The Farmers' Alliance Insurance Company v. Ferguson

• Decision Date: 07 November 1908
• Docket Number: 15,563
• Citation: 98 P. 231,78 Kan. 791
• Parties: THE FARMERS' ALLIANCE INSURANCE COMPANY v. SAMUEL FERGUSON
• Court: Kansas Supreme Court

98 P. 231

78 Kan. 791

THE FARMERS' ALLIANCE INSURANCE COMPANY v. SAMUEL FERGUSON

No. 15,563

Supreme Court of Kansas

November 7, 1908

Decided July, 1908.

Error from Woodson district court; OSCAR FOUST, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. FIRE-INSURANCE--Election of Grounds of Forfeiture by Insurer--Waiver. Where an insurer bases its refusal to pay a loss entirely upon a forfeiture caused by the failure of the insured to comply with a particular condition of the policy it can not, when sued for the loss, maintain a defense founded upon another alleged forfeiture for violation of other conditions not referred to in such refusal and of which it had knowledge when the refusal was made.

2. FIRE-INSURANCE-- Forfeiture--Waiver. A waiver of the forfeitures alleged from the breach of conditions not referred to in such refusal may, in the circumstances stated be properly found by a jury, when such waiver is an issue upon the trial.

3. FIRE-INSURANCE-- Evidence--Waiver of Forfeiture. Making and collecting an assessment upon the premium note given for insurance, after the examination and report of an adjuster showing that a forfeiture for violation of a condition in the policy had been made, and indorsing the payment of such assessment as a credit upon the note after consideration of the report of the adjuster by the executive board of the company, and after knowledge of the circumstances upon which such forfeiture is claimed, were facts from which the jury could properly find that such forfeiture had been waived.

John D. Milliken, and A. F. Florence, for plaintiff in error.

G. H. Lamb, and W. E. Hogueland, for defendant in error.

OPINION

BENSON, J.:

In February, 1902, Samuel Ferguson insured his house and barn in the Farmers' Alliance Insurance Company, and gave his note for the premium, twenty-one dollars, payable in such proportions and at such times as the directors of the company might order. The following payments were made, as shown by indorsements upon the note, before the loss hereinafter mentioned occurred, namely: "First payment, $ 6.30; 1903 assessment No. , $ 2.80; 3/11/1904, $ 2.80."

The buildings insured were upon Mr. Ferguson's farm in Woodson county, which was occupied by a tenant at the date of the insurance. On November 9, 1904, the tenant moved about three miles away from the farm, leaving the dwelling-house vacant, and leaving in the barn about twenty tons of baled hay, grown on the farm, and some fodder in the field. In the barn were also a few implements belonging to a neighbor. On December 19, 1904, while the premises were unoccupied, except as stated, the barn burned. The company sent its adjuster to examine and report concerning the loss. The examination was made December 29, 1904, and his report to the company contained the following:

"Found total loss of barn by fire, which occurred on December 19, 1904, about 7 o'clock P. M., according to the statements of M. M. Williams, J. W. Williams, E. Dey and Mr. Muffley, all of whom were at the fire and assisted in saving the house. The origin of the fire is unknown, as no one was living on the premises at the time of the fire. The tenant, Henry Buholtz, having moved from the premises on November 9, 1904, according to statement of Mr. Muffley, who has a knowledge of the time, and all the above-mentioned persons placed the time to exceed thirty days. There was in the barn at the time of the fire about fifteen tons of baled hay belonging to tenant, Henry Buholtz, and no insurance on the same, according to the statement of the owner. There is a mortgage given to secure a loan of $ 1000, dated October 1, 1902, given by Samuel Ferguson to Jones & Maxwell, of Paola, Kan. Upon the evidence collected I concluded that the company is not liable, for the premises were vacant for more than thirty days prior to the fire."

On or about January 1, 1905, the company notified Mr. Ferguson of an assessment of $ 2.80 for the year 1905 upon his premium note, which he promptly paid, and the payment was duly acknowledged by the secretary on January 6, 1905. On February 15, 1905, the report of the adjuster, which was then on file in the general office of the company at McPherson, Kan., was formally considered by its executive board, and afterward, on the 18th day of that month, the company, by its secretary, wrote to Mr. Ferguson as follows:

"In answer to your inquiry of the 15th inst. in reference to your loss and the reason why the matter is not settled up, will say that our adjuster was upon the ground and went over the situation very carefully, and has reported to the executive board of this company that, the property having been vacant for more than thirty days, this company, under the operation of the by-laws, is not liable. Of this, of course, you are aware, that this company does not carry vacant property beyond the period of thirty days after the vacancy by the occupant, and under the operation of this rule there is nothing for this company to do but to reject the claim.

"We regret very much that the conditions are such that the company can not recognize its liability to you, but you can see that unless these restrictions are observed carefully the losses of the company must be excessive. There are hundreds of properties that are occupied off and on by people who are not calculated to add anything to the moral risk.

"There is no reflection in this matter on you or any one else, but simply a plain statement as to the cause that leads us to reject the claim."

Again, on February 25, 1905, the company, by its secretary, wrote to Mr. Ferguson, saying:

"Your claim came before the executive board on a recent date and was rejected on the ground that the property had been vacant more than thirty days prior to the time it was destroyed, and that this company had no notice of said vacancy, and therefore is void under the by-laws of this company."

On March 11, 1905, the company indorsed the $ 2.80 received from Mr. Ferguson on January 6 on the premium note, as a credit thereon. No reason was given for refusing to pay the loss and no objection was made to the claim other than that stated in the two letters of the secretary, as shown above, until the filing of the answer in the district court.

Mr. Ferguson having commenced an action, the company answered, setting up several affirmative defenses based upon conditions in the policy, viz.: That the barn and premises had been vacant more than thirty days when the fire occurred, no notice of such vacancy having been given; that the premises had been made more hazardous by being so vacant; that the property had become more hazardous by the use of the barn as a warehouse for baled hay; and that the plaintiff had encumbered the property by mortgage, without giving notice. The answer also stated in substance that the assessment paid on January 6, 1905, had in fact been made January 1, 1904, to be payable on demand and notice, which was given January 1, 1905, pursuant to the custom of the company, and that at the latter date the secretary had no knowledge of the invalidity of the policy, and would not have received the assessment with such knowledge. The defendant thereupon offered in its answer to return this $ 2.80, with interest, and paid the amount into court.

The petition alleged that the assessment paid January 6, 1905 had been received by the company upon its demand, after notice of the loss, and also that the company had...