 62 Ark. 348; 65 Ark. 295. A "rider" or mortgage clause is a part of the policy when attached to the policy at the time of delivery. 30 L. R. A. 636; 153 N.C. 285; 69 S.E. 214; 138 A S. 665. In the absence of fraud, a person executing a written contract is bound by its provisions. 133 N.Y. 356; 28 A. S R. 645; 43 Kan. 15; 19 A. S. R. 118; 71 Mich. 414; 15 A. S. R. 275; 69 Tex. 353; 5 A. S. R. 63. The extension of the time of the payment of the notes was a breach of the warranty and therefore voided the policy. 119 Ark. 597; 72 Ark. 47; 77 Ark. 57; 152 Ark. 65; 153 Ark. 156; 72 N.J.L. 289; 3 L. R. A. (N. S.) 107; 125 Ark. 93; 79 Tex. 23; 11 L. R. A. 293; 111 Ark. 167; 120 F. 916; 61 L. R. A. 137; 69 Ark. 295; 171 Mo. 143; 71 S.W. 160; 94 A. S. R. 778; 53 Ark. 53; 58 Ark. 276; 62 Ark. 276.

S. S. Hargraves and John M. Prewitt, for appellee.

Any ambiguities in an insurance policy must be most strongly construed against the insurance company. 50 Am. St. Rep. 832; 22 Am. St. Rep. 324; 25 Am. St. Rep. 773; 65 Am. St. Rep. 264; 69 Am. St. Rep. 134; 77 Am. St. Rep. 129. Forfeitures are not favored, and should not be enforced by the courts unless compelled to do so. 73 Am. St. Rep. 532; 78 N.W. 300; 45 N.W. 171; 83 N.W. 78. Stipulations and conditions in policies of insurance are to have a reasonable intendment and are to be construed, if possible, so as to avoid forfeitures and to advance the beneficial purposes intended. 97 Ga. 44; 69 Am. St. Rep. 143; C. & M. Digest, § 6148.

OPINION

WOOD, J.

This is an action by the appellee on a fire insurance policy issued to the appellee by the appellant, in which the appellant undertook to indemnify the appellee against loss or damage by fire to a seven-passenger touring car. The car was totally destroyed by fire while the policy was in force, and the appellee alleged that he had fully complied with the terms of the policy on his part, and prayed, judgment in the sum of $ 500 and for penalty and costs.

The appellant admitted the issuance of the policy and the loss, but set up in defense that the policy contained a loss-payable clause in favor of the mortgagee of the car, Karakoffe Motor Company, which clause contained a promissory warranty or condition that the policy should be wholly void if any of the notes due the mortgagee should not be completely paid on or before ten days after the maturity thereof, or if any change be made in any of the notes representing the incumbrance otherwise than by the payment thereof. The appellant alleged that, at the time the car was destroyed by fire, said notes due the mortgagee were past due and unpaid for more than ten days after maturity, and therefore the policy was void as to the appellee. Appellant further alleged that the mortgagee had been paid the amount of appellee's indebtedness to it.

The appellee testified, among other things, as follows: "I paid a premium of $ 14.75 for the policy. When the notes became past due I had made arrangements with the Karakoffe Motor Company about when I was to pay them. This was before the car burned. I did not tell the insurance people anything about these arrangements made with the Karakoffe Motor Company, until after the car burned. I did not notify them of the arrangements to extend the notes, at the time they were made. I notified them, after the car had burned, to collect the money." The appellee identified and introduced the policy which recites that, in consideration of the warranties and the premium mentioned, it insured the automobile described therein to an amount not exceeding the amount specified therein.

Under the title "warranties" in the policy, the policy contains the recital that "the following are statements of facts known to and warranted by the assured to be true, and this policy is issued by the company relying upon the truth thereof." Then follows, among other things, a loss-payable clause, in which it is recited that the appellee owed a balance on the purchase price of the automobile of $ 350, evidenced by seven notes of $ 50 each, payable on the 22d day of each month, beginning with July, 1922, and reciting that the policy "shall be wholly void if any of such statements is inaccurate in any respect, or if any change is made in any of the notes representing said indebtedness or incumbrance otherwise than by payment thereof. * * * Or if any of said notes shall not be completely paid and the indebtedness represented wholly discharged on or before ten days after maturity thereof, without grace." There was the further provision in the loss-payable clause to the effect that the interest of the owner of the notes only shall not be invalidated by the failure of the assured to pay any of the notes within the time specified, and, in such case, the liability of the company under the policy shall be to the Karakoffe Motor Company only, and limited to the amount of the principal and interest then unpaid on said notes. There is a further provision to the effect that the policy is made and accepted subject to the provisions, exclusions, conditions and warranties set forth herein or indorsed hereon, and that the insured agrees that its terms embody all agreements then existing between himself and the company.

The testimony on behalf of the appellant was to the effect that the Karakoffe Motor Company sold the automobile to the appellee, the entire consideration being the sum of $ 850. The company took a mortgage for the balance due on the purchase money, $ 350, evidenced by notes in the sum of $ 50 each, payable in seven installments. The first one or two notes were paid as they fell due. At the time the car burned three of the notes were unpaid. The company extended the time for payment of one or two of the notes, and did not notify the insurance company of the extension. The insurance company inserted a loss-payable clause in the policy at the time it was issued. The insured knew that such clause was in the policy. The premium of $ 14.75 was paid, and carried the policy for a year. The premium was not reduced by reason of the fact that the loss-payable clause was inserted.

The court gave instructions as to the burden of proof and the credibility of witnesses, and refused to grant appellant's prayer for instructions as follows:

"1. The jury is instructed to return a verdict for the defendant.

"2. You are instructed that, unless you find by a fair preponderance of the evidence that the plaintiff, Lee Avant, paid the indebtedness of $ 350 owed to Karakoffe Motor Company, as the same became due and payable, you will find for the defendant.

"3. You are instructed that, under the terms of the policy, the plaintiff agreed to pay $ 50 a month on the 22d day of each month, beginning July, 1922, to the Karakoffe Motor Company, and agreed that the policy would be wholly void if these notes were not paid as due, or if any change is made in any of said notes, you are instructed that if the notes were not paid as they matured, or if any extension were granted on any of the notes, the policy is void as to the plaintiff, and you will find for the defendant."

The appellant duly excepted to the ruling of the court in the refusal of these instructions.

The jury returned a verdict against the appellant for the amount of the policy, less the amount paid the Karakoffe Motor Company, in the sum of $ 340.56. The court entered a judgment in favor of the appellee for that sum, from which is this appeal.

The policy, according to its recitals, was issued "in consideration of the warranties and...