Opinion
Opinion filed November 28, 1930. Petition to rehear denied January 17, 1931.
1. INSURANCE. Fire insurance. Misrepresentation of interest of insured voids policy.
Where a party represents himself to be the owner of certain property and he only owns a one-half interest the policy is void, even though the misrepresentation be the result of ignorance. (Post, p. 643.)
Case cited and approved: Catron v. Tennessee Insurance Co., 25 Tenn. (6 Humph.), 176.
2. INSURANCE. Fire insurance. Misrepresentation in policy of ownership of property voids policy.
Even though nothing is said about title in the application for insurance, when a policy designating as owners those who are not such is accepted and it provides that it shall be void if the interest of the insured is not truly stated or is other than unconditional and sole ownership, there can be no recovery. (Post, p. 643.)
Case cited and approved: Foster v. Ill. Trav. H. Ins. Co., 156 Tenn. (3 Smith), 436.
3. INSURANCE. Fire insurance. Mistake not attributable to insurance agent.
Where a stock of goods is the property of a corporation the capital stock of which belongs to four individuals and where two of these persons tell the insurance agent that they are the owners of the goods and they accept the policy payable to them as proprietors, the mistake in naming the insured cannot be attributed to the negligence of the insurance agent. (Post, p. 644.)
4. INSURANCE. Fire insurance. Waiver. Facts stated and held not to constitute waiver of right to resist liability.
Before taking any steps in regard to a loss, the insurance company secured from the claimant the customary written non-waiver agreement. Thereafter its adjuster investigated the loss and agreed as to its amount. This adjuster, acting with another, found a party who offered to purchase the salvaged goods, and with the express consent of the owner and his agreement that it should not prejudice the right of the insurer to resist liability, sold such salvage. The purchase price was paid directly to the owner. Held: The conduct of the insurance company did not constitute a waiver of the right to resist liability under the provisions of the policy. (Post, p. 644.)
5. INSURANCE. Fire insurance. Non-waiver agreement valid but does not prevent subsequent waiver.
Non-waiver agreement is valid and binding, but it does not prevent a waiver by subsequent independent acts or statements of the company through its authorized agent. (Post, p. 644.)
Citing: 26 C.J., 338; 33 C.J., 32.
6. INSURANCE. Fire insurance. Facts held to constitute misrepresentation of interest of insured which voids policy.
Where a policy of fire insurance was issued to the Carter Grocery Company owned by Long and Stanberry, when as a matter of fact this business was owned by the Standard Grocery Company, a corporation whose capital stock was owned by Long, Stanberry and two others, and where the policy provided that it should be void if the interest of the insured was not truly stated or if the interest of the insured was other than unconditional and sole ownership, the insurance is void; notwithstanding that the representations of Long and Stanberry as to ownership appeared to have been innocent and not fraudulent. (Post, p. 645.)
FROM CARTER.Appeal from Chancery Court of Carter County. — HON. S.E. MILLER, Chancellor.
MILLER, SEILER HUNTER, for complainant, appellee.
SIZER, CHAMBLISS SIZER, for defendant, appellant.
The chancellor entered a decree on a fire policy in favor of complainant for $1062.50. His decree was affirmed by the Court of Appeals. The defenses are:
1. That the policy did not insure complainant.
2. That the interest of the insured was not truly stated in the policy.
3. Change of ownership prior to the fire.
The policy was issued in favor of "Carter Grocery Co., G.C. Long and A.J. Stanberry, Props."
The facts are that the Standard Grocery Company is a corporation engaged in the wholesale grocery business at Elizabethton. It decided to open a branch house in the same city, using the trade name of Carter Grocery Company, and placed G.C. Long and A.J. Stanberry in charge. The capital stock in the Standard Grocery Company was owned by Long, Stanberry and two Birchfields. The agent of defendant, Jenkins, called on Long to sell him some life insurance. After discussing that matter they discussed fire insurance, and Long agreed to take $2,000 fire insurance on the stock with defendant. Long testified as follows:
"Q. Did you tell Mr. Jenkins to put the word `Props.' after your name in this policy or did he do that of his own accord? A. I think he asked me if we were the owners of the Carter Grocery Company and we told him that we were, and I think he just added that of his own accord. I don't know if I suggested it."
So that it was the Carter Grocery Company, owned by Long and Stanberry, that defendant was insuring, when as a matter of fact this business was owned by Standard Grocery Company, a corporation. The words "proprietor" and "owner" mean the same thing and are synonymous. The policy provides as follows:
"This entire policy shall be void if the interest of the insured in the property be not truly stated therein."
Also:
"This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the interest of the assured be other than unconditional and sole ownership."
The company was insuring goods which Long and Stanberry claimed to be the owners of but which they only had an interest in.
Where a party represents himself to be the owner of certain property and he only owns a half interest the policy is void even though the misrepresentation be the result of ignorance. Catron v. Tennessee Insurance Co., 25 Tenn. 176.
Even though nothing had been said about title, if complainant had accepted the policy, in which Long and Stanberry were designated as owners of the property insured, it could not recover. Foster v. Ill. Trav. H. Ins. Co., 156 Tenn. 436.
We are unable to accept the view entertained by the other courts, that the mistake in naming the insured was due to the negligence of Jenkins, which negligence will be imputed to the company. Long told Jenkins that he and Stanberry were the owners and they accepted the policy, payable to them as "proprietors," which is the same thing.
Neither can we agree with the other courts that defendant waived the provisions of the policy quoted above.
Before the fire all of the stock in complainant company had been sold and transferred to the Jellico Grocery Company.
When the defendant was notified of the fire it sent its adjuster to Elizabethton, who, before taking any steps, entered into the customary written nonwaiver agreement, which he signed for defendant, and which was also signed "Standard Grocery Company, Jellico Grocery Co., Prop., by B.F. Siler, Mgr." The adjuster and the one representing the other company then investigated the loss and agreed that it amounted to $4,000. They found a party who offered to pay $1875 for the salvaged goods. Before making the sale, however, the adjuster for defendant had Mr. Siler to agree thereto, the $1875 to be paid to complainant, which was done by the purchaser, and had him to further agree that this was to in nowise prejudice its right to resist liability on the policy. So that complainant suffered no prejudice or injury by that proceeding.
Such an agreement is valid and binding. 26 Corpus Juris, 338.
It is also well settled that a nonwaiver agreement does not prevent a waiver by subsequent independent acts or statements of the company through its authorized agent. 33 Corpus Juris, 32.
If the adjuster had gone ahead and sold the salvaged goods without the consent of complainant, and without reserving the right of the company to contest its liability on the policy, we would have a different case.
The equities of the cause seem to be with complainant; but equity has to follow the law. There is nothing to indicate any fraud or purposeful misrepresentation by Long and Stanberry. It was unfortunate that Long told Jenkins that he and Stanberry were the owners of this stock and accepted the policy when so written without having it corrected.
The writ of certiorari has heretofore been granted and argument had.
For the reasons indicated, we feel constrained to reverse the Court of Appeals and dismiss the bill. We feel that it would be equitable to tax the defendant with all of the costs.