Alabama State Mutual Assurance Co. v. Long Clothing & Shoe Co. , 123 Ala. 667 ( 1898 )

SHARPE, J.

The action is in the Code form npon a policy of fire insurance.

The errors assigned relate only to the action of the court in overruling demurrers to replications 2, 3, 4, 5, 7 and 9 to the 2d plea, and in overruling the demurrer to the special rejoinder to those replications.

The 2d plea averred in substance that the plaintiff violated the contract of insurance by obtaining contrary to its stipulations additional insurance upon the goods alleged to have been damaged, without giving notice to and obtaining the written consent of the defendant.

The replications in question each set up in avoidance of the plea facts depended upon as constituting a waiver on the part of the defendant of the stipulation respecting additional insurance.

Provisions like the one set out in the second plea are inserted for the benefit of the insurer and can, therefore, be waived by the insurer. Since the law of waiver and estoppel 'cannot be abolished by contract, the stipulation which in case of additional insurance purports to hinge the validity of the policy upon the wiitten consent of the secretary, does not prevent the operation of the usual rules by which a waiver of that clause may be established. Such waiver may, therefore, be shown by parol and even by acts, declarations or conduct on the part of the insurer.—Queen Ins. Co. v. Young, 86 Ala. 424; Bouton v. Am. Mut. L. Ins. Co., 25 Conn. 542; Knickerbocker Ins. Co. v. Norton, 96 U. S. 234; N. Y. Life Ins. Co. v. Eggleston, 96 U. S. 572; Ins. Co. v. French, 30 Ohio St. 240; Ins. Co. v. Earle, 33 Mich. 153; Williams v. Maine State Relief Asso’n, (Me.) 36 Atl. Rep. 13.

A waiver may be founded npon an estoppel but it is not so necessarily. Though the conduct of the insurer may not have actually misled the insured to his prejudice or into an altered position, yet, if after knowledge of all the facts, its conduct has been such as to reasonably imply a purpose not to insist upon a forfeiture, the law leaning against .forfeitures will apply, the peculiar doctrine of waiver invented probably to prevent them, and will hold the insurer irrevocably bound as by an election to treat the contract as if no cause of forfeiture had occurred. Kiernan v. Duchess Co. Mut. Ins. Co., 44 Atl. Rep. (N. Y.) 698; Titus v. Glenn Falls Ins. Co., 8 N. Y. 410.

Under this principle the sufficiency of the second, third, fourth and fifth replications may be tested. They set up no estoppel, but they each aver the failure of the defendant to object to the additional insurance before the loss occurred, though it had been given notice of the subsequent insurance and a reasonable time for objections had then elapsed.

The authorities appear to be generally agreed that such failure to act on the part of the insurer is evidence of an intention to waive the stipulations against additional insurance, but they are not entirely in accord as to whether such non-action in itself will constitute a waiver as a legal conclusion. In Queen Ins. Co. v. Young, supra, it was said: “If the defendant did not have notice of the forfeiture until after the destruction of the goods, some affirmative act or conduct is requisite. In such case a waiver cannot be inferred from mere silence.” But where the notice is given the company before the loss, the reason is strong for holding it to the duty of expressing its dissent in some unequivocal way if a forfeiture is to be* claimed. The right of forfeiture residing alone with the company, it should not hold it in abeyance for an unreasonable time so as to thereafter be enabled’ to accept or reject the contract as may suit its interests, while the other party continues bound for the premium and ought to know whether the property is protected. Acquiescence of the company in the continuance of the contract may be more readily presumed where it may bring benefits than where nothing but loss is in sight, and the insured is therefore more likely to be misled by the lack of objection. The view that the silence of the company in such case should be treated as its assent to the additional insurance is reasonable, and it is well supported by authority!- — Beach on Ins., § 767; Wood on Ins., p. 807; Ins. Co. v. Lyon, 38 Tex. 253; Cromwell v. Phœnix Ins. Co., 47 Mo. App. 109; Potter v. Ontario Ins. Co., 5 Hill (N. Y.) 147. See also Marple v. Ins. Co., 27 N. E. Rep. (Ind.) 633; Joliffe v. Madison Mut. Ins. Co., 39 Wis. 111; Haywood v. National Ins. Co., 52 Mo. 181.

The last mentioned replications were, therefore, each good in avoidance of the plea, and the demurrers thereto were properly overruled.

Replications 7 and 9 each aver acts of the defendant’s agent, McOargo, as assenting, to and thereby waiving in behalf of the company the breach of the stipulation in question. There is a material difference in the power of an agent in respect of waiving provisions against other insurance existing within his knowledge at the time of his issuance of a policy and in respect of waiving subsequent insurance. We have only to consider his authority in the second case and in view of the contract here involved. Where, as in this case, the contract provides whose consent shall be necessary to the allowance of a second policy, the insured is bound by it, and Avhile it is operative the consent of another person will not suffice. Wood on Ins., 796; Stark v. Hurd, 19 Ohio 149. The provision, however, may be modified or changed and the alteration may be shown by proof that the company has actually conferred the power on another, or that it has held out one as having the power. — Biddle on Ins., § 1081. Not every agent of an insurance company, though authorized and held out as being authorized to transact business for it, can waive a forfeiture arising from subsequent insurance. And one “who is only authorized to solicit and take applications for insurance and receive the premiums and deliver the policy after having been signed by the proper officers, has no authority express or implied to waive” such breach.— Queen Ins. Co. v. Young, supra; Central City Ins. Co. v. Oates, 86 Ala. 558; Phœnix Ins. Co. v. Copeland, 90 Ala. 386; Taylor v. State Ins. Co., 98 Iowa, 521; 60 Am. St. Rep. 210; German Ins. Co. v. Heiduk, 30 Neb. 288; 27 Am. St. Rep. 402. And where a merely local agent is depended upon as having authority to receive notice of such other insurance, the burden of showing that his authority extends so far, rests upon the assured.—Miller v. Hamilton F. Ins. Co., 17 N. Y. 609; Security Co. v. Fay, 22 Mich. 467.

Neither .of the replications 7 and 9 show authority in. McOargo to either waive the breach averred in the second plea or to receive notice upon which a waiver by the,defendant might be based. The overruling of the demur: rers left the want of authority to be set up by rejoinder, one effect of which was to misplace the burden of proof. The retention of the premium and the inspection of the damage.by the company without any expense or inconvenience to the plaintiff do not, either by themselves or jn connection with the other matters averred in the 9th replication, show a waiver of forfeiture as a legal result. At most they are only circumstances which under proper pleading might be evidence upon the question of an intention to waive.

The special rejoinder averred ‘facts showing a lack of authority in McOargo sufficient to meet each of the several replications to which it was interposed, and was not subject to the demurrer. It was unnecessary, however, to rejoin those facts specially to the 2, 8; á and 5 replications, since the general rejoinder to them would have put such authority in issue, and if replications 7 and 9 had sufficiently averred McCargo’s authority in the premises the special rejoinder would likewise have been unnecessary as to them.

For the errors indicated, the judgment must be reversed and the cause will be remanded.