Rudd v. American Guarantee Fund Mut. Fire Ins. Co.

• Decision Date: 05 June 1906
• Citation: 120 Mo. App. 1,96 S.W. 237
• Parties: RUDD v. AMERICAN GUARANTEE FUND MUT. FIRE INS. CO.
• Court: Missouri Court of Appeals

96 S.W. 237

120 Mo. App. 1

RUDD v. AMERICAN GUARANTEE FUND MUT. FIRE INS. CO.

St. Louis Court of Appeals. Missouri.

June 5, 1906.

1. INSURANCE—PROVISIONS OF POLICY—WAIVER —AUTHORITY OF LOCAL AGENT.

Local agents of insurance companies vested with authority to make contracts to insure and to countersign and deliver policies and receive premiums, have power to waive stipulations in the policy, although it contains a restriction declaring that its provisions can only be waived by an agreement in writing signed by the president or secretary.

2. SAME—IRON-SAFE CLAUSE—WAIVER.

Where an agent of a fire insurance company issues a policy with knowledge that the insured has no iron safe, and that owing to the nature of his business it is impossible for him to remove his books from the insured building when he is absent therefrom, a provision of the policy making it void unless the books are kept in an iron safe, or removed from the building when insured is absent therefrom, is waived.

3. SAME—EFFECT OF ADJUSTMENT OF LOSS.

The adjustment of a loss under a fire policy waives a forfeiture for previous violation of conditions of the policy.

4. SAME—ACTION ON POLICY—INSTRUCTIONS.

Where, in an action on a fire policy in which it was claimed that an agent of the insured

had adjusted the loss and agreed to pay it, its agent testified that at the time he agreed on a settlement he did not know that the iron-safe clause of the policy had not been complied with, and that the books of insured had been lost, it was error to instruct that the agent's agreement to settle estopped the company from asserting a forfeiture for noncompliance with the iron-safe clause, without requiring a finding that at the time the agreement was made the adjuster had knowledge of the destruction of the books.

5. SAME—FORFEITURE—WAIVER BY ADJUSTMENT —AGREEMENT AS TO ADJUSTMENT.

Where, after a loss under a fire policy, insured agreed with an adjuster sent by the company that any action taken in investigating the cause of the fire, and the amount of loss or damage should not waive or invalidate any rights of either of the parties this agreement did not prevent a final adjustment and promise by the adjuster to pay the loss from operating as an estoppel preventing the company from enforcing a forfeiture for previous noncompliance with a provision of the policy.

6. TRIAL—INSTRUCTIONS—IGNORING DEFENSE —ACTION ON INSURANCE POLICY.

Where, in an action on a fire policy, the insured defended on the ground of forfeiture for failure to comply with the iron-safe clause, an instruction that if the company issued the policy and while it was in force, and without the fault of the plaintiff, part of the property was destroyed, and proper proofs of loss made or wavied, the jury should find for plaintiff, improperly disregarded the defense, and was erroneous.

Appeal from Circuit Court, Dent County; Leigh B. Woodside, Judge.

Action by W. E. Rudd against the American Guarantee Fund Mutual Fire Insurance Company. From a judgment for plaintiff, defendant appeals. Reversed and remanded.

A. E. McGlashen and Barclay & Fauntleroy, for appellant. Cope & Elmer, for respondent.

GOODE, J.

This is an action on a fire insurance policy issued by the defendant company October 16, 1903, to run for one year and covering a stock of drugs and merchandise contained in a store in the town of Anutt, in Dent county, Mo. The stock was entirely destroyed by fire July 25, 1904, the store building having been ignited by some unknown cause. It was agreed at the trial that the loss to plaintiff on the property covered by the policy was greater than $500, the maximum indemnity to be paid in case of loss by fire. The action was instituted to recover that sum. A few days after the fire the company sent plaintiff blank proofs of loss which he filled out, signed, and returned to the company. No point is made that the proofs furnished fell short of complying with the requirements of the policy. In defense a violation of the "inventory and iron-safe clause" of the policy was pleaded. This stipulation required the assured to take a complete inventory of stock at least once in each calendar year, and unless such inventory had been taken taken within 12 months prior to the date of the policy, to take one in detail within 30 days. It also required him to keep a set of books clearly setting forth a complete record of the business transacted for cash and on credit, including purchases, sales, and shipments, from the date of the inventory, and during the continuance of the policy, and to keep such books and inventory securely locked in a fireproof safe at night, and at all times when the building containing the insured stock was not open for business; or failing this, to keep such books and inventory in some place not exposed to a fire which might destroy the building. It was further provided that if the assured failed to produce such books and inventory for the inspection of the company on demand, the policy should become void, and there could be no recovery on it. The defendant alleged that plaintiff failed to make an inventory in compliance with the clauses we have digested; that he did not keep a set of books showing purchases and shipments during the term the insurance contract was in force, or keep such books and inventory locked in an iron safe, or other place not exposed to fire, and did not produce such books on demand of defendant, though the fire occurred when the building where plaintiff kept his store was not open for business; that is, did not occur during business hours; that whatever inventories or books plaintiff kept were destroyed by the fire and plaintiff was unable to produce any books or inventories from failure to preserve the same in a fireproof iron safe or other place not exposed to fire. Therefore, it is alleged the policy became null and void, and defendant tendered into court and offered to return to plaintiff, the premium paid for the insurance.

A reply was filed denying each allegation of the answer and averring in avoidance of defendant's plea in bar, that John M. Stephens is defendant's agent at Salem; that plaintiff made application to said Stephens for insurance on the property covered by the policy, and, at the time of applying for it, informed Stephens that the drug store and said business would be conducted in connection with plaintiff's practice as a physician; that he did not employ a clerk nor keep the store open regularly for business; that Stephens was also informed at the time of such application that plaintiff did not have an iron safe and this fact was well known to said agent from a personal inspection of the risk; that Stephens told plaintiff it was not necessary to have an iron safe; that plaintiff's profession called him away from the store at all times of the day and night and said calls for his professional services were so urgent that plaintiff was compelled to leave without having time to put his books in a place of safety; that plaintiff did keep a set of books showing the sales made by him, and invoices of all goods he purchased, and said agent knew the kind and character of books kept and where they were expected to be kept, and assented to the keeping of them in such manner, and waived the keeping of them in an iron safe; that with this understanding, plaintiff paid the agent the premium, and it was accepted by the company, and the policy issued; by which act defendant, through its agent, waived all right to claim any benefit from said conditions set forth in the answer; that plaintiff can produce, and has offered to produce to defendant's adjuster, and now offers to produce the bills of invoice of all purchases made by him, and make full proofs of loss, but the same were not demanded by said adjuster; that defendant's adjuster agreed to pay the loss to plaintiff by reason of said fire, at the expiration of the time fixed for payment of losses by the policy, said adjuster having agreed to pay plaintiff's loss in full after having made an investigation concerning the origin of the fire; that by agreeing to pay said loss in full, there became an accord and satisfaction of damage and loss on part of plaintiff, and defendant waived any forfeiture of the policy it might have asserted, and is now estopped from asserting a forfeiture.

The policy contained the clauses alleged in the answer, and it was proved the fire occurred at night when the store was not open for business; that plaintiff told Stephens, the agent to whom he made application for insurance, that plaintiff kept no clerk, and the store would be closed at irregular hours; that there was no iron safe in it; that whenever plaintiff knew he was to be away for any length of time he would leave his books at the store of Mr. Porter in the same town. When negotiating for the insurance, plaintiff objected to the iron-safe clause in the policy, explaining to the agent that it would be impossible, on account of his professional practice to secure his books from fire in the manner required by that clause. Both he and Stephens swore the latter consented to accept his application for the policy on the understanding that keeping the books in an iron safe or some place where they would be safe from fire which might consume plaintiff's store building, would not be obligatory on plaintiff. A written application for the insurance was signed in plaintiff's name by his brother-in-law, who, according to plaintiff's testimony, had authority to act for him. This application was dated October 13, 1903, and contained certain statements and warranties; among others, that plaintiff would comply with the inventory and iron-safe requirement. One clause of the policy was the following: "This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements, or conditions as may be indorsed hereon, or added hereto, and no officer, agent or other...