Liverpool & London & Globe Insurance v. Georgia Auto & Supply Co.

29 Ga. App. 334 | Ga. Ct. App. | 1922

Jenkins, P. J.

(After stating the foregoing facts.) The questions presented by the record are: (1) Is the language relative to the location of the insured property, contained in the original policy, as taken in connection with or as modified by the language of the certificates, to be construed as a descriptive recital made for the purpose of additional identification of the property, or must such language be treated as constituting an essential part of the terms and conditions of the contract attesting rights and limiting the liability thereunder ? (2) If merely descriptive and used only as an additional means of identification, does such language nevertheless constitute a material and continuing warranty, so that a breach thereof would invalidate the policy? (3) If such words should be construed as contractual rather than descriptive in their nature, or as constituting an essential war7 ranty, is the defendant estopped by its knowledge and conduct from claiming the benefit thereof-? (4) If the contract be otherwise enforceable, is the claim on account of the three bodies for White trucks maintainable, when, by the terms of the original policy, loss or damage to “ extra bodies ” is expressly excluded, and the policy states that the insurance is to cover “ the body, machinery, and equipment of the automobile described herein,” and by the terms of the rider subsequently attached it was to cover “ automobiles, owned and for sale by the assured, consisting principally of automobiles known by the trade name of — see certificate — including bodies, chassis, tops, and other equipment attached to or forming a part of such automobiles,” but when the certificate itself, to which reference is repeatedly made both by the original policy and by the rider, specifically insures the bodies for White trucks as such.

1, 2. Section 2475 of the Civil Code (1910) declares that “The contract of insurance should be construed so as to carry out the true intention of the parties.” The rules that contracts of insurance are to be liberally construed against the interest of the insurer who has prepared the policy, and so as to avoid a forfeiture if possible, are not in conflict with this provision of" the code, nor do they run counter to that other fundamental rule of construction which prescribes that in case of ambiguity a contract will, if possible, be treated as valid and efficient rather than useless and nugatory, in order that the substantial purpose and intent of the contracting parties might be carried out, and that the parties are presumed to have had in contemplation the nature and character of the business, and to have foreseen the usual course and manner of conducting it. Thus, in construing a policy of insurance so as to arrive at the true intention of the parties, the ordinary legal and literal meaning of the words must be given effect where it is possible so to do without destroying the substantial purpose and effect of the contract. Maril v. Conn. Fire Ins. Co., 95 Ga. 604 (23 S. E. 463, 30 L. R. A. 835, 51 Am. St. Rep. 102); Cherokee Bride Co. v. Ocean &c. Corp., 21 Ga. App. 702 (94 S. E. 1032); Clay v. Phoenix Ins. Co., 97 Ga. 44 (25 S. E. 417); North British &c. Ins. Co. v. Tye, 1 Ga. App. 380 (58 S. E. 110).

It is a well-recognized general rule that a policy of fire insurance which is expressly limited to loss occasioned while the insured property is located in a definite and particular place does not impose liability such as will follow the property upon its being removed to and destroyed at another and different place. Such a construction is plain enough where the contract embodies the “standard fire policy” clause expressly stipulating that it shall cover the property “ while ” contained in a certain described building “ and not elsewhere.” The use of such particular words of limitation as quoted from the “standard fire policy” clause does not, however, constitute the only means of manifesting an intent to impose such a limitation upon the liability of the insurer. For example, in a policy which did not contain such a clause, it has been held that, where the insured property is described in no other way than as being contained in a certain building, no liability can extend for loss incurred elsewhere. Benton v. Farmers’ Mut. Fire Ins. Co., 102 Mich. 281 (60 N. W. 691, 26 L. R. A. 237). In such a case the sole basis of the liability necessarily rests upon such a construction. Likewise, it has been recognized that, even though the insured property be otherwise described, yet if it be designated as “ contained in ” a certain building, and from its nature, character, and ordinary use is to be continuously kept in such place, the location of the property is ordinarily to be taken as an essential element of the risk. This would be especially true where, as in Simonton v. Liverpool &c. Ins. Co., 51 Ga. 77, the terms of the policy plainly indicate that the nature and character of the particular building, such as the “ 2-story- tin roof store,” was in the minds of the contracting parties as constituting a material element of the risk. While the text-book writers seem unable to lay down any uniform and trustworthy rule relative to whether a mere statement as to the location of the property constitutes a continuing warranty or is to be taken as a contractual limitation upon the insurer’s liability, it is perhaps in view of the exceedingly great number of policies of the kind and character we have just referred to that we find attempted generalizations of the rule, such as the following from 19 Cyc. 664: “ The location of the property is usually an essential element in the description, and the policy will not be extended to property not within the terms of the description in this respect. The location of .personal property is as material a part of its description as the location of buildings; and if the personal property is described as kept or contained in a certain building, its loss will not be covered if destroyed elsewhere. And a removal of the property to another building or location takes it out of the description of the policy.”

Where, however, no such words of limitation are used as are employed in the “ standard fire policy,” and where the insured property is particularly described otherwise than by its location, and where from the mobile nature and character of the property and from the use intended the contracting parties must be presumed to have contemplated and foreseen that it would.in the nature of things be more or less continually moved for different purposes to different places, the mere inclusion, along with other words of description, does not necessarily require the construction that a statement of the location was intended to constitute an essential part of the terms and conditions of the risk assumed, or, when thus intended merely for the purpose of additional identification, that it should constitute an essential and continuing warranty. Of course, by inserting the clause of limitation embodied in the “ standard fire policjg” or by the use of language of similar import, it is possible so to contract that any sort of property, and howsoever otherwise described, will be proctected only while located at the place designated in the policy. Rosenthal v. Ins. Co. of North America, 158 Wis. 550 (54 L. R. A. (N. S.) 361; 149 N. W. 155). But where no such words of limitation are used,- the intent of the parties must be gathered in each particular case from the language used, as viewed in the light of the attendant circumstances. Mr. Joyce, in his work on Insurance (2d ed., vol. 4, § 2068) makes this observation: “But some consideration must be given to the nature of the property insured and the uses contemplated; so reference must be had to the voluntary acts of the assured — in fact, all the material circumstances should be considered. . . The above statement also applies where the property is, and is known by tbe assured to be, of such a character in connection with the business in which it is employed as necessitates its temporary removal and its being kept temporarily in places other than the owner’s premises, and where the description of location may be merely intended for identification.” In 2 Cooley’s Briefs on Insurance, 1618 (k), is found this statement: “On the question whether a statement in the policy that the personal property insured is situated in a certain place or contained in a certain building is a warranty that it shall remain in such location, the courts are in direct conflict. The weight of authority is that statements as to location are matters of description only, and not continuing warranties.”

The great or seemingly great diversity of authority doubtless arises on account of the construction placed by the courts upon particular contracts, as to whether the language relative to the location of the property, as viewed in the light of the attendant circumstances, was intended to limit and define the rights of the parties, or whether it was intended merely as an additional aid to identification. In the instant case we are dealing not with an ordinary policy of fire insurance, but with an “open” policy issued in favor of a dealer in automobiles. It will be observed that the 5th section of the warranty contained in the original policy provides: “ The automobile described is usually kept in — see certificate-—garage located 222-226 Drayton street, Savannah, Georgia.” It would not seem that such a statement of the location, especially where the cars are otherwise particularly described, could be taken as any sort of warranty, or that it was thereby intended to limit or define the liability. The language is manifestly much too indefinite to afford the basis of any such construction. Counsel for the defendant contended, however, that the certificates, which supersede the terms of the policy itself wherever in conflict, are precise in their statement as to location and contain no such loose and indefinite language, and that by the certificate and not by the language of the original policy the contracting parties should be governed. While the certificates are made to control when in actual conflict, the terms of the policy under which the certificates are issued remain of full force and effect except where superseded by inconsistent terms of the certificates. Although the policy sought in a loose and general sort of way to specify the most -usual location of the cars, it appears that even this was qualified by a reference to the certificate, which by the terms of the rider was to govern in cases of conflict. Thus, the original policy states that the cars are "usually” kept at a certain number on " Drayton street,” but qualifies this statement by adding " see certificate.” Most of the certificates give another location, but does this have the decessary effect of not only changing the stated location, but of striking that most significant word " usually ” as well ? In other words, in changing the stated place of location, does it go further and strike at the basic language employed by the'policy, under which and in accordance with which the certificate was issued? Construing the policy and certificate together, does it not rather appear that, instead of the ear being usually located at " Drayton street,”' it is usually kept at “ Bay street ? ” In other words, instead of filling in the location blank with "Drayton street,” the certificates substitute the words "Bay street,” but leave the original basic statement with reference thereto unaltered. This would seem to be at least a possible, if indeed not the most natural, construction; and in giving this construction it is possible to give effect to the language of both the original policy and the certificates issued thereunder. If such be a reasonable and possible construction, it should be applied, not only because the whole agreement can thereby be given effect, but also because such a construction is favorable to the insured, and the policy must be interpreted in his interest and against the interest of the insurer who prepared it. This familiar rule of construction has already been referred to, but the language used by Mr. Wood in his work on Insurance, p. 140, seems appropriate here: " It is the duty of the insurer to clothe the contract in language so plain and clear that the assured cannot be mistaken or misled as to the burdens or duties thereby imposed upon him. Having the power to impose conditions, and being the party who drew the contract, he must see to it that all conditions are plain, easily understood, and free from ambiguity.”

In the instant case, is it necessarily true, as a matter of legal construction, that the protection afforded by the policy is limited to a loss occasioned while the property is actually in the building referred to in the certificates and not elsewhere, despite the lack of any such express clause of limitation as that embodied in the “standard fire policy,” despite the particular description of the property otherwise than by location, despite the use of the word “usually” in the original policy when referring to location, despite the character of the assured’s business and the extremely mobile nature of the property insured, and despite the broad and sweeping language quoted from the first provision of the policy, insuring. the property “ while within the limits of the United States (exclusive of Alaska, the Hawaiian Islands, and Porto Rico) and Canada, including while in building, on road, or common carrier or other conveyance, ferry or inland steamer, or coast-wise steamer’ between ports within said limits,” and from the rider that the insurance “ continues (unless cancelled) until said property is delivered to the purchaser or until the same otherwise passes out of the possession of the assured ? ” This is the defendant’s contention. In the brief of its learned and distinguished counsel appears this statement: “The original policy shows a willingness on the part of the insurance company to insure in an extensive territory, but subject to the provisions that each automobile had to be specifically accepted and the evidence of such acceptance manifested by a certificate or entries in a passbook. If, for example, it was proposed to insure an automobile en route, a specific agreement would have to be made as to this automobile, and no contract could be inferred by the mere fact that the policy indicated a willingness to insure within an extensive territory. After the property arrived in Savannah, then the insurance was covered by the riders and the certificates, particularly by the latter, which were specific. We submit that the word ‘ usually,’ which is used in the 5th paragraph of the original printed form, cannot help the defendant in error, in view of the specific contracts involved. It is in a printed form dated November 6, 1918. It was preliminary to specific insurance and did not purport to be the final, or -the chief, contract with reference to specific property. On the contrary, the rider dated March 16, 1920, and made a part of paragraph nine of the original petition, in terms changes the policy, and at its conclusion provides that ‘ the terms and conditions contained in this form supersede anything to the contrary printed in the policy to which this form is attached.’ ”

Construing together the language of the policy and of the certificates written thereunder, and giving effect so far as possible to all of the provisions contained within the entire contract, as construed in the light of the attendant circumstances and the essential purpose had in view by the contracting parties, we do not feel authorized to hold, as a matter of law, that the defendant’s contention is sound, and that this particular and peculiar policy must necessarily be taken and construed just as the ordinary “ standard fire policy,” which in express terms limits its protection to “ while ” the property is located as prescribed “ and not elsewhere.” There are other clauses in the contract which seem to somewhat negative any such. intention. For instance, if by legal construction we should say.that the coverage is impliedly limited to while the cars are actually within the building named in the certificates and not elsewhere, then it would be somewhat difficult to interpret and give effect to the clauses of the rider which provide that the policy shall be null and void if the automobile described should be “used for carrying passengers for compensation, or rented, or leased,” or should be “ operated in any race or speed contest,” during the term of this policy. The clause seems to corroborate the plaintiff’s contention that the coverage of this dealer’s policy was not intended to be pinned down to one definite contingency, to wit, while the cars were actually contained within the building mentioned in the certificates, but was intended to provide protection to the dealer against loss by fire under broad and sweeping terms of coverage, having in mind the nature and character of the assured’s business and the usual course and manner of conducting it.

3. If the policy with its riders and certificates were to be construed as limiting the coverage to “ while ” the cars were actually within the building designated by the certificates “and not elsewhere,” we think that the trial judge was, nevertheless, correct in holding that the allegations in the amendment were sufficient to legally raise the issue of estoppel. It has become well settled that a forfeiture of a contract of insurance cannot be waived by a local agent without the express assent of the governing authorities of the company. Lippman v. Ætna Ins. Co., 120 Ga. 247 (4) (47 S. E. 593); Sparks v. Natl. Union Fire Ins. Co., 23 Ga. App. 38 (97 S. E. 462). In other words, if the policy be valid when issued, in accordance with its terms, the subsequent knowledge, permission, or promise of the agent relative to invalidating facts subsequently arising does not have the effect of reviving it. In Graham v. Niagara Fire Ins. Co., 106 Ga. 840 (32 S. E. 579), it was questioned whether even the governing authorities could do so, but in Western Assurance Co. v. Williams, 94 Ga. 128 (21 S. E. 370), it seems to be assumed that in such manner it could be done. It is, however, an equally well-settled principle of law that notice to the local agent who writes the insurance, given at the time the policy is issued and the premium paid, of the existence of a fact which by the terms of the contract would void the insurance prevents the operation of the forfeiture, since “ the knowledge of the agent, who acts for the insurer when the. policy is issued, of existing conditions which enter into the validity of the contract is the knowledge of the principal; and if the policy is issued with knowledge of a fact or condition which by a stipulation in the contract would render it void, the insurer is held to have waived the existence of such fact or condition in its application to the provisions of the policy. Otherwise the insurer would knowingly issue and accept pay for a policy void in its very inception, thereby practicing a fraud upon the insured.” Athens Mutual Fire Ins. Co. v. Evans, 132 Ga. 703, 710 (64 S. E. 993, 996), citing Mechanics Ins. Co. v. Mutual Bldg. Assn., 98 Ga. 262 (25 S. E. 457); Johnson v. Ætna Ins. Co., 123 Ga. 404 (51 S. E. 339, 107 Am. St. Rep. 92). See also Athens Mutual Ins. Co. v. Ledford, 134 Ga. 500 (68 S. E. 91); Atlas Assurance Co. v. Kettles, 144 Ga. 306 (87 S. E. 1); Atlanta Home Ins. Co. v. Smith, 136 Ga. 592 (71 S. E. 902).

In Simonton v. Liverpool &c. Ins. Co., 51 Ga. 76, at the time the jroliey was issued the stock of goods was actually.located in the house where under its terms they were required to be kept. The court held that neither notice to the agent of their subsequent removal nor his verbal consent thereto operated to prevent a forfeiture, on account of such consent not being endorsed on the policy. In Beasley v. Phœnix Ins. Co., 140 Ga. 126, 127 (78 S. E. 722), while the agent knew of the additional insurance prior to the date of the fire, he did not have knowledge thereof at the time the policy was issued. In like manner, in Nowell v. British-American Assurance Co., 17 Ga. App. 46 (85 S. E. 498), the additional insurance referred to was' procured subsequent to the date of the policy sued on. In May v. Globe &c. Fire Ins. Co., 23 Ga. App. 798 (99 S. E. 631), while the vacancy existed with the knowledge of the agent at the time' the policy was issued, it cannot be said that he must have then known that it would so remain for more than the ten days allowed by the contract. In Athens Mutual Ins. Co. v. Evans, 132 Ga. 703 (64 S. E. 993), the rulings made in the syllabus are as follows:

'' 1. Where when a policy of fire insurance was issued upon a house the title thereto was in the insured, and the policy contained a condition that, unless provided otherwise by agreement indorsed thereon or added thereto, it should become void 'if any change, other than by the death of an insured/ took place in the title of the subject of insurance, the subsequent conveyance by the insured of the title to another, to secure the payment of a debt due him for the construction of the house, without the consent of the insurer, indorsed on or added to the policy, was such a violation of the inhibition against a change in the title as by the terms of the policy rendered it void.

“2. Where the policy also provided that 'no officer, agent, or other representative of this company shall have the 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, agent or representative 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/ the agent representing the company when the policy was issued had no power to bind the company by then giving a parol permission for the making of such security deed.

''3. In the absence of fraud, accident, or mistake, the terms of a written contract can not be varied by parol evidence.

"4. As the law of this State requires that a contract for fire insurance shall be in writing, such a contract can not be made partly in writing and partly in parol.

" 5. Where a policy contained the above-mentioned provisions and the. property insured was a house, which the insurance company, at the time the policy was issued, knew the insured was under a moral and legal obligation to convey to another to secure the payment of a debt contracted for its construction, the issuance of the policy with such knowledge did not estop the company, when an action was brought upon the policy to recover for a loss, from insisting that the policy was rendered void when such a conveyance of the insured policy was made without the consent of the insurer thereto having been obtained and expressed as the policy required.”

Even that case does not seem analogous to the one at bar. There, ás is pointed out in the 'opinion (p. Ill), “the policy was not, under facts known to the insurer, according to its terms, void when it was issued. On the contrary, it was then perfectly valid; for'if the house had been, without fault of the insured, destroyed by fire, in the interval of time between the issuance of the policy and the making of the security deed to Golucke & Son, the company would have been liable to the insured under its contract. It was the subsequent act of the insured which invalidated the policy. It matters not that this was an act which he was morally and legally bound to perform, and that the agent of the insurer knew this when the policy was issued. The company issued the policy with a promissory warranty on the part of the insured, implied by his acceptance of the same with the condition as to subsequent change of title therein, that the title should remain as it then was, unless changed with the consent of the company expressed by indorsement upon or addition to the policy. If it be granted that the company knew, through knowledge imparted to its agent, that sooner or later Evans was bound to make the security deed to the contractors who built the house for him, he, on the other hand, knew that in order to execute this deed without thereby rendering the policy void, he must first obtain the written consent of the company, expressed in the manner pointed out by the policy. If he had applied for this consent and it had been refused, he could have surrendered' the policy and collected from the company the difference between the amount of the premium which he had paid and the customary short rate for the time during which the policy remained valid.”

In the instant' case it is set forth in the amendment to the petition that, at the very time the certificates were'issued, thq defendant was informed that the cars were not at the place which the certificates indicate, but that' some of them had already been removed and that the remainder were at that time being removed. In this case, according' to 'the allegations, the insurer' issued'the certificates with actual knowledge to itself through its agent that the statement therein set forth with reference to the location was not true. Accordingly, in the language of the Evans case, supra, since the policy was “issued with knowledge of a -fact or condition which by a stipulation in the contract would render it void, the insurer is held to have waived the existence of such fact or condition in its application to the provisions of the policy.”

4. In reference to the claim for the three bodies for White trucks, while it is plain that the original policy in insuring automobiles sought by express terms to exclude “ extra bodies,” that is, the insurance on an automobile included only “the bodies, chassis and other equipment attached to or forming a part of such automobiles,” still, where by the passbook it is made perfectly plain that in the case of these three bodies they were by special-contract specifically insured as such,' and since the claim is not made as for “ extra bodies ” going along with automobiles insured as such, we think that the terms of the actual contract, as evidenced by the passbook, should govern. It appears from paragraph 4 of the amendment that the insured must have filled out, on a form furnished by the company for that purpose, an entry blank covering these three articles, and that the company thereafter entered the same upon the passbook, thereby assuming the risk, and the plaintiff assuming its own obligation for the premium. The fact that the original policy speaks of the insurance as for automobiles, and excludes extra equipment when issued on automobiles, should not permit the company to escape liability on its own obligation thus definitely and specifically incurred.

Judgment affirmed.

Stephens and Bell, JJ., concur.