Southern Guaranty Ins. Co. v. Dean, 43392

• Court: Mississippi Supreme Court
• Writing for the Court: ETHRIDGE; LEE
• Citation: Southern Guaranty Ins. Co. v. Dean, 252 Miss. 69, 172 So.2d 553 (Miss. 1965)
• Decision Date: 08 March 1965
• Docket Number: No. 43392,43392
• Parties: SOUTHERN GUARANTY INSURANCE COMPANY et al. v. Mrs. Ruby Jones DEAN.

Page 553

172 So.2d 553

252 Miss. 69

SOUTHERN GUARANTY INSURANCE COMPANY et al. v. Mrs. Ruby Jones DEAN.

No. 43392.

Supreme Court of Mississippi.

March 8, 1965.

Bryan & Gordon, Pascagoula, for appellant.

Albert Sidney Johnston, III, Pascagoula for appellee. ETHRIDGE, Justice.

This case deals with the failure of an insured to comply with the provisions of fire and extended coverage insurance policies, to submit to examinations under oath by the insurer, and to produce for examination by insurer all pertinent records. Appellee, Mrs. Ruby Jones Dean, brought this action in the Chancery Court of Jackson County against Great American Insurance Company and Southern Guaranty Insurance Company, appellants, on insurance policies issued by these companies covering a restaurant building in Pascagoula, in the total amount of $65,000. The defendants pleaded, among other things, failure of the insured, Mrs. Dean, to comply with these provisions in their policies. After a lengthy hearing, the chancery court held the policies were valid. It rendered a decree against Southern Guaranty on its $20,000 policy, and held Mrs. Dean was entitled to have the $45,000 policy of Great American applied to her mortgage. See companion case, Great American Ins. Co. v. Smith, No. 43,391, decided March 8, 1965. The chancellor allowed appeals with a $40,000 supersedeas bond. We hold that insured failed and refused to answer questions in the examination under oath on matters which were material and relevant to the insurance and the loss, and failed and refused to produce for examination written documents which were pertinent and material to the insurance and loss. Failure of insured to comply in material respects with these contractual clauses bars her recovery under the policies. Hence the decree of the chancery court is reversed, and judgment is rendered here for appellants.

The pertinent clauses are the same in both policies, and provide:

'This entire policy shall be void if, whether before or after a loss, the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto. * * *

'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; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices and other vouchers, or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by this Company or its representative, and shall permit extracts and copies thereof to be made.'

Mrs. Dean and her husband moved to Pascagoula in January 1961. Her sister, Mrs. Rosie E. Norwood, and her husband owned and operated a restaurant there. Mrs. Dean rented the restaurant and operated it until August 1961, when she purchased it from her sister. She paid no cash for the property, but assumed a 1959 note and deed of trust to Mobile Fixture and Equipment Company, Inc., originally in the amount of $27,000, covering the fixtures, equipment, and four lots.

On May 23, 1962 Mrs. Dean and her husband borrowed $50,000 from Mrs. Mildred Smith. The loan was secured by a deed of trust covering the real property and the restaurant, and its equipment and fixtures, and an 80-acre tract of land in Bolivar County, Mississippi, which was subject to a prior lien. Part of the proceeds of this loan were used to pay off the Mobile Fixtures note and deed of trust.

On May 23, 1962 Mrs. Dean purchased a policy of fire and extended coverage insurance from appellant, Great American Insurance Company, providing $30,000 on the building and $15,000 on the contents. This deed of trust had a loss payable clause to Mrs. Mildred Smith. On December 6, 1962 Mrs. Dean purchased an additional policy of fire and extended coverage insurance providing $15,000 on the building and $5,000 on the contents. Both policies contained the above-quoted clauses. This suit was brought by Mrs. Dean on the aggregate of this insurance, $65,000.

Around 10:30 p. m. on Sunday, January 6, 1963, the restaurant and its contents were totally destroyed, when there was an explosion in the building and fire ensued. An investigation was begun by the Pascagoula Police Department, the state fire marshal, and a special investigator of the National Board of Underwriters. There was a serious question as to whether there had been arson. The fire was preceded by a violent explosion which threw debris and brick on property in the vicinity. Within a week, investigating officers and representatives of appellants found, by removing the debris, that the thermostat control on the hot water heater had been turned to a very high point, and two gas valves on the stove and one situated on a pipe at the back of the gas stove were open. These facts were discovered by removing the debris, there was dust on the valves, and the valve at the rear of the stove was 'frozen,' all of which indicated it was unlikely that anyone had meddled with them after the fire.

The insurance companies had no information with reference to Mrs. Dean's financial affairs, nor those of the restaurant, and whether it was operating at a profit or loss. Mrs. Dean and her sister, Mrs. Norwood, who operated another restaurant, were intimate friends, and helped one another at their respective cafes on various occasions. The insurance companies had some information that Mrs. Dean up to a time shortly before the fire had been negotiating to lease her place. The fire occurred on a Sunday night. The restaurant had been closed that day. According to a statement given by Mrs. Dean on January 8, two days after the explosion and fire, neither she nor her husband were in the restaurant that weekend after she closed it around 9:00 p. m. on Saturday; and she and her husband were the only ones who had possession of the key. They lived in a residence directly behind the cafe. She was positive that neither her husband nor anyone else was in the restaurant that day, according to her statement. Yet the insurance companies had some information by witnesses indicating that Mr. Norwood drove to the restaurant around four-thirty that Sunday afternoon in his small foreign car, and stayed in it without light for about an hour and a half.

The companies also knew there had been a tremendous explosion preceding the fire, and a man named Rutherford, who lived in a trailer at the back of the restaurant, moved out about 8:30 p. m. before the fire. They apparently also had information that some of the mortgaged equipment had been removed from the premises, although on the trial the record is ambiguous on this. Millette, who wrote the $45,000 insurance policy, said on the trial that Mrs. Dean did not advise him about the additional $20,000 insurance which she purchased on December 1962. She denied that, and the chancellor found against appellants on that issue, but this recollection of Millette also supported appellants' interest in getting a full disclosure on oral examinations from appellee. The company also had information indicating that there was a considerably excessive amount of insurance on the property. On the trial a general contractor stated that, after studying the building site, measurements, debris, and after conversations with Mrs. Norwood, the replacement cost of the building in his opinion would be $30,488.71, not including equipment. In 1959 a qualified realtor made an appraisal for Mobile Equipment of $30,000.

We do not consider or decide whether there was arson involved in this case. The evidence on the trial did not connect Mrs. Dean with anything of this sort. However, as the chancellor observed, there were 'many serious circumstances in the case' which certainly justified the...