Sun Mutual Insurance Company v. Dudley

• Decision Date: 23 April 1898
• Parties: SUN MUTUAL INSURANCE COMPANY v. DUDLEY
• Court: Arkansas Supreme Court

45 S.W. 539

65 Ark. 240

SUN MUTUAL INSURANCE COMPANY v. DUDLEY

Supreme Court of Arkansas

April 23, 1898

Appeal from Hempstead Circuit Court RUFUS D. HEARN, Judge.

Judgment reversed and cause remanded for new trial.

Williams & Arnold, for appelants.

The evidence totally fails to show that plaintiff complied with the conditions of his policy; hence any instruction based on an assumption of such compliance is erroneous. 57 Ark. 461; 42 Ark. 57. The fulfillment of the requirement in the policy as to the keeping of a complete record of the business was a condition precedent to recovery of the insurance, and a strict compliance with its terms was necessary. 58 575; 62 Ark. 348; 151 U.S. 452; 1 May, Ins. §§ 175, 176 and cases cited; 61 Ark. 214; 1 Wood, Fire Ins. 448. Therefore any evidence tending to show a substantial compliance with these requirements was erroneous. The court erred in refusing to allow appellants to introduce in evidence the agreement signed by appellee, to the effect that none of the acts done or statements made by the insurers, in endeavoring to ascertain the amount of the loss, should constitute a waiver of the conditions of the policy. Such an agreement is valid and estops the insured to claim a waiver of conditions. 43 N.W. 59; 49 P. 555; 33 Pa. 633; 65 N.W. 742; 35 S.W. 955; 66 N.W. 525; 31 N.W. 616; 2 Biddle, Ins. § 1054, p: 329; 38 S.W. 1119; 71 N.W. 272; 3 Mo.App. 56; 35 N.Y.S. 374; 11 R. I. 139; 78 Ky. 150. Any instruction based on the assumption that the company yaived the forfeiture was erroneous. 29 N.W. 521.

Jas. H. McCollum, for appellees.

The courts do not favor forfeitures, and will not declare them where they can reasonably avoid it. 1 Joyce, Ins. § 220; May, Ins. (3 Ed.) §§ 170, 174, and 367; 53 Ark. 494; 96 U.S. 577; 34 Am. St. Rep. 565; 45 Am. St. Rep. 361. The object of the "iron safe" clause in a policy of insurance is to enable the insurer to arrive at the amount of the loss. 3 Joyce, Ins. § 2063; 61 Ark. 207; 62 Ark. 43. Any method of compliance which does not injure the insurer or prejudice his rights is good. 50 Am. St. Rep. 832; May, Ins. § 175. Any doubt as to the construction of the clause is to be resolved in favor of the assured. 54 Ark. 376; May, Ins. § 175. Whether or not assured. 54 Ark. 376; May, Ins. § 175. Whether or not assured complied with clause was a question for the jury. 58 Ark. 565. If the insurer, after becoming aware of the facts that worked a forfeiture of the policy, failed to claim same, and so acted as to induce the assured to believe such forfeiture is waived, and such assured, relying on the acts and instructions of the insurer, made out proofs of loss, at an expense, such forfeiture will be treated as waived. 53 Ark. 494; 7 Am. St. Rep. 495; 11 ib. 51; 15 ib. 739; 25 Am. St. Rep. 133; 54 ib. 550; 3 Dak. 80; 35 S.W. 955. The non-waiver agreement ousts the courts of their jurisdiction to declare a waiver when the facts are such as to constitute such. Hence, it is void, as being against the policy of the law. Joyce, Ins. §§ 904, 2530, 2531 and 3330; 8 Am. St. Rep. 913, and note; 35 Am. St. Rep. 793; 32 L. C. P. Ed. U. S. S.Ct. 365. The contract was without consideration, and therefore invalid. Lawson, Cont. § 91.

OPINION

BATTLE, J.

On the 17th of February, 1894, the Sun Mutual Insurance Company of New Orleans issued to C. R. Dudley a policy insuring him against "all direct loss or damage by fire, to an amount not exceeding $ 700, on his stock of merchandise in the town of Hope," in this state, for a period of one year from the 18th of February, 1894. On the 7th of November, 1894, C. R. Dudley, with the consent of the insurance company properly given, transferred the policy and all the property protected thereby to Dudley Bros., a firm composed of C. R. Dudley and R. E. Dudley. On the 13th of January, 1895, the stock of merchandise was destroyed by fire, and after? wards, on the 30th of January, 1895, Dudley Bros. transferred the policy to Val. Duttenhoffer & Sons, Jarvis, Phillips & Co., and Gauss-Shelton Hat Co. On the 17th of May, 1895, Dudley Bros. and their assigns commenced an action against the insurance company and the sureties on its bond, filed with the auditor of this state, in the Hempstead circuit court, upon the policy, to recover damages occasioned by the fire.

The policy sued on contains this covenant: "The assured under this policy hereby covenants and warrants to keep a set of books showing a complete record of business transacted, including all purchases and sales (cash sales need not be itemized except by daily totals), together with the last inventory of said business; and further covenants and agrees to keep such books and inventory securely locked in a fire proof safe at night, and at all times when the store mentioned in the policy is not actually open for business, or in some secure place not exposed to a fire which would destroy the house where said business is carried on; and in case of loss, whether the store be open for business or not, the assured warrants and covenants to produce such books and inventory, and, in the event of a failure to produce the same, this policy shall be null and void, and no suit or action at law shall be maintained thereon for any such loss."

The policy further provides that the insured, as often as required, shall produce for examination all books of account, bills, invoices, or other vouchers, or certified copies thereof, if the originals be lost, at such reasonable place as may be designated by such defendant company or its representative, and shall permit extracts thereof and copies to be made."

The defendants, denying any liability under said policy, alleged, among other things, as a defense, that "the said plaintiffs, Dudley Bros., did not keep a set of books showing a complete record of business transacted, including all purchases and sales, together with their last inventory of said business; that said plaintiffs, Dudley Bros., have failed and refused to produce to said defendants such books as are contemplated by such provision in said policy, or books of any kind whatever; that said provision in said policy is a warranty, and, the same having been broken, the policy is void; and that plaintiffs, Dudley Bros., though called upon to do so, have failed to produce for examination either the said books of account, the original bills and invoices of goods alleged to have been bought since the issuance of said policy, or certified copies thereof, and that, by reason of said failure on the part of said plaintiffs, said policy is null and void."

The issues in the action were tried by a jury.

In behalf of the plaintiffs, C. R. Dudley testified that the goods destroyed were of the value of $ 5,345.66, and that the insurance on them amounted to $ 4,000, including the policy sued on. He further testified "that the only book kept relating to the business prior to August or September, 1894, was what he called a 'cash book,' but it contained nothing except a record of the totals of daily cash sales. In August or September, 1894, he began to keep a bill register, in which was entered the date and amount of invoices of goods purchased, the maturity of the bills, from whom purchased, and when paid," but nothing more. "He (and his firm) kept this register and the original invoices in lieu of merchandise account, the bills representing the debit side and the cash, the credit side." His firm, Dudley Bros., "took an inventory of the stock December 24, 1894," and thereafter purchased and received no goods, and kept no books except the cash book, and "the invoices and bill register were not kept in the safe, but were laid aside as of no use, and were on a desk in the store the night of the fire, and were destroyed. The only book produced when called for by the adjusters was merely the memorandums of totals of daily cash sales, and this was the only book kept in the safe after the inventory was taken."

He also testified as follows: "After the fire I talked with Mr. Balfour Klein, representing the defendant, and one Mr. Meyers, representing the other insurance companies, whose policies we held on this stock. I told them that all the books I had was the cash book and the inventory. They did not claim the forfeiture of the policy at the time, but before they looked at the books they asked me to sign the non-waiver agreement. This was immediately after they reached here, and before they had begun to examine into the question of loss, and I signed the non-waiver agreement. After I made and signed the non-waiver agreement, I gave them my book and inventory; also my policy. I produced the cash book and inventory, and told them that they were all I had. They asked me a few questions, and told me they would take the matter under consideration, and the next day they told me from what they could see they would be willing to pay us fifteen hundred dollars ($ 1,500), and that they would take the responsibility upon themselves. This I refused to accept. They told me to get up proofs of loss, and send them in, and the policies might be paid. They did not say that the policy had been forfeited. I then employed a justice of the peace by the name of Wallace, and he got up the proofs of loss. By the conduct of these adjusters I was led to believe that they would pay me, if I would prepare and send in proofs of loss. They told me that, before they proceeded to business, I must sign the paper. After I signed the paper or non-waiver contract, they asked me to produce the books, and said that if my loss was just they would pay the policies."

The defendants introduced Balfour Klein, who testified as follows: "Before investigating the amount of the loss we asked C. R. Dudley to sign the non-waiver contract, and if he had...