| Ark. | Apr 25, 1896
1. The plaintiff sued upon a fire insur- . r r auce policy, for the loss of certain hotel furniture. The defense was based upon alleged noncompliance with the terms of the policy, which provided “that if the subject of the insurance be personal property, and be or become encumbered by a chattel mortgage,” the policy should be void. The property covered by the policy was mortgaged after the issuance of the policy. But the plaintiff contends that the policy was only suspended during the continuance of the mortgage, and was revived by the discharge of the mortgage before the loss occurred. There was proof, though meagre, to support the finding that the mortgage was cancelled before the fire, although the record was not satisfied until after. The satisfaction of the record was not essential to the removal of the incumbrance. If the mortgage was paid off and cancelled, it was sufficient. May, Ins., sec. 292; Hawkes v. Dodge County Mut. Ins. Co., 11 Wis. 188" date_filed="1860-06-04" court="Wis." case_name="Hawkes v. Dodge County Mut. Ins.">11 Wis. 188; Smith v. Ins. Co., 60 Vt. 682" date_filed="1887-02-15" court="Vt." case_name="Smith v. Niagara Fire Insurance">60 Vt. 682; Merrill v. Agr. Ins. Co., 73 N.Y. 452" date_filed="1878-05-21" court="NY" case_name="Merrill v. . Agricultural Ins. Co.">73 N. Y. 452.
But the proposition that the incumbrance, while it existed, only suspended the policy, contravenes the unambiguous terms of the contract, which the parties themselves have made. The language of the clause quoted supra,in its plain, ordinary, and popular sense,indicates a total extinction of the policy if the property be incumbered, and not a suspended animation thereof, subject to be revived upon payment of the mortgage debt. Courts, by interpretation, cannot ingraft upon insurance contracts, any more than upon any other, a meaning totally foreign to that which the plain terms employed by the parties themselves convey. It is undoubtedly true that where the contract, on account of any ambiguity in the language used, is reasonably susceptible of different constructions, that construction should be adopted most favorable to the insured. Imperial Fire Ins. Co. v. Coos Co., 151 U.S. 452" date_filed="1894-01-29" court="SCOTUS" case_name="Imperial Fire Insurance v. Coos County">151 U. S. 452; 1 May, Ins., sec. 175, 176, and authorities cited.
The insurer has the right to contract against any possible risk of loss or embarrassment incident to incumbering the property insured. If it be said that, where the mortgage is paid off, there is no longer an incumbrance and increase of risk, still as to whether or not the mortgage had been paid off would be the question, and one that often could not be settled without expensive litigation. The insured mortgagor might enter into collusion with the mortgagee to defraud the insurance company after the loss occurred by claiming that the mortgage had been paid off and discharged, when in fact it had not. Unfortunately, all men are not honest. Without some such provision in the policy, the unscrupulous would have an inviting opportunity, after a loss, to divide the spoils, at the expense of the insurer. Doubtless some such considerations as these prompted the clause in the policy under consideration. The clause is reasonable and clear, and the parties had the right to thus contract. The opinion in Imperial Fire Ins. Co. v. Coos Co., supra, and the numerous authorities there reviewed, leave no doubt of the correctness of our ruling. Contra, counsel cite, May on Fire Insurance, at page 589, sec. 294, where he says: “An incumbrance in violation of the policy only suspends it, and, if paid before the loss, the policy revives;” and the learned author cites Kimball v. Monarch Ins. Co., 70 Iowa, 513" date_filed="1886-12-22" court="Iowa" case_name="Kimball v. Monarch Ins.">70 Iowa, 513. An'examination of that case will show that, after the mortgage had been paid off, the insured assigned the policy, and the company indorsed upon it its assent to the assignment. This was tantamount to the issuance of a new policy. It was a waiver of forfeiture. So the case cited does not support the text.
2. It is also contended by the appellee that, if there was a forfeiture, it was waived by an agreement of plaintiff with John L. Mills, clerk of the local agent, to the effect that the assured should see the mortgagee, and have the mortgage canceled, and that the policy should remain in force. And appellee says that said agreement on his part was performed before the loss occurred. Such an agreement, if made by one having authority, would be a waiver of the forfeiture. Pratt v. Ins. Co., 55 N.Y. 505" date_filed="1874-01-20" court="NY" case_name="Pratt v. . N.Y. Central Ins. Co.">55 N. Y. 505. Since counsel for appellant’s have not questioned here the sufficiency of the evidence to prove such an agreement, we will treat the verdict as conclusive on that point. Appellant questions only the authority of the clerk of the local agent to make such agreement. The testimony as to the authority of the agent and his clerk is related by Jno. R. Mills as follows : “R. H. M. Mills is my father, and I am a clerk in his office. I never make any agreement about insurance, other than the conditions in the policy. The only contract we have is the policy. I am not a partner with my father, but only a clerk. I merely sell the policies, and receive the premiums. My brother and I merely do the office work for my father. I have no authority from the German-American Insurance Company. My father has never appointed me sub-agent for them. I have no power, from the agent or otherwise, to alter any of the terms of the printed contracts, nor to make any changes in a policy of insurance. I have no power to sign policies, but they are all signed by my father. I solicit insurance, and fill up blank policies for my father’s signature. I filled up this one. This policy is signed by my father, who is the only person authorised to sign it. I am simply a soliciting agent and clerk, without any authority to modify the contract embodied in the policy.”
The policy provides that “no agent shall have power to waive any provision or condition of this policy, ekcept such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto; and as to such provisions or conditions no agent shall have such power or be deemed or held to have waived such provisions or conditions, unless such waiver, if any, shall be written upon, or attached hereto; nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured, unless so written or attached.”
Under the express terms of the policy, the placing of a mortgage upon the property ipso facto avoided the policy. The forfeiture thus created could only be waived by one who had authority to do so, and authority, too, as high as that by which the contract was made in the first instance. Hamilton v. Aurora Fire Ins. Co., 15 Mo. App. 59" date_filed="1884-01-29" court="Mo. Ct. App." case_name="Hamilton v. Aurora Fire Insurance">15 Mo. App. 59.
There is a marked distinction between a waiver of conditions made before and those made after the issuance of a policy. But an agent who has been furnished by his principal with blank applications, and with policies duly signed by its officers, and who has been authorized to take risks, and to issue policies by simply signing his name, to collect premiums, and to cancel policies, — all without consulting his principal, — would certainly be empowered to waive the condition as to incumbrance either before or after the issuance of the policy. And he could waive the forfeiture by parol, nothwithstanding the limitations upon his power in this respect contained in the policy. Ins. Co. v. Brodie, 52 Ark. 11" date_filed="1889-05-15" court="Ark." case_name="Insurance Co. v. Brodie">52 Ark. 11, and authorities cited; Grubbs v. Ins. Co., 108 N.C. 472" date_filed="1891-02-05" court="N.C." case_name="Grubbs v. North Carolina Home Insurance">108 N. C. 472; S. C. 23, Am. St. Rep. 62 and authorities cited; Fireman's Fund Ins. Co. v. Norwood, 69 Fed. Rep. 71; Burlington Ins. Co. v. Kennerly, 60 Ark. 532" date_filed="1895-05-18" court="Ark." case_name="Burlington Insurance v. Kennerly">60 Ark. 532.
If R. H. M. Mills, the local agent, possessed this power, there is nothing in the record to show that he exercised it himself, or that he assented to its exercise by his son. If he could delegate such powér to his subordinate, the undisputed proof shows that he has not done so. The work of Jno. U. Mills, as he shows, was clerical and special. There was nothing in the nature of his employment, or in the manner of the discharge of his duties, from which authority to waive a forfeiture could'be inferred. Nor does it appear that the defendant company, or its local agent, held him out to the public as possessing such power.
The court’s first instruction was correct. The second was not supported by the evidence.
Reversed and remanded.