Western Assur. Co. v. Stoddard

• Decision Date: 26 November 1889
• Citation: 7 So. 379,88 Ala. 606
• Parties: WESTERN ASSUR. CO. v. STODDARD ET UX.
• Court: Alabama Supreme Court

7 So. 379

88 Ala. 606

WESTERN ASSUR. CO. v. STODDARD ET UX.

Supreme Court of Alabama

November 26, 1889

Appeal from city court of Selma; J. HARALSON, Judge.

Action by W. J. Stoddard and E. R. Stoddard, his wife, against the Western Assurance Company, to recover the amount of a policy of insurance against fire taken out by the said W. J Stoddard for his wife on a gin-house and certain personal property contained therein. In support of its defense that the warranty contained in the application, that the property was not in litigation, had been broken, defendant offered a transcript of the record in a suit to recover the dwelling-house on the tract on which the gin-house was located. There was judgment for plaintiffs, and defendant appeals.

STONE C.J.

Mrs Stoddard, the female plaintiff in the court below, had a life-estate in the land on which the gin-house stood which was the subject of insurance in this case. The land had been allotted to her as dower in the estate of Steele, her deceased former husband. It is not denied that the land had been so allotted to her, that the gin-house stood upon the land, and that it was destroyed by fire during the term covered by the insurance. To this extent there is no controversy.

The defense took four forms: First, it was and is contended that Mrs. Stoddard, in her application for insurance, represented herself as sole and absolute owner of the gin-house, when in fact she owned but a life-estate in it. This, it is claimed was a breach of warranty, which, under the provisions of the policy, worked a forfeiture of the insurance. In the second place, it is contended that in her said application it was represented that the said premises were not involved in litigation, whereas there was a suit then pending which disputed her right to the same. The application for insurance was made through the husband of Mrs. Stoddard, and in said application are found the following questions, and answers thereto: "Is there any interest in the property other than your own? Answer. None other [than] my wife and self. *** In litigation or dispute? A. None." In issuing the insurance policy, the insurance company was represented by Franklin, its agent. It is replied to the two lines of defense stated above hat while the negotiation for insurance was pending, and before the policy was issued, Franklin, the agent, was notified of the true state of the title, and of the litigation, which, it is asserted, was in progress, and as is claimed, assailed Mrs. Stoddard's title to the property. If it be true, as asserted, that Franklin, the agent, knew or was notified, pending the negotiation, of the nature and extent of Mrs. Stoddard's ownership, and of the alleged litigation, this was constructive notice to the insurance company; and, receiving the premium and issuing the policy after such notice, the insurance company will not be heard to complain of the false representation or breach of warranty. To allow it to do so would be to sanction had faith on its part. Insurance Co. v. Young, 58 Ala. 476; Insurance Co. v. Copeland, 86 Ala. 551, 6 South. Rep. 143; Insurance Co. v. Allen, 80 Ala. 571, 1 South. Rep. 202; 1 Wood, Ins. § 152, and note 1; Insurance Co. v. Olmstead, 21 Mich. 246; and authorities on brief of counsel. We fail to perceive, however, that there was any suit in progress which did or could question her ownership of the gin-house. The transcript from the circuit court, made a part of the bill of exceptions, certainly falls short of making this contention good. That was a possessory suit, and sought to recover only the dwelling-house. The testimony which it is claimed shows the title to the land on which the gin-house stood was in dispute, does not, in our opinion, tend to show the character of disputed title, which would avoid the policy.

The third ground of defense rests on the alleged reduction on the amount of insurance on the gin-house. This defense is limited to the amount of recovery, and does not question the right. Nine days after the policy was issued to Mr. and Mrs. Stoddard they, "for value received," transferred, assigned, and set over unto H. C. Keeble & Co. all their right, title, and interest in said policy of insurance, and all benefit and advantage to be derived therefrom. This was done with the knowledge and authority of the insurance company, evidenced by indorsement on the policy, made an signed by Franklin, the company's agent; and the policy was placed in the hands of Keeble & Co. Franklin knew Keeble & Co. held the policy. On the 7th day of September, 1885,-17 days after the transfer of the policy to Keeble & Co.,-Franklin, the agent, called on them, and notified them that his company refused to carry so much insurance on the gin-house. He asked for the policy, and, receiving it, he made the following indorsement upon it: "The amount of $800, covering gin-house, is reduced from this date to $400, and $18.50 returned assured, receipt of which is acknowledged." Franklin then paid to Keeble & Co. the $18.50 return, part premium, and they received it.

The policy, on its face, provides that "this insurance may be terminated at any time, at the option of the company, on giving notice to that effect and refunding a ratable proportion of the premium for the unexpired term of this policy, to any person named in this policy, whether owner, mortgagee, or otherwise." The policy contains no provision authorizing the insurance company to reduce the amount of insurance. Authority to terminate the insurance is not an authority to reduce the amount of the risk. Such provision in favor of insurance companies cannot be enlarged by interpretation. There is neither proof nor claim that Stoddard and wife, or either of them, was present when this reduction was made, nor that they had notice that it would be made. There is proof tending to show that notice was carried home to them within a month after the reduction, and other proof that they were not informed of it until after the gin-house was destroyed by fire in December. The rulings of the trial court, as to the authority to make the reduction, and its legal effect on the rights of Stoddard and wife, are free from error prejudicial to appellant, unless there was error in the rulings considered further on.

The fourth and last defense relied on in this case is partial, and claims only a reduction in the amount of damages. The substance of it is that, inasmuch as Mrs. Stoddard had only a life-estate in the gin-house, she should not be allowed to recover the entire value, but only the value of her life-estate. The general rule certainly is that the owner of a qualified or partial interest in property can only insure to the extent of that interest; and, in case of loss or destruction of the property, his recovery must be limited to the value of his interest. Commercial Fire Ins. Co. v. Capital City Ins. Co., 81 Ala. 320.

It will be borne in mind that one of the indispensable conditions of plaintiffs' right of recovery in this case is that the jury must be convinced from the testimony that Franklin while he was negotiating the insurance, had knowledge or notice that Mrs. Stoddard's title was only a life-estate. If, having such knowledge or notice, he placed the insurance as upon an absolute title, and the demanded and received...