Old Colony Insurance Company v. Garvey

• Decision Date: 03 March 1958
• Docket Number: No. 7551.,7551.
• Citation: 253 F.2d 299
• Parties: OLD COLONY INSURANCE COMPANY, Appellant, v. E. W. GARVEY and wife, Mary L. Garvey, Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

253 F.2d 299 (1958)

OLD COLONY INSURANCE COMPANY, Appellant, v. E. W. GARVEY and wife, Mary L. Garvey, Appellees.

No. 7551.

United States Court of Appeals Fourth Circuit.

Argued January 16, 1958.

Decided March 3, 1958.

Joshua S. James, Wilmington, N. C. (James & James, Wilmington, N. C., on the brief), for appellant.

Wallace C. Murchison (Yow & Yow, and Carter & Murchison, Wilmington, N. C., on the brief), for appellees.

Before PARKER, Chief Judge, and SOPER and SOBELOFF, Circuit Judges.

PARKER, Chief Judge.

This is an appeal from a judgment for plaintiff in an action to recover on a fire insurance policy on a dwelling house. The defense was that the house had been vacant for more than the sixty days allowed by the policy at the time of its destruction by fire and that the policy had been issued upon the false representation by the owner that the house was occupied by a tenant at the time of the application for and issuance of the policy. The case was heard by the District Judge without a jury. He found that, while the house was vacant at the time of the application for and issuance of the policy, the owner, who lived some distance away, was not aware of the vacancy when she made the application and that her statement was made in good faith and without fraudulent intent. He further found that the misrepresentation was not material and that the vacancy had existed for less than sixty days after the issuance of the policy. See Garvey v. Old Colony Insurance Company, D.C., 153 F.Supp. 755, 756. The controlling facts were thus tersely and correctly stated by the judge in his opinion:

"The policy was issued on December 1, 1955, and the frame building described in the policy was completely destroyed by fire of undetermined origin during the night of January 23, 1956. At the time the policy was issued Mrs. Garvey represented to the agent that the insured dwelling house was then occupied by a tenant, but the evidence satisfies me that on that date the house was unoccupied and that it had been so for several days; it was continuously unoccupied until the fire which destroyed it. The evidence does not satisfy me, however, that the misrepresentation was wilful or intentional. The evidence establishes these facts with regard to the rental of the property and plaintiffs\' contact with the tenant: The property was rented to a tenant by the name of English at $20 per month in March, 1955; the plaintiffs lived in Wilmington, N. C., 30 to 50 miles from this rural property located near Wallace, and the father of Mrs. Garvey, who lived near the property, looked after the collection of the rent; only small amounts on the rent were paid from time to time, but plaintiffs did not press for payment of the past due rent or move to eject the tenant since she had known him all of his life, because he had a wife and small child and also because she kept hoping that he would do better and catch up on the rent; payments were made to the father who remitted to Mrs. Garvey; at the time the policy was written Mrs. Garvey, then out of touch with the situation, told the agent that the property was then occupied by the tenant English; neither Mr. Garvey nor Mrs. Garvey had heard that English had moved out and Mrs. Garvey made the statement to the agent in good faith and in ignorance of its falsity."

The misrepresentation relied on by the company to invalidate the policy is nothing more than a verbal answer by the insured made in answer to a question by the agent of the company which was asked for the purpose of obtaining information on which to describe the insured property. The policy contains no reference to the questions of the agent or to insured's answers thereto. The policy is signed only by the agent; and the occupancy of the insured house by a tenant is referred to only under the heading "Description and Location of Property Covered". Beneath these words is the printed instruction: "Show construction, type of roof and occupancy of building(s) covered. If occupied as a dwelling state No. of families". Under this is the following in typewriting: "On one story, four room frame, approved roof dwelling, occupied by tenant situated East Side of Hwy 41 near Robert Cavanaugh's store Wallace, Pender County, North Carolina".

The provision with regard to vacancy is contained, not among the conditions rendering the policy void, but under the heading: "Conditions suspending or restricting insurance", and is as follows:

"Unless otherwise provided in writing added hereto this Company shall not be liable for loss occurring (a) while the hazard is increased by any means within the control or knowledge of the insured; or (b) while a described building, whether intended for occupancy by owner or tenant, is vacant or unoccupied beyond a period of sixty consecutive days; or (c) as a result of explosion or riot, unless fire ensue, and in that event for loss by fire only."

The District Judge absolved the insured of any fraud in connection with the application, and the company does not now contend that the statements relied on were fraudulent. The contention...