Palatine Insurance Co. v. Smith, McKinnon & Son

• Decision Date: 11 June 1917
• Docket Number: 19262
• Parties: PALATINE INSURANCE COMPANY v. SMITH MCKINNON & SON
• Court: Mississippi Supreme Court

75 So. 564

115 Miss. 324

PALATINE INSURANCE COMPANY v. SMITH MCKINNON & SON

No. 19262

Supreme Court of Mississippi

June 11, 1917

Division B

APPEAL from the circuit court of Choctaw county, HON. H. H. RODGERS Judge.

Suit by Smith McKinnon & Son against the Palatine Insurance Company. From a judgment for plaintiff, defendant appeals.

The facts are fully stated in the opinion of the court.

Reversed and dismissed.

McLaurin & Arminstead, for appellant.

The provision in the contract sued on and pleaded in this case "that the entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void if the assured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on the property covered, in whole or in part, by this policy," is a part of the contract sued on, and valid by all the decisions of all the courts that we have seen, including the Mississippi courts, and is effective to defeat a recovery on the policy, unless it has been in some manner waived by the general agent of the insurance company, as will appear from the authorities hereafter discussed.

Counsel for appellees in their suggestion of error fail to call the court's attention to the two lines of decisions on what is the duty of an agent of an insurance company when he comes into possession of knowledge that an assured is violating his policy, and counsel also failed to call the court's attention to what constitutes a waiver at the time of the issuance of the policy, and what are the rights of the respective parties to the contract after the issuance of the policy. Some courts hold that if the general agent of the insurance company who issued the policy and had power to make the contract is advised that an assured has violated his policy, that it becomes the duty of such agent to cancel his policy or the forfeiture will be waived. Such is the line of decisions from which counsel for appellees state the case of Westchester Fire Insurance Co. v. Earl, 33 Mich 149. A great number of courts, including the Mississippi court, take an opposite view, and hold that if at the time the policy is issued the general agent of the insurance company having power to make the contract is advised of facts different from the requirements of the insurance contract that requirement of the contract issued will be waived, but after the policy has been issued, Mississippi, with a great number of courts holds that it is not the duty of the insurance company to see that an assured does not violate his contract; in other words, all the duty of preserving the rights of the respective parties to the insurance contract does not rest alone on the insurance company; that the insurance company is not the guardian of its policyholder, that the same law applies to the policyholder that applies to the insurance company.

The case of Insurance Company v. Scales, 71 Miss. at the bottom of page 780, the court passing on the question of whether or not the knowledge of the general agent of the company that a house insured by his agent had become unoccupied after the issuance of the policy required such agent to cancel his policy or waive the forfeiture, as was held in the Earl case cited in the suggestion of error, 33 Mich. 149, held exactly to the contrary, and said:

"The company was not bound to notify the insured of the unoccupied condition of the house, if it actually knew. There was silence, and that is never ground for estoppel, except where it is a fraud, which cannot be predicated of this silence. The agent had a right to be silent and give no notice as to the unoccupied condition of the house. It was no part of his business as agent of the company to keep policies from being avoided by a violation of their conditions whatever obligations he may have assumed by his engagement to the assured, as to which engagements he could not bind the insurers."

This case clearly distinguishes Mississippi's rule of law from the Earl case, in 33 Mich. cited by counsel in their suggestion of error. Again the supreme court of Mississippi in Insurance Association v. Matthews, 65 Miss. 313, opinion by Judge CAMPBELL, said:

"If the court can affirm confidently that the assured should not, as a reasonable person, have been misled, it is not left to the jury; it should be decided by the court. Where it appears that the insured was not misled, all idea of waiver is excluded."

Waiver has been defined by the supreme court of Mississippi, in the case of K. of P. v. Quin, 78 Miss. 525-531, as follows:

"A waiver is defined to be the intentional relinquishment of a known right and it implies an election of the party to forego some advantage he might have at his option insisted upon. There must be both knowledge of the existence of the right and an intention to relinquish it."

Now, we ask the court, in view of these definitions, how in the name of high heaven could it be insisted that this man McKinnon, who testified at the bottom of page 20 of the record and the top of page 21 that he did not claim that McWhorter had any knowledge of this additional insurance, and he would not swear that he had any such knowledge, that McWhorter could, under that state of fact, have waived something he didn't know anything about? In support of the holding in the Scales case, 71 Miss. supra, we cite the court to the case of Petit et al. v. German Insurance Company, 98 F. 800 and at page 803. Fisher v. London L. & Fire Insurance Company, 83 Federal, at page 807; Insurance Co. v. Gunter, 116 U.S. 113; West End Hotel & Land Company v. American Fire Insurance Company of New York, 74 F. 117-118; Imperial Fire Insurance Company v. Coos County, 115 U.S. 462, 14 S.Ct. 397; Phoenix Insurance Company v. Dorsey, 102 Miss. 87; pany, 16 Peters, 495 at page 510.

But, be these considerations as they may, we see no Carpenter v. Providence-Washington Insurance Comreason, why, as these clauses are a known part of the stipulations of the policy, they ought not to receive a fair and reasonable interpretation according to their terms and obvious import. The insured had no right to complain, for he asserts to comply with all the stipulations on his side, in order to entitle himself to the benefit of the contract, which upon reason or principle, he has no right to ask the court to dispense with the performance of his own part of the agreement and yet to bind the other party to obligations which but for those stipulations, would not have been entered into.

J. M. Vardaman, for appellee.

The main contention of counsel for appellant in this case is that this policy was avoided when appellees took out the additional insurance in the Home Insurance Company and that there was no waiver on the part of the agent for the Palatine Insurance Company (appellant here) of this prohibitory clause. The two principal witnesses on the question of waiver are McKinnon, one of the plaintiffs in this case, and McWhorter, agent for the defendant company. McKinnon testifies that McWhorter had written him some other insurance and that he returned the policies to him, stating that he was going to give his insurance business to Gladney. McWhorter it seems, had written plaintiffs twenty-five hundred dollars additional insurance on their stock of goods and when they attempted to deliver the policy, plaintiffs advised them that they had taken the same insurance with Mr. Gladrey, to which McWhorter tacitly agreed. From the evidence in this case it appears that McWhorter, the agent for the appellant, had written an additional policy on the stock of goods of appellees for twenty-five hundred dollars, but that same had been cancelled by ap...