Watertown Fire Insurance v. Grehan , 74 Ga. 642 ( 1885 )

Hall, Justice.

The defendant moved a new trial in this case upon the following grounds:'

(1.) Because the verdict is contrary to the evidence, andwithout evidence to support it. -

(2.) Because the verdict is decidedly and strongly against the weight of evidence.

(8.) Because the verdict is contrary to law and the principles of justice and equity.

(4.) Because the jury found, .contrary to the charge of the judge, in this: “ If this previous fire, or attempt to burn the place, took place before the 9th, several days before, and it was a fire that resulted in any material loss, and the defendant intentionally failed to communicate that fact, and swore his loss took place on the 9th, that would be false swearing.”

(5 ) Because the jury found, contrary to the charge of the judge, in this: The concealment of a fact material to be known, and which the plaintiff was under an obligation to communicate, constitutes fraud.”

(6.) Because the jury found, contrary to the charge of the court, in this: If the company’s agent acted from a fair and honest belief that this claim was not a just claim, and the company had a defence to it, that would be in good faith, and the company would not be liable in damages.

(7.) Because the verdict in said case was illegal, null and void, as the said verdict was not written on the pleading, but was put on a separate piece of paper, and on a blank piece of páper, not designating the case in which it was rendered.

(8.) Because the court erred in admitting, over defendant’s objection, evidence of bad faith, and attorneys’ fees, as the same was not alleged in the declaration.

(9.) Because the court erred in charging the jury : “ If you find this plaintiff did not wilfully or intentionally refrain from communicating the fact, believing it to be immaterial, then I charge you, if you find an attempt to burn the place took place on the 5th, several days before the property was destroyed, the fact that he failed to communicate it to the insurance company would not cause him to forfeit his pplicy.”

(10.) Because the court erred in charging the jury : “ I think in the case here the company is given sixty days in which to pay or not to pay. If the cómpany refused to pay, and it turns out it refused to pay wrongfully, I think he has a right to recover interest from the time of the loss.”

(11.) Because the court refused to charge: “ The concealment of a fact material to be known need not be a fraudulent concealment.”

(12.) Because the court omitted to charge, being one of the pleas of defendant, and being verbally requested: ££Any increase of risk not brought to the attention of the Company voids the policy.”

(13.) Because the court refused to charge the jury that the insured was bound to notify the company of this first incendiary fire.

(14.) Because the court refused to charge the jury: “•Fraud voids all contracts. Fraud may not be presumed, but, being in itself subtle, slight circumstances may be sufficient to carry conviction and authorize a verdict,”

(15.) Because the court read to the jury and refused to charge, as requested by defendant: If plaintiff swore, in his proof of loss, that his damage took place by reason of the fire of the 9th, when he knew a part.of the loss was caused by the fire of the 5th, he can’t recover,” but qualified it by adding, “ if that loss was immaterial and the damage was trifling, and the plaintiff made no claim, in good faith, he can recover.”

(16.) Because the court read'to the, jury defendant’s request, and charged as follows: “lam requested to charge that circumstantial evidence is as good as direct; if you believe from it plaintiff set fire to the premises, you must find against him. I charge you on that, circumstantial evidence is good evidence, if you believe it; it is just as good as direct evidence, if you believe it, and is sufficient to predicate a verdict on. Circumstantial evidence will support .a verdict.”

(17.) Because the court read to the jury defendant’s request to charge, and charged as follows: u If you find Grehan was occupying the house the night of the second fire, that his place of residence was really in town, then the house was vacant or unoccupied, and he can’t recover. I do not charge you that; but if the house was unoccupied the night of the fire, and Grehan swore it was occupied, that would void the policy. But if Grehan slept in it and was occupying it at the time, that would be a sufficient occupation.”

So much of the judge’s charge as js necessary to the full • understanding of the grounds of this motion is as follows:

“If plaintiff is entitled to recover his loss, the loss is fixed by the appraisement at $1,846.44. If yon find that, several days before this loss, there was an attempt to bum the place, and, at the time of submitting his proof of loss, the insured intentionally failed to communicate that fact to the company, and you find this was a material fact, then this failure to communicate was a fraud and voids this policy, under clause 9, section 2. If plaintiff did not wilfully or intentionally refrain from communicating the fact, believing it immaterial, then it does not release the company. If plaintiff swore his loss took place on the 9th, and you find ¡this previous fire did material damage, and he intentionally failed to communicate, and swore his loss took place on the 9th, he would be guilty of false swearing, and it would void the policy; but if the loss was trifling, and plaintiff thought it immaterial, then it was not false swearing. If plaintiff was in .any way concerned in the burning, of course he can’t recover. It is not necessary to prove it as a criminal charge is proved. The company must prove it by a preponderance of evidence, or they do not make out their defence. I am requested to charge, the company had as much right to refuse payment after adjustment as .before. I am requested to charge, if defendant believed insured set fire to the premises, they were right not to pay. I charge you, if the agent acted under an honest and reasonable belief that company was not liable, that would bear on the question of good faith. If plaintiff set fire to the premises on 4th or 5th, that voided his policy-Circumstantial evidence is good evidence, if you believe it; it is as good as direct, if you believe it; circumstantial evidence will support a verdict. I am requested to charge, and do charge, that a contract of insurance is like any other contract; the conditions are a part of the contract; the insured is bound to observe them; if he does not, and loss occurs, he can’t recover. I am requested to charge, ‘If you find that Grehan was occupying the house for the night of the second fire, and that his place of residence was really in town, then the house was vacant and unocupied; he can’t recover.’ I don’t charge you that, but if the house was unoccupied the night of the fire, and Grehan swore it was occupied, that would void the policy; but if Grehan slept in it, and was occupying it at the time, that would be a sufficient occupation. Plaintiff is bound to as much good faith as defendant in the matter. The concealment of a material fact — material to be known, and which plaintiff was under an obligation to communicate — constitutes fraud. The plaintiff not only claims the right to recover his actual loss, but damages and attorney’s fees; upon that I read you section 2S50. If you believe this company refused to pay for sixty days after loss was due, and this refusal was in bad faith, the 'plaintiff is entitled to damages not greater than twenty-five per cent of the amount due, and reasonable attorney’s fees. If the company’s agent acted from a fair and honest belief that this claim was not a just claim, and the company had a defence to it, that would be good faith, and it would not be liable in damages; but if the defence was made simply to delay and embarrass the collection of tho claim, not believing fairly and honestly that it had a good defence, then they would be liable. If the agent of the company acted recklessly, had no foundation for his belief that there was a defence — no probable cause for it — and acted recklessly, recklessness might amount, in a case of that kind, to bad faith; but if there was probable cause for his belief — if it was a fair and honest belief, although it was a mistaken belief, although an unfounded belief — if it was a fair and reasonable belief that the company had a defence, it would not be liable in damages. If plaintiff is entitled to recover for his loss at all, and the company refused to pay wrongfully, I think interest should run from time of loss.”

The verdict was for the amount of the loss, as found by the adjuster, with interest from the date of the fire, instead of sixty days thereafter, when the loss was payable, with ten per cent damages and five hundred dollars coun. sel fees. The motion for a new trial was refused on all the grounds except the tenth, and on that, if the plaintiff would write off the sixty days’ interest between the fire and when the loss was payable, which was done..

The conditions of the policy, which it was claimed the plaintiff had violated, whereby he forfeited his right to recover, are as follows: *

“3. If the risk be increased by any change in the occupation of the building or premises herein described, or by the erection or occupation of adjacent buildings, or by any means whatever within the knowledge of the assured. v

”4. If any building herein described be or become vacant or unoccupied for the purpose indicated in this contract, or become occupied in whole or in part for other and more hazardous purposes than indicated in the contract.

“9. Any fraud or attempt at fraud, or any misrepresentation in any statement touching the loss, or any false swearing on the part of the assured or his agent, in any examination, or in the proofs of loss or otherwise, shall cause a forfeiture of all claims on this company under this policy; and in such case this company shall have the right at any time to require the same to be delivered up to be canceled.”

The questions material to be considered are :

1st. Whether the alleged fraudulent conduct of the plaintiff in concealing from the company, in his proof of loss, the occurrence of what it charges to have been an incendiary attempt to burn the building on the 5th of April, and which, it is alleged, he knew to be an incendiary attempt, was submitted by the court under proper instructions to the jury, on the facts in evidence.

2d. Whether the building was in fact occupied on the night of the fire, and whether its occupancy had been abandoned previous to that occurrence, in the sense of that condition of the policy.

3d. Whether there were facts in evidence sufficient to show that the company acted in bad faith in withholding the payment of the loss from the plaintiff and in justifying the j ury in finding damages and counsel fees against it on that ground.

1. The evidence was conflicting as to the extent of the burning on the 5th, and also as to the cause of that fire. The plaintiff swore that the. injury from it was trifling, and that it would not have cost more than fifty or sixty cents to repair the damage ; he then had no reason to suspect that it was a wilful burning, but thought it accidental; the damage done was so trifling that lie did not consider it worthy of mention. There was nothing to the contrary but the testimony of certain negroes with whom he had had trouble, growing out of disputes concerning his dealings with them while they occupied the premises as his laborers, and from whose possession his hogs and sheep had disappeared under very suspicious circumstances. He suspected those discharged laborers of having started the fire on the 9th of April, and promptly communicated his suspicions to the agent of the company.

The charge of the court upon this question leaves the company nothing to complain of. It was in the terms of our Oode, §2804, which seems to have been in accordance with the common law upon the subject. The concealment of facts enhancing the risk must have been done fraudulently in order to avoid the policy; it must have been wilful. Wood on Fire Insurance, §199, and citations; 58 Ga., 426; Ib , 251, 255, 256. Where the policy provides “ that any false swearing or attempt at fraud,” or “ if there shall appear any fraud in the claim by false swearing or otherwise,” shall avoid the policy, the company, in order to avail itself of the defence, must show that the assured knowingly and intentionally swore falsely, or said or did that which is claimed to be fraudulent. There must be a wilful intent to defraud rather than an innocent mistake. This condition of the policy extends to every matter material to be stated, or which the policy in terms required to ■ be stated. Wood on Fire Ins., §429, and cases cited in notes 1, 2 and 3 there.

2. That the pfemises were occupied within the meaning of the policy-at the time of. the fire, we think can admit of no doubt either under the law or upon the facts given in evidence. Id., §§89, 180; 71 N. Y. R., 509, 512; 2 Cent. L. Journal, 478.

3. The rule as to damages and counsel fees and the circumstances under which théy are to be 'allowed, is laid, down with precision in the Code, §2850; it is that whenever it shall be made to appear to the jury trying the case that a demand has been made in terms of the law and the refusal of the company to pay the loss was in bad. faith, then they may award the damages and attorney’s fees thereby allowed. We think there were facts in evidence here which certainly j ustified, although they might not have required the jury to find damages and counsel fees for the plaintiff. The loss was promptly adjusted, and the company offered payment before .the expiration of sixty days,, if the plaintiff would discount the amount found to be due at 7 per cent — an offer which he declined because he knew of' no investment which would yield him that interest ; at the expiration of the period, he promptly applied for his money, but was put off a short time because, as was-stated, the draft had not arrived; this was not the real cause, however, for refusing payment; they had received, information,-which they withheld from the plaintiff, implicating him in the burning; they did not disclose this until they were threatened with a suit; and after the suit was commenced, they threatened a prosecution to bring him to terms of settlement; they even v^ent so far as to-demand-the surrender of his policy, that it might be can-celled, because, as they allege, before the expiration of the sixty days, they were put m possession of affidavits con- ■ clusively proving that the premises were fired on the 5th of April by an incendiary act and material damage ivas done thereto at that time; that the failure of the plaintiff to give notice of this fire to the agent of the company at that time, and his making no mention of the fact in the proof of loss, when he was well aware of if, constituted concealment or misrepresentation within the terms of the policy, which gave them t‘he right of cancelling it at any time. The correspondence between the company and its agents rendered it altogether probable, if not certain, that each of these steps were parts of a plan to force the plaintiff into a settlement of tho loss at a ruinous discount, or, to employ their own language, at a mere “ stipend.” This correspondence was produced under notice and-was put in evidence. The Jury doubtless considered it proof of bad faith, and they acted upon the presumption which it raised in giving damages for delaying payment. This, we decided in the Cotton States Life Insurance Company vs. Edwards, September term, 1884,^* was within their province.

Judgment affirmed.

* Ante, p. 220.