Peterson v. The Hudson Insurance Company, Civil 3231
Decision Date | 18 October 1932 |
Docket Number | Civil 3231 |
Citation | 15 P.2d 249,41 Ariz. 31 |
Parties | I. D. PETERSON, Appellant, v. THE HUDSON INSURANCE COMPANY, a Corporation, Appellee |
Court | Arizona Supreme Court |
APPEAL from a judgment of the Superior Court of the County of Maricopa. Joseph S. Jenckes, Judge. Judgment affirmed.
Mr. V L. Hash, for Appellant.
Messrs Frazier & Perry, for Appellee.
I. D Peterson, hereinafter called plaintiff, brought suit against Hudson Insurance Company, a corporation, hereinafter called defendant, to recover on a certain policy of fire insurance issued by defendant in favor of plaintiff and covering certain property located in Maricopa county. The case was tried to the court sitting without a jury upon an agreed statement of facts, and, judgment being rendered in favor of defendant, this appeal was taken.
The question therefore presented is whether upon such an agreed statement of facts the court properly rendered the judgment which it did. This statement may be summarized as follows: On October 30th, 1929, plaintiff was the owner of certain real estate in Maricopa county upon which there was a frame dwelling-house. On that day defendant issued to plaintiff a policy of fire insurance insuring the house against fire for the term of three years in an amount not exceeding $1,500. The policy, among other matters, contained the following clause: "This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void if . . . with the knowledge of the insured, foreclosure proceedings be commenced or notice given of sale of any property covered by this policy by virtue of any mortgage or trust deed," which clause is part of the New York standard form of fire insurance required by the statute to be used in Arizona. On February 15th, 1930, some three and one-half months after the issuance of the insurance policy aforesaid, plaintiff mortgaged the premises in question to the J. D. Halstead Lumber Company, which mortgage was duly recorded in March, 1930. On October 15th, 1930, the lumber company commenced an action against plaintiff in the superior court of Maricopa county to foreclose the mortgage, summons being issued and served the same day upon the plaintiff. No notice of the pendency of the action was filed in the office of the county recorder at any time, but on November 6th the default of plaintiff was entered, and on the sixteenth day of February, 1931, a judgment of foreclosure was entered in the suit, upon which execution was regularly issued. On March 24th the sheriff sold the real property and building covered by the mortgage to the J. D. Halstead Lumber Company, certificate of sale being issued on that date, but not recorded until October 17th, 1931. On the eleventh day of April, 1931, the building covered by the insurance policy was wholly destroyed by fire, being then reasonably worth the sum of $1,500. Shortly after the fire, plaintiff notified the Standard Insurance Agency, which was the local agent of the defendant, that he made claim to recovery under the policy herein sued upon, and it informed plaintiff that it did not have authority to either admit or deny liability, but would refer the matter to defendant's San Francisco office. This latter then sent it to the Phoenix office of the Fire Insurance Companies' Adjustment Bureau. Plaintiff called upon the Standard Insurance Agency and the Adjustment Bureau many times in respect to his claim, spending a good deal of time and some money in so doing, but could never get an express admission or disclaimer thereof, the bureau on the occasion of each call informing plaintiff that it was investigating the matter. Becoming tired of the delay, on the fifth day of November, 1931, he instituted this suit. It is further agreed that plaintiff had paid the defendant all the premiums due on said policy as and when due, and that defendant at no time had tendered the return to the plaintiff of any unearned portion of said premium or demanded the surrender of the policy, but it is admitted by plaintiff that, had such tender and demand been made after the fire, he would have refused it. The policy contained no mortgage clause in favor of the Halstead Lumber Company, and the latter makes no claim thereunder, and it is stipulated defendant never in any manner waived, modified, changed or dispensed with the provision of said policy above quoted, or consented to the foreclosure proceedings, or any part thereof.
The real legal questions raised by the appeal may be stated thus: (1) Did the bringing of the foreclosure proceedings, as above set forth, render the policy in question void, unless reaffirmed by the insurer; (2) if it did, did the insurer waive its rights in any manner; and (3) if the insurer did not waive such rights, was it by its conduct estopped from claiming that the policy is void?
There has been considerable litigation in the different states over provisions of fire insurance policies, either exactly like the one in question or of similar effect, and there are two distinct lines of decisions upon the question, but it is a matter of first impression in Arizona, and we are therefore at liberty to follow the line which we think is most consistent with justice and our public policy. We have frequently had under consideration the construction of both fire and life insurance policies, and we think the general principles applicable to such construction are well set forth in the case of Equitable Life Assur. Soc. v. Pettid, 40 Ariz. 239, 11 P.2d 833, as follows:
The reason for the insertion in fire insurance policies of clauses similar to the one in question is explained in the case of J. I. Kelly Co. v. St. Paul Fire & Marine Ins. Co., 56 Fla. 456, 47 So. 742, 16 Ann. Cas. 654, as follows:
And we know of no case which holds that such an agreement is contrary to public policy, or, indeed, in any manner unfair or unjust. There is, however, a line of cases found in Idaho and Texas which greatly limits the application of such clauses. They are apparently based upon the theory that courts are reluctant to enforce a forfeiture of an insurance policy, and that the rule of strict construction against the insurer and in favor of the insured should be followed,...
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