Va. Fire & Marine Ins. Co v. Lennon Et Ux

• Decision Date: 18 December 1924
• Citation: 125 S.E. 801
• Court: Virginia Supreme Court
• Parties: VIRGINIA FIRE & MARINE INS. CO. v. LENNON et ux.

125 S.E. 801

VIRGINIA FIRE & MARINE INS. CO.

v.LENNON et ux.

Special Court of Appeals of Virginia.

Dec. 18, 1924.

Error to Circuit Court, Elizabeth City County.

Action by W. J. Lennon and wife against the Virginia Fire & Marine Insurance Company. Judgment for plaintiffs, and defendant brings error. Reversed and rendered.

Meredith & Meredith, and Leake & Buford, all of Richmond, for plaintiff in error.

John H. Bowen, of Hampton, for defendants in error.

CHICHESTER, J. The defendant is a Virginia corporation with its head office at Richmond, Va. M. H. Morgan is its agent at Hampton, Va. He is agent for a number of other insurance companies, and is also a real estate agent, acting as such for persons desirous of renting out their real estate. The plaintiffs are husband and wife. About May 24, 1921, they rented, through M. H. Morgan as agent for a Mrs. Shelten, what is known as the Shelton farm in Elizabeth City county; their object being to conduct a boarding house. Plaintiffs took possession of the leased premises in the early part of June, 1921, and on July 12th of the same year made a verbal application for insurance upon their furniture in the leased premises. A policy of ¥4, 000 was issued by Morgan upon the furniture in favor of the plaintiffs. The policy was in the usual standard New York form, and contained, among others, the following clauses:

"This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void, * * * if the interest of the insured be other than unconditional and sole ownership, * * * or if the subject of insurance be personal property and be or become incumbered by a chattel mortgage."

Eight days after the policy issued, at about 3 o'clock a. m., a fire broke out on thepremises occupied by the plaintiffs, but, through the efforts of several boarders, it was extinguished before any serious damage was done. We are not concerned with the details disclosed by the evidence as to the probable origin of the fire further than to say in passing that the fire was undoubtedly of incendiary origin, and immediately after this fire all the boarders departed from the premises, leaving only the plaintiffs.

On the following Monday, July 25th, at about 2 o'clock a. m., another fire broke out, totally destroying the dwelling house and the insured furniture. There were many peculiar circumstances connected with this second fire, and, while we are not concerned particularly with them here, they too, and not unjustly, directed the finger of suspicion toward the plaintiffs as the authors.

After the fire, when claim was made against the defendant insurance company, it was ascertained that plaintiffs purchased, on May 25, 1921, $1,946.60 worth of furniture from the Brittingham Furniture Company of Hampton, Va., under conditional sales contracts, and that only $110 had been paid on the purchase price thereof. This payment was made on May 25, 1921. An installment due on June 25th of $106.50 had not been paid, and an installment of $106.50 due on July 25, 1921, the day of the last fire, had not been paid.

The conditional sales contracts were identical in terms and conditions, and, as far as it is necessary to copy them here, were as follows:

"It is hereby expressly understood and agreed that the title and right of property in said articles is to remain and be vested in the said Brittingham Furniture Company, Inc.; that no title to the same shall pass until the said articles shall have been paid for in the manner herein specified; and that the said Brittingham Furniture Company, Inc., or their agents or attorneys, may at any time enter upon the premises of the undersigned, without process of iaw, and take possession of and remove said articles upon default being made in any of the installments herein specified for more than three days, and if said articles, when so taken possession of, or at any time should be worth less than the balance due on them, the undersigned agrees to pay the balance. Provided that, if default is made upon the payment of any of the said installments, all the purchase price unpaid shall become due and payable, and prodded further that the said Brittingham Furniture Company, Inc., shall have the right to forthwith repossess themselves of said goods should they be removed from said residence without the consent of the said Brittingham Furniture Company, Inc.

"This contract contains all the conditions upon which said goods are delivered, and no other condition, verbal or written, shall vary or alter the same."

It was claimed that the defendant's agent, Morgan, was aware of the conditional sales contracts, and that he became aware of them through conversation had with him when the plaintiffs were negotiating with him for the rental of the Shelton farm over six weeks before the insurance policy was written, and for a loan to pay on furniture to start their business with. These negotiations did result in securing Morgan's indorsement of a note for $350. The details of these negotiations, however, will be set out in full when we come to discuss the information which came into Morgan's possession as to the character of the plaintiffs' title.

When demand was made upon the defendant for payment of the loss, it declined to settle, and notice of motion for $4,000 was filed by the plaintiffs against the defendant as aforesaid. The insurance company defended, among others, upon the following grounds: That the conditional sales contracts violated the sole and unconditional ownership and the chattel mortgage clauses (supra) in the policy, and thereby avoided it.

The plaintiffs denied this, but alleged that, even if these conditions of the contract of insurance, or either of them, would ordinarily have been violated by the conditional sales contracts, the company's agent had knowledge of the contracts, and his knowledge was imputed to the company, and this constituted a waiver of the breach of these clauses.

Trial of the case was had on October 10 and 11, 1922, and resulted in a verdict of $3,000, and judgment in favor of the plaintiffs.

There are five assignments of error. They consist of alleged errors as to the admissibility of evidence; as to the giving of certain instructions asked for by the plaintiffs; refusing certain instructions asked for by the defendant; in modifying others offered by the defendant; and as to the action of the court in refusing to set the verdict aside. As we view it, however, the case can be disposed of by considering the questions of law raised by the action of the court in giving instructions Nos. 1 and 4 and in refusing to give instructions Nos. 1A and 2A offered by the defendant and the refusal of the court to set the verdict aside.

The instructions 1 and 4 were as follows:

"The court instructs the jury that, if they believe from the evidence that at the time the insurance was applied for through M. H. Morgan, agent of the Virginia Fire & Marine Insurance Company, the said M. H. Morgan, agent, had been told by the plaintiffs that a portion of the furniture insured was bought on the installment plan from the Brittingham Furniture Company, then the court instructs the jury that such notice to the agent was notice to the company, and amounts to a waiver of the condition of the contract against incumbrances and liens and requiring the plaintiffs to be the sole and unconditional owners thereof; and the jury should find for the plaintiffs in a sum not exceeding three-fourths of the actual cash value of eachitem of the property destroyed immediately preceding the fire, but in no event to exceed $4,000. And the burden of proving such value to a reasonable degree of certainty rests upon the plaintiffs.

"The court further instructs the jury that the conditional sales contract in question is a short form of chattel mortgage, the reservation of the title being merely security for the payment of the debt, and was not such an estate in or title to the property within the meaning of the provision in the policy sued on that if the interest of the assured be other than unconditional and sole ownership or be or become incumbered by chattel mortgage, the interest of the assured continues to be an unconditional and sole ownership notwithstanding such contract."

The instructions 1A and 2A, offered by the defendant and refused by the court, were as follows:

"The jury are instructed that, under the terms of the policy of insurance sued on in this case, if any of the insured property was held under the Brittingham contracts introduced by the plaintiffs, then the policy was revoked or annulled, unless the jury believe and are satisfied from a preponderance of the evidence that the defendant had knowledge, at the time of issuing the policy, of the nature of the plaintiffs' interest in such property. If, therefore, you believe from the evidence that a portion of the property destroyed by the fire of July 25, 1921, was held by the plaintiffs under the Brittingham contracts, and if the jury further believe from the evidence that the defendant company did not, at the time of issuing said policy, know or have in mind, as hereinafter stated in these instructions, that the plaintiffs held a part of said property under the Brittingham contracts, you should find for the defendant.

"You are further instructed that, if you believe from the evidence that Mr. Morgan, the local agent of the Virginia Fire & Marine Insurance Company, at the time of issuing the policy of insurance, had knowledge, acquired in and about the prosecution of the business of that company, of the nature of the interest of the plaintiffs in the property bought from the Brittingham Furniture Company, or if you believe from the evidence that said Morgan had, prior to issuing said policy, acquired such knowledge not in and about the prosecution of that company's business, and further believe, from the evidence, that he had such knowledge in mind at the time of issuing such policy, then, but not...