Rowell v. Fireman's Insurance Co. , 142 S.C. 457 ( 1927 )

I think that his Honor, Judge Moss, was entirely right in directing a verdict for the defendant, and, therefore, respectfully dissent from the conclusion to the contrary announced in the opinion of Mr. Justice Stabler, for the reasons which follow.

The policy of fire insurance issued to and accepted by the insured contained the following plain and unambiguous condition:

"Unless otherwise provided by agreement in writing, added hereto, this company shall not be liable for loss or damage occurring while the insured shall have any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy."

The validity of this limitation upon the obligation of the company is sustained by the cases of Spann v. InsuranceCo., 83 S.C. 262; 65 S.E., 232. Camden Co. v. InsuranceCo., 106 S.C. 467; 91 S.E., 732. De Shields v. InsuranceCo., 125 S.C. 457; 118 S.E., 817. Young v. InsuranceCo., 68 S.C. 387; 47 S.E., 681. Walker v.Insurance Co., 136 S.C. 144; 134 S.E., 263.

As is said in the Spann Case:

"The provisions of the policy with respect to additional insurance are perfectly clear and consistent, and their validity has universal judicial recognition."

In Young v. Insurance Co., 68 S.C. 387; 47 S.E., 681, the Court said:

"To hold the insured not to be bound by this provision, would be equivalent to holding that when a contract is made for a policy of insurance, and the ordinary policy is issued with the usual conditions printed in it, all these conditions would be void and have no effect on the liability under the policy, unless expressly brought to the notice of the insured and assented to by him. To state such a proposition is to reject it. * * * It was admitted by the plaintiff that she took out other insurance, and this was sufficient to defeat her recovery, unless this condition was waived."

In Walker v. Insurance Co., 136 S.C. 144;134 S.E., 263, the Court said:

"It follows that, if the condition [as to additional insurance] was a valid one, that it was breached by the insured, and that there was no waiver by the company, the direction of a verdict in favor of the defendant company was inevitable."

The plaintiff admits that after the policy in the defendant company was issued to her on May 25, 1925, insuring the dwelling house for $1,500 and the contents for $500, upon an agreed valuation of the house at $2,500 on October 7, 1925, she took out an additional policy in another company, insuring the dwelling house for $1,750 and the contents for $500, upon the same agreed valuation of the house at $2,500. According to her own statement she had $3,250 insurance upon a house valued at $2,500.

The plaintiff admits the facts and admits the law, but claims that there was sufficient evidence of a waiver by the company of the condition in reference to additional insurance to carry the case to the jury.

The evidence of such waiver, upon which the plaintiff relies, consists of two circumstances: (1) That the agent who had issued the policy in the defendant company, several times, after the issuance of the policy, suggested to her and insisted upon her taking out additional insurance. (2) That after she had taken out the additional policy with an agent of another company, she informed the agent of the defendant company that she had done so.

I do not think that either circumstance presents the slightest evidence of a waiver by the company of the condition as to additional insurance.

I. As to the first circumstance:

(a) The insured made no reply to the insistence of the agent that she take out additional insurance. Even if she had specifically notified him that she intended to do so, such notification, under the case of McCarty v. Insurance Co., 81 S.C. 152; 62 S.E., 1; 18 L.R.A. (N.S.), 729, would not have amounted to evidence of waiver.

In that case the company claimed a forfeiture from the fact that the insured placed an incumbrance on the property after the issuance of the policy, in violation of a condition in it. The insured sought to establish a waiver from the fact that, at the time of the issuance of the policy, he told the agent that he expected to put a small mortgage upon the property.

The Court stated the issue as follows:

"Another question involved is whether the knowledge and representations of the agent in this case can be the basis of waiver or estoppel, since they did not relate to a knownor existing fact, but to something intended to be done inthe future."

— and proceeded to discuss and decide the issue, holding that although the intention was expressed before or at the time of the issuance of the policy, it was merely an intention and did not for that reason constitute evidence of a waiver. After citing and quoting from the case of Union Ins. Co. v.Mowry, 96 U.S. 544; 24 L.Ed., 674, with approval, the Court continued:

"It has frequently been held in this State that if an insurance agent at the inception of the contract has knowledge of a fact constituting a forfeiture, such knowledge is imputed to the company, and the issuance of the policy * * * estops the company from asserting the forfeiture * * * [citing cases]. * * *

"Imputing to defendant company the knowledge had by its agent, then the case practically stands as if the agent had incorporated in the application plaintiff's intention to place a small mortgage on the property, and the delivery of the policy was, therefore, made after knowledge of his intention. But the distinction between knowledge of a fact inconsistent with a valid policy in its inception and knowledge of a mere intention to do something in the future, which knowledge is consistent with the existence of the policy as a valid contract in its inception, is manifest. The intention may never be carried out, or, if carried out, the contract stipulates as to the manner and conditions. Hence to sustain the view that there was waiver of, or estoppel to assert, the conditions of the contract in this case, the Court must go further than it has yet gone on this subject."

The precise point was presented and decided in the case of Feagin v. Insurance Co., 122 S.C. 532; 115 S.E., 808. The defense was the same as in the case at bar and the effort to avoid the policy was the same except that the expression of the intention to procure additional insurance was made to one claimed to be the agent of the company at the time ofthe issuance of the policy, and not long afterwards as in the case at bar. The Court said:

"Even if Briggs was the agent of the company at the time of the inspection and was told by the plaintiff that he intended to take out additional insurance, that would not have relieved the forfeiture" (citing the McCarty Case).

(b) The insistence of the agent that additional insurance be taken out, cannot constitute evidence of a waiver, for another reason: The policy did not absolutely forbid the taking out of such insurance; it impliedly allows it upon a written agreement signed by the company; the suggestion of the agent naturally presupposed a compliance by the insured with that condition.

As the Court said in the McCarty Case:

"The by-laws of the defendant company do not forbid the placing of an incumbrance upon the insured property. The policy, however, contained a stipulation that if the property be incumbered, etc., without the written consent of the company indorsed thereon, it shall not be held liable, and further provided that the insured shall furnish a correct account of any incumbrance on the property insured and promptly advise the company of any insurance placed upon it after the policy is issued. * * * The foregoing recitals show that the delivery of the policy as a valid contract is consisted with the imputed knowledge that the insured intended to place a mortgage upon the insured property, for the policy provided what the assured should do in that event."

(c) The insistence of the agent that additional insurance be taken out, cannot constitute evidence of a waiver for still another reason: The rule that an insurance company is chargeable with the knowledge of its soliciting agent does not apply to matters of which he is informed after the issuanceof the policy. (This point will be discussed in connection with the second circumstance above referred to which is the more important one of the two.)

II. As to the second circumstance:

The appellant's counsel insist that there is evidence tending to show that after Mrs. Rowell took out the additional policy she notified the agent of the defendant company who had issued the first policy of the fact; and that that is evidence of a waiver by the company of the condition.

In her direct testimony the plaintiff did not even mention a meeting or conversation with the defendant's agent after she had taken out the second policy, and certainly gave no intimation that she had so notified him. Upon cross-examination, counsel for the defendant asked her the single question: "Did you state that you had a policy on the same property with Mr. Watson's agency here in Orangeburg?" to which she answered, "Yes, sir." This is all that the plaintiff has to show that she testified of the notification. In view of the reasonable explanation of counsel for the defendant, whose reputation and character are above reproach, I think it clear that he was referring to her testimony, and not a supposed conversation with the agent after the second policy was issued, of which there is no evidence. If the plaintiff relies so strongly upon this notice as waiver, it is passing strange that reliance is placed upon a question by opposing counsel which can so easily be construed as simply buttressing his defense under the condition in the policy. The redirect examination is too obscure to mean anything.

But assuming that there is evidence tending to show that after the insured had taken out the second policy, she specifically and pointedly notified the defendant's agent, who had issued the first policy, of that fact, I do not think that it constituted the slightest evidence of a waiver by the company of the condition.

(a) The observations above, under this sub-division, are obviously not applicable to this circumstance.

(b) For the same reasons as above outlined under subdivision (b), it is manifest that if the insured did notify the agent that she had taken out a second policy, and nothing more, the agent had the right to assume, as he had had nothing to do with it, that the insured and the company issuing the first policy had come to an agreement with reference to the additional policy; that the terms of the policy had been complied with in such matters. The alleged notification was at best barren of details; no amount was mentioned; no company designated; it was not a matter with which the agent as agent of the defendant was at all concerned or which required extension of notice to the company; he was at the time not engaged in the course of his employment; and his meager information, if received at all, could not be held as notice to the company.

(c) The alleged notice to the agent of the defendant, of additional insurance, cannot constitute evidence of waiver for another reason: The rule that an insurance company is chargeable with the knowledge of its soliciting agent does not apply to matters of which he is informed after the issuanceof the policy.

The office of a soliciting agent of a fire insurance company, upon a particular occasion, is discharged when the policy is delivered, the premium paid and remitted to the company. He has nothing to do with the policy from that time on, except, as a matter of accommodation to the insured, to notify him of its expiration and effect a renewal. During that interval he is functus officio so far as that policy is concerned, and any information received by him is necessarily received as a private individual, not within the course of his employment, which pro hac vice is terminated.

In 3 Cooley, Br. Ins. 2526, it is said:

"The rule that an insurance company is chargeable with the knowledge of its soliciting agent does not, as a general rule, apply to matters of which a soliciting agent is informed after the execution of a policy. His authority ends with the forwarding of the application or with the delivery of the policy, and as to all that occurs afterwards he has neither duty nor responsibility. This doctrine is asserted in Queen Ins. Co. v. Young, 86 Ala., 424; 5 So., 116; 11 Am. St. Rep., 51. Cassimus v. Scottish Union NationalIns. Co., 135 Ala, 256; 33 So., 163. Cedar Rapids Ins. Co.v. Shimp, 16 Ill. App. 248. Russell v. Cedar Rapids Ins.Co., 78 Iowa, 216; 42 N.W., 654; 4 L.R.A., 538. Garretsonv. Merchants' Bankers' Ins. Co., 81 Iowa, 727;45 N.W., 1047. Taylor v. State Ins. Co., 98 Iowa, 521;67 N.W., 577; 60 Am. St. Rep., 210. Harrison v. City FireIns. Co., 9 Allen (Mass.), 231; 85 Am. Dec., 751. A.M.Todd Co. v. Farmers' Mut. Ins. Co., 137 Mich., 188;100 N.W., 442. Hamilton v. Aurora Fire Ins. Co.,15 Mo. App. 59. Wilson v. Genesee Mut. Ins. Co., 14 N.Y., 418.Sun Mut. Ins. Co. v. Texarkana Foundry Machine Co., 4 Willson, Civ. Cas. Ct. App. (Tex.), § 31; 15 S.W. 34."

"Nor is there any waiver where the agent only has authority to take applications and deliver them, and the knowledge of the facts constituting a breach comes to him after the contract is completed; and notice to the soliciting agent that the applicant keeps gunpowder in the insured premises is held not to be notice to the company, * * * and the company is not chargeable with notice acquired by the soliciting agent subsequently to the delivery of the policy for the reason that his functions are held to have ceased." 2 Joyce, Ins. (2d Ed.), p. 1326. Insurance Co. v. TexarkanaCo., 4 Willson, Civ. Cas. Ct. App. (Tex.), § 31; 15 S.W., 34. Insurance Co. v. Van Os., 63 Miss., 431; 56 Am. Rep., 810. Crane v. Insurance Co. (C.C.), 3 F., 558. Heath v.Insurance Co., 58 N.H. 414. Putnam Co. v. InsuranceCo., 145 Mass. 265; 13 N.E., 902.

"The insurer is also estopped from asserting the invalidity of its policy at the time it was issued for the violation of any of the conditions of such policy, if at the time it wasissued the fact of such violation was known to the company or to its duly authorized agent." 2 Joyce, Ins. (2d Ed.), 536.

"Notice to a soliciting agent, after a fire insurance policy has been issued, is not notice to the company." 2 Joyce, Ins. (2d Ed.), 515b. Insurance Co. v. Kennedy,161 Ala., 600; 50 So., 73; 135 Am. St. Rep., 160. Lewis v. InsuranceCo., 181 N.Y., 392; 74 N.E., 224; 106 Am. St. Rep., 557.

"If the change in title or interest occurs after the policy is issued, and not duty devolves upon the agent to take any action in the matter, except upon assured's request, said agent's knowledge of all the facts in relation to an administrator's sale and its confirmation, to which he makes no objection but allows the policy to stand, does not estop assurer to take advantage of said change in the interest or title." 2 Joyce, Ins. (2d Ed.), 561. Moller v. InsuranceCo., 54 Wn., 439; 103 P., 449; 24 L.R.A. (N.S.), 809; 132 Am. St. Rep., 1115.

"There was strong testimony going to show that the defendant knew when it issued this policy of insurance all the facts relating to the ownership," etc. Graham v. InsuranceCo., 48 S.C. 195; 26 S.E., 323; 59 Am. St. Rep., 707.

"The plaintiff offered to introduce testimony for the purpose of showing that, at that time, the agent of the defendant had knowledge that there was other insurance on the property. Such knowledge would prevent the company from setting up, as a defense, that there was other insurance."Schroeder v. Insurance Co., 51 S.C. 180;28 S.E., 371.

"The receipt of the premium and the deliverey of the policy were the acts of the principal, and, if the testimony of plaintiff is true, the principal, through its agent, had knowledge of the concurrent insurance at the time of theinception of the contract of insurance. Under such circumstances, it would be a fraud on the insured for the insurer to assert a forfeiture, which, by such acts, it declared it would not asserts." Gandy v. Insurance Co., 52 S.C. 224;29 S.E., 655.

"Where the insured at time of making application showed to agent of insurer an inventory of the stock of goods and agent says, `It is all right,' the insurer thereby waives its right to afterwards insist that such inventory does not conform to the iron-safe clause." Madden v. Insurance Co.,70 S.C. 295; 49 S.E., 855. Plunkett v. Insurance Co.,80 S.C. 407; 61 S.E., 893.

"An insurance company, affected with knowledge of its agent and thus knowing the existence of a cause of forfeitureat the inception of the contract, is estopped to assert such forfeiture by accepting the premium and delivering the policy as a valid contract of insurance." Doyle v. Hill, 75 S.C. 261;55 S.E., 446.

"If an insurance company, at the inception of the contractof insurance, has knowledge of facts which render the policy void at its option, and the company delivers the policy as a valid policy, it is estopped to assert such ground of forfeiture." Fludd v. Insurance Co., 75 S.C. 315;55 S.E., 762.

"Knowledge by the agent at the inception of the insurance contract, that the books could not be kept in an iron safe on the premises, would estop the insurance company from claiming a forfeiture." Cobb Seal v. Insurance Co.,78 S.C. 388; 58 S.E., 1099.

"In Rearden v. Insurance Co., 79 S.C. 526;60 S.E., 1106, it is held that any information a soliciting agent may have, before application, of the condition of health of an applicant, obtained while soliciting insurance, is notice to the company."

"It has frequently been held in this State that if an insurance agent at the inception of the contract has knowledge of a fact constituting a forfeiture such knowledge is imputed to the company, and the issuance of the policy as a valid policy estops the company from asserting the forfeiture."McCarty v. Insurance Co., 81 S.C. 152;62 S.E., 1; 18 L.R.A. (N.S.), 729.

"If an insurance agent at the inception of the contract has knowledge of a fact constituting forfeiture, that knowledge is imputed to the company, and the issuance of the policy as a valid policy estops the company from asserting the forfeiture." Jones and Woods, JJ., Slawson v. InsuranceCo., 82 S.C. 51; 62 S.E., 782.

"A statement to the policyholder by an agent of the insurer,made at the time of the issuance of the policy and receipt of the premium; to the effect that a condition of the policy will not be insisted on, is evidence of waiver or estoppel."Berry v. Insurance Co., 83 S.C. 13;64 S.E., 859.

To the same effect are Hollings v. Bankers' Union, 63 S.C. 192;41 S.E., 90. Hankinson v. Insurance Co., 80 S.C. 392; 61 S.E., 905. McCarty v. Insurance Co., 81 S.C. 152;62 S.E., 1; 18 L.R.A. (N.S.), 729. Huestessv. Insurance Co., 88 S.C. 31; 70 S.E., 403.

In Cassimus v. Insurance Co., 135 Ala., 256; 33 So. 163, is it held that where the policy forbids the keeping of certain inflammable commodities on hand, and after the policy hasbeen issued, the agent has knowledge of the breach of such condition, notice to him does not bind the company, or operate as a waiver of the insurer's right to avoid the policy for keeping such prohibited articles.

In Garretson v. Insurance Co., 81 Iowa, 727,45 N.W., 1047, it is held that an agent, authorized only to solicit insurance, deliver policies, and receive premiums, who after the issuance of the policy consents that the insured may keep gasoline, in violation of the policy, does not thereby bind the company.

To the same effect is Bartholomew v. Insurance Co.,25 Iowa, 507; 96 Am. Dec., 65, in reference to gunpowder.

In Stevens v. Queen Ins. Co., 81 Wis. 335;51 N.W., 555; 29 Am. St. Rep., 905, it is held that, where the policy contains a condition against mortgages, and after it is issued the agent assists in the preparation and execution of a mortgage by the insured, the knowledge of the agent is not to be imputed to the company as a ground of waiver.

The same principle is applied to cases of vacancy occurring within the knowledge of the agent after the policy has been issued. Insurance Co. v. Garland, 108 Ill., 220.

In Moller v. Insurance Co., 54 Wn., 439; 103 P., 449; 24 L.R.A. (N.S.), 807; 132 Am. St. Rep., 1115, it is held, quoting from the syllabus:

"Knowledge on the part of the agent of an insurance company, after a policy has been issued, of a change in title of the insured sufficient to work a forfeiture of the policy, will not estop the insurer from taking advantage of it, since he was under no duty to take any action by reason thereof unless requested to do so by the assured."

The rule adopted by the Supreme Court of the United States is that it is not admissible to show by parol evidence that a condition stated in a policy as essential to its validity was known by the local agent not to exist at the time the policy was issued, where the policy provides against waiver. Northern Assurance Co. v. Grand View Bldg. Association,183 U.S. 308; 22 S.Ct., 133; 46 L.Ed., 213. "But," as declared by this Court in Pearlstine v. InsuranceCo., 74 S.C. 246; 54 S.E., 372, "the rule adopted in this State and the large majority of the States of the Union is that an insurance company cannot avail itself of provisions in the policy that it should be void if certain facts therein mentioned as essential to the insurance should be found not to exist when these facts were known to the agent not to exist when the policy was issued through him, and the existence of such facts [nonexistence?] and the knowledge of the agent may be proved by parol."

I do not agree that this Court should further extend the rule, admittedly out of harmony with the Supreme Tribunal, to instances of notice to the agent after the issuance of the policy; a principle which has not heretofore, within my knowledge, been enunciated by this or any other Court.

"If an agent has merely authority to take applications and deliver them, and his knowledge of a breach of warranty comes to him in his individual capacity, after the contract of insurance is made, there is no waiver of forfeiture." 2 Joyce, Ins. (2d Ed.), 546.

"It is necessary that the knowledge of an agent, in order to bind the company, should have been obtained by him in the course of his employment. If obtained while doing an act in no way connected with his agency, the company is not bound." 2 Joyce, Ins. (2d Ed.) 544.

In Taylor v. Insurance Co., 98 Iowa, 521;67 N.W., 577; 60 Am. St. Rep., 210, quoting syllabus, it is held:

"An insurance agent, whose powers are limited to making contracts and issuing policies, has no power, after issuing a policy, to violate a condition therein by agreeing verbally with the insured, without the knowledge of the insurer to additional insurance in another company. Notice to such agent of additional insurance is not notice to his principal, and it is not bound thereby nor by such verbal agreement of the agent."

To the same effect are Todd v. Insurance Co.,137 Mich., 188; 100 N.W., 442. Stipcich v. Insurance Co. (D.C.),8 F.2d 285. Traders' Ins. Co. v. Letcher,143 Ala., 400; 39 So., 271. American Ins. Co. v. Walston, 111 Ill. App. 133. Insurance Co. v. Spiers, 7 Ky., Law Rep., 370.Beasley v. Insurance Co., 140 Ga. 126; 78 S.E., 722.Bank v. Insurance Co., 23 N.D., 139; 134 N.W., 873; 38 L.R.A. (N.S.), 213. Cobel v. Insurance Co.,154 Minn., 233; 191 N.W., 592. Scrivner v. Insurance Co.,144 Iowa, 328; 122 N.W., 942. Insurance Co. v. Marsh,34 Okla. 453; 125 P., 1100; 42 L.R.A. (N.S.), 996.Kring v. Insurance Co., 195 Mo., App. 138; 189 S.W., 628. Pettijohn v. Insurance Co., 100 Kan., 482;164 P., 1096.

I think, therefore, that the judgment of the lower Court should be affirmed.