Phoenix Indem. Co. v. Zinn
| Decision Date | 09 April 1955 |
| Docket Number | No. 39668,39668 |
| Citation | 281 P.2d 1065,177 Kan. 689 |
| Parties | The PHOENIX INDEMNITY COMPANY, a Corporation, Appellant, v. William S. ZINN, Appellee. |
| Court | Kansas Supreme Court |
Syllabus by the Court.
1. G.S.1949, 60-3128 provides that a declaratory judgment may be obtained and reviewed the same as any other action, and G.S.1949, 60-3129 sets out the procedure to be followed in obtaining further relief than mere interpretation under the declaratory judgment act.
2. When a plaintiff applies for a declaratory judgment in order to determine liability under an insurance policy, it cannot later demur to a cause of action set out in defendant's answer which is in favor of defendant.
3. There is no more reason for courts to modify a plain and unambiguous insurance contract than for them to write a new contract for any other party.
4. The record amply supports the trial court's finding that plaintiff received notice of an outstanding lien on the vehicle through its agent as a result of the insured's handing the certificate of title, which showed the lien on its face, to the agent at the time the application for insurance was made.
5. The record in an action for declaratory judgment to determine the liability under a policy of insurance on a truck examined, considered and held: The trial court did nor err (1) in overruling plaintiff's demurrer to defendant's cause of action; (2) in rendering judgment for defendant based on the pleadings, admissions, and facts; (3) in finding the value of the damaged vehicle; and (4) in overruling the motion for a new trial.
George V. Allen, Lawrence, argued the cause and was on the briefs for appellant.
W. C. Jones, Olathe, argued the cause and was on the briefs for appellee.
This appeal was taken from a judgment in favor of appellee on a counterclaim in what was originally a declaratory judgment action filed by appellant to determine the liability under a policy of insurance on a truck.
William S. Zinn, a married man, purchased a 1951 Chevrolet truck to use in his business. He borrowed $3,100 from his father-in-law, Fred J. Walker, and executed a note with a mortgage on the truck to secure payment of the note to Walker. The note and mortgage forms were secured from W. C. Mercer. Zinn and Walker testified Mercer made out the note the mortgage. Mercer did not deny this, but said he had only a faint recollection of it. The chattel mortgage was dated June 1, 1951, and was filed in the office of the register of deeds on January 14, 1952. Zinn paid $962 on this note and mortgage by checks on the Kaw Valley State Bank of Eudora, with which bank Mercer was connected.
On June 1, 1951, the truck was first insured with Delbert Richardson in Lawrence. Later a second policy was obtained from Mr. Mercer who, in addition to his banking activities, wrote insurance and was an admitted agent of appellant. Prior and subsequent to the issuance of this policy, Zinn and Mercer had discussed Zinn's progress financially and how he was getting along with payments on the truck. When application was made to Mercer for the second policy, which covered the period from May 18, 1952, to May 18, 1953, Zinn handed Mercer the certificate of title which read, in part:
'This vehicle is Subject to the Following Lien
Cond. Sale Lienholder Fred Walker
Contract Address Lawrence, Kansas"
According to Zinn's testimony it was from the certificate of title that Mercer obtained the numbers to put in the application. This was not denied by Mercer, but he stated he didn't remember it. A third policy of insurance, which covered the period from May 18, 1953, to May 18, 1954, was issued by Mercer. This was a renewal of the previous policy. Two accidents happened to the truck on May 30, 1953; the first caused approximately $35 damage, and the second caused almost a complete loss of the truck. The policy was a $100 deductible type and contained an exclusion clause as follows:
'(4) while the automobile is subject to any bailment lease, conditional sale, mortgage or other encumbrance not specifically declared and described in this policy.'
After the two accidents, negotiations were carried on between Zinn and representatives of the appellant but were to no avail. Zinn had put $334.76 worth of extras on the truck and just prior to the accident the truck had a value of $2,500 to $2,600. He had owned the truck two years and twelve days. It had 90,000 miles on it before the accidents. After the accidents it was worth approximately $500 or $600. Appellant's representative received an offer from Zinn on September 17, 1954, after the had furnished the required proof of loss, to arbitrate in accordance with the terms of the policy. This declaratory judgment action to construe the policy was also filed on September 17, 1954.
Appellant's petition admitted the issuance of the policy of insurance and set out the exclusion clause (4); the mortgage to the Walkers in the amount of $3,100; the failure of Zinn to declare the mortgage to appellant; the accidents which damaged the truck; alleged appellant had no remedy at law; and finally, asked for a declaratory judgment decreeing the policy void by reason of the undisclosed mortgage.
The insurance policy, which did not set out any mortgage, conditional sales, or lien of any kind on the truck, provided as follows under 'Conditions', paragraph 19:
'The company shall not be held to have waived any of its rights by any act relating to appraisal.'
Appellee filed an amended answer admitting all allegations of the petition except that the denied his failure to declare the mortgage and denied that appellant had no remedy at law. Appellee's amended answer further stated that he was a married man at all times pertinent to this case, the truck was exempt for the reason it was used in his business, his wife did not sign the mortgage, and the mortgage had always been null and void.
Appellee's cause of action then followed his answer. He first alleged the facts as hereinbefore set out and further stated:
He had shown the certificate of title to Mercer, whereby appellant was estopped from claiming and waived any right to claim that the policy was void because of knowledge imparted to Mercer by the certificate of title; (appellee then repeated for his cause of action what he had before stated in his answer to show the mortgage was void because the truck was exempt property and his wife had not joined in the mortgage) there was damage of $2,200 on the basis of the value of the truck immediately before and after the accident; appellee had paid all insurance premiums due; and, finally, he set out attorney fees in the amount of $350.
A demurrer was filed by appellant to appellee's cause of action and a journal entry dated January 8, 1954, was signed by the court, which overruled the demurrer. The trial court made its findings in a letter wherein it was stated:
'Plaintiff requests a declaratory judgment under Section 60-3127 of the Statutes of Kansas. It requests determination of questions which are, or might have been, a defense to defendant's cause of action. Plaintiff cannot abate or delay defendant's legal redress by 'beating him on the draw' and filing his action first. The declaratory judgment act is remedial in character and is to be 'Liberally construed and administered, with a view of making the Courts more serviceable to the people.' Section 60-3132. They were not intended to provide an addition or preliminary action, and thereby an avenue for multiplicity of suits. [Railroad] B. L. & S. Ass'n v. Grayum, 136 Kan. 418, 423 ; Hudson v. Travelers Ins. Co., 145 Kan. 732 ; Rutland Savings Bank v. Steele, 155 Kan. 667 .
* * *''
Notice of appeal from the ruling on the demurrer was filed on January 18, 1954. A general denial was filed by appellant, a jury was waived, and the matter was submitted to the court.
The following named witnesses qualified and testified as follows as to the value of the truck:
Harry Edwards, garageman for eighteen years, from Eudora--value of truck before accident was $2,600 and after was $500.
Ralph Bolton, shop foreman, Morgan Mack Motor Company, Lawrence--estimate for repairs was $1,516.
C. F. Pattie, truck manager, Winter Chevrolet Company, Lawrence--actual cash value of appellee's truck, which he had seen, was $1,895 on May 30, 1953.
Eugene C. Long, insurance appraiser--value before was $1,700 to $1,750, value after was a total loss.
Zinn (owner)--he could have sold truck for $2,600 before the accident.
A memorandum opinion of the trial court substantially stated as follows:
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