Wells v. North Carolina Farm Bureau Mutual Insurance

HILL, Judge.

Although 21 exceptions were taken by the defendant, only six questions were brought forward. Of these, the principal question is whether or not the defendant had waived the sixty and ninety-day unoccupancy/vacancy clauses of the policy. The jury, by its verdict, so found, and we must decide if the matter as a matter of law should have been permitted to go to the jury.

In looking to the questions of whether or not the unoccupan-cy vacancy clauses — both sixty and ninety days — were violated, it appears that a violation was in existence at the date of the fire.

In the case of Firefighters Club v. Casualty Co., 259 N.C. 582, 131 S.E. 2d 430 (1963), it is said that “occupancy” must be construed with reference to the type of property insured and the use intended. “The term ‘occupied’ implies a continuing tenure for a period of greater or less duration, and does not embrace a mere transient or trivial use. Society of Cincinnati v. Exeter, 92 N.H. 348, 31 A. 2d 52 (1943); Lacy v. Green, 84 Pa. 514 (1877). A building is occupied when it is put to a practical and substantial use for the purposes for which it is designed. See 67 C.J.S. 84.” Firefighters Club v. Casualty Co., supra, at p. 589.

This property was purchased as a tenant house and as rental property. Thus, the use contemplated by the plaintiffs was habitation by tenants or certainly more than a mere transient or trivial use such as when the premises were used for a pajama party, or even a casual inspection of the house.

The question then arises as to whether or not the company by the information received through its agent and actions on its part waived the unoccupancy/vacancy clauses. We hold so.

Firefighters Club v. Casualty Co., supra, points out three theories among the courts as to waivers of unoccupancy/vacancy clauses:

1. Some courts hold that a vacancy known to the insurer when it issues the policy constitutes the waiver of the policy provision with respect to that vacancy. Bledsoe v. Farm Bureau Mutual Insurance Company, 341 S.W. 2d 626 (1960).

2. A few cases hold that a waiver created by knowledge of an existing vacancy is not limited to that vacancy, but to any subsequent vacancy which may occur during the life of the policy. See McKinney v. Providence Washington Insurance Company, 144 W.V. 559, 109 S.E. 2d 480 (1959).

3. Other courts, recognizing the recent change in policy provisions which merely suspend the insurance during a non-permitted vacancy, hold that a vacancy existing at the time that the insurance issues is not a waiver of the policy provisions. The insured has such time as may be fixed by the policy and endorsements in which to occupy the property. Conley v. Queen Insurance Company, 76 S.W. 2d 906, 256 Ky. 602, 96 A.L.R. 1255 (1934).

The Conley case goes on to say that where the policy is issued on vacant property with the expectation that the property is to remain vacant, the clause against vacancy is deemed waived.

In the instant case, the agent clearly had knowledge of the vacancy of the property prior to issuance of the policy in 1973. There is no question but that the knowledge of the agent is imputed to the company and is a waiver of the vacancy or unoc-cupancy provision at that time.

If the insurer or its agent has knowledge at the time the contract of insurance is effected that the premises are vacant or unoccupied, the issuance of the policy waives any provisions or conditions as to the vacancy or unoccupancy. 8 Couch on Insurance 2d § 37:876. (Citing many authorities.)

Admittedly, since the issuance of the policy in 1973, the premises were occupied from time to time and unoccupied at other times. Does this fact waive or revoke the waiver? The law seems to be that where the property was insured at the time it was vacant, occasional occupancy and consecutive occasional vacancies do not destroy the right to recover, although no notice of such vacancies was given by the insured to the insurer. Maxwell v. York Mutual Fire Insurance Co., 114 Me. 170, 95 A. 877 (1915).

Likewise, “Accepting unearned premiums with the knowledge of a breach of a vacancy clause waives the breach.” 8 Couch on Insurance 2d § 37:877. Such acceptance and retention of the premiums with the knowledge that the policy was issued at the time that the premises were vacant is waiver by conduct. Continental Insurance Company v. Ruckman, 127 Ill. 364, 20 N.E. 77, 11 Am. St. Rep. 121 (1889).

In the instant case, the insurance agent received premiums from the insured from out of the state. Furthermore, when the insurer’s agent, Mr. Barfield, visited the premises in 1976, he could find no one occupying the building.

The agent was advised that the building was vacant in 1973, and there is no evidence that the company was ever informed of any change in occupancy thereafter. As a matter of fact, in May 1976 when the policy was renewed, the cottage was vacant. Having been put on notice concerning the vacancy in 1973, the burden then would remain with the company to ascertain the status of the property if it desired not to renew such policy. See Stuart v. Insurance Company, 18 N.C. App. 518, 197 S.E. 2d 250 (1973). Furthermore, the Stuart case indicates that if the insurance company had accepted premiums (as is the case here) after notice of non-occupancy, the company would have been estopped to deny coverage. See also, Williams v. Insurance Company, 209 N.C. 765, 185 S.E. 21 (1936). The jury in the light of conflicting testimony between the agent Barfield and Mrs. Wells decided the same in favor of the plaintiffs Wells, and the defendant is bound by the rules of law set out above.

We have examined the other objections and exceptions brought forth by the appellants in their brief and have concluded that they are not material to the disposition of this case. Therefore, in the opinion of this Court, the judgment entered in the trial court is without error.

No error.

Judges Vaughn and Erwin concur.