Sutton v. Hawkeye Casualty Co.

• Decision Date: 01 December 1943
• Docket Number: No. 9533.,9533.
• Citation: 138 F.2d 781
• Parties: SUTTON et al. v. HAWKEYE CASUALTY CO.
• Court: U.S. Court of Appeals — Sixth Circuit

138 F.2d 781 (1943)

SUTTON et al. v. HAWKEYE CASUALTY CO.

No. 9533.

Circuit Court of Appeals, Sixth Circuit.

December 1, 1943.

Will Allen Wilkerson, of Chattanooga, Tenn. (Wilkerson & Wilkerson, of Chattanooga, Tenn., on the brief), for appellants.

Alvin O. Moore and Silas Williams, both of Chattanooga, Tenn. (Williams, Reynolds & Moore, of Chattanooga, Tenn., on the brief), for appellee.

Before HAMILTON, MARTIN, and McALLISTER, Circuit Judges.

McALLISTER, Circuit Judge.

The Hawkeye Casualty Company issued an automobile insurance policy, to run for a period of one year, to Jack White, in Kalamazoo, Michigan, on May 8, 1941. One of the provisions of the policy, under the heading of "Warranties," is as follows: "The automobile will be principally garaged and used in the above town, township, county and state (Kalamazoo, Michigan) unless otherwise specified herein — No exceptions." In a subsequent portion, it is provided: (1) that the policy issued "* * * in consideration of the payment of the premiums and of the statements contained in the Warranties, which statements the Assured makes and warrants to be true, * * *"; and (2) that "This policy shall be void in event of violation by the Assured of any agreement, condition or breach of any warranty contained herein. * * *" The area liability of the policy was stated to be anywhere within the United States or Canada.

In the latter part of October, or the first part of November, 1941, White moved his residence from Kalamazoo to Chattanooga, Tennessee, where he worked as a taxicab driver with the Yellow Cab Company, and where he continued to reside until, at least, March 21, 1942. He did not use the insured car in the taxicab business, but on the day above mentioned, while driving it for pleasure, he was involved in an accident.

The injured parties, appellants herein, brought suit against White; and the Hawkeye Company, thereupon, filed a complaint, asking for a declaratory judgment with regard to its liability under the policy. The District Court held that the provision stating that the principal use of the automobile was to be in Kalamazoo, Michigan, was a promissory warranty, breached by White, and that the policy was thereby vitiated.

The insurance contract was executed in Michigan and the law as announced by that state is here controlling, where applicable.

The question presented on appeal is whether the statement as to where the automobile would be principally used was merely an expression of the intention or expectation of the assured, or whether it was a warranty, agreement, or condition of the policy.

Whether a statement is a warranty or not depends upon the intention of the parties, which is determined from the language employed and the subject matter to which it relates. Convis v. Citizens' Mut. Fire Ins. Co., 127 Mich. 616, 86 N.W. 994. Policies of insurance are to be construed in favor of the assured to effect the insurance, and exceptions to the general liability provided are to be strictly construed against the insurer. Pawlicki v. Hollenbeck, 250 Mich. 38, 229 N.W. 626; Zabonick v. Ralston, 272 Mich. 247, 261 N.W. 316. Courts should not indulge in a strict construction of an insurance policy to defeat liability, but should take into consideration the policy as a whole and indulge in such a construction as will give it force for the purpose it was intended to serve; for, if possible, the construction of the language used should be such as to make it of some value to the insured. Kalamazoo Auto Sales Co. v. Travelers' Ins. Co., 227 Mich. 74, 198 N.W. 579; Elliott v. Casualty Ass'n of America, 254 Mich. 282, 236 N.W. 782.

As an instance of the construction of policies containing warranties, it is held that where a policy, in addition to stating that the answers of insured in an application are warranted by him to be true in all respects, contains the additional statement that if the policy has been obtained by or through any fraud, misrepresentation, or concealment, it shall be absolutely void, such additional statement is persuasive toward treating the answers as mere representations and not as warranties, since, in that way only, may the provision relating to fraud, concealment and representation, be of any effect. Continental Life Ins. Co. v. Rogers, 119 Ill. 474, 10 N.E. 242, 59 Am.Rep. 810.

The policy in the instant case provided that it would be void "if the Assured has concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof; or in case of any fraud, attempted fraud, or false swearing by the Assured touching any matters relating to this insurance or the subject thereof, whether before or after a loss or accident." In accordance with the above-noted construction of an insurance policy, the so-called warranty in the instant case, even if it had been one of existing fact, would be construed as a representation rather than a warranty, especially to avoid a forfeiture.

However, a review of certain of the terms of the policy here involved, throws light upon the interpretation to be given the contract. The language of the policy in the instant case commences with the single word "Warranties," printed at the top of the first page. Thereafter, follow nine paragraphs. Of these, several are obviously not warranties, but mere descriptive statements, such as, length of the policy period, description of the automobile, and the risks insured by the company — which does not warrant or represent anything under the heading "Warranties." At the outset, it may be remarked that the designation of a provision in an insurance policy as a warranty is not conclusive that it is one, for there may be warranties without the use of the word, and statements may not be warranties, even though the word is used. Teeple v. Fraternal Bankers' Reserve Society, 179 Iowa 65, 161 N.W. 102, L.R.A.1917C, 858. There is no language of covenant or agreement between the parties on the first page, which purports to be signed, at the bottom thereof, by the insurer but not by the assured.

On the second page of the policy, it is provided that the company agrees with the assured "named in the Warranties made a part hereof, in consideration of the payment of the premiums and of the statements contained in the Warranties, which statements the Assured makes and warrants to be true....