Keistler Co. v. Aetna Ins. Co.

February 1, 1923. The opinion of the Court was delivered by This is an action on a policy of fire insurance. The allegations of the complaint are as follows:

"(1 and 2) [The allegations of these paragraphs are formal.]

"(3) That on the 21st day of December, 1920, the defendant insured against all direct loss or damage by fire the Keistler Company for the term of one year from date of the policy, to the amount of $2,500, its entire stock of general merchandise, contained in a brick building, with metal roof, on the west side of extension of Main Street, near Great Falls, and the said defendant issued its said insurance policy in writing, bearing No. 1116, and delivered the same to the plaintiff at and for a money consideration as a premium.

"(4) That on the 26th day of January, 1921, a fire occurred, thereby damaging and destroying completely the entire stock of goods of the plaintiff, which was insured by the defendant company, under said policy, against all direct loss or damage by fire.

"(5) That the plaintiff's loss and damage to the stock of goods, insured by the defendant company, was far in excess of $5,500, the total amount of insurance carried on the stock of goods, the defendant company having concurred in total insurance to said amount, and the plaintiff's loss was total.

"(6) That under the terms of the said policy the defendant company is now liable to the plaintiff for the sum of $2,500, with interest thereon from the 26th day of January, 1921, and that the said company has failed and refused, and still fails and refuses, to pay the plaintiff the sum of $2,500, or any other sum, in settlement of its liability to the plaintiff, as aforesaid."

The answer of the defendant is as follows:

For a first defense:

"(1) That it denies each and every allegation in the said complaint contained."

For a second defense:

"(1) That the contract of insurance mentioned in the complaint herein provides among other things as follows, to wit: ``If a building or any material part thereof falls, except as a result of fire, all insurance by this policy on such building or its contents shall immediately cease.'

"(2) That on or about the 26th day of January, 1921, the roof of the building containing stock of merchandise insured by said policy fell in and demolished said building and the contents thereof.

"(3) That thereafter, and as a result of the fallingroof, a stove used in heating said building was overturned,from which the debris and wreck caused by the said fallingroof caught fire, and the same was totally destroyed. (Italics added.)

"(4) That, in accordance with the provisions of said policy set out above, all insurance upon the contents of said building immediately ceased upon the falling in of the roof set out above."

On the first trial of this case the jury failed to agree, but on the second trial there was a verdict in favor of the plaintiff for $2,500, with interest from the 15th day of March, 1921, and the defendant appealed upon exceptions, which its attorney has divided into three classes. In the first class are included exceptions numbered 2, 4, 6, and 8, which are as follows:

(2) "Because his Honor, the presiding Judge, erred in refusing to grant the defendant's motion for a direction of a verdict, on the ground that the only inference that can be drawn from the testimony is that the building, which contained the goods insured in the case, or a material part of it, collapsed before the fire, and that, in accordance with the terms of the policy, the insurance under said policy ceased at that time, and that there is no evidence of any new contract of insurance; the error being that said provision constituted an excepted risk against which defendant did not insure, and for which it collected no premium."

(4) "Because his Honor, the presiding Judge, erred in refusing to charge defendant's first request to charge, to wit: ``If you find that the roof and part of the side walls of the building which contained the stock of merchandise insured under the policy involved in this case fell and collapsed, and that a fire started immediately thereafter and consumed the merchandise covered by the said policy, then, and in that event, I charge you that you must find for the defendant.' The error being that it contains a sound proposition of law applicable to the case, and is not a charge on the facts."

(6) "Because his Honor, the presiding Judge, erred in refusing to charge defendant's third request to charge, to wit: ``I charge you that the defendant, under its policy sued on in this case, insured a stock of merchandise in a building that was standing and intact, and not in a building a material part of which had fallen. To find the defendant liable for a fire which had destroyed the contents of a building that had fallen, you would have to find that the defendant had insured the plaintiff against that special risk, or that it had made a new and distinct contract of fire insurance after the collapse of the building. I charge you that there is no evidence of any such contract in this case' — the error being that it contains a sound proposition of law applicable to the case, and is not a charge on the facts."

(8) "Because his Honor, the presiding Judge, erred in refusing to charge defendant's seventh request to charge, to wit: ``The undisputed testimony in this case shows that the roof of the building containing the merchandise covered by the policy of insurance sued on in this case and also part of the side walls of same fell before the goods caught fire. Under these circumstances, I charge you that the policy of insurance sued on in this case ceased at the time of the collapse above mentioned and that there being no evidence of a new contract of insurance your verdict must be for the defendant' — the error being that it contains a sound proposition of law applicable to the case and is not a charge on the facts."

In stating the questions raised by these exceptions the defendant's attorney in his argument says: "Exceptions 2, 4, 6 and 8, in which the trial Court's building containing the goods insured by the defendant-refusal to grant a directed verdict on the ground that the appellant had fallen in before the fire, and that under the terms of the policy all insurance under it ceased at the time of the collapse, and its refusal to charge the jury to the same effect, is questioned."

A.N. Keistler thus testified for the plaintiff:

"On the night of the 26th the roof to our building fell in, and it immediately caught fire, and everything was destroyed in the building. We notified Mr. Mullican, the agent, on the next morning, and told him we would like to commence cleaning up and get ready to rebuild as soon as possible. He came up and looked over it, satisfied himself that it was a complete loss, and told us to go ahead; that the company would settle with us; that it would be all right to go ahead and clean up and get ready to rebuild. I told him how it occurred. We had no insurance on the building. Heavy sleet and ice caused the roof to fall. The stove was not turned over. I could not say what caused the fire. The goods were destroyed by fire. The roof, which was solid tin, fell in, and the goods, I would say, were fairly well protected by this roof covering; very little damage if there had been no fire. Value of stock was $15,000. We went ahead to clear up the place and rebuild. About three weeks after the fire, an insurance adjuster, Mr. Wallace, came to see me. He told us he came to investigate the loss. I took him down, showed him the place, and told him how the fire occurred. He asked for the policies, and we gave them to him."

Cross-Examination by Mr. Clarkson "My house is about 200 yards from the store. We have no street lights. I was at home. The bookkeeper called me over the 'phone and told me he heard the roof crack. I immediately ran to the store, and when I got there the roof was in, and the fire had started. Our store faces about north and south. It is 75 feet long and 35 feet wide. No pillars in the middle. It was a truss roof. When the roof fell in like that, the outside fell down. The wall on the east side broke about 2 or 3 feet from the front at the top, angled down until about 3 or 4 feet from the ground, and then ran back to about 10 feet from the back, where about 8 to 10 feet of the wall was left standing. On the west side the wall broke off near the front and angled down to the ground, nearer the front than the center. At the southwest corner we had an office about 15 feet square that held the wall and roof up. The break started at the top, about the office partition, and went right down. About 15 feet of the wall was left standing. We have shelves on both sides of our store, back to the office on the west side, and the full length on the east side, except for a 4 x 8 door. We had shelves on the back end. I approached the front of the building from the west side, and went around to the office, as soon as I got there, to look for the boys, and found them back there. The goods were scattered over the ground a very little. When the roof came in at the top, it spread out, and practically all of the goods were covered up by it. Two men were in the store at the time it fell. One telephoned me from the office. * * * The stove was about the middle of the store; stove pipe went to a flue which went from the girders, up through the roof. The pipe and the bricks composing the flue had fallen in over the stove."

J.R. Goudelock thus testified for the plaintiff:

Direct Examination by Mr. Hamilton "I was working for Keistler Company, at Great Falls, on January 26th. The roof fell in, part of it, and a fire immediately afterwards destroyed our stock of goods. Mr. Roddy was with me. Seven inches of sleet on the roof caused it to fall in. The stove was not turned over. It fell near the center. I was in the building at the time. It kinder came down and sheltered the whole stock of goods, and the fire immediately afterwards destroyed it. The falling of the building didn't damage it at all. I used the telephone in the office before it fell. Don't know what caused the fire. I was present when the adjuster came about three weeks later. * * * " Cross-Examination by Mr. Clarkson "I was in the office at the southwest corner of the building. When the roof crashed, I went out the window. It happened about 8:30 at night. I was in the office at the time I 'phoned Mr. Keistler, and I could see the stock back there then. It didn't fall any more after I got out of the office at all.

"Court: Did you stay in there until after the roof was down? A. Yes, sir; stayed in there until after the roof was down. It was pretty dark. I could see the stove and the stock from the back end. The roof fell on the counter in the center, and one of the side walls fell on the ground. One wall was standing when the fire occurred, and the fire burning it caused it to fall loose. On the side where the wall had fallen the goods were down, and the roof on top of them, sheltering them."

Redirect Examination "The store was lighted with electric lights. Stove was not turned over. The fire had not started when I 'phoned Mr. Keistler. That was the first thing I did. There was a little space of time between the falling in of the roof and the fire. I noticed the fire while I was going out of the building."

The burden rested upon the defendant to prove the allegations of its answer. In the case of Copelandv. Western Assurance Co., 43 S.C. 29;20 S.E., 755, the Court uses this language:

"1. That where the defendant claims that the plaintiff has not a right of recovery on the policy of insurance, by reason of the fact that he failed to comply with the requirements of the policy, such objection must be set up in his answer to the complaint. 2. That where the defendant sets up a defense in his answer that the plaintiff is barred of his right of recovery on the policy of insurance, by reason of his failure to perform certain things therein required to be done on his part, it is not incumbent on the plaintiff to introduce testimony showing such performances by him, and, consequently, a failure to introduce testimony does not entitle the defendant to an order of nonsuit. 3. That where the defendant sets up such defense in his answer, and the facts brought out during the introduction of plaintiff's testimony in chief show that there has not been performance by the plaintiff of such requirements of the policy, still the defendant would not be entitled to an order of nonsuit, because such order would deprive the plaintiff of his right to show waiver or estoppel on the part of the defendant to make such objection."

The defendant alleged in its answer that the stove used for heating the building was overturned. It was incumbent on it to prove that allegation, yet no witness testified to such fact, while, on the contrary, A.N. Keistler and J.R. Goudelock both testified that the stove was not turned over. The store was lighted with electricity, and the stovepipe went to a flue which went to the girders up through the roof. It is far more probable that the fire was caused by an electric wire, or from the flue, than from the stove. In any event, it is unreasonable to suppose that the falling of the bricks from the flue and the stovepipe caused the fire to be scattered from the stove, as it was not overturned by the fall of the debris. There were persons in the store at the time the roof caved in, yet no witness testified that he saw any fire from the stove communicated to the goods.

The testimony as to when the fire first commenced to burn is purely circumstantial. It may have been burning for a considerable length of time before it broke out or was discovered. As the testimony in regard to the cause of the fire was conflicting the issue raised by the pleadings was properly submitted to the jury.

A case should be submitted to the jury, not only when the testimony is conflicting, but likewise where the inferences from it are in doubt. When the defendant failed to show its allegation that "as a result of the falling roof the stove was turned over," it could not successfully contend that a verdict should have been directed in its favor. These exceptions are overruled.

The exceptions in the second group are as follows:

(5) "Because his Honor, the presiding Judge, erred in refusing to charge defendant's second request to charge, to wit: ``I charge you that the question of waiver is not involved in this case' — the error being that it contains a sound proposition of law applicable to the case, and is not a charge on the facts."

(9) "Because his Honor, the presiding Judge, erred in charging the jury as follows, to wit: ``There is such a thing known as waiver, gentlemen, and whether or not they waived that condition (fall of building) in the policy is a question which you are going to have to now determine,' and ``it is for you to say in this case, gentlemen, as to whether there was any waiver, or whether or not the insurance company did give up its rights to insist on this clause in the policy, which voided the policy when the building fell' — the error being that the doctrine of waiver cannot be made applicable to this case, a collapsed building being an excepted risk under provisions of the policy, and all facts upon which the alleged waiver was based having occurred after the fall of the building and after the insurance had ceased."

In discussing these exceptions the defendant's attorney says:

"The point, which includes exceptions 5 and 9, raises the question as to whether or not the contract of insurance, having ceased and determined before the fire which destroyed the goods formerly insured by the contract, could by acts of waiver after the fire and after the goods had been destroyed be revived and made a living, vital contract at the time of the fire. To state the proposition is to deny it. Yet at the trial plaintiff-respondent contended that the ``fallen building clause' had been waived by acts of the defendant-appellant's agents after the fire, and the trial Court, accepting this view of the case, charged the jury that the clause could be waived in this case, and that it was for them to say whether or not it had been waived. This charge is the basis of the ninth exception."

The defendant's attorney erroneously assumes that the contract of insurance had ceased and determined before the fire occurred which destroyed the goods. That was the main issue in the case.

These exceptions are overruled.

The exceptions in the third group are as follows:

(1) "Because his Honor erred in refusing to allow the witness Keistler to answer the following question, on the ground that it was incompetent: ``If the premium had been offered you, would you have accepted it?' — the evidence being competent, relevant, and material on the issue as to whether or not it was necessary for the defendant company to make a tender of the return premium in order to stand upon its rights as fixed in the contract of insurance; it being claimed on the trial of the case that the company had waived its rights under the policy by a retention of the return premium, and the evidence of plaintiff showing that a tender had been attempted."

(3) "Because his Honor, the presiding Judge, erred in refusing to grant defendant's motion for a direction of a verdict, on the ground that the clear and only inference that can be drawn from the testimony is that there was no waiver on the part of the company; the error being that there was a total failure of evidence of any expense or trouble to which the plaintiff was put by the defendant inconsistent with the idea that the amount of the insurance would not be paid, and that any inference of waiver on the part of the defendant which might have been drawn by its failure to tender the return premium was conclusively rebutted by the action of plaintiff's representative in failing to accept or refuse a proffered tender from a representative of defendant who he knew had come a long distance for that purpose, in leaving said representative's presence without having indicated his preference, and by the fact that defendant admittedly denied liability and attempted to make a tender."

(7) "Because his Honor, the presiding Judge, erred in refusing to charge defendant's fifth request to charge, to wit: ``The Court charges you that there is no evidence of any waiver on the part of the defendant of its right to insist upon the terms of the policy, and that the retention of the premium by the defendant in this case would be no evidence of a waiver on its part to insist upon the terms of the policy' — the error being that it contains a sound proposition of law applicable to the case, and is not a charge on the facts."

What has already been said shows that these exceptions cannot be sustained.

Affirmed.

MR. JUSTICE WATTS concurs.

MR. JUSTICE FRASER: I concur in the result with the Chief Justice. I think there was evidence sufficient to carry the case to the jury.

The distinction between an accepted risk to be defeated by conditions set forth in the policy and an excepted risk is clear, and it is logical to hold that it takes a new contract to cover an excepted risk. By way of illustration: A. has a plantation on which there are 10 buildings. All are covered by a policy of insurance, but the policy provides that, in case A. shall store certain inflammable materials in any of the houses, then the insurance on that building shall instantly cease. That is an assumed risk, which will be void upon a condition subsequent. B. has a plantation upon which there are 10 buildings; 9 of them are covered by a policy of insurance. Building No. 10 is excluded from the policy. It is entirely logical to hold that it takes a new contract to include insurance on B.'s No. 10, but not on A.'s No. 10. I do not see the application of excluded insurance to this case. The appellant unquestionably accepted insurance on the property destroyed in this case. The insurance was to cease upon the condition subsequent, to wit, the falling of the house in which the property was stored. The avoidance of the policy on account of the happening of a condition subsequent may be waived, and it does not require a new contract.

In Kingman v. Ins. Co., 54 S.C. 603, 32 S.E., 763, we find: "Waiver of a forfeiture does not rest upon a new contract upon consideration."

In Norris v. Ins. Co., 57 S.C. 358; 35 S.E., 572, it was provided that the insurance would cease if foreclosure proceedings were commenced. Foreclosure proceedings were commenced, and then the fire occurred. The agent of the company knew that foreclosure proceedings had been commenced, and made no objection. The jury found for the insured, and a judgment on the verdict was sustained. There is no difference in principle. This case was reaffirmed in Powell v. Ins. Co., 97 S.C. 375;81 S.E., 654, where goods stored in one building were removed to another with the knowledge and without objection by the agent. Several authorities are cited in the Powell Case that need not be repeated here.

It seems to me that this case is an accepted risk, with a condition subsequent, that is subject to waiver, and not an excepted risk.