Sanford v. Royal Ins. Co.

• Decision Date: 24 April 1895
• Citation: 40 P. 609,11 Wash. 653
• Parties: SANFORD v. ROYAL INS. CO.
• Court: Washington Supreme Court

40 P. 609

11 Wash. 653

SANFORD v. ROYAL INS. CO.

Supreme Court of Washington

April 24, 1895

Appeal from superior court, Garfield county; R. F. Sturdevant Judge.

Action by I. C. Sanford, as assignee of the estate of John Harford and F. G. Harford, partners as Harford & Son, insolvent debtors, against the Royal Insurance Company, on a fire policy. Judgment for plaintiff. Defendant appeals. Affirmed.

B. L. & J. L. Sharpstein (T. C. Coogan, of counsel), for appellant.

M. F Gose, Sanderson Reed, M. M. Godman, and S. G. Cosgrove, for respondent.

GORDON, J.

In March, 1893, John Harford and F. G. Harford (father and son) were partners doing business as such at Pataha City, in this state, and on the 23d day of said month insured their stock of hardware, etc., including buildings, for the sum of $15,300, represented by 10 policies in various companies; the amount of insurance effected in the appellant company being $2,500, $1,000 of which was upon building and $1,500 upon stock. On the 7th day of April of that year said insured property was wholly destroyed by fire. On the 19th day of April following, said firm of Harford and Son, and the individual members thereof, made a general assignment for the benefit of all of their creditors, and respondent, I. C Sanford, is such assignee. He brought this action upon said policy of insurance. After the usual denials, the answer sets up two affirmative defenses, the first of which is that respondent's assignors, at the time of procuring said insurance, concealed from the appellant and from its agents the fact that said firm and the several members thereof feared damage of destruction of said property by incendiarism, and then "fraudulently represented and stated to the agent of the [appellant] that they had no such fear, when, as a matter of fact, they did at said time so fear the destruction of or damage to the said property from said cause, and that they did thereby, by their said failure to disclose the same, and by the concealment thereof, and by said misrepresentation thereof, fraudulently induce and cause the said policy of insurance *** to be issued to them; and that it was in and by said policy, and as a part thereof contracted and agreed that said policy should be void if the insured had concealed or misrepresented any material fact or circumstance concerning said insurance or the subject thereof." The second affirmative defense sets out that on the 17th of April, 1893, and prior to the filing (and prior to making the assignment mentioned in the complaint), the firm of Harford & Son (the insured), "at a time when a controversy and question was pending between [appellant] and said firm as to the liability of the [appellant] under said policy to said firm of Harford & Son for and in consideration of one dollar paid to said firm, and the further payment to said firm of the premium mentioned in said policy, *** fully settled and adjusted the said matter, and said considerations were paid and received in full satisfaction and settlement of all demands under said policy, and the said firm then and there, for said consideration, canceled, surrendered, and delivered said policy to this [appellant]." Replying to the matter set up in said affirmative defenses, the plaintiff denied the allegations of the answer concerning fraudulent representation and concealment of fears of incendiarism, and alleged that the appellant so issued and delivered up the policy after a full, true, and complete statement, and with full knowledge of all the facts and circumstances; and, replying to the defense of release and surrender of the policy, alleged that the same was procured by the fraud, deceit, and misrepresentation of appellant, its agent and adjuster, acting in concert with one Whitley, who was the agent and adjuster of some of the other companies which had written insurance upon said stock. The particular circumstances of such alleged fraud and misrepresentation are set out at great length in the reply. There was a trial and verdict for respondent, and thereafter, appellant's motion for a new trial having been overruled, judgment was entered upon the verdict, from which this appeal is prosecuted.

Numerous errors are assigned by appellant, but there are four principal grounds of contention, the disposition of which must control the cause. They are: (1) That the insured misrepresented or concealed material facts and circumstances concerning said proposed risk at the time application was made for insurance. (2) It is contended that an action could not be maintained for a recovery of the loss under the policy until the release had been canceled by decree in equity. (3) That the release and surrender of the policies could not be attacked for fraud, either in law or in equity, until the respondent had restored to the appellant company the consideration received by his assignors (said consideration being the premium note and a cash consideration of one dollar). And (4) that the evidence upon the trial was not sufficient to avoid the so-called "release."

1. The question of whether the insured had concealed or misrepresented any material fact concerning the insurance or their fears of incendiarism (if such were entertained) was properly a question to be determined by the jury, under correct instructions, which, from an examination of the record, we think were given. No written application for insurance was required or given in this case, and there is nothing in the record at all tending to show that any inquiry was made of the insured, or either of them, as to their fears from incendiary causes. It appears, however, that after the loss occurred, J. L. Fuller, appellant's agent and adjuster, went to Pataha City for the purpose of adjusting said loss, and was so employed for the period of upwards of a week; that while so engaged, and at his instance and request, the younger Harford went before a justice of the peace, and was sworn according to law, to make answers to questions to be propounded to him by the said Fuller, adjuster. In the examination which followed he stated that some time in March, 1893, one Williamson, a clerk of said firm, had been aroused in the night by some one picking at the lock of the outer door of his house: that upon such person (supposed to have been a burglar) opening the door Williamson had fired upon him, the supposed burglar making immediate flight; that he, Harford, feared that the burglar "might burn us out" in revenge against Williamson, who, he might have believed, was a partner in the business. On said examination the said Harford further stated that he had suspected one R. P. Reynolds, who was doing business in a one-story building situated in the same block, of incendiary intentions. His stock of goods having run down, and he being indebted to said firm of Harford & Son in a large sum of money, and having failed to secure the same, the firm had placed the claim in the hands of an attorney for collection, and Reynolds' family had left town, with valuables in the way of clothing, and household goods had been stored in a smokehouse situated some distance from the business property, and out of danger; "all of which caused us to suspicion the said Reynolds. For the two reasons above mentioned we feared incendiarism to the extent of causing us to protect ourselves with insurance." The question was then asked: "Did you tell any one of your reasons for fear of being burned out? Answer. Yes, I told O. S. Williamson, our clerk, and L. M. Carter, the marshal of Pataha City, and to no one else whomsoever." Upon the trial, F. G. Harford testified that prior to the issuance of the policies, and while appellant's agent, King, was examining the premises, and making a survey of the risk, he (witness) informed him of the difficulty occurring between their clerk, Williamson, and the supposed burglar; also mentioning the circumstances surrounding the Reynolds' property; and his testimony in this regard is strongly corroborated by that of the plaintiff, Sanford, who testified that he was present at a conversation between King and one Wills (who was agent for some of the companies having policies upon the same risk), in which conversation King related to Wills that Harford had told him that he was afraid of being burned out, etc. This was prior to the issuance of the policies. It further appears that the witness Sanford informed said adjuster, Fuller, during the time that he was engaged in adjusting said loss, of such conversation between King and Wills concerning Harford's fears of incendiarism. The agent, King, was sworn as a witness, and denied that Harford expressed any fears of incendiarism to him prior to the issuance of the policies, or that he stated any circumstances connected therewith; but he did not deny having the conversation with Wills to which Sanford had testified, nor did he make any explanation of it, nor did the adjuster, Fuller, deny that Sanford had so informed him of it. We are satisfied from an examination of the record upon this question that a full statement of the grounds upon which the younger Harford seemed to entertain some fear of incendiarism was communicated to King, the agent of the appellant, prior to his issuing the policy in this case. Indeed, the condition of the record is such as to admit of little doubt of it. But the same result is reached viewing the evidence in a light most favorable for the appellant. No written application having been required, and no questions asked of the assured upon the subject of incendiarism, the fact that Harford actually entertained such fear, based upon the circumstances already detailed, would not render the policy void. "When no inquiries are made, the intention of the assured becomes material, and to avoid the...