Bank of Anderson v. Home Insurance

The action was on a fire insurance policy, and from the judgment in favor of plaintiff and the order denying defendant’s motion for a new trial this appeal has been taken. The trial was had before a jury who made special findings upon various issues and also rendered a general verdict in favor of .plaintiff for the amount of the policy. The policy was issued December 13, 1906, to Seaman Brothers, through one Barkuloo, the local agent of defendant at Anderson, Shasta county. The plaintiff had' advanced said Seaman Brothers money to start them in business, and had the loss under the policy made payable to itself. After the issuance

1. The demurrer to the complaint was properly overruled. The complaint alleges a performance of all the terms and conditions of the policy, except that as to furnishing proofs of loss, and that said proof of loss was not furnished “for the reason that said defendant denied and disclaimed all liability.” It is the contention of appellant that this is not an allegation that defendant did deny and disclaim all liability and refuse to pay the loss. The rule undoubtedly is that when a party relies upon the waiver of the performance of an act, upon which his right of action depends, such waiver must be specially pleaded. (Aronson v. Frankfort Accident etc. Ins. Co., 9 Cal. App. 473 , [ 99 Pac. 437 ].) But it does appear, at least by necessary implication, that the defendant denied all liability, and it is elementary that “when necessary facts are shown by the complaint to exist, although inaccurately or ambiguously stated, or appearing by necessary implication, the judgment will be sustained. Reason requires that this rule shall be applied in case of a general demurrer.’’ (Amestoy v. Electric R. T. Co., 95 Cal. 314 , [ 30 Pac. 551 ].) The allegation that a certain condition exists because of a certain “fact necessarily carries with it the implication that the fact exists also. The other objections to the complaint are equally technical and untenable.

2. The policy provided that “This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy,” and it also contained the usual and familiar provision that “No officer, agent or other representative of this company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto; and as to such provisions and conditions no officer,

In Arnold v. American Ins. Co., 148 Cal. 660 , [ 84 Pac. 182 ], it was held that: “Notwithstanding a printed stipulation that any waiver must be made in writing and attached to the policy, such stipulation could not prevent the conduct of the affairs of the company from constituting a waiver or estoppel of the company, based upon its presumed knowledge, when its proper officer had knowledge, where such conduct led the insured to rely upon his policy as a valid policy, although there was a breach of condition of which the company knew, in which case it will not be heard to allege such breach against a claim for a subsequent loss.”

In Mackintosh v. Agricultural Fire Ins. Co., 150 Cal. 440 , [ 119 Am. St. Rep. 234 , 89 Pac. 102 ], the rule is stated as follows: ‘ ‘ General agents authorized to issue and deliver new policies are regarded as having the same power to Waive conditions and forfeitures as the companies themselves. The limitations embodied in the stipulation do not prevent them from making new contracts; and waivers constituting a new contract upon sufficient consideration need not be evidenced by writing nor indorsed upon the policy, if made by a general agent having power to make the contract, no matter what limitations or conditions may be expressed in the policy.” To the same effect is Raulet v. Northwestern Nat. Ins. Co., 157 Cal. 213 , [ 107 Pac. 292 ]. See, also, 16 Am. & Eng. Ency. of Law, p. 935.

The evidence shows that the agent, Mr. Barkuloo, was clothed with authority to waive said condition and stipulation and that his conduct and declarations must be regarded as a

“It may be laid down as a general rule that an agent with general authority is an agent who is authorized to take risks and enter into contracts of insurance without consulting the company, may waive any of the conditions contained in the policy, and his knowledge of the facts contained in the risk is the knowledge of the company.” (16 Am. & Eng. Ency. of Law, p. 942.)

In Farnum v. Phoenix Ins. Co., 83 Cal. 261 , [ 17 Am. St. Rep. 233 , 23 Pac. 874 ], it is said: “Whether or not any particular agent has the general power of the company to make an oral contract or an oral waiver of a condition, notwithstanding the provision in the policy requires a writing, is a question of fact. (Insurance Co. v. Norton, 96 U. S. 234 ; Steen v. Niagara Fire Ins. Co., 86 N. Y. 326 , 42 Am. Rep. 297 .) The authorities before cited show that a local agent who is clothed with general power to solicit and consummate contracts of insurance within a certain territory stands in the stead of the company, and represents its whole power to give validity to the contracts which he is authorized to execute and deliver, and to waive conditions precedent to liability by oral agreement, including the condition as to the mode of waiver of such conditions precedent. In this ease, the circumstance that the company had general agents for the state located at San Francisco does not affect the question, since it conferred its whole power in regard to the policy in question upon its agent at Stockton, who appears to have received his appointment and instructions direct from the home office, in the

Did his conduct and declarations in reference to the said second policy of insurance amount to a waiver of said stipulation? Concerning this there can be no more doubt than of his authority to bind his principal. Philip Seaman testified that “I told Mr. Barkuloo that we had taken out other insurance, that the other agent told me to notify him about it and to note it on the policy of the Home. I told him to attend to the matter, and he said he would and note it on their policy. At the time the Home policy was in the Bank of Anderson, and I showed him the policy of the Insurance Company of North America. I had a slip with me that Mr. Gardner gave me along with this policy. I gave it to Mr. Barkuloo and told him to note it on the policy.” The testimony of the agent is substantially the same. Additionally, he gives the substance of the slip, which he says w;as in the usual'form, and testifies that “I had the policy before me at the time that I had the slip. All that I had to do to affix it to the policy was to put mucilage on the slip and stick it on the policy,” and he admits that he simply neglected to do it.

Strictly speaking, this is probably not a waiver of the said conditions, but a case of equitable estoppel. The effect, however, is the same. The insured did everything required of them. "When they took out the second policy they notified the agent of the Home Insurance Company, who promised to make the proper indorsement for his company. The insured had a right to rely upon this promise, by virtue of which they probably refrained from securing other insurance, and equity will treat that as done which ought to have been done, and not permit appellant to question it.

The rule is well settled, which is stated in the case of Aetna Ins. Co. v. Eastman (Tex. Civ. App.), 80 S. W. 255 , as follows: “"When a general agent of a fire insurance company, with power to issue and deliver policies, solicit and write insurance, and otherwise to act" for and on behalf of the company in the conduct of its business in a certain place, receives notice from the insured of the taking of other insurance on

Neither can there be any question that the evidence showing the waiver or estoppel was properly admitted. (Arnold v. American Ins. Co., 148 Cal. 660 , [ 84 Pac. 182 ]; Phoenix Ins. Co. v. Grove, 215 Ill. 299 , [ 74 N. E. 141 ].)

But it is contended by appellant that, admitting that “one with the powers of Barkuloo could be held to be empowered to waive the provision as to other insurance in this transaction he could not be considered, and in law was not the agent of, defendant, and his acts or neglect could not bind the defendant,” for the reason that his interests and those of the defendant were conflicting by virtue of the fact that he was the vice-president, cashier and manager of the bank to which the policy was made payable. The evidence, however, shows clearly that the property insured belonged to Seaman Brothers, and that neither the Bank of Anderson nor Barkuloo had any interest therein, and appellant had knowledge of Barkuloo’s relation to the bank. Said policy was made payable to the bank as collateral security for a loan of $2,000, which the bank had made to Seaman Brothers and which was amply secured by a mortgage on $10,000 worth of real estate. The evidence shows further that the company, through its general agent in San Francisco, had full knowledge of the transaction and in fact ratified it. It would seem to be just and elementary that since the insurer had knowledge of the bank’s interest in the policy and of Barkuloo’s position in the bank, and directed its agent, Barkuloo, to have the policy made payable to the bank in ease of loss, that it cannot after loss question the authority of its own agent because of an act which it authorized and ratified. Under the facts disclosed, manifestly the insurance company may have cause for complaint against the agent, Barkuloo, but for his

“A general insurance agency representing several companies with authority to act upon applications and issue policies, as well as to cancel the same in proper cases, may also act as the agent of the insured in waiving notice of cancellation and in accepting a delivery of a new policy when substituted for the one canceled.” (Hamm Realty Co. v. New Hampshire Fire Ins. Co., 80 Minn. 139 , [ 83 N. W. 41 ].)

The cases cited by appellant are distinguishable from the one at bar in the following particulars, as substantially pointed out by respondent. In Rockford Ins. Co. v. Winfield, 57 Kan. 576 , [ 47 Pac. 511 ], the banks, of which the agent of the insurance company was an officer in each, held security on the property covered by the policies of insurance, and the companies had no knowledge of this, and, besides, the question of forfeiture or waiver was not involved, the point being that the company had declined the risk. The decision is really based upon the'ground that the condition of affairs was not disclosed to the insurance company, but it is held that the agent would be authorized to write a policy even on his own property, and the company would be bound by it if fully informed of the facts and the risk was accepted. The other cases, Ritt v. Washington Marine & Fire Ins. Co., 41 Barb. (N. Y.) 353, Bentley v. Columbia Ins. Co., 19 Barb. (N. Y.) 595, and Spare v. Home Mutual Ins. Co., 19 Fed. 14 , involve ownership of the property by the agent and illustrate the rule that the agent of the insurance company cannot as such agent insure himself or the corporation of which he is an

There is some intimation by appellant of fraud on the part of the insured and plaintiff in regard to said second insurance, but the suggestion finds no support in the evidence. There was apparently no attempt at concealment, and the property at the time said policy was issued far exceeded in value the amount of the two policies.

3. We think there was sufficient evidence to support the allegation of the complaint that defendant disclaimed and denied all liability under the policy, and therefore the failure to furnish proof of loss was excused. One John Ehrlich was sent by defendant to adjust the loss. As to the extent of his authority he testified: “I am an independent fire adjuster, and work for the Home of New York” and other companies. “As a loss comes along I am hired to adjust it; I go on the road and tell parties that I am adjusting for such and such a company, and it is accepted, and whenever I settle the loss the money is ready. I went to Anderson to adjust the loss of the Seaman Brothers.” Philip Seaman, among other things, testified that Ehrlich said: “You know this company is not responsible for the loss on that policy.” George Seaman’s testimony is that Ehrlich said: “Well, I cannot do anything with this; the company is not responsible or liable for this loss. Just before we left for home on the morning train I asked Ehrlich what he was going to do about the matter, if he was going to straighten it up, and he said no, the company isn’t liable. I told him their agent at Anderson had been notified of the other insurance being taken out.” Barkuloo’s testimony was of the same import and he added: “I was trying to persuade him (Ehrlich) that the company was responsible, and he insisted that they were not, and finally he said that he had a stipulation, I believe he called it, signed by the brothers, and it was to be taken up by the home office. He said I could take it up with them if I wasn’t satisfied with his statements regarding it.” We think the foregoing justifies the inference that Ehrlich disclaimed any liability on the part of the company, and from his statements the insured could reasonably conclude that any proof of loss would be unavailing, as the company would reject it. It would also

This view is not inconsistent with special finding No. 11 of the jury, wherein the answer, “No,” was given to the following question: “Did Seaman Brothers and said plaintiff, or either of them, fail to furnish proofs of loss of the fire to defendant as required by the policy of insurance, for the reason that said defendant, within sixty days after said fire and loss, denied and disclaimed all liability under said policy

4. There is no merit in the contention that it was necessary for plaintiff to allege the waiver or estoppel by reason of the agreement of Barkuloo to make the necessary indorsement on the policy. The true rule is stated in Arnold v. American Ins. Co., 148 Cal. 668 , [ 84 Pac. 185 ], as follows: “It is incumbent upon plaintiffs, in an action upon a policy of insurance, to allege the performance of conditions precedent, such as the giving of any required notice of loss, etc., and performance of all promissory warranties; but limitations, stipulations and conditions which are in the nature of conditions subsequent, and go to defeat the liability of the insurer, must be alleged in the answer, as they were in this case. To this matter so alleged in the answer, under our system of pleading, any defense by way of replication was open to plaintiff without pleading.” Here the forfeiture was set up in the answer, and it was proper in order to meet that for the plaintiff to show the waiver or estoppel. The cases cited by appellant involved conditions precedent and not subsequent.

5. It is claimed that the court erred in instructing the jury that “A provision of a fire insurance policy that it should be void if the insured procured other insurance without the consent of the insurer and without such consent being indorsed upon or attached to the policy is waived by failure on the part of the insurer to object or cancel the policy and return

6. There was sufficient evidence to support all the material special findings. The answer “Yes” to the question: “Was any consent in writing to said other insurance given by defendant?” is not strictly correct, although it represents the legal effect of defendant’s conduct. But it is entirely immaterial since, if answered either way, in view of the other findings as to waiver and the undisputed evidence, the general verdict must have been for plaintiff.

Many special findings were submitted to the jury, some of them complicated, and quite likely to produce confusion in the minds of the jurors. They probably answered inadvertently No to the following question: “Did the defendant, with knowledge of the facts relied upon by plaintiff as a waiver of the provision as to other insurance, namely, the alleged taking of a slip to Barkuloo, the alleged notification to him of the other insurance, dispense with the condition that consent to such insurance must be indorsed in writing on said policy?” but this plainly calls for a conclusion of law and should not prevail over the findings of fact.

7. The nonwaiver agreement signed by the insured, Seaman Brothers, cannot have the effect claimed for it by appellant.

No further specific consideration of appellant’s objections is considered necessary. We think the complaint is sufficient, the cause was fairly tried, the evidence supports the findings and they in turn support the judgment, that no prejudicial error was committed and the judgment and order are therefore affirmed.

Hart, J., and Chipman, P. J., concurred.