Williams v. Pacific States Fire Ins. Co.

• Decision Date: 07 December 1926
• Citation: 251 P. 258,120 Or. 1
• Parties: WILLIAMS ET AL. v. PACIFIC STATES FIRE INS. CO.
• Court: Oregon Supreme Court

251 P. 258

120 Or. 1

WILLIAMS ET AL. v. PACIFIC STATES FIRE INS. CO.

Supreme Court of Oregon

December 7, 1926

Department 2.

Appeal from Circuit Court, Multnomah County; Dalton Biggs, Judge.

Action by D. C. Williams and another, copartners under the firm name and style of D. C. & A. L. Williams, against the Pacific States Fire Insurance Company. Judgment for plaintiffs, and defendant appeals. Affirmed.

This is an action on a fire insurance policy. The case was tried to the court and a jury, resulting in a verdict in favor of plaintiffs, and a judgment on the verdict. Defendant appeals. The policy upon which the action is brought is made a part of the complaint.

The property insured was a Velie auto truck, which was destroyed by fire on June 24, 1922, during the term of the policy. The defendant answered, admitting it issued its insurance policy No. 34426 in substantially the form set out in the exhibit to the complaint, and denied the other material allegations of the complaint, except the partnership of plaintiffs and the corporate character of the defendant, and set up as an affirmative defense that the insured made certain statements which by the terms of the policy are expressly made warranties. The statements, so far as material, as stated in appellant's brief, are as follows: (1) that the automobile was purchased by the insured in April, 1922, new (2) that the automobile is fully paid for by the insured, and is not mortgaged or otherwise incumbered, except $4,000 due the United States National Bank; (3) the uses to which the automobile described are, and will be put, are commercial (4) the automobile described is usually kept in private garage located at Oregon City, Or.; and that these warranties were false.

At the conclusion of plaintiffs' case in chief the defendant moved for a nonsuit, which was denied, and which is assigned as error. At the conclusion of all the testimony the defendant moved for a directed verdict in its favor, which was likewise denied, and is assigned as error.

Gus C Moser and John C. Veazie, both of Portland (Veazie & Veazie of Portland, on the brief), for appellant.

W. F. Magill, of Portland, for respondents.

BEAN, J. (after stating the facts as above).

At the trial the plaintiffs, by consent, amended their complaint by adding a new paragraph as follows:

"That said policy of insurance, Exhibit A, was furnished and delivered to the plaintiffs at the United States National Bank of Portland, Or., by the defendant's agent, who was acquainted with all the facts in the premises, or was correctly informed thereof, or failed to inquire concerning the same, and who transmitted to the defendant the information upon which the same was written; that the plaintiffs never saw said policy until after the fire and did not know the contents thereof, and did not know that it stated said automobile was purchased in April, 1922, and that the actual cost was $5,000; that the actual cost was $4,800, and the date of the agreement for purchase was about October, 1920, but said machine had never been delivered to the purchaser; that the statements hereinabove referred to were the mistakes of the defendant's own agent and not of these plaintiffs, and the defendant ought to be and is therefore estopped to rely upon said mistakes, or any mistakes of its agent, as a defense to this action."

Defendant criticises the pleading of plaintiff, and, while it may not be perfect, it was not demurred to, and there was no motion against the same. The pleading practically follows the precedents in the cases of Koshland v. Home Ins. Co., 31 Or. 321, 49 P. 864, 50 P. 567, Koshland v. Fire Ass'n, 31 Or. 362, 49 P. 865, and Koshland v. Hartford Ins. Co., 31 Or. 402, 49 P. 866, sometimes referred to as the Cunningham Cases, and which were hotly contested. We think the plea is sufficient after verdict. Walker v. Fireman's Fund Ins. Co., 114 Or. 560, 234 P. 542.

Estoppel or waiver may be availed of in an action at law. If the policy, when properly construed in the light of extrinsic facts, has the same meaning it would have if reformed, and sufficiently shows the agreement of the parties, no reformation is necessary. Reformation is not necessary where the insurer has waived or is estopped to rely upon a breach of a condition of the policy. 26 C.J. 107, § 106; Mercer v. Germania Ins. Co., 88 Or. 411, 171 P. 412; Baker v. State Ins. Co., 31 Or. 41, 48 P. 699, 65 Am. St. Rep. 807; Ashley v. Pick, 53 Or. 410, 417, 100 P. 1103, and other Oregon cases cited herein.

The rule is stated in II Wood on Fire Ins. 1163, as follows:

"When the insurer issues a policy to the assured without any written application, containing conditions inconsistent wtih the risk, * * * the insurer knowing the facts, it is estopped from setting up a breach of such conditions in defense to an action upon the policy, and the insured may maintain an action for a loss under the policy, without seeking its reformation, as the doctrine of estoppel and waiver comes in aid of the assured. And the same rule prevails when the insurer ought to have known the facts constituting the alleged breach."

One of the principal assignments of error relied upon by defendant is that the court erred in refusing the requested instruction No. 2 by defendant in the bill of exceptions, and giving in lieu thereof the instruction covered by assignment of error No. 18. This is closely related to several other errors assigned, including those involving the motion for a nonsuit and the motion for a directed verdict in favor of defendant. The requested instruction reads as follows: "You are instructed that Lamping & Co., acting through A. D. Trunkey, its manager, must be presumed in law, under all of the evidence introduced in this case, to be the agent of the plaintiffs, and whatever representations were made by Mr. Trunkey to the defendant company in procuring this policy must be deemed by you to be the representations of the plaintiffs."

The instruction given in lieu thereof is as follows:

"It is for you to determine, first, in this case, whether or not those representations were made by the plaintiff, or the plaintiffs' agent; and, second, if they were false; and, third, if they were material. In determining whether those representations were made by the plaintiffs' agent, or the defendant's agent, in the first instance, I instruct you that direct evidence is not indispensable to prove agency, but it may be shown by circumstances such as the relations of the parties to each other and their conduct with reference to this subject-matter, of the business in hand, and if you find from the evidence in this case that Mr. Trunkey, or Lamping & Co., had an agreement or an arrangement with the defendant company whereby he or they were to be paid commissions upon business he, or they, brought to the defendant, and that the defendant was accustomed to write policies of insurance upon risks solicited by Trunkey, or Lamping & Co., or that Lamping & Co. turned said policy over to him, or for him to deliver and receive the premiums upon such policies, then Trunkey, or Lamping & Co., was the agent of the defendant company, and you would be justified in so finding, if you find those to be the facts."

These assignments of error embrace the pivotal point of the case and may be considered together.

It appears from the record that the plaintiffs applied to Mr. Trunkey, who was the manager of Lamping & Co., general insurance agents in Portland, Or., for insurance on certain auto trucks. There was no written application, but the negotiations were by conversations over the telephone. Mr. Trunkey was requested to deliver the policy to the First National Bank of Portland as he has other policies procured by him for plaintiffs. Without any knowledge on the part of the plaintiffs, Mr.Trunkey procured a policy from the defendant with whom Lamping & Co., pursuant to an arrangement made with the defendant company, was placing all of its automobile insurance at that time, and turned it over to the bank as requested. Plaintiff never saw the policy until after the fire destroyed the insured property. Mr. Trunkey asked certain information from the respondents and was given correct information of the 1920 model, 3 1/2 ton Velie truck motor No. 15246, factory No. 8698. The list price of the truck, $3,950, was obtained from a manual or price list. As to other matters relating to the policy, Mr. Trunkey made no inquiry, but assuming that he knew the facts he furnished the information to the defendant upon his own responsibility. It is because of some of this information furnished to it by Mr. Trunkey, and not by plaintiffs, that the defendant claims it is relieved from any liability on its contract.

The policy was issued to "Seth Leavens and/or D. C. and A. L. Williams, as their interests may appear." The address of the insured is given as Oregon City, Or. The policy is dated April 4, 1922, for the term of one year. The amount of insurance is $3,500.

The further statement contains, in substance, the following facts with respect to the purchase of the automobile:

"Actual cost to insured, including equipment, $5,000. The automobile described is fully paid for by the insured, and is not mortgaged or otherwise incumbered, except as follows: $4,000 due U.S. National Bank. The uses to which the automobile described are and will be put are commercial. The automobile described is usually kept in private garage, located at Oregon City, Or."

It appears that Mr. T. H. Williams, the president and manager of the Pacific States Fire Insurance Company, who signed and issued the policy involved herein, had solicited business from Mr. Trunkey, or Lamping & Co., and paid the agents full commission on business procured...