Home Ins. Co. of N.Y. v. Horrell Cravens

The plaintiff brought suit on an installment note given for a policy of insurance covering a period of four years. The note was for $288, and the installments were $72 per year. Under the contract of insurance the plaintiff paid $72 cash and signed up an application for the insurance together with the installment note sued upon. It appears from the evidence that several months later there was a loss, covered by the policy, for which the defendants claimed against the Insurance Company, and which loss was settled and paid to defendants by the plaintiff. When the first installment in the note came due it was not paid by the defendants and after some negotiation, which was over a year after the note had been made and the policy had been delivered, the first installment on this note was paid by the defendants. Nothing more was paid, and this suit is for the balance due on the note.

The defense made by defendants is that the policy did not conform in the amounts placed on the various items insured on the farm to those which were placed in the application for insurance, the claim being that the company reduced the amounts on the houses and combustible property and added such amounts therefrom reduced to other items which were less liable to be destroyed.

There is an attempt to plead a failure of consideration. The defendants give the excuse for paying the second payment, which was the first installment in the note, on the grounds, as they say, that the agent told them if they would pay that to the company it would cancel the insurance, defendants having written to the company complaining about the policy not being according to the terms of the application and asking for a cancellation.

Under the terms of this policy the mode of cancellation is expressly provided for, and it is admitted by defendants that they did not comply with the terms in this respect. It has been consistently held on this same contract that where the policy provides for a certain form of cancellation, the terms as therein provided must be strictly complied with. [See Home Ins. Company v. Fleeman, 217 S.W. 536; Continental Ins. Company v. Phipps, 190 S.W. 994; Home Insurance Co. v. Hamilton, 143 Mo. App. 237, 128 S.W. 273; American Insurance Co. v. Neiberger, 74 Mo. 167.]

This policy was delivered to the defendants, accepted by them and retained without any objection whatever until a long time had transpired, and after they had accepted the benefits under the policy on a loss, which was paid.

We have recently had a case involving the question of the right of cancellation and repudiation of an insurance contract, and held that on such contracts there must be prompt action if the insured excepts to repudiate on the ground that the policy does not conform to the contract as understood when the application was signed. [See Faith v. Home Insurance Co.,208 S.W. 124.]

It therefore follows that the defendants in this case, by accepting the benefits on a loss sustained, and their failure to repudiate on the ground of an alleged fraud within a reasonable time, that the policy as delivered is in force and defendants are bound by its terms. It also appearing that defendants, having failed to cancel the policy under the provisions thereof, the trial court committed no error in directing a verdict for the plaintiff. The judgment is affirmed.

Bradley, J., concurs. Cox, P.J., not sitting.