Queen of Arkansas Insurance Co. v. Laster

• Decision Date: 05 May 1913
• Parties: QUEEN OF ARKANSAS INSURANCE COMPANY v. LASTER
• Court: Arkansas Supreme Court

156 S.W. 848

108 Ark. 261

QUEEN OF ARKANSAS INSURANCE COMPANY v. LASTER

Supreme Court of Arkansas

May 5, 1913

[Copyrighted Material Omitted]

Appeal from Saline Circuit Court; W. H. Evans, Judge; affirmed.

STATEMENT BY THE COURT.

The appellee sued appellant on a fire insurance policy to recover for a loss by fire of certain farm products and implements the amount being stated in the policy at $ 1,100. The plaintiff alleged the loss by fire and compliance with the terms of the policy, and prayed judgment for the sum of $ 1,100, together with 12 per cent penalty and reasonable attorney's fee.

The defenses relied on by appellant in its brief are:

First. That the appellee violated his contract of warranty by making false statements as to encumbrances on the property, and as to the property being in litigation at the time of its loss, etc.

Second. That he failed to comply with the provisions of the policy as to furnishing proof of loss.

There is a statement in the policy which reads: "This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning this insurance, or the subject thereof, or if the interest of the insured in the property be not truly stated herein."

There is also a provision in the policy to the effect that if the interest of the insured "be other than unconditional and sole ownership, or if the subject of the insurance be personal property and be and become encumbered by a chattel mortgage; or 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," etc., the policy shall be void etc.

The policy also contained the following provision: "If fire occur, the insured shall, within sixty days after the fire, unless such time be extended in writing by this company, render a statement to this company, signed and sworn to by said insured, stating the knowledge and belief of the insured as to the time and origin of the fire, the interest of the insured and all others, in the property, the cash value of each item and the amount of loss thereon, all encumbrances thereon; and changes in the title, use and possession."

The application was a part of the contract of insurance and the statements in the application are made warranties. Appellant contends that appellee made false statements as to encumbrances on the property. The substance of the testimony on this issue is stated in opinion.

The appellant complains of the refusal of the court to give its prayer No. 6, which is as follows:

"You are instructed that there is a provision in the policy of insurance that if with the knowledge of the insured foreclosure proceedings be commenced, or if any change take place in the interest, title or possession of the subject of the insurance, whether by legal process or judgment, or by voluntary act of the insured or otherwise, the entire policy shall be void. You are therefore instructed that if you believe from the evidence that the property insured, or any portion of the same was in litigation at the time of its loss, or if any change had taken place in the possession of said property, or any change in the title or interest of the plaintiff, whether by legal process or otherwise, then your verdict will be for the defendant."

The appellant also complains of the refusal of the court to give the following prayer for instruction:

"You are instructed that it is incumbent upon the plaintiff under the provisions of the policy to furnish the defendant within sixty days after the loss alleged to have been sustained, a complete inventory of the property alleged to have been destroyed, stating the quantity and cost of each article and the amount claimed thereon; that said statement should be signed and sworn to by the insured, stating the interest of the insured and of all others in the property, the cash value of each item thereof and the amount of loss thereon, and if you find from the evidence that the plaintiff failed to do this, then your verdict will be for the defendant, unless you find that the defendant waived same by denying liability or otherwise."

It also excepted to the giving of that part of instruction No. 1, given at appellee's instance, in which the court told the jury "that the denial of liability by the defendant was a waiver of proof of loss and rendered unnecessary any proof of loss."

The court, at the request of appellant, gave instructions in effect telling the jury that if the assured stated that there was no encumbrance against the property, and if they found that there were outstanding ownership notes against the agricultural implements, and an outstanding landlord's lien against a portion of the other property insured, they should find for the defendant, unless defendant's agent was informed of the liens at the time of the application for insurance.

There was a verdict in favor of the appellee for the sum of $ 900, with 12 per cent penalty. The court allowed an attorney's fee of $ 225. Judgment was entered in favor of the appellee, and the case is here on appeal.

Judgment affirmed.

A. W. Files and W. R. Donham, for appellant.

1. If the statement in an application for insurance are made express warranties, and the statements made are false, the warranties are broken and the policy of insurance is rendered void. 82 Ark. 400.

If the facts touching the landlord's lien against the property and the outstanding ownership notes against the farming implements were made known to appellant's agent, the evidence, on its face, shows fraudulent collusion between appellee and the agent, and the latter's knowledge as to the facts will not be imputed to appellant. 86 Ark. 538.

2. Instruction 6, requested by appellant, should have been given.

3. No proof of loss was ever furnished to appellant. This is a complete defense. 72 Ark. 484; 84 Ark. 224; 88 Ark. 120; 91 Ark. 43. Under the evidence, it was a question for the jury to say whether there was a denial of liability, and the court erred in its instruction 1, saying that appellant had denied liability. 83 Ark. 126.

Mehaffy, Reid & Mehaffy, for appellee.

1. The insurance was written upon a crop described as upon a place which the application plainly states was leased, and the name of the owner of the land, facts sufficient to advise a purchaser of the possible existence of a landlord's lien. 34 Ark. 691. An insurance company issuing a policy upon an application containing such disclosure, ought not to be permitted to claim a forfeiture even if it be shown that a landlord's lien for rent existed at the time the policy was issued. Id. See also 82 Ark. 90; 81 Ark. 92; 65 Ark. 581.

2. The course of conduct of the insurance company and its adjuster towards appellee amounts to a waiver of any proof of loss other than that taken by the adjuster, and to a denial of liability. 83 Ark. 111; 83 Ark. 126.

OPINION

WOOD, J., (after stating the facts).

1. The testimony of the appellee tended to show that he informed the agent of the appellant at the time the latter took his application for insurance, that he did not own the land on which the products being insured were grown. He told the agent that the property was leased. He told the agent about the lien. He told him about the plow and about giving notes with security--told him that "he had given these ownership notes."

The testimony of the daughter of appellee tended to show that while she was not present all the time when her father was making the statements in the application, yet the agent of the company knew that the property was encumbered. When asked the question as to whether the parties who took the application knew that the property was encumbered, she answered affirmatively.

Testimony of the appellee himself further tended to show that he did not tell the agent who took the application that there was no encumbrance on the property. He said he did not "remember the question nor answer." Said he thought the question was asked and he told the agent, but did not know whether he "put it down or not."

The above testimony was amply sufficient to warrant the court in submitting to the jury the question as to whether or not, at the time of the application for insurance, the appellant's agent was...