Sullivan v. Mercantile Town Mut. Ins. Co.

Decision Date12 March 1908
Docket NumberCase Number: 666 Ind Ter T
Citation20 Okla. 460,1908 OK 35,94 P. 676
PartiesSULLIVAN v. MERCANTILE TOWN MUT. INS. CO.
CourtOklahoma Supreme Court
Syllabus

¶0 1. INSURANCE--Forfeiture--Waiver--Knowledge of Agent--Courts--Controlling Decision. In an action arising on an insurance policy issued in the Indian Territory and pending in the United States Court of Appeals of the Indian Territory at the time of the admission of the state into the Union, an insurance company cannot be deemed to have waived a condition in a policy of fire insurance to the effect that the entire policy and each and every part thereof shah be void if the subject of insurance be personal property and be or become incumbered by a chattel mortgage, because the agent who countersigned and delivered said policy had notice or knowledge at that time of the existence of a mortgage on the property, where such policy provides that no officer, agent, or other representative of the company shall have power to waive any provision or condition of the policy, except such as by the terms of the policy may be the subject of agreement indorsed thereon or added thereto, and as to such provisions or conditions no officer, agent, or representative shall have power or be deemed or held to have waived such provision or condition unless such waiver, if any, be written upon or attached thereto.

2. SAME--Collection of Premiums after Loss--Statements of Adjuster. Where an insurance policy contains the Provision aforesaid, an insurance company issuing the same cannot be deemed to have waived a condition in said policy rendering it void in case the subject of insurance be personal property and be or become incumbered by mortgage, because the agent who counter-signed and delivered said policy, with notice of the existence of a mortgage upon a portion of said property, collected a portion of the premium thereon after the property covered by said policy had been destroyed by fire, or because an adjuster of such company, with knowledge of the existence of such mortgage, stated to the insured that the claim would be adjusted.

3. SAME--Ambiguous Stipulation--Construction Favoring Insured. Under a stipulation that the entire policy and each and every part thereof shall become void if the subject of insurance be personalty, and be or become incumbered, a forfeiture cannot be claimed because one item of personal property insured by said policy, separately set out, and separately valued therein, was incumbered by mortgage, where the subject of insurance was partly real and partly personal property.

Error from United States Court far the Southern District of the Indian Territory; before Hosea Townsend, Judge.

Action by C. F. Sullivan against the Mercantile Town Mutual Insurance Company. Judgment for defendant, and plaintiff brings error. Reversed and remanded.

Cruce, Cruce & Bleakmore, for appellant.

Barclay & Fauntleroy and E. A. Walker, for appellee.

HAYES, J.

¶1 This is an action brought by C. F. Sullivan, appellant, who for convenience will hereinafter be called plaintiff, against the Mercantile Town Mutual Insurance Company, who for convenience will hereinafter be called defendant, upon a policy of fire insurance executed by the defendant on the 2d day of November, 1903, for a consideration and premium in the sum of $ 25.20, by which policy the defendant undertook to insure the plaintiff's onestory plank-roof boxed shed used for storage, size 24x30, in the sum of $ 150, and his one J. L. Case threshing machine in the sum of $ 500, and his one Advance threshing machine in the sum of $ 250. On the 20th day of November, 1903, all of said property insured by said policy was destroyed by fire.

¶2 Defendant filed its answer to the plaintiff's amended complaint, and attached as an exhibit thereto a copy of the policy issued by it to the plaintiff. One of the conditions of said policy is:

"This entire policy, and each and every part thereof, unless otherwise provided by agreement indorsed hereon, or added hereto, shall be void if the insured now has or hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy, * * * or if the hazard be increased by any means within the control or knowledge of the insured, * * * or if the interest of the insured be other than unconditional and sole ownership, or if the subject of insurance be a building on ground not owned by the insured in fee simple, or if the subject of insurance be personal property and be or become encumbered by a chattel mortgage. * * *"

¶3 And said policy contains this further stipulation:

"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 representative of this company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto, and as to such provisions and conditions no officer, agent, or representative shall have such power to be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached."

¶4 Defendant alleges in its answer that plaintiff, before the 20th day of November, 1903, to wit, on the 2d day of November, 1903, made, executed, and delivered to the City National Bank of Ardmore a chattel mortgage to secure the payment of $ 300 upon a portion of the property which is mentioned in and covered by said contract and policy of insurance; that said chattel mortgage continued to be a mortgage, lien, and incumbrance upon said property up to and at the time of said fire; and that by reason of said facts said policy at the time of Said fire was void. Evidence was introduced by plaintiff in support of his cause of action, and the defendant moved the court to instruct the jury to return a verdict in favor of the defendant, which motion was by the court sustained.

¶5 The plaintiff thereupon took the case by writ of error to the United States Court of Appeals of the Indian Territory. Plaintiff makes the following assignments of error:

"First. The court erred in charging the jury to return a verdict for the defendant, and refusing to submit the question of facts, as raised by the testimony, to the jury. Second. Because of the error of the court in holding that the mortgage given upon the J. I. Case threshing machine invalidated the insurance upon the building and the Advance threshing machine, neither of which was under mortgage, and both of which items were insured separate and distinct from the J. I. Case machine. Third. Because of the error of the court in holding that the defendant company had not waived the provisions of said policy in accepting and retaining the premium upon the policy after it was apprised of the mortgage that existed upon the J. I. Case threshing machine. Fourth. Because the court erred in refusing to allow the witness Sullivan to answer the question as to whether or not the agent who wrote the policy and the defendant company knew at the time said policy was written and delivered that said J. I. Case threshing machine was under mortgage, which said questions were as follows: 'Q. Do you know whether the agent knew at the time? Mr. Walker: Objected to. (Objection sustained.) Q. Do you know whether or not defendant company, knew at the time said policy was written, that the property was mortgaged? Mr. Walker: Objected to. (Objection sustained.)' Fifth. Because the court erred in refusing to allow the witness Sullivan to testify as to what he told the agent of the company and the adjuster sent there to adjust the loss as to the mortgage upon this property and the lien existing thereon, and refused to let said witness testify after the adjuster of said mortgage had adjusted the loss, promised to pay same, and delivered the premium from said policy. Sixth. Because the court erred in refusing to let the witness Sullivan testify as to whether or not he paid the premium upon said policy after the loss upon the faith and representation of the adjuster that said loss would be paid, and in holding that said testimony was immaterial, and in holding that the only way the company could waive the forfeiture of said policy was by indorsing the same upon the policy in writing, and that, too, notwithstanding the waiver set up and relied upon, if made at all, was made after the loss had occurred. Seventh. Because of the error of the court in holding and so stating in the presence of the jury that the testimony of J. W. Kemp, the agent of the company, did not prove anything that was material or immaterial, and holding that it did not have anything to do with any waiver of any conditions of the policy."

¶6 By express terms of the policy it is provided that no officer, agent, or other representative of the company shall have power to waive any provision or condition of the policy except such as by the terms of the policy may be the subject of agreement indorsed thereon or added thereto, and that as to such provisions and conditions no officer, agent, or representative shall have such power or be deemed or held to have waived such provision or condition unless such waiver, if any, shall be written upon or attached thereto. The effect of this provision in fire insurance policies has been repeatedly passed upon by the courts. Many of the courts have held that as to such restrictions upon the power of the agent to waive any condition unless done in a particular manner, inserted in the contract, cannot be deemed to apply to those conditions which relate to the inception of the contract, where it appears that the agent has delivered the policy and...

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