Capital City Insurance v. Autrey

105 Ala. 269 | Ala. | 1894

COLEMAN, J.

The plaintiff, Autrey, sued the defendant upon a policy of insurance to recover the value of a lot of hay, which had been destroyed by fire. There is but little conflict in the evidence on any point, and we do not deem it necessary to consider more than two or three questions.

In the contract of insurance, it was stipulated that the statements and representations made by plaintiff in his application for insurance were a part of the policy and warranted to be- true ; and it was further stipulated that if tlie exact interest of the insured was not truly stated, the policy was to be void. The application contains the following questions and answers :

“Title: Is your ownership of the property to be insured absolute, unqualified and undivided? Ans. Yes.”

“Has any other person claimed property? Ans. No.”

‘ ‘Incumbrance : Is there any lien or mortgage on the property, if so, for what amount? Ans. No.”

Among other pleas, the defendant pleaded that at the time of the execution of the policy, one W. E. Story, Ex. &c. had a judgment with waiver of exemptions against the plaintiff, which had been duly recorded in the office of the judge of probate as provided in the statute, and which thereupon became a lien upon the property. In a separate plea, as a defense, the defendant averred that one Jeff Autrey and B. P. Autrey were interested and had a just claim and interest in and to tbe property. These pleas were drawn out formally, setting up all necessary facts to present them as a defense.

The court sustained a demurrer to the plea, which set up the judgment lien' as a defense, upon the grounds, that the provision in the insurance policy in reference to liens and incumbrances, did not include liens created by law, but only those created by contract of parties. In this the court erred. A lien upon property in favor of a stranger, though created by operation of law, may affect the interest of the insured, as much so as one created by the contract of the parties. The reasons which influence the insurer to inquire and ascertain the existence of liens of the one character apply with equal force to liens of the other kind. A lien created by operation of law would be equally potent as one created by contract, to incite or induce the insured to destroy his property or to be less careful in its preservation. The insurer has the right to know the exact condition of the property to be insured, and the extent of the interest of the insured therein. The question is plain and broad — “Is there any lien upon the property?” The answer is unequivocal and positive that there is no lien or incumbrance on the property. The question is not, whether there is a contract lien, but any lien or incumbrance.

We recognize the principle, that when parties contract with each other they are presumed to do so with refer-en.ce to facts and laws known to both, whether there is any specific reference to such facts and statutes or not. Thus where a party insures property in those States where by statute a lien is given upon all property for the payment of taxes, it will be presumed, that both parties knew of such liens, but not so as to a lien of a judgment or vendor’s lien. This would be a fact within the knowledge of the applicant for insurance, and not presumed to be within the knowledge of the insurer. In such cases it would be the duty of the applicant for insurance, upon proper inquiries, to disclose the condition of the property, and the extent of his absolute, and unqualified interest in the property.—Pelican Insurance Co. v. Smith, 92 Ala. 428; Brown v. Commercial Fire Ins. Co., 86 Ala. 189.

We are of opinion the facts show, that the brothers of plaintiff, Jeff and B. P. Autrey, owned an interest in the property within the meaning of the contract of insurance. As stated by the plaintiff the facts are substantially as follows : The plaintiff purchased the hay as it stood in the field. He and his two brothers agreed to harvest the hay for market, each to contribute proportionately to this expense, that after the hay was sold, and the rental or purchase money and some machinery and expenses of harvesting and selling were paid for, the remainder of the proceeds was to be equally divided between the three. There was evidence that Jeff Autrey and plaintiff both stated in the presence of each other, that all three of the brothers were equally interested in' the hay. We need not determine, whether the contract between the Autreys constituted them tenants in common or not. We are very certain that they owned an interest in the hay which the applicant should have disclosed in response to the inquiry, “Is your ownership of property, absolute, unqualified and undivided?” The court erred in giving the general charge for the plaintiff.

The court also erred in sustaining a demurrer to the plea in which the lien of an existing judgment was pleaded as a defense,

Reversed and remanded.