Phœnix Insurance v. Boulden , 96 Ala. 609 ( 1893 )

STONE, C. J.

-Tbe subject of insurance in tbis case was tbe same building situated near East Lake, Jefferson county, tbe burning of wbicb gave rise to tbe appeal recently decided in tbis court, in wbicb Tbe Liberty Insurance Company of New York was appellant, and Boulden the appellee. Tbe pleas in tbis case were in many respects tbe same as those interposed in tbe former one, but it was decided in tbe Circuit Court on a different issue. Tbe case of The Liberty Insurance Company v. Boulden, ante, 508, went off on tbe question of tbe latter’s ownership of tbe land or lot on wbicb tbe insured building stood. That question — tbe nature of Boulden’s ownership of tbe lot — -presented tbe pivotal issue on wbicb we decided tbe case. Tbe record in that case disclosed tbe exact status and imperfect nature of Boulden’s ownership. Those facts are not shown in tbe record before us. In that case tbe policies sued on were obtained from Adams & Co., who were shown to have been tbe resident agents of tbe two companies there sued, and to have acted for tbe insurance companies in tbe issue of tbe policies. Martin & Leedy were tbe resident agents of the Phoenix Insurance Company, at Birmingham, and tbe policy here sued on was obtained from them. A further difference : In tbe case of Tbe Liberty Insurance Company tbe policy is set out in extenso. It contains tbis provision: “Tbis entire policy, unless otherwise provided by agreement endorsed hereon, or added hereto, shall be void ... if tbe interest of the insured be other than unconditional and sole ownership; or, if tbe subject of tbe insurance be a building on ground not owned by tbe defendant in fee simple.” In tbe present case tbe policy is not set out in extenso. If tbe policy states or affirms tbe nature or extent of Boulden’s title to, or interest in tbe lot of ground, tbe record does not inform us of it.

In tbe former case — Liberty Insurance Company v. Boulden — we made some reference to tbe agency performed by Adams & Co. in placing insurance on tbe building, tbe burning of wbicb gave rise to these suits. Tbe testimony discloses the following state of facts: Adams & Co. were insurance agents, having tlieir office in Birmingham. In 1889, they were applied to by Boulden for insurance, and had placed insurance on the building, the amount not shown. The insurance having expired, Boulden in October, 1890, went again to Adams & Co. to obtain renewed insurance. The building was valued at something over twenty thousand dollars, and it was agreed that fifteen thousand dollars of insurance should be placed upon it; but no greater amount was to be so placed. So, a clause was inserted in each of the policies that fifteen thousand dollars was the maximum sum of permissible concurrent insurance. The clause in the policy issued by The Phoenix Insurance Company is in this language : “$15,000 total concurrent insurance permitted.” Of this sum Boulden obtained from Adams & Co., insurance agents, two policies issued by the two insurance companies represented by them, the aggregate of the amount so insured being forty-five hundred dollars. For this sum two policies, one in the City Insurance Co. of New York, and the other in the Scottish Union and National Insurance Co. of Edinburgh, Scotland, were issued by and through Adams & Co., insurance agents. Boulden then requested Adams & Co. to place the balance of the insurance he was permitted to take out - (the balance of the fifteen thousand dollars) — in other insurance companies. This they agreed to do, and did do, and in this way they obtained for him from the agents of the Plnenix Insurance Company the policy which is the foundation of the present suit. This policy is for the sum of two thousand dollars. They, Adams & Co., in pursuance of Boulden’s request, obtained for him several other policies, issued by other companies, which, including the forty-five hundred dollars issued by the companies of which they were agents, amounted to fifteen thousand dollars, the limit of permissible, concurrent insurance.

These several policies, aggregating fifteen thousand dollars, were delivered to Boulden by Adams & Co., the agents, at one and the same time, and he paid them the premiums, something over three hundred dollars on the entire lot. In delivering the policies to Boulden, Adams informed him that the policies amounted to only twelve thousand five hundred dollars, thus leaving his insurance two thousand five hundred below $15,000, the aggregate of the insurance he was permitted to place on the property. Thereupon, Boulr den proceeded to B,. S. Knott & Co., agents of the Syndicate Insurance Company of Minneapolis, Minnesota, and obtained from them a 'policy of insurance in said company on the same property, covering tbe time wbentbe bouse was burned; said policy being for tbe sum of twenty-five hundred dollars. That policy also contained tbe stipulation, “$15,000 total concurrent insurance permitted.”

It must be borne in mind that when Adams delivered tbe •policies to Boulden — tbe policies which covered tbe period of tbe burning — be informed him that tbe aggregate of their several amounts was $12,500, being $2,500 less. than tbe $15,000 permitted to be placed on tbe property. If tbe information Adams gave Boulden bad been correct, tbe policy of $2,500 which tbe latter obtained from tbe Syndicate Insurance Company in May, 1891, would have just reached tbe permitted limit of $15,000 of insurance on tbe property, expressed and limited in tbe several policies.

Tbe defense relied on in this case, and which succeeded in tbe Circuit Court, was that Boulden, in obtaining tbe policy from tbe Syndicate Insurance Company for $2,500, exceeded by that sum tbe limit which bad been prescribed and permitted in tbe former policies, and for that reason bad forfeited all right to recover on those former policies, including tbe one sued on in this case.

Tbe reply to this defense of over-insurance assumed two forms. First, it was contended that some of tbe policies which were estimated in making up tbe prior insurance of $15,000 were void on their faces, and therefore their several amounts should not, and could not be computed or embraced in tbe calculation, And, first, tbe two policies issued by Tbe Liberty Insurance Company of New York, and by Tbe Scottish Union & National Insurance Company of Edinburgh, Scotland, aggregating $4,500, bore date October 19, 1890, which was a Sunday. This, it was contended, rendered them void on their faces, and hence they were no impediment to plaintiff’s right of recovery. If it be true that these policies were void because issued on Sunday, then Boulden did not have or acquire legal or valid insurance on bis bouse in excess of $15,000. It was shown, however, that although tbe policies bore a date which was a Christian Sabbath, they were not, in fact, either made out or delivered on Sunday, but on a judicial day. Tbe date, October 19, 1890, was affixed to them, because that was tbe day tbe former policies expired. There was nothing in this feature of tbe replication. — Aldridge v. Br. Bank of Decatur, 17 Ala. 45; Burns v. Moore, 76 Ala. 339 ; 1 Greenl. Ev. § 285.

Another feature of tbe replication to tbe plea of over-im-surance was rested on tbe policy for $2,500, issued by Tbe Home Protection Insurance Company, of Huntsville, Alabama.. That policy was for $2,500, and if it could be properly eliminated from tbe computation, then the whole insurance on the building, including the policy issued by the Syndicate Insurance Company, the last in point of time, was not in excess of $15,000, the stipulated limit. In fixing and defining the term for which that policy should be operative and binding, the following clause appears in the body of it : “ Bo hereby agree to indemnify C. M. Boulden against all such immediate loss or damage as may occur by fire and lightning to the property • • • for the term of one year from the 28th day of October, 1890, at 12 o’clock noon, to the 28th day of October, 1890, at 12 o’clock noon.” So, according to the letter of the policy, it expired at the precise instant of time at which it was issued. If this policy was inoperative when the policy of the Syndicate Insurance Company was issued, then there was no over-insurance, and consequently nothing in that line of defense.

We can not assent to the contention that the Home Protection policy is void for the reason stated. It proves conclusively on its face that a mistake was made in the draught of it. A policy “ for the term of one year” can not expire on the date of its issue. It being shown that it was issued in October, 1890, it must necessarily expire in 1891. Consequently, if the mistake referred to was its only imperfection, it was in force when the house was destroyed by fire in June, 1891. In neither of the aspects mentioned above was the replication a sufficient answer to the defense of over-insurance. And this brings us up to the last ground, on which plaintiff contends he should not be barred of his recovery by reason of the excessive insurance held by him.

We have stated that Boulden obtained his first two policies from Adams & Co., and in companies of which they were agents. These policies amounted to $4,500, and the circumstances tend to show they were renewals. We have also stated that Boulden requested Adams & Co. to place the residue of his permitted insurance — $10,500—in other companies, and that they proceeded to do so. We have shown above that one of the policies so taken out by them was in the Home Protection Insurance Company, and that that policy expressed on its face that it was to run for a term of one year from its date, while its express language was that it expired at the very moment it was issued and bore date. In other words, it expressed on its face that it insured the building from 12 o’clock noon of October 28, 1890, to 12 o’clock noon of October 28, 1890. On the back of this policy and exposed to view when folded, the following indorsement bad been made by Terry & McDavid, agents of the company? when they folded it up for delivery: “No. 88,660. Home Protection of North Alabama, Huntsville, insures C. M. Boulden against ñre and lightning; amount insured $2,500 —premium $65.50, espires Í0-28, 1890. Terry & McDavid, agents.” "We have also stated that when Adams & Co. delivered the policies, seven or eight in number, to Boulden, they informedhim the aggregate amount of them was $12,500, and that he wanted $2.500 of having as much insurance on the property as he desired, and was permitted to have. After obtaining this information, Boulden sought and obtained the $2,500 policy from the Syndicate Insurance Company. This last policy, it will be noted, is the one which it is claimed swelled the amount of insurance above the limit, and vitiated the other insurance.

As a reply to the defendant’s plea of over-insurance, the plaintiff sought to introduce the foregoing facts, and with them the testimony of Adams, the agent, setting forth that before delivering the policies to Boulden, he had added together the several sums of the policies, and and had reached the conclusion that the whole amount was only $12,500 ; that in making this calculation he had included the policy insured by the Home Protection Company, thus treating it as an expired policy, as the indorsement upon it showed it to be. Their testimony, on motion, was excluded by the court, and the plaintiff excepted. The manifest purpose of the testimony thus offered was to convince, or attempt to convince the jury that plaintiff had not intentionally or knowingly over-insured his property, but that he had been led into it by the mistake of Mr. Adams.

The rationale of the rule which forbids excessive insurance must be, and is, that, to allow it, would be to offer an inducement to persons so insured to destroy their own property. It seeks to maintain in the insured an interest in the preservation of the property, which will stimulate care and watchfulness. Hence, what is known as the three-quarter rule. Insurance companies require that the owner of the property shall carry one-fourth of the risk. If the insured, however, does not know he is over-insured — is ignorant that he is not carrying his proportion of the risk — can that unknown fact make him less watchful, less solicitous for the preservation of the property ? There can be but one negative answer to this question. If Boulden was ignorant that the sum of his policies exceeded fifteen thousand dollars, even though he was in error, such excess could not have influenced his conduct. The Circuit Court erred in not allowing this line of defense;' but tbe burden of proving bis mistake and want of knowledge rested on tbe plaintiff.

We desire not to be misunderstood. We do not hold that a policy in excess of tbe authorized limit taken out through mistake, and in ignorance of tbe facts, is thereby rendered collectible. We bold tbe contrary. Mistake, or ignorance of tbe facts,no matter bow blameless that mistake may be, can not legalize a contract of insurance that is in excess of tbe authorized limit. To allow it would be too perilous. All we decide is, that excessive insurance, applied for and obtained through mistake, such as is contended for in this case, does not per se vitiate older insurance, if otherwise legal and binding.' — Wait Ac. & Def. 57-8

[Reversed and remanded.

WALKER, J., not sitting.