Shelter Ins. Companies v. Spence

• Decision Date: 02 May 1983
• Citation: 656 S.W.2d 36
• Parties: SHELTER INSURANCE COMPANIES, Plaintiff-Appellant, v. Archie SPENCE and wife, Jane Spence, Defendants-Appellees.
• Court: Tennessee Court of Appeals

Page 36

656 S.W.2d 36

SHELTER INSURANCE COMPANIES, Plaintiff-Appellant, v. Archie SPENCE and wife, Jane Spence, Defendants-Appellees.

Court of Appeals of Tennessee Western Section, at Jackson.

May 2, 1983.

Application for Permission to Appeal Denied by Supreme

Court July 25, 1983.

William C. Bell, Jr., Menzies, Rainey, Kizer & Alderson, Jackson, for plaintiff-appellant.

Charles L. Hicks, Camden, for defendants-appellees.

TOMLIN, Judge.

The plaintiff-insurer filed a declaratory judgment action in the Chancery Court of Benton County in connection with a fire loss under a homeowners policy of insurance, whereby plaintiff sought a determination as to whether the two defendants--the insured under the policy--should be required to give separate sworn statements, taken under the cooperation clause, apart from, and not in the presence of, each other. The chancellor held that if the plaintiff desired to take the insureds' statements, it should take their statements in the presence of each other. We are of the opinion that he was in error, and reverse the chancellor's ruling.

The material facts are not in controversy. The plaintiff issued a homeowners policy of insurance to the insureds, who, at the time of issuance, were husband and wife, for the period March 10, 1981, through March 10, 1982. The policy provided fire insurance, among other coverage, for the premises owned and occupied by the insureds, located in Benton County. On or about February 18, 1982, the insured premises were destroyed by fire. At the time of the loss, the defendants were married, but living apart, and were in the process of obtaining a divorce, which they did on May 20, 1982.

The first sworn proof of loss, signed by the defendants under date March 15, 1982, was rejected by the plaintiff in writing. The defendants filed a second proof of loss, executed by them on April 6, 1982. Subsequent to its receipt, the plaintiff, through one of its representatives, scheduled an examination of the defendants at the Benton County Courthouse, for the purpose of taking sworn statements. This action was taken in accordance with the following provision of its homeowners policy:

The insured, as often as may be reasonably required, shall exhibit to any person designated by this Company all that remains of any property herein described, and submit to examinations under oath by any person named by this Company, and subscribe the same ....

When it was made known to the defendants that the plaintiff's representative intended to take the sworn statement of each defendant separately, they refused to comply, stating that they would give their statements only in the presence of each other. No statements were taken. This action followed.

The right of the insurer to take and the obligation of the insureds to give sworn statements in accordance with the terms of the policy is not questioned. Fire policies such as the one in question almost universally require that the insured cooperate with the insurer in the investigation of the fire as a condition precedent to performance by the company to indemnify the insured for his loss.

As was stated in the recent case of Dyno-Bite, Inc. v. The Travelers Companies, 80 A.D.2d 471, 439 N.Y.S.2d 558, 560 (N.Y.App.Div.1981):

The reason for including a cooperation clause in the policy and for conducting examinations pursuant to it is obvious enough. The company is entitled to obtain, promptly and while the information is still fresh, "all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to their rights to enable them to decide upon their obligations, and to protect them against false claims. And every...