Indian River State Bank v. Hartford Fire Insurance, 46 Fla. 283

Tayror, C. J.

(after stating the facts). — The propriety of the amendments allowed and effected, whereby Simon Hamburg was changed from co-plaintiff to sole nominal plaintiff suing for the use of his former co-plaintiff, the Indian River State Bank, and whereby again the said Simon Hamburg was dropped from the case as nominal plaintiff and his usee, the Indian River State Bank, substituted as the real and only plaintiff, has been fully considered and passed-upon, adversely to the contention of the defendant in error, in the casе of Hamburg v. Liverpool & London & Globe Ins. Co., 42 Fla. 86, 27 South. Rep. 872, wherein it is held that such amendments can properly be made under our statute, and that the orders of the court permitting amendments to the declaration were broad enough to authorize the amendments as they have been made in this case.

It is next contended by the defendant in error in support of the ruling of the court below sustaining its demurrer to the last quoted declaration of the plaintiff, the Indian River State Bank, that such bank shows by its declaration that it has no legal right tо maintain the action in its own name, because such declaration shows that the alleged assignment of the policy of insurance sued upon was not an absolute one, but conditional only as a security for an' alleged debt due by Hamburg, the insured, to the bank; and that such an assignment, under our statute declaring all instruments given as security for debts ato be mortgages, did not authorize the bank, as mortgagee of this policy, to sue upon or collect the same in its own name, but that undеr such statute the legal title to such policy remained in the mortgagor thereof, Simon Hamburg, and that he alone was authorized to sue upon and collect the same. This contention is untenable. The first count of the plaintiff’s declaration alleges with reference to such assignment as follows: “The said Simon Hamburg assigned and delivered said policy to the plaintiff, the Indian River State Bank, to secure an indebtedness due said bank by him, and for collection as his agent, the said bank to collect said policy and deduct from the proceeds thereof the amount of said Hamburg’s indebtedness up to the time of said collection, and to account to the said Hamburg for the balance, and said policy has never been redeemed, but is still in the custody of the said bank, which is the pledgee thereof and is entitled to receive the full proceeds of said policy.” It will be observed that it is here distinctly alleged that Hamburg assigned and delivered the policy to the assignee bank with authority to collect the same and to apрropriate out of the proceeds of such collection the debt due from him to the bank, the balance, if any, to be accounted for by the bank to Hamburg. Whether this assignment was in writing or not does not appear; but however this may be, we think that it is shown from the allegations of this declaration that the plaintiff bank was such a “real party in interest” in the policy sued upon as to bring it within the purview of our statute authorizing it, as such real party in interest, to sue in its own name alone to recover upon such policy. Our mortgage statute invoked by the defendant in error is as follows:

“1981 (Rev. Stats.) Instruments deemed Mortgages. All deeds of conveyance, obligations conditioned or defeasible, bills of sale or other instruments of writing conveying or selling property, either real or personal, for the purpose or with the intention of securing the payment of money, whether such instruments be from the debtor to the creditor, or from the debtor to1 some third person in trust for the creditor, shall be deemed and held mоrtgages, and shall be subject to the same rules of foreclosure and to the same regulations, restraints and forms as are prescribed in relation to mortgages/’

“1982 (Rev. Stats.) Nature of a mortgage. A mortgage shall be held to be a specific lien on the property ‍​‌‌‌​‌​‌​‌​‌​​​‌​‌​‌​‌​​​‌​‌​‌‌​‌‌‌​‌​​​‌​​​‌‌‌‌‍therein described, and not a conveyance of the legal title or of the right of possession.”

The latter section, it will be observed, declares that a mortgage shall not be a conveyance of the legal title or of the right of possession. We do not think that this statute was designed to prohibit the delivery of possession of chattels and choses in action in pledge as security for debts. That such was not its design is made clear by the provisions of section 1983 of the Revised Statutes, that provides: “No chattel mortgage shall be valid or effectual against creditors or subsequent purchasers for a valuable consideration and without notice, unless it be recorded, or unless the property included in it be delivered to the mortgagee and continue to rеmain truly and bona ñde in his possession.” This section expressly recognizes the right of a mortgagor of a chattel to deliver, and of the mortgagee to retain, possession thereof. Neither do we think that these statutes with reference to mortgages were designed to abrogate the distinction between pledges of chattels and choses in action artd mortgages thereof. And while the distinction between the two species of security rqay be, in the presence of our quoted statutes, difficult of clearly defined demarkation, and shadowy, yet a difference is recognized in the books, and we do not think that our statutes quoted above in anywise abrogate such distinction. Jones on Pledges & Col. Securities, sec. 4 et seq. And we think that the assignment of the policy alleged in the declaration in this case makes out a case of pledge rather than that of a mortgage. But whether the transaction of the assignment of this policy as between Hamburg the assignor and the bank as assignee be considered technically as either a pledge or mоrtgage as between them, still we do not think that the right of the bank to sue in its own name for the collection thereof as against the insurance company will be affected thereby. Section 981, Revised Statutes, treating exclusively the subject of parties to suits at law, provides as follows: “981. Real Parties in Interest. Any civil action at law may be maintained in the name of the real party in interest. This shall not be deemed to authorize the assignment of a thing in action not arising out of contract. An executor, administrator, trustee of an express trust (including a person with whom or in whose name a contract is made for the benefit of another or a person expressly authorized by statute), may sue without joining with him the person for whose benefit the action is prosecuted.” This provision of law was first enacted in this State in 1870, as sections 62 and 64 of the code of civil procedure adopted here from the State of New York, being sections 111 and 113 of the New York statute. Robinson, Assignee, v. Nix, 22 Fla. 321. It was repealed with the code of which it was a part by chapter 1938, laws of 1873, but was re-enacted in chapter 3241 laws, approved February 25th, 1881, and brought forward as section 981 of the Revised Statutes.

In the cáse of Allen v. Brown, 44 N. Y. 228, it is held that “an assignee of choses in action, holding the legal title by written assignment, valid upon its face, is the real party in interest, under section 111 of the code of procedure, ‍​‌‌‌​‌​‌​‌​‌​​​‌​‌​‌​‌​​​‌​‌​‌‌​‌‌‌​‌​​​‌​​​‌‌‌‌‍although others may have an ultimate beneficial interest in the proceeds, and even if he would be liable as their debtor, under his contract with them, for the amount realized.” Eaton, Admx. v. Alger, 47 N. Y. 345; Cummings v. Morris, 25 N. Y. 625; Green v. Republic Fire Ins. Co., 84 N. Y. 572.

In Minnesota the statute is identical with ours. Rev: Stats, of Minnesota of 1866, secs. 26 and 28, p. 453. In the case of Castner v. Summer, 2 Minn. 44, it is held that where “A assigned to B certain notes made by C to secure indebtedness due from A to B, and took a bond from B conditioned that if B should realize on these notes more than his claim against A and expenses of cpllecting, the balance was to be paid to the assignor, that as B was authorizеd to receive the money on the notes from C, he was also authorized to bring suit to collect it, and that A had no legal interest in the notes assigned, and not even a certain resulting interest, but only a contingent interest in the. proceeds; and his only claim for the balance would be against B, and not against the maker of the note.” This case effectually disposes of the contention of the demurrer of the defendant in error to the effect that a judgment against it in favor of the Indian River State Bank would be no bar to a suit against it on the same policy by Hamburg, the assignor thereof. Pease, Chalfant & Co. v. Rush, Pratt et al., 2 Minn. 107; White v. Phelps, 14 Minn. 27; Bentley v. Standard Fire Ins. Co., 40 West Va. 729, 23 S. E. Rep. 584; Withers v. Sandlin, 36 Fla. 619, 18 South. Rep. 856. There is nothing in the mortgage statute invoked, when considered in connection with the quoted statute authorizing the real party in interest to sue, that would preclude even a mortgage of a chose in action due by a third party to sue in his own name such third party for the collection thereof if put in possession thereof and duly authorized by the mortgagor so to collect it and tо retain' out of the proceeds of such collection the . debt due to the mortgagee by the mortgagor the balance to ■ be paid by the former to the latter. And in such case upon the recovery of judgment upon the mortgaged chose in .action in favor of such mortgagee, the mortgagor would be effectually barred from bringing another suit against the third party owing the assigned or mortgaged debt upon the same cause of action,.but his only redress would be against the mortgagee for the balance collected over and above the debt that he himself owes such mortgagee. In such- a case the bringing of suit and collection of the debt by the mortgagee would be nothing more, as between the mortgagor and mortgagee, than a reduction to the possession of the mortgagee of the substantial avails of the incorporeal chose in action. As we have seen, our mortgage statute expressly authorizes thе mortgagor to deliver to the mortgagee the possession of the thing mortgaged and permits such mortgagee to retain such possession, and in the case of a chose in action the mortgagor thereof can likewise authorize the mortgagee to possess himself of the substantial avails thereof by enforced collection through the courts. Neither is-there anything in the provisions of chapter 4376, laws of 1895, that militates against, or is inconsistent' with, this conclusion. The latter statute simply makes provision for an absolute sale of choses in action pledged as security by the pledgee thereof on such terms and in such manner as may be agreed upon in writing between the pledgor and’pledgee, enabling the pledgee to realize his claim by an absolute sale of the chose in action pledged, instead of resorting to" suit thereon against the debtor owing such chose in action.

The second and third grounds of the demurrer to the plaintiff’s declaration contend that thе declaration is bad because it fails to allege that Hamburg, the insured, was the owner in fee of the ground upon which stood the bundling insured; and because it fails to allege that the personaI( propertjr insured was not encumbered by a chattel mortgage.', It was not necessary for the declaration to contain either! of the averments contended for. If the provisions of the policy sued on rendered it void in the event the insured did not own the land in fee upon which the insured building stood, or if the personalty insured was encumbered with a chattel mortgage, and if it was a fact that such avoiding facts existed, it was not necessary for the plaintiff in its declaration to negative such facts, but it was a matter of defense for the defendant to urge by plea.

The fourth ground of the defendant’s demurrer con* tends that on the face of the pleadings in the case the sr "■ was instituted more than twelve months next after the fire when the policy sued on limited the time for suit thereon to twelve months. This contention is not borne out by the ■facts on the face of the record. The suit was instituted by the plaintiff, the Indian River ‍​‌‌‌​‌​‌​‌​‌​​​‌​‌​‌​‌​​​‌​‌​‌‌​‌‌‌​‌​​​‌​​​‌‌‌‌‍State Bank, conjointly with Hamburg within' twelve months from the date of the fire, and by authorized and proper amendments, apparent on the face of the record, Hamburg was dropped from the suit and the same continued in the name alone of the present plaintiff up to the final judgment under review. The plaintiff bank being a real party to the suit from its inception.

The contention of the fifth ground of the demurrer to the declaration is untenable because the* declaration of the plaintiff in error is not such a radical or material departure from the case made by the original and former amended declarations as renders it for that reason subject to demurrer, but presents a case proper to be evolved through authorized amendments from the case made by the original and formеr amended declarations upon the same cause of action, as was held in effect in the case of Hamburg v. Liverpool & London & Globe Ins. Co., supra.

The contention of the sixth ground of the defendant’s demurrer to the declaration is that the declaration is bad because it does not show that an alleged agent of the defendant, one Hall, was the agent of the defendant in the matter of the adjustment of loss or the acceptance or refusal to accept proofs of loss, nor that knowledge of the alleged denial of liability was brought home to this defendant, or that the said Hamburg, or the plaintiff, was misled by the alleged acts of said Hall. The only allegation in the declaration with reference to the actions of said Hall as the agent of the defendant company is to the effect that said Hall as the authorized agent of the defendant company denied to the plaintiff absolutely and unconditionally any liability whatever on the part of the dеfendant company upon said policy, and this immediately after the fire. This feature of the declaration was designed to show a waiver of proofs of loss by the company as a consequence of its denial through its agent of all liability on the policy. This ground of the demurrer is untenable because it was not necessary that the agent Hall should have been clothed with authority as the agent of the company in the matter of the adjustment of the loss or the acceptance or refusal to accept proofs of loss, in order to deny liability on the policy on behalf of the company. The adjustment of the loss and the acceptance or refusal to accept proofs of loss are entirely different matters from an absolute repudiation of liability on a policy, and an agent may be fully authorized to represent the company in the latter, and have no authority to represent it in the former. If thе alleged agent Hall had authority on behalf of the defendant company to deny for it any liability on the policy, then it makes no difference whether such denial by him as its agent was brought home to its knowledge or not; it is bound by the authorized acts of its agent whether it has knowledge of such acts or not. Neither was it necessary that the declaration should allege that the plaintiff, or its assignor Hamburg, was misled by the alleged denial of liability made by the defendant’s agent. -A simple allegаtion of the denial of all. liability on the policy by the company through its-,agent was sufficient to give to the plaintiff any advantage to be derived from the waiver of proofs of loss following as a legal consequence upon a denial of liability. In such a case it is not a question of being misled into this, that or the other course of action, but presents purely a question of fact. Did the defendant company absolutely repudiate or deny all liability upon the policy sued upon? If it did, then it follows as a legal consequence that it has waived the making of proofs of loss provided for in the policy. Taylor v. Glens Falls Ins. Co., 44 Fla. 273, 32 South. Rep. 887.

The said first count in reference to the agency of said Hall alleges that he was “the agent of the defendant company at Titusville, Ela., * * * and was clothed with full authority to receive proposals for insurance, to receive money, and countersign, issue and renew policies of insurance of said company, and was the agent of said company fоr the purpose of receiving service of process in any civil action against said company.”

In the case of Nickell v. Phoenix Ins. Co., 144 Mo. 420, 46 S. W. Rep. 435, it is held that “where a local agent of an insurance company has authority to represent the company in making contracts of insurance, in collecting the premiums and in signing the policies, he also has authority to waive proof of loss, either in writing or by parol, or by matters in pais which amount to an estoppel. And that an insurance company can nоt make its local agent the medium through which all the benefits of a policy flow from the insured to it, and then deny that he has authority to represent it when the benefits of the insured are involved.” While there is conflict in the authorities upon this point, yet we think that in soundest reason, and from the standpoint of fairness and justice, the case quoted from above and the authorities cited therein in support thereof announce the correct rule. Citizens Insurance Co. v. Stoddard, 99 Ill. App. 469 ; Harness v. National Fire Insurance Company, 76 Mo. App. 410. In the case of Hahn v. Guardian Assur. Co., 23 Oregon, 576, 32 Pac. Rep. 683, it is held that “the acts of an agent, рerformed within the scope of his real or apparent authority, are binding upon his principal. The public have a right to rely upon an agent’s apparent authority, ‍​‌‌‌​‌​‌​‌​‌​​​‌​‌​‌​‌​​​‌​‌​‌‌​‌‌‌​‌​​​‌​​​‌‌‌‌‍and are not bound to inquire as to his special powers unless the circumstances are such as to put them upon inquiry.” This case, we think, also announces the correct rule in such cases.

But it is further contended that the policy itself provides that “no officer, agent or other representative of this company shall have power to waive any condition or provision 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, agent or representative shall have such power or be deemed or held to have waived such conditions or provisions unless such waiver, if any, shall be written upon or attached herеto.” And that the alleged denial of liability by the agent Flail and consequent waiver of proofs of loss claimed thereby can not avail the plaintiff in the face of the quoted provision in the policy. As to this contention we agree with those authorities that hold that “this stipulation refers to the conditions which go to the making of the contract of insurance, and not to provisions relating to the proof of loss which are to be performed in the event of a loss, and consequently this stipulation does not operate to prevent the company from making waiver of proof of loss by conduct or otherwise than by an express agreement.” Farmers’ Fire Ins. Co. of York, Pa., v. Baker, 94 Md. 545, 51 Atl. Rep. 184; Carson v. Jersey City Fire Ins. Co., 14 Vroom (N. J.), 300, S. C. 39 Am. Rep. 584, and cases cited in note; Indiana Ins. Co. v. Capehart, 108 Ind. 270, 8 N. E. Rep. 285; O’Leary v. German American Ins. Co., 100 Iowa, 390, 69 N. W. Rep. 686; Citizens Ins. Co. v. Stoddard, 197 Ill. 330, 64 N. E. Rep. 355; Rokes v. Amazon Ins. Co., 51 Md. 512, S. C. 34 Am. Rep. 323.

The contentions of the seventh and eighth grounds of the defendant’s demurrer to the declaration are, in effect, that the declaration is bad because the excuse therein set up for not making proofs of loss within sixty days from the fire, as provided by the policy, viz: the arrest and imprisonment of the insured Hamburg and the detention from him of his books of account, etc., does not furnish any excuse in law for the failure to make such proofs within the prescribed time; and further, that even if such imprisonment of the insured Hamburg and detention from him of his account books furnished any excuse to Hamburg, it did not excuse the plaintiff, the Indian River State Bank, to whom the policy was alleged to have been assigned, from making such proofs within the required time, it not being alleged that' the bank had labored under any such disability. These grounds of the demurrer are predicated upon the assumption and contention that the failure of the assured to make the proofs of loss required by the policy sued upon within the time provided by such policy works an absolute forfeiture thereof, and releases the insured from all liability thereon; and the contention is that the imprisonment of Hamburg, alleged as an excuse for sitch failure, furnishes no legal excuse therefor, and does not save such policy from the fоrfeiture contended for as resulting from such failure. Unfortunately for this contention it is founded upon a false premise. The provision of the policy sued upon herein requiring the assured to make proofs of loss within sixty days after the fire does not provide that such policy shall become void, forfeited or annulled upon a failure to furnish such proofs of loss within the prescribed time, and such is not the legal effect of said contract between the parties. Taken in connection with another provision of said contract of insurance, the only effect of a failure to furnish the prescribed proofs of loss within the 'required time, when such failure has not been excused or waived, is that it postpones the date when the amount of the loss becomes due and payable, and consequently postpones the time within which suit may be brought thereon; another part of the policy providing that the amount due upon the policy shall be payable sixty days after satisfactory proofs of loss have been received by the company. Kahnweiler v. Phoenix Ins. Co. of Brooklyn, 57 Fed. Rep. 562; Hall v. Concordia Fire Ins. Co., 90 Mich. 403, 51 N. W. Rep. 524; Tubbs v. Dwelling-House Ins. Co., 84 Mich. 646, 48 N. W. Rep. 296; Sun Mut. Ins. Co. v. Mattingly, 77 Texas, 162, 13 S. W. Rep. 1016; Rheims v. Standard Fire Ins. Co., 39 West Va. 672, 20 S. E. Rep. 670; Vangindertaclen v. Phoenix Ins. Co. of Brooklyn, 82 Wis. 112, 51 N. W. Rep. 1122; Steele v. German Ins. Co., 93 Mich. 81, 53 N. W. Rep. 514, S. C. 18 L. R. A. 85; Coventry Mutual Live Stock Ins. Association v. Evans, 102 Pa. St. 281; Northern Assurance Company v. Hanna, 60 Neb. 29, 82 N. W. Rep. 97.

The ninth ground of the defendant’s demurrer to the declaration, as we understand it, that none of the counts in the declaration set forth facts showing the validity of the policy in its inception, is wholly without merit as will be seen from a mere reading of the plaintiff’s declaration.

The tenth and last ground of the defendant’s demurrer to the declaration contends that the first and second counts of the declaration are bad because they are inconsistent with each other in this, that the first count alleges that the failure to make the proofs of loss as required was caused by the . denial of liability on the policy by the company, which was a waiver of such proofs, and in the second count it is alleged that such proof was not given because Hamburg immediately after the fire was confined in jail and denied access to his books. We do not think that the two cоunts are materially repugnant, but even if it be held that there is a material inconsistency between the positions assumed in these two counts of the declaration, still that will not render them subject to demurrer, because the rule is that a plaintiff in an action on an insurance policy may, in different counts of his declaration, aver both a waiver by the company of the proofs of loss, and a compliance with the provisions of the policy as to such proоfs on his part, and may rely upon that one of the counts that the evidence establishes. Warshawky v. Anchor Mut. Fire Ins. Co., 98 Iowa, 221, 67 N. W. Rep. 237. The same case holds also that the assured may insist that proofs of loss have been waived, notwithstanding the fact that he, later, furnishes such proof, from abundance of caution. We think that the court below erred in giving judgment for the defendant ‍​‌‌‌​‌​‌​‌​‌​​​‌​‌​‌​‌​​​‌​‌​‌‌​‌‌‌​‌​​​‌​​​‌‌‌‌‍upon the demurrer of the plaintiff to the pleas of the defendant to the third count of the plaintiff’s declaration. This count, in connection with thе other counts, was a proper one upon which to predicate a claim for interest on the amount, if any, due upon the policy, and while a recovery of such interest may have been had without its presence in the declaration, still i it is not an improper pleading, and is not subject to demurrer.

It follows from what has been said that the court below erred in the judgment rendered, and it is, therefore, hereby considered, ordered and adjudged that the judgment of the сourt below in said cause is hereby reversed with directions to overrule the demurrer of the defendant to the declaration of the plaintiff, the Indian River State Bank, and to sustain the demurrer of the plaintiff to the pleas of the defendant insurance company in all those particulars wherein such pleas shall be inconsistent with the principles of law announced in this opinion, and for such further proceedings as shall be consonant with law. The costs of this appellate proceeding to be taxed against the defendant in error.

Case Details

Case Name: Indian River State Bank v. Hartford Fire Insurance

Court Name: Supreme Court of Florida

Date Published: Jun 15, 1903

Citation: 46 Fla. 283

Court Abbreviation: Fla.