Roth v. National Fire Ins. Co.

• Decision Date: 05 May 1934
• Docket Number: 31575.
• Citation: 139 Kan. 463,32 P.2d 213
• Parties: ROTH v. NATIONAL FIRE INS. CO.
• Court: Kansas Supreme Court

32 P.2d 213

139 Kan. 463

ROTH v. NATIONAL FIRE INS. CO.

No. 31575.

Supreme Court of Kansas

May 5, 1934

Syllabus by the Court.

Evidence sustained finding that provision that insurer should not be liable on fire policy while premium note was past due and unpaid had been waived by insurer.

In an action on a fire insurance policy, where the defense was that liability on the policy was suspended because a note given for part of the premium was past due and had not been paid in full, the record is examined, and it is held that the evidence was sufficient to sustain a finding and judgment of the trial court that the provision of the policy providing for such suspension of liability had been waived.

Appeal from District Court, Sedgwick County, Division No. 4; I. N Williams, Judge.

Action by Theodore Roth against the National Fire Insurance Company. Judgment for plaintiff, and defendant appeals.

Robert Stone, James A. McClure, Robert L. Webb, Beryl R. Johnson and Ralph W. Oman, all of Topeka, and George Cox and Lawrence Weigand, both of Wichita, for appellant.

W. E Holmes, Mark H. Adams, Howard L. Baker, and Charles E. Jones all of Wichita, for appellee.

HARVEY Justice.

This is an action on a fire insurance policy. The defense was that at the time of the loss liability of defendant under the policy was suspended because of the nonpayment in full of a note given for a part of the premium. A jury was waived. Many of the facts were agreed upon. Judgment was for plaintiff, and defendant has appealed. We refer to the parties as they appeared in the trial court.

Defendant is a fire insurance company, having a western department at Chicago, an agent for this state at Topeka, and an agent, Harry Mellor, at Whitewater, in this state, who had authority to solicit applications for fire insurance. Plaintiff is the owner of improved real property near Whitewater, whom Mellor solicited for insurance, as a result of which plaintiff made written application for insurance on his property against loss by fire for a term of five years. This application was sent to the state agent, and the policy was issued May 27, 1930. In part payment of the premium for the entire term, plaintiff executed his note, payable to the defendant, in the sum of $233.70, dated May 27, 1930, and due December 1, 1930. Mellor forwarded this note to the agent at Topeka, who sent it on to the western department at Chicago. The application, the policy, and the note each contained a provision in substance that defendant should not be liable on the policy while the note, or any part of it, was past due and unpaid. The effect of this provision, defendant contends, is that, if the note became past due and unpaid, all liability of defendant under the policy became automatically suspended until the note should be paid in full, and, if and when such payment was made, defendant automatically became again liable on the policy for the remainder of the term for which it was written. This contention appears to be supported by former decisions of this court (Continental Ins. Co. v. Daly, Adm'x, 33 Kan. 601, 7 P. 158; Eikelberger v. Insurance Co., 105 Kan. 675, 189 P. 139), unless that provision of the policy contract had been waived or rescinded by the insurer. Plaintiff did not pay the note when it became due; neither did he pay it in full at any time prior to the loss for which suit was brought, which loss occurred in June, 1932. The amount of this loss, if defendant is liable under the policy, is stipulated.

Broadly speaking, the sole question in this case is whether the provision of the policy relied upon by defendant was waived by the insurer prior to the loss. The facts upon which such waiver depend may be stated as follows: On November 10, 1930, defendant, from its Chicago office, wrote plaintiff that his note would be due Decmeber 1, and called his attention to the provision of the policy that the company would not be liable thereon while the note was past due and unpaid. On December 15, 1930, defendant again wrote plaintiff that his note was due December 1, and again called his attention to the provision of the policy and the importance to him that he pay the note. On January 9, 1931, defendant wrote plaintiff as follows:

"We have on two previous occasions called your attention to your note under the above policy which matured December 1, 1930 and is still unpaid.

"Your failure to make this payment is no doubt an oversight. Do you realize that under the provisions of your policy liability on the part of the company is suspended as long as the note remains overdue and unpaid?

"We are ready and willing to live up to our part of the contract and will of course, expect you to do your part which you agreed to when you signed the note. Your failure to comply with this request will force us to take drastic action which will be unpleasant as well as expensive for you.

"Forward remittance at once for $241.96 to cover the principal of $233.70 and interest of $8.26 and your policy will be immediately reinstated."

Apparently plaintiff answered this with a letter dated January 12, but we do not have that letter in the record. On January 16, 1931, defendant wrote plaintiff as follows:

"We are in receipt of your communication of January 15th, 1931, advising us of your inability to meet payment of note of $233.70 due under the above policy since December 1st, 1930.

"We have advised our agents, the Meller Realty Company of your city to this effect and also suggested the plan of changing the above policy in order that you may have the advantage of paying yearly payments, and trust you will not fail to call upon them at once. We believe our suggestion will meet with your approval."

There appears to have been no action by plaintiff as a result of this letter. On April 11, 1931, defendant wrote plaintiff as follows:

"Several notices for payment of $233.70, principal, and $11.70, interest, have been sent to you covering above note, due Dec. 1, 1930, but to date remittance has not been received.

"This note provides for expenses of collection and if you force us to place it with our legal department it makes added trouble and expense to you.

"We desire to retain our pleasant relations and trust you will let remittance to reinstate your policy come forward at once. If unable to remit full amount at this time see our agent or advise us promptly the best yon can do and we will give this our further consideration."

And on the same date sent a copy of that letter to its agent Mellor, at Whitewater, with a notation thereon: "Agent--Your cooperation in the early disposition of this item will oblige."

On receipt of that letter, plaintiff went to see Mellor, and he testified: "Told him I was unable to pay the whole amount and that they had told me to see him and he would make arrangements for the payment of this note. He asked me what I could do at present. I told him I had $70.00 that I could pay at the time and he said 'Well make the check out direct to the company' and he would mail it in and he was sure that I could pay the rest in the future; that it would be all right with the company; and we did that. *** Mr. Mellor told me that he was sure that this would meet the approval of the company and that my policy would be in force and valid. *** And he said I could pay the balance as I could raise the money."

With respect to this transaction, Mellor testified that plaintiff came to his office and discussed the letter which he had received, of which the witness had a copy, and said something about carrying the policy on an installment basis. Witness told him the rates were higher on that basis, and, if he could see his way clear, he should send them what money he could and take care of the present note rather than to write a new contract. Plaintiff said he had some money, $70, that he would pay if witness thought that would be satisfactory, and witness had told him "we could try it." "He wrote the cheek to me. I asked him to change it. *** I asked him to make the check direct to the National Fire Insurance Company because I didn't care to assume any liability; that if it wasn't satisfactory to them they would return this money to me with further instructions to him." The witness did not recall what was said about when further payments would be made on the note.

Following this transaction, and on April 28, 1931, Mellor wrote defendant as follows:

"We are in receipt of a copy of your letter to Theo Roth of this address, dated April 11th, in connection with note # 53486, Farm Policy # 558637, and note what you say with reference to the collection of this particular item.

"Mr. Roth was in the office Saturday and said that he could pay $70 on the account if we figured same would be acceptable to you, and that it was impossible for him to pay the full amount of the note at this time. We were sure that this would be satisfactory with you, so had him make his check in this sum payable to you and are enclosing it herewith. Please credit same to the note and we are sure that in due course of time this account, with accrued interest, will be taken care of."

Defendant received plaintiff's check for $70, collected the same, and credited the amount upon his note, but made no acknowledgment of it either to plaintiff or to its agent Mellor, nor did defendant advise plaintiff that the arrangement its agent Mellor made with plaintiff was not satisfactory.

About May 1, 1932, defendant delivered plaintiff's note to the Associated Credits of America, at Chicago, with authority to collect the same. That agency wrote plaintiff three letters dated May 2, May 17, and June 1, 1932, in an effort to collect the remainder of the note, stated to be $175.50. The first of these,...