Hughes v. Palatine Insurance Company

Before the reargument herein was ordered an opinion by Mr. Justice Watts, concurred in by Mr. Justice Fraser, was filed ordering the affirmance of the judgments herein, and a dissenting opinion by Mr. Justice Cothran, concurred in by Mr. Justice Marion, was likewise filed, which held that there should be a reversal. In view of this contrariety of opinion, I was designated to participate in the rehearing, and in the resultant decision of these appeals.

Under these circumstances, I shall not attempt to discuss all of the somewhat complicated questions involved herein, but shall content myself solely with stating my opinion as to those matters upon which I have found the Court equally divided.

As I understand it, there are two of these debated issues: (1) Should a verdict have been directed in favor of the London Lancashire Insurance Company? and (2) was there reversible error in the use in the trial of the duplicate invoices? As to the first question:

Assuming that there was a violation of the iron-safe clause, the issue presented is whether there is in the record sufficient evidence of waiver to take the case to the jury. Mr. Justice Watts holds simply:

"The evidence tended to show knowledge on the part of the defendant's agent, Graham, who wrote the policies and delivered them to the respondent, that he did not have a safe, and the manner in which he kept his books."

In the dissenting opinion Mr. Justice Cothran states that he yields his views "for the moment," to the binding authority of the Madden Case, 70 S.C. 295; 49 S.E., 855, and the doctrine therein established, viz., that, where an insurance agent represents two companies, knowledge obtained by him in the preparation and issuance of a policy in one company will be imputed to the other company. H.M. Graham, the agent herein, represented both of the defendant companies. He issued the policy in the Palatine Company in September, 1920, and in the London Lancashire Company (hereinafter referred to as the Lancashire Company) in December, 1920. In the dissenting opinion it is held that there was in the Lancashire Case a compliance with the requirement as to an inventory, and a waiver of the requirement as to the keeping of a set of books, but that there was no evidence of waiver of the requirement as to an iron safe, for the reason that:

The Lancashire Company "could only be charged with the knowledge of Graham that, when the Palatine policy was issued three months before the London Lancashire policy was issued, the plaintiff did not have an iron safe; it could not be charged with any conduct of Graham while acting for another company, upon an entirely different transaction from which it might be inferred that the other company intended to waive future compliance with the requirement."

This difference of opinion presents the main question for consideration.

My application, to the present appeal, of the doctrine of the Madden Case, the authority of which I recognize, and the reasoning of which I approve, is that there was imputed to the Lancashire Company in December the exact information which the agent of both companies had in September when he wrote the Palatine policy. The dissenting opinion herein exceedingly accurately states what this knowledge of the agent in question was, as follows:

"The evidence also tends to show that at that time the plaintiff informed Graham that he did not have an iron safe in which the inventories and books were to be kept; that Graham repled: `That is all right.' He not only did not object to the absence of the safe, but approved it. It may not have been an unnatural inference that the absence of the safe was `all right' during the continuance of thepolicy." (Italics mine.)

I fully agree with the foregoing statement and the suggested inference which might be drawn from the same, viz., that from the alleged remark of Graham the plaintiff might reasonably infer that, for the purposes of insurance, the absence of an iron safe was "all right" during thewhole period of continuance of the Palatine policy, which would exist until September, 1921. It is my further opinion that if Graham, and through him the Lancashire Company, for whom he was then acting, knew in December that the (Graham) had been informed in September that the plaintiff then had no iron safe, and that Graham had replied, "That is all right," and thereby induced the plaintiff to conclude that the absence of the safe was "all right during the continuance of the policy," to wit, from September, 1920, to September, 1921, which period covered the date of the issuance of the Lancashire policy, and also the date of the fire, then I think and hold that the issuance of the policy and the collection of the premium from the plaintiff, with this knowledge present in Graham's mind, and with this knowledge imputed by law to the Lancashire Company, constituted evidence of waiver.

I am not unmindful of the doctrine enunciated by this Court in the cases of McCarty v. Insurance Co., 81 S.C. 152;62 S.E., 1; 18 L.R.A. (N.S.), 729, and Feagin v.Insurance Co., 122 S.C. 532; 115 S.E., 808, to the effect that knowledge by an agent of the intention of the insured to violate his policy in the future will not constitute evidence of waiver; but I consider that the distinction between these decisions and the present case is obvious. Herein the agent had before December, 1920, as an accomplished fact led Hughes to suppose that for insurance purposes an iron safe would not be required for the year running from September, 1920, to September, 1921. This accomplished fact, which is relied upon as evidence of waiver, had nothing to do with future conditions or future happenings.

Furthermore, I think and hold that there was other evidence of waiver. Graham in December, according to plaintiff's testimony, visited the store, which was a very small establishment, measuring 20 feet by 47 feet, in which an iron safe, if it had existed, would have been a very imposing article of furniture. Plaintiff testified that Graham looked over the stock, estmated its value, and was told that the same system of bookkeeping — the McCaskie system — which does not call for an iron safe, but which is operated in connection with an iron case or box, was still in use as it was upon his first visit, at which time he had been specifically informed that the plaintiff had no safe. The witness, Spivey, testified in giving his version of the conversation had between Graham and the plaintiff on this occasion, as follows:

"He (Graham) asked what system did he have for book-keeping, and he (the plaintiff) showed him the McCaskie, and told him that he had nothing but the McCaskie."

Again, defendant's witness, Reynolds, who wrote the Lancashire policy, testified that he and Reeves, an inspector for the Lancashire Company, went in February, 1921, to plaintiff's store on an inspection tour, which inspection was to include, "not only the building, but the contents thereof." Reeves stated that on this visit he "inspected his (the plaintiff's) store," looked over his stock of goods, suggested changes in his store, and inquired about his books.

In all this, I think and hold that there was evidence upon which a jury might reasonably conclude that, although the iron safe was not specifically mentioned, Graham, Reynolds, and Reeves must all have known that there was no iron safe in plaintiff's small store.

As to the second question:

Plaintiff in an endeavor to figure his loss wrote to the dealers from whom he had bought his goods, and produced supposed copies of his invoices procured from said dealers, the originals having been destroyed in the fire. Plaintiff did not attempt to testify as to the accuracy of the duplicates, and had not examined de bene esse the dealers who made them. The presiding Judge properly ruled that, not being proven, these duplicate invoices could not be introduced in evidence. He, however, allowed plaintiff, under the guise of refreshing his memory, to read these rejected duplicate invoices in evidence. This was done, although plaintiff frankly stated that neither he nor "any other man" could remember the items, even with the use of the duplicate invoices. This, in my opinion, was error.Gwathmey v. Foor Hotel Co., 121 S.C. 237;113 S.E., 688. Copeland Co. v. Davis, 125 S.C. 449; 119 S.E., 19.

The final question, which presents considerable difficulty, is whether or not this ranks as prejudicial error and necessitates a reversal of the judgments herein. The case of Beaufort Truck Growers' Associationv. Railway (S.C.), 121 S.E., 554, is strikingly similar to the present case. This Court therein sustained an exception to the Circuit Court allowing a witness, Boller by name, to testify from a memorandum made by another person, which memorandum Boller testified did not in fact refresh his memory. Hence the Court held that Boller's testimony was erroneously admitted, but the Court refused to reverse the judgment on account of this error, holding:

"But, inasmuch as there is enough evidence without this to sustain the verdict of the jury, we are of the opinion that the admission of this evidence was not prejudicial, and the judgment should be affirmed."

In Edgefield Manufacturing Co. v. Casualty Co., 78 S.C. 73;58 S.E., 969, this Court held that the presiding Judge therein erred in excluding a deposition taken in defendant's favor. Plaintiff recovered judgment. Upon appeal this Court refused, despite the error, to reverse the judgment, holding:

"But this Court should not order a new trial where from an examination of the record it has no doubt the verdict of any fair jury would have been the same, even if no error had been committed."

In the present cases, in addition to the erroneously admitted testimony, and in addition to his and his clerk's estimate of the value of the goods in the store at the time of the fire, plaintiff presented the testimony of three traveling salesmen, each of whom had visited the store "within a short time" before the fire. Each of these traveling salesmen, who were presumably versed in mercantile affairs, estimated that the worth of the merchandise then in the store was between $5,000 and $6,000. The defendant introduced absolutely no testimony to contradict these estimates.

It is true that the plaintiff was asked on cross-examination if a paper which was shown him was a copy of his tax return, to which he replied that he did not know. He was then asked if he did not return $820.42 as the amount of his inventory on January 1, 1921, to which he replied that he supposed so, but he immediately asked his questioner, "You went to the books, didn't you?" No reply was made to this question, and no proof was offered as to the correctness of the paper in question or that it came from "the books." The plaintiff then upon redirect examination was asked if he had any recollection of the correctness of the aforesaid figures. To this he replied: "No, sir: I told him