Opinion
October 4, 1948.
November 8, 1948.
Insurance — Fraud of insured — Pleadings — Issue — Evidence.
In an action on an insurance policy, in which the issue was whether or not the insured was guilty of fraud, it was Held that (1) the trial judge did not commit reversible error in charging on the issue of fraud; (2) the pleadings raised the issue of fraud on the part of plaintiff, and there was evidence to sustain a finding that plaintiff was guilty of fraud; and (3) defendant had not waived the defense of fraud.
Before MAXEY, C. J., DREW, LINN, PATTERSON, STEARNE and JONES, JJ.
Appeal, No. 144, March T., 1948, from judgment of Common Pleas, Allegheny Co., Jan. T., 1946, No. 3357, in case of J. B. Sack v. Glens Falls Insurance Company. Judgment affirmed.
Assumpsit.
The facts are stated in the opinion, by PATTERSON, J., of the court below, PATTERSON and SOFFEL, JJ., as follows:
This case was before the Supreme Court of Pennsylvania and an opinion was handed down and reported in 356 Pa. 487. There is no need of reviewing the facts and circumstances as they are set forth with ample particularity in the opinion of the Supreme Court. At that time the matter was before the appellate tribunal upon appeal from the court en banc, which had overruled plaintiff's motion for judgment for want of a sufficient affidavit of defense with new matter, and sustained defendant's motion for want of a sufficient reply.
The matter was remitted to the lower court with a procedendo in the following language: "The pleadings contain an adequate averment by defendant of fraud on the part of plaintiff, and a sufficient denial by plaintiff. Therefore, the question of fraud is at issue and a trial must be had. If the jury finds that the plaintiff was guilty of fraud as alleged by the defendant, the following provision of this insurance policy would be applicable: 'This entire policy shall be void if the insured has concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof; or in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss.' However, if no fraud on the part of plaintiff is proved, then he is entitled to recover on the basis of the report filed January 9, 1945."
Upon the procedendo the matter came on for trial and a verdict was returned in favor of the defendant. The plaintiff has filed motions for a new trial and for judgment n. o. v. We cannot see how either motion can be entertained in the face of the record which presents itself.
The lower court submitted the case in accordance with the mandate from the appellate court in the following language: "As I said, if you find that he was guilty of fraud, your verdict would be for the defendant. That would be the end. You would say no more. If you find his statements were honest and not tainted by fraud, then he is entitled to a verdict at your hands of the amount I have indicated, $14,718.12, plus interest from May 6, 1945. That is not actually interest; it is really damages for detention, and is measured by the legal rate of interest, six percent per annum. So, if he was entitled to the money at that time, then he is entitled to damages for retention of that figure at six percent per annum. I don't say he is entitled to damages at all; the Court must explain to you the measure of damages, and that's why I tell you about the damages. If you find for the defendant you don't have to go into the question of damages at all. But if you find for the plaintiff you have to find in accordance with the measure of damages I have indicated."
We are of opinion that no reversible error appears in the record of the trial or in the trial judge's charge, including his ruling upon the points submitted by the respective parties. Accordingly, a new trial will be refused.
As to the motion for judgment n. o. v., plaintiff labors ponderously and argues at great length attenuated lines of attack and tenuous legal theories that have no proper place in the question before us. As hereinbefore indicated, the case came back to the lower court to try the factual circumstance of fraud. Plaintiff's position appears to be (a) that there was no sufficient averment of fraud in defendant's pleading; (b) that even if there was it was waived as a defense; and (c) that while it is not necessary to meet the defense of estoppel, nevertheless the admitted facts are more than sufficient to do so.
We are of opinion that no amount of sophistry in case construction can escape the appellate court's dispositive pronouncement in the plainest of plain words, to wit: "The pleadings contain an adequate averment by defendant of fraud on the part of plaintiff, and a sufficient denial by plaintiff. Therefore, the question of fraud is at issue and a trial must be had."
In the face of this declaration can defendant be heard to say that the trial judge erred in submitting the question of fraud to the jury? The trial judge could not with impunity declare that because plaintiff's case was predicated on admission from the pleadings, as a matter of law there was no question of factual fraud for the jury to decide. This fatuous example of legal ingenuity overlooks entirely the doctrine that whether or not plaintiff's case was prima facie predicated on defendant's admissions, the effect of such admissions must be considered in their relation to the rest of the pleadings. The admissions do not prove that the factual circumstances offered were free from fraud. That plaintiff performed the acts admitted by defendant to have been performed does not preclude fraud in the circumstances attending such performance. This must be elicited by oral testimony pertinent to the admitted facts. The floundering testimony of plaintiff called as for cross examination at page 69 et seq. through page 76, and again at pages 83-4, and his frequent statements of assumption in fixing the amount of inventories is indicative of how supplementary oral evidence will raise the inference of fraud when it is sought to explain such glaring discrepancies as here existed between the inventories prior to the fire loss and that subsequent thereto.
Finally, it is to be noted that in replying to new matter in defendant's answer plaintiff declared that his failure to give correct statements was "an inadvertent mistake". What tribunal can say, as a matter of law, whether or not so extravagant an error as is here involved, implicit as it is in substantially minimizing plaintiff's premium payments in derogation of defendant's rights, was inadvertent? As a fact it was a mistake. It may or may not have been inadvertent. The difference constitutes the distinction between fraud and good faith. The jury found in the instant case it was not inadvertent.
Now as to defendant's contention that defendant waived the defense of fraud, we can accord it no merit. The argument is based on the premise that fraud was not alleged as a defense. The Supreme Court found otherwise. We may note also that because defendant conceded an obligation of $5281.88 constituted no waiver. This concession was long before the matter was before the Supreme Court and, of course, long before the trial. Apropos thereof we may cite Judge HENDERSON in Logan's Estate, 74 Pa. Super. 82, 86, cited with approval in Myers v. Metropolitan L. Ins. Co., 152 Pa. Super. 507, 516: " 'The exercise of generosity does not create a binding obligation for its continuance', nor, we might add, does it estop a party from defending against its expansion to other subjects."
But waiver is wholly insecure ground for plaintiff at this stage of the proceeding after the legal effect of the policy has been reviewed by the Supreme Court. And in addition thereto there is a wealth of authority that waiver is a matter of intention. Freedman v. Providence Washington Ins. Co. of Providence, R.I., 175 Pa. 350, 360; Girard F. M. Ins. Co. v. Hebard Forsman, 95 Pa. 45, 51; Spector v. Grossman, 115 Pa. Super. 372, 376.
One who sets up an implied waiver must show he was caused to change his position in reliance upon the insurance company's act of waiver. That element is not present in the instant case. The doctrine can be invoked only when the conduct of the company has been such as to induce action or reliance on it: Glessner v. Neshannock Mutual F. Ins. Co., 331 Pa. 439, 445, and cases there cited; Brown v. Penna. Casualty Co., 207 Pa. 609, 611; Myers v. Metropolitan etc., supra, 516; Kittelberger, Exec., v. Clearfield Ins. Co., 106 Pa. Super. 333, 340; Shay v. Phoenix etc., 28 Pa. Super. 527, 529.
We are not, we think, called upon to discuss the question of estoppel because the plaintiff himself in his argument and brief declares, "As indicated above, our contention is not based upon any theory of estoppel". Considering, therefore, the facets of argument presented by the plaintiff's contention, we are of opinion that the motion for judgment n. o. v. must be refused.
Plaintiff appealed.
John A. Metz, Jr., with him John A. Metz, A. C. Teplitz and Metz Metz, for appellant.
John E. Evans, Jr., with him John E. Evans, Sr. and Evans, Ivory Evans, for appellee.
The judgment of the court below is affirmed on the opinion of Judge PATTERSON.