Watertown Fire Ins. Co. v. Grehan

• Decision Date: 17 March 1885
• Citation: 74 Ga. 642
• Parties: THE WATERTOWN FIRE INSURANCE COMPANY v. GREHAN.
• Court: Georgia Supreme Court

74 Ga. 642

THE WATERTOWN FIRE INSURANCE COMPANY v. GREHAN.

Supreme Court of Georgia.

March 17, 1885

February Term, 1885.

1. Where a policy of insurance provides that for any false swearing or attempt at fraud, " or if there shall appear any fraud in the claim, by false swearing or otherwise," such policy shall be avoided, the company, in order to avail itself of the defence, must show that the assured knowingly and intentionally swore falsely, or said or did that which is claimed to be fraudulent. There must be a wilful intent to defraud, rather than an innocent mistake, and this condition of the policy extends to every matter material to be stated or which the policy in terms requires to be stated.

2. That the premises in this case were occupied within the meaning of the policy at the time of the fire, admits of no doubt, under the law or the facts in evidence.

3. A fire loss was promptly adjusted under a policy of insurance and the company offered payment before the expiration of the sixty days allowed in its policy, provided a certain discount should be allowed, which was refused. At the expiration of that time, the assured promptly applied for his money, but was put off a short time, on the ground that the draft had not arrived. This was not the real reason, but the company had received information which they claimed implicated the assured in the burning of the house. They did not disclose this until threatened with suit, and after suit was commenced, they threatened a prosecution to bring him to terms of settlement, and even demanded the surrender of the policy for cancellation, on the ground that, before the expiration of the sixty days, they had received affidavits proving that the house was set on fire by an incendiary several days before it was finally burned; that material damage was done at that time, and that the failure to give the company notice then or in his proofs of loss, was a concealment or misrepresentation which gave them the right of cancelling the policy. Correspondence between the company and its agent, drawn out under notice, indicated that these transactions were part of a plan to force the plaintiff to settle for a small amount:

Held, that the jury were authorized to find damages and attorneys' fees for a refusal to pay in bad faith.

Insurance. Fraud. Policy. Bad Faith. Attorney and Client. Damages. Before Judge ADAMS. Chatham Superior Court. June Term, 1884.

Grehan brought suit against the Watertown Fire Insurance Company on a policy of insurance for $2,100.00. The declaration, as amended, alleged the making of proofs of loss and demand for payment, which was refused, in bad faith. In addition to the loss, plaintiff claimed twenty-five per cent damages and $500.00 attorneys' fees.

Defendant filed the following pleas:

(1.) The general issue.

(2.) Avoidance, because the loss alleged was caused by the fraudulent act and procurement of the assured.

(3.) Avoidance, under clause avoiding for any increase of risk during the continuance of the policy known by the assured and not consented to by the company.

(4.) Avoidance on account of false swearing, fraud or attempt at fraud.

The plaintiff introduced the policy containing the conditions set out in the decision, and proved a total loss by fire on April 9, 1883; also that he made proof of loss of same, and that appraisers were appointed, and fixed the value at $1,846.44. He also showed that the company's agent offered to pay the amount of the loss before the expiration of the sixty days, less seven per cent interest, which was declined; but payment was refused after the expiration of that time.

A correspondence between the general and local agents of the company was produced under notice. In the first of these letters, the local agent stated the loss, and the general agent replied that the company was ready to pay it as soon as it could get a clear receipt, but stated that a garnishment had been served. On June 15, the local agent wrote that he had received certain information which he desired to lay before the company. He then recited substantially what is set out as the testimony of Clark below, and added:

" I do not know what time Grehan's loss is payable but should I receive the amount, as I suppose I will, before I hear from you, I will suppress the check until I hear your pleasure in the matter. Grehan was in this afternoon to know if his money had come, as he expected it on the 11th inst. It is on this information that I take it for granted that the check will arrive before you get this. Grehan seems very anxious for the money. I said nothing to him of having seen Clark."

On June 17, the local agent wrote that the garnishment had been dismissed, and that he would take the affidavit of Clark. On June 18, the general agent wrote to the local agent to make further investigation, and added:

" If it is not too late, I want to answer that we have no funds in hand of Grehan; that is, if the garnishee is still in force; then we will keep quiet and see what offers we will get for the cash on this policy."

On June 25, the local agent wrote, enclosing the affidavit of Clark. This letter contained the following statement:

" I have refrained from saying anything to him (Grehan) except to give him evasive answers to his questions as to why the company did not send him the money, as I feared his trying to bribe these witnesses to keep quiet. I have hesitated to act pointedly in this matter in the absence of any instructions from you, but I am inclined to the belief that Grehan can be worked on by threat of prosecution in the event of his going to law on his claim, and that when the pinch comes, he will be inclined to surrender his policy for a stipend to evade the prosecution."

Other letters followed, not material to be set forth, until, on October 12, the company, by letter, demanded of Grehan the policy for cancellation, on the ground of fraud in not communicating to them the fact that a fire had occurred in the house on April 5. It appeared that there had been a small fire on that date.

The plaintiff's evidence on this subject contains the substance of his position, and was as follows: I own the property destroyed. It cost $2,700 to $2,800. I and Pat Sweeney slept in the house; I woke, thinking I heard the wind blowing hard; saw house was afire; woke Pat; we could not go down stairs; we slid down post of piazza. I knocked down fence and saved stable; threw a little water on house; couldn't save it. I claimed my loss from company before bringing suit. Three days after, loss was adjusted, and I was offered $1,846.44 less 7 per cent for sixty days. I said I rather wait and get whole amount. I told the adjuster all I knew of fire; I didn't refer to first fire, as it was too trifling. The place in partition burned was only about three feet five inches rough boards; some shelves were burned and a hole in the floor where demijohn was. I did not think anything of it. On my way out to the place, a man, Ulmer, told me there had been a fire there. I found some furniture piled in the kitchen. I nailed up the broken window. We came to town; got a bed and a couple of chairs, and Sweeney and I went to sleep on place. I had a crop and cattle on the place. These folks hid away, and I did not see them. He sued me for wages; my lawyer advised me to settle. I had lost two hogs while Clark was on the place. I told him that they could not disappear without his knowing about them. Fifty cents would have repaired the damage. The room was 12 by 15. There were three boards, three feet five inches, burned and a few blackened.

I believe no one else fired the house on the 6th but Clark, on account of his threatening to sue me. Saw his things piled in kitchen; thought he was going to move; I had sold him some of the things; I inquired of Peggy, who nursed my wife, but could find out nothing; she lived nearest the place. At last fire I halloed for help, but none came. I thought first fire immaterial; the room burned was next to the kitchen; I had unlocked this room to take out some chicken food, and locked it again; I never tried to find out about Clark; I was glad he was gone; he was always after me to sign our agreement; I heard Clark's relatives lived near my store, but I made no inquiries for Clark; the hogs I lost never would have been lost if Clark was attending to his business; I had lived on the place a year before Clark; both dogs always barked at me when I came on the place. I considered the house worth $2,500; the appraisers valued it at $1,840.44. I went on the place to stay till I got a man; while Clark was there, I went nearly every day; I moved my furniture from the house in the fall; I did not move it in March; I lost by the fire on 9th a few chairs, a bed and mattress; the place burned was only eleven inches wide; sixty cents would cover the loss of the 5th. Night of 9th, I was waked by noise and found house in a blaze; I had slept with my underclothes and pants on, as it was cold; Pat had on his clothes, too; I went to the place nearly every day.

Attorneys' services were shown to be worth $500.00.

The evidence on behalf of the defendant was, in brief, as follows: At the time of the adjustment, nothing was said about the fire of April 5th, and the agent did not know about it, but discovered it and the facts testified to by Clark afterwards.

The testimony of Clark, which sets out the substance of defendant's claim, was as follows:

I worked on Mr. Grehan's place, about a mile from Savannah from last of December, 1882, till April 5th, 1883. I went out to work the place on shares; Mr. Grehan lived in town; we were to have a written agreement about planting the place; it consisted of about seventy acres. I tried several times to get the paper,...