Whaley v. Guardian Fire Insurance Co. , 124 S.C. 173 ( 1923 )

April 3, 1923. The opinion of the Court was delivered by On January 22, 1921, the defendant-appellant, through its local agent, C.R. James, issued a policy of fire insurance for $2,000, to continue in force for one year, on the dwelling and household goods of the plaintiff. The policy, which was in the usual standard form, contained a clause providing that it was to "be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy. On or about May 12, 1921, the insured applied for and secured an additional policy for $2,000 on the same property in another company. The property was destroyed by fire June 8, 1921. Plaintiff recovered in an action upon the defendant's policy, which was contested by defendant upon the ground that the contract had been avoided or forfeited by the insured's action in subsequently taking out additional insurance. The appeal raises the one question of whether the special presiding Judge, Hon. N.G. Evans, committed error of law in refusing defendant's motion for a directed verdict upon the ground that there was no evidence of waiver by defendant of the undisputed breach of the additional insurance clause of the policy.

The testimony of C.R. James, a witness for the defendant, tended to establish that he was the local agent of the defendant company; that on the morning after the fire he learned of the other insurance for the first time; that he and Mr. Loryea, agent for the other insurance company, then went to where the house was burned; that he talked with Whaley there; that shortly after the fire he told Whaley to bring his policy and leave it in witness' office; that about a week after the fire he requested Whaley, the insured, to furnish him with a statement or "inventory of his losses"; that Whaley did so; that this document was accepted and kept by him; and that at the time of these occurrences no nonwaiver agreement had been signed. The testimony of J.E. Wallace, a witness for the defendant, tended to establish that he was the insurance adjuster to whom the loss was referred by the company; that in about a week or 10 days he went to St. Matthews, and accompanied by Mr. James, his local agent, and the other agent, went to see Whaley, the insured; that he then reported to the company; that he went back a second time, about 44 days after the fire, tendered the insured the return premium, and told him the company denied liability. We think it fairly inferable from this evidence that after knowledge of the alleged forfeiture there was (1) a request for the policy and for what might be deemed proofs of loss from the insured; (2) the furnishing of information as to the loss by insured; and (3) the retention of the "inventory" furnished and of the so-called "return premium" for a period of about 40 days after knowledge of the breach.

A well-established general principle, recognized and applied by this Court in numerous decisions, is thus stated in 14 R.C.L. p. 1197, § 376:

"It is the general rule that when an insurer, with knowledge of any act on the part of the insured which works a forfeiture, enters into negotiations with him which recognize the continued validity of the policy, and thus induces him to incur expense or trouble under the belief that his loss will be paid, the forfeiture is waived. This rule is most frequently applied to a request for proofs of loss from the insured after knowledge of the forfeiture," etc.

See Curnow v. Insurance Co., 46 S.C. 79; 24 S.E., 74.Norris v. Insurance Co., 57 S.C. 358; 35 S.E., 572. Kingmanv. Insurance Co., 54 S.C. 599; 32 S.E., 762. Montgomeryv. Insurance Co., 55 S.C. 6; 32 S.E., 723. Cobb v.Insurance Co., 78 S.C. 396; 58 S.E., 1099. McMillan Son v. Insurance Co., 78 S.C. 444; 58 S.E., 1020, 1135.

In the case of Kingman v. Insurance Co., supra, the Court quotes with approval the following from the case of Titus v.Insurance Co., 81 N.Y., 410:

"It may be asserted broadly that if in any negotiation or transaction with the assured, after knowledge of the forfeiture, it [the insurer] recognizes the continued validity of the policy, or does acts based thereon, or requires the assured by virtue thereof to do some act, or incur some trouble or expense, the forfeiture is as matter of law waived; and it is now settled in this Court after some difference of opinion that such waiver need not be based upon any new agreement, or an estoppel."

It is also well settled in this state that:

"When an insurance company has a right to cancel a policy, and fails to cancel it and return the unearned premium, either before or after the fire, the jury may consider that as evidence of intention to waive the forfeiture."Norris v. Insurance Co., 57 S.C. 358; 35 S.E., 572. Powellv. Insurance Co., 97 S.C. 375; 81 S.E., 654. Scott v. Insurance Co., 102 S.C. 115, 126; 86 S.E., 484. Spence v.Insurance Co., 104 S.C. 403; 89 S.E., 319. Porter v. InsuranceCo., 107 S.C. 393; 93 S.E., 141.

Upon the issue of waiver the statements and conduct of the local agent were admissible in evidence against the company. Sections 2711, 2712, Civil Code 1912.Powell v. Insurance Co., supra; Hankinson v. Insurance Co.,80 S.C. 392; 61 S.E., 905. Norris v. Insurance Co.,supra.

Unless some valid reason exists for not applying, or for limiting the application of, the foregoing principles to the case at bar, it would seem entirely clear that Judge Evans' ruling was correct. The contention of appellant's counsel, as we understand it, is that such reason may be found in the clause of the policy providing that "the amount of loss or damage for which this company shall be liable shall be payable 60 days after proof of loss is received," etc. It is argued that, "construing the paper handed Mr. James, the agent, to be proofs of loss, * * * then the company had 60 days thereafter to decide whether or not it would waive the breach of the policy and pay the claim, or declare the contract forfeited by the breach"; that the 60 days should be allowed the insurer as a reasonable time in which to decide, and that the conduct of the insurance company, and especially its nonaction in failing to return the premium, during that time should not be construed as a waiver of its rights. We are unable to perceive the logical connection between this 60-day stipulation as to time of payment of a loss and the doctrine of waiver. The obvious intent of that stipulation is merely to impose a limitation upon the insured's right of action upon the policy, postponing the maturity of the insurer's obligation and the accrual of the insured's right of action until after the lapse of the 60-day period specified. How the force and effect of a "nonwaiver agreement," exempting the insurer from the operation of the law of waiver for a period of 60 days, can be read into or reasonably attributed to this stipulation has not been pointed out, and, as we think, is not susceptible of demonstration.

Waiver is predicable upon any acts or conduct of the insurer, after knowledge of a breach, either before or after loss, tending to show recognition of the validity of the policy and an intent to relinquish the right to avoid it for the known breach. Kingman v. Insurance Co., supra;Norris v. Insurance Co., supra; Powell v. Insurance Co.,supra. When even an express nonwaiver agreement is construed strictly against the insurer (Cobb Seal v. InsuranceCo., 78 S.C. 397; 58 S.E., 1099), certainly the effect of such an agreement is not to be extended by implication to a provision of the contract expressly referring to an entirely different matter.

The exception is overruled, and the judgment of the Circuit Court is affirmed.

MR. CHIEF JUSTICE GARY and MESSRS. JUSTICES WATTS and FRASER concur.