Pennsylvania Fire Ins. Co. v. Draper

• Decision Date: 21 May 1914
• Docket Number: 370
• Citation: 65 So. 923,187 Ala. 103
• Parties: PENNSYLVANIA FIRE INS. CO. v. DRAPER.
• Court: Alabama Supreme Court

65 So. 923

187 Ala. 103

PENNSYLVANIA FIRE INS. CO. v. DRAPER.

No. 370

Supreme Court of Alabama

May 21, 1914

On Rehearing, June 18, 1914

Appeal from Circuit Court, Jefferson County; John C. Pugh, Judge.

Action by R.W. Draper against the Pennsylvania Fire Insurance Company on a fire insurance policy. Judgment for plaintiff and defendant appeals. Affirmed.

The facts sufficiently appear. The following charges were refused defendant:

(9) The court charges you that, if you believe from all the evidence in this case that defendant's agent, Reynolds took a nonwaiver agreement from plaintiff as soon as said Reynolds became aware of the breach of the conditions and covenants contained in the said policy of insurance by plaintiff, then you must find a verdict for defendant.

(20) If you are reasonably satisfied from all the evidence in the case that as soon as defendant's agent, Reynolds discovered that there had been a breach of the conditions and warranties contained in the policy of plaintiff, plaintiff then and there consented and agreed that by going on with the adjustment or examination defendant should not be held to have waived any defense it might have to the claim of plaintiff under said policy, then you must find a verdict for defendant.

(21) If you believe all the evidence in this case, plaintiff breached the covenant and warranty contained in his policy of insurance by leaving his inventory book out of the iron safe in his store after the close of business on the night of the fire, and before the opening of business the next day, then you cannot find a verdict for plaintiff, unless you should be reasonably satisfied from all the evidence in this case that defendant's agent, Reynolds, waived said breach of said covenants and warranty by plaintiff with knowledge of said breach before plaintiff signed the nonwaiver agreement.

(37) If you are reasonably satisfied from all the evidence that defendant's agent, Reynolds, did not proceed with his examination or adjustment of plaintiff's loss after discovering that there had been a breach of the conditions and warranty contained in plaintiff's policy by plaintiff, until plaintiff had consented and agreed that by going on with such examination or adjustment defendant should not be held to have waived any defense which it might have to the claim of plaintiff under said policy, then you cannot find a verdict for plaintiff.

(41) If you believe all the evidence in this case, plaintiff breached the covenants and warranties contained in plaintiff's policy, in that he failed to keep a set of books which clearly and plainly presented a complete report of business transactions, including all purchases, sales, and shipments, both for cash and on credit.

(42) If you believe all the evidence in this case, the court charges you that you cannot find a verdict for plaintiff on account of any settlement of plaintiff's claim under his policy by defendant or its agent.

A.G. &amp E.D. Smith, of Birmingham, for appellant.

John T. Glover and John H. Miller, both of Birmingham, for appellee.

GARDNER J.

This is a suit by appellee against appellant, substantially in Code form, on a policy of fire insurance issued to appellee on his stock of goods. There were two counts, the second count claiming also the statutory penalty of 25 per cent. of actual damages or loss, for the reason of membership of defendant company in a tariff association wherein certain premium rates were fixed, etc. The sole defense interposed was a breach of the "iron-safe clause," wherein defendant claimed the inventory was not properly kept nor produced, nor were the books kept in compliance with the provisions of the policy, etc. There were pleas, replications, and rejoinders, not necessary for us to set out in this opinion, as no assignment of error presents for review any ruling of the court on the pleadings.

To the said defense of a breach of the "iron-safe clause" plaintiff replied, declaring upon a waiver of the breach or breaches, if any there were, in that the defendant sent one W.L. Reynolds to the scene of the fire with authority to examine, investigate, and adjust the loss and damages, and, in substance, that said adjuster, being informed fully of a violation of said terms of said policy, recognized and treated the policy as binding, and agreed to pay the same.

To such replications the defendant rejoined that after said Reynolds had entered upon an examination and investigation of said loss with a view to adjustment thereof, said Reynolds then and there for first time discovered there had been a breach or breaches of terms of said policy, and that he then refused to proceed with such examination or adjustment unless and until plaintiff would consent that by so proceeding with said examination and investigation the said Reynolds and said defendant should not be held to have waived any defense defendant might have to the claim of plaintiff; that plaintiff did then agree that the further investigation and examination or adjustment of said loss by Reynolds should not be taken as a waiver of any defense, etc.

The third rejoinder sets up that the said Reynolds did not proceed with said examination or adjustment after discovering that there had been a breach of the conditions and warranties contained in said policy until the plaintiff had consented and agreed that by going on with such examination or adjustment the defendant should not be held to have waived any defense it might have to the claim of plaintiff under the said policy.

The rejoinder had reference, as appears, to the execution by plaintiff of what is termed a "nonwaiver agreement."

It is shown by testimony of the witness Adams: That his firm was agent for defendant company at the time this policy was issued, and that he issued the same. That he remained such agent until the latter part of March, 1910, but continued to write business for the company during the month of April. The fire occurred May 21st. The plaintiff came to see him after the fire, asking his advice, etc., and that he (witness) notified the company of the loss. That when he notified the company of the loss they replied by writing him a letter that they had turned the matter over to Mr. Reynolds, and that "W.L. Reynolds had been appointed by it to adjust this loss." That he so notified plaintiff. The plaintiff testified that he notified the witness Adams of the loss, and that Adams told him W.L. Reynolds had been appointed to adjust the loss, and that he would find him at the Morris Hotel. The witness was asked whether or not, at the time he so notified Adams of the loss, he knew the company had changed its local agent at Birmingham. Defendant objected to question upon ground that it called for immaterial and irrelevant testimony, which objection was overruled, and this constitutes one of the assignments of error on this appeal. The witness answered he did not know it. As stated, the witness Adams had continued to act as agent up to within three weeks of this loss. He, as agent, had issued this policy. He notified the company of the loss, and the company appointed W.L. Reynolds "to adjust the loss," as the witness stated it. There is no question raised as to the notice of the loss. The only defense was the breach as to the "iron-safe clause" of the policy. The testimony was merely by way of explanation of why the plaintiff notified Adams. We do not hold the question called for testimony "immaterial and irrelevant," under the circumstances and at that stage of the trial, for this need not be decided, but we do hold that in any event it was entirely harmless, and we are unable to see that any possible prejudice could result therefrom. In this there was no reversible error.

While the defendant company, in answering interrogatories filed under the statute, stated that W.L. Reynolds was not regularly employed as its adjuster, but was employed for this particular case, and that there were limitations upon his authority, yet it is further shown that plaintiff had no notice of any limitations.

The following quotation found in case of Georgia Home Insurance Co. v. Allen, 128 Ala. 451, 30 So. 537, is in point:

"The question is not so much," observes Mr. Joyce, "what powers did the agent actually possess? It is the agent's ostensible or apparent authority, that which he is held out to the world to possess, which is the test of his actual power, in the absence of knowledge of limitations thereon, on the part of persons dealing with such agent. And the tendency of courts of the present day is toward a liberal, rather than a strict, construction of an agent's power. *** An insurance company is bound by the acts of its agents within the real or apparent scope of his authority, and to this extent the act of the agent is the act of his principal."

The opinion proceeds:

"The same author lays it down, supported by a greater array of authorities, that such an agent may waive conditions, notwithstanding inhibitions in the policy; and that where the agent, who has knowledge that a ground of forfeiture exists, and thereafter by some act recognizes the contract as valid, there is a waiver. *** Where, after a fire, an insurance company sends a person to the scene of the fire and authorizes him to act as an adjuster in the particular case, with all the authority in reference thereto that is given to general adjusters, the insured, in dealing with such persons, in the absence of notice to the contrary,

has the right to presume he has authority to act for and bind the company as to all matters within the scope of his duties as the adjuster in the particular case, and such special adjuster, by denying all liability under the policy, may waive the provisions of the policy, requiring the assured to produce

...