Liverpool & London & Globe Insurance v. Stuart

Felton, J. The policy sued on provided: “This entire policy shall be void, unless otherwise provided by agreement in writing added hereto, if the interest of the insured be other than unconditional and sole ownership.” The Supreme Court has held in answer to a certified question that the policy sued on was an entire one. Liverpool & London & Globe Insurance Co. v. Stuart, 191 Ga. 745 (14 S. E. 2d, 98). To a second certified question the Supreme Court answered that its answer to the first certified question does not preclude us from passing on the question of “de minimis non curat lex.” Liverpool & London & Globe Insurance Co. v. Stuart, 193 Ga. 437 (18 S. E. 2d, 681). We do not think the rule which permits a contract against interest less than sole and unconditional ownership applies in this case. When the reason for a rule ceases the rule itself ceases. “The purpose in requiring the insured to have the unconditional and sole ownership of the property insured is to give protection only to those upon whom the loss insured against would inevitably fall except for the insurance, and to avoid taking risks for those whose lack of interest or *187 whose contingent interest in the property insured might tend to encourage carelessness or wrongdoing in the use or preservation of the property.” 29 Am. Jur. 484,-§ 599. The rule is not applicable in this case under the facts because it can not reasonably be contended that an instrument in the nature of an incumbrance of $58 by conditional-sale contract on goods insured for $7000 would be conducive to wrongdoing or carelessness on the part of the insured with reference to the whole property insured, even taking the value found by the jury as the true value. The amount of the instrument is comparatively but a trifle, and under the circumstances ought not to be noticed by the law. Our conclusion is that the instrument did not void the policy. Even though the outstanding title to a small part of the property bears a relationship to the hazard insured against, the amount is not large enough, comparatively, to be “material” to the risk, because it would not in reason violate the rule supporting the sole and unconditional ownership provision stated above. It would seem preposterous to hold that a policy insuring $3000 worth of listed household and kitchen furniture would be void because there was an outstanding conditional-sale contract on a radio or a kitchen stove or refrigerator in the amount of $58. There would be no more cause for avoidance of the policy for such an insignificant outstanding title than there would be for an insignificant violation of a provision against incumbrances, and it has been held that an incumbrance may be so small as not to be material to the risk. 4 Couch Cyclopedia of Insurance, 3134, § 902. Especially is this true where •the instrument involved amounts to no more than an incumbrance so far as practical ownership is concerned. There is another reason why the present policy is not voided by the conditional-sale contract. We have already stated' the basis for the rule supporting the stipulation in a policy providing for avoidance in the absence of unconditional and sole ownership. It will be observed that the reason does not embrace the hazard of an insured’s wrong which arises out of a temptation to wrongdoing to pay off an incumbrance by burning the insured property. This hazard is usually provided for by a provision of some kind in the policy against incumbrances. The sole and unconditional ownership clause does not provide against incumbrances. 3 Cooley’s Briefs on Insurance, 2191. The present policy provides that that *188 part of the property sought to be insured which is incumbered by a chattel mortgage will not be considered covered by the policy. A number of Georgia cases have held that the sole and unconditional ownership clause in an insurance policy is violated by a deed to secure debt and a conditional-sale contract. Conyers v. Yorkshire Insurance Co., 30 Ga. App. 6 (117 S. E. 102); Springfield Fire & Marine Insurmce Co. v. Chero-Cola Bottling Co., 22 Ga. App. 503 (96 S. E. 332); Peoples Credit Clothing Co. v. Old Colony Insurance Co., 47 Ga. App. 819 (171 S. E. 587); Orient Insurance Co. v. Williamson, 98 Ga. 464 (25 S. E. 560); Williamson v. Orient Insurance Co., 100 Ga. 791 (28 S. E. 914). The only reason for such a rule, under the sole and unconditional ownership provision, would seem to be that unless otherwise provided the loss, falls where the legal title lies. Randle v. Stone, 77 Ga. 501. If a vendor under a conditional-sale contract would bear all or part of the loss, the vendee would not have an insurable interest in his own right as to property, the loss of which the vendor would have to bear. The Georgia cases do not discuss this reason, but it must certainly be the assumed reason back of all the cases on the subject, because but for the principle of losses following title a security deed or conditional-sale contract is merely an incumbrance, so far as ownership of property is concerned, as respects any of the rights of an insurance company under a fire-insurance contract. Certainly the risk of an insurance company would be no greater where a house is incumbered by deed to secure debt than it would be if the house was incumbered by a mortgage if the grantor in the deed had to bear the loss in any event. In this case the conditional-sale contract provides that there should be no rescission or abatement in the purchase price if the property Avas damaged or destroyed. Since the loss Avould fall on the vendee, there seems to be no reason why the insureds in this case are not to be considered as the sole and unconditional oAvners of the property under the sole and unconditional oAvership provision. In what we have said Ave have not intended to apply the law of Georgia to this case so far as mortgages are concerned. We have applied the Georgia laAv as to conditional-sale contracts because there was no such contract at common law and no statute law of North Carolina is pleaded. It was not error for the court to strike the defense that a part of the property insured was subject to a conditional-sale contract. *189 There is no merit in ground 5 of the amended motion for new trial. The court did not err in admitting the evidence and in refusing to rule out testimony to the effect that Mr. Stuart had tires stored in a warehouse in Atlanta. The evidence was admissible to show, in connection with testimony to the effect that all of the tires were moved from warehouses in Atlanta to Murphy, shortly before the fire, that there were as many tires destroyed as plaintiffs contended, and to refute the contention of the defendant that there was only a small number of tires destroyed by the fire. The testimony as to the value of the tires in Atlanta was not too remote. It was shown that the value was the same in Atlanta as at Murphy, and the tires were in Atlanta only a few months before the fire. (6). The plaintiffs’ witness Eagle testified that Mr. Stuart had 100 to 200 tires in witness’s garage in Atlanta, and that they were not moved out until March 1939, after the fire. Defendant objected to this evidence, and on the statement by the attorney for the plaintiffs'that the tires would be connected up with the fire the testimony was tentatively admitted. At the conclusion of the evidence defendant’s counsel moved to exclude evidence as to tires in Atlanta and the court denied the motion. The court did not err in not ruling orxt the above evidence for the reason that there was other evidence as to other tires stored in Atlanta which were shown to have been moved to Murphy and put in the building which was destroyed by fire. If the motion had specified the particular evidence at which the motion was directed, so as to put the court and opposing counsel on notice, our ruling might be different. However, it is very doubtful whether admitting this testimony was harmful to the defendant as the witness clearly stated that the tires were not moved from the garage before the fire. The jury put a value on the tires which was less than half of what the plaintiffs contended they were worth. The following charge of the court was not error for any reason assigned: "A slight overestimate by the insured will not avoid the policy. In fact, the estimate must be so plain an overvaluation, that is, so extravagant, as to negative an error of judgment and import an intention to defraud.” This excerpt was assigned as error because (1) it was confusing to the jury; (2) it was misleading to the jury; (3) it excluded from the jury’s consideration *190 a substantial part of the evidence, in that it limited their consideration solely to evidence of extravagance and excessiveness of the claim in determining whether or not there was fraud; (4) it submitted to the jury a matter of law; and (5) it was not sound as an abstract principle of law. The charge was correct so far as it went. The exception does not cover the failure to charge another or other applicable principles of law. The ruling in division 4 applies to the exception to the following excerpt from the charge: “Where evidence that the insured made an excessive estimate of his loss is relied upon as proof of his fraudulent intent, the estimate should be so extravagant as to lead necessarily to the conclusion that the excess was due, not -to an error of judgment, but to an intention to defraud.” The following excerpt from the charge was not error for any reason assigned: “Evidence, gentlemen, to establish fraud or false swearing in connection with an insurance policy must be either direct and positive or the circumstances must be strong, convincing, and preponderating. Loose testimony is not sufficient.” The exceptions are (1) that it required too high a degree of proof; (2) it conflicted with the following part of the charge: “Now, where the defendants have come into court and set forth in their answers certain reasons why the policies have become void, and certain reasons why no recovery can be had thereon, then, gentlemen, as to those defenses, the burden of proof is on the defendants to show to your satisfaction by a legal preponderance of the evidence in the case that the matters set forth by them in order to avoid the policies are true. Having already defined to you what the law means by preponderance of evidence, I will not repeat it. You would not be authorized to presume fraud. It must be, as the court has charged you, proven, and the burden of proof is upon the defendants, and they must prove fraud by a preponderance of evidence— but fraud, being in itself subtle, slight circumstances may be sufficient to carry conviction of existence. While fraud is subtle in its nature and slight circumstances may be sufficient to establish fraud, fraud under the law must not be presumed;” (3) it undertook to exclude a kind of evidence not recognized by the law of Georgia as “loose testimony,” and resulted in confusion to the jury; (4) it was argumentative in that it tended to lead the jury to believe that the evidence offered by the defendant in support of its defense of *191 fraud failed to meet the legal requirements necessary for defendant to sustain its defense; and (5) it was not sound as an abstract principle of law. The rule here is the same as where fraud in connection with an application for insurance is in issue. National Life & Accident Insurance Co. v. Falks, 57 Ga. App. 384 (195 S. E. 463); 26 C. J. 54; 33 C. J. 125; 8 Couch on Insurance, 7185. The jury can not be said to have had any understanding of the term “loose testimony” other than that of explanation of the kind of evidence which had been explained as sufficient, and distinguishing that kind of evidence from the kind which would not satisfy the mind by a preponderance. In other words, the judge meant, and the jury in all likelihood probably understood him to mean, that unconvincing, weak, and indirect proof would not be sufficient. The following excerpt from the charge was not error for any reason assigned: “Each of the policies involved in these suits contains a provision permitting the insured to take out concurrent additional insurance without notice to the insurer until such notice is required. The Murphy Retreading Company was, therefore, permitted under the terms of the policies to take out additional concurrent insurance on this property without notifying any of the companies issuing the insurance that such additional insurance had been or would be taken out.” Ground 8 of the amended motion, not being argued or insisted on, is treated as abandoned. It was not error for the court to refuse to give in charge the following request: “I charge you that if A. J. Stuart and W. E. Humphries, or either of them, has sworn falsely as to the books alleged to have been kept by Murphy Retreading Company, or as to the time when entries in said hooks were alleged to have been made, or as to the tickets alleged to represent moneys paid out and moneys received, such false swearing would void the policy sued on, and you must find a verdict for the defendant,” for the reasons that the request omits to state that false swearing must involve a material matter, and fails to state that the false swearing referred to therein must be with intent to defraud. The policy provides in lines 1, 3, 3, 4, 5-, and 6 on page 3 of the policy as follows: “This entire policy is void if the insured has concealed or misrepresented any material fact or circumstance concerning this insur *192 anee or the subject-matter thereof; or in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after the loss.” This provision of the policy contemplates that the false swearing which will void the policy must be false swearing as to a material matter, and must be done fraudulently. False swearing is defined in Code, § 26-4003, as “wilfully, knowingly, absolutely, and falsely swearing, etc.” The contention of movant that the rulings on demurrers to the answer and amendment made the requested charge applicable under the law of the case is not well founded. The demurrer to certain parts of the answer and amended answer was overruled. The demurrer was as follows: “Plaintiffs move to strike from paragraph 8 of the answer the statement, ‘That said plaintiffs have sworn falsely as to the books and records kept by said plaintiffs/ and from the amendment to defendant’s answer the whole of paragraph 4, on the ground that said statements constitute no defense to this action and are irrelevant, there being no provision in the policy or attached thereto requiring plaintiffs to keep books and records or to keep them íd a safe place or to make any inventory or other record of their stock and equipment or of the operation of their business.” Paragraph 4 of the amendment to the answer is as follows: “Plaintiffs have both knowingly and wilfully sworn falsely in examination under oath conducted on December 1, 1938, in accordance with provisions of the insurance policy, in the following particulars: they have sworn falsely as to what books were kept by the plaintiffs, and when said books were written up; they have sworn falsely about tickets representing money received and paid out; they have sworn falsely as to receipts and disbursements of said business, and as to sales of said business; they have sworn falsely as to the inventory on hand on January 1, 1938; all of which was sworn to falsely for the purpose of defrauding defendant, when said plaintiffs knew that said books were not in fact made up currently as the transactions took place, and that said tickets were not made up currently as the transactions were alleged to have taken place, but were prepared for the purpose of defrauding this defendant subsequent to the dates of the entries reflected by said books and tickets.” The overruling of this demurrer did not eliminate the issues of materiality and intention to defraud from the defense of false and fraudulent swearing. *193 There is no merit in the assignment of error contained in ground 10 of the motion. The assignment of error in ground 11 is as follows: “The jury’s verdict is inconsistent within itself in that the following findings being necessarily comprehended therein are irreconcilable, to wit, (a) plaintiffs’ proof of loss set forth a claim showing damages of $2438.96 on equipment and $5195.27 on stock of goods. (b) The value of the equipment destroyed as found in said verdict was $1610 and the value of the stock of goods destroyed was $1652. (c) The plaintiffs did not falsely state the amount of the loss with intent to defraud the insurer, (d) The plaintiffs did not prepare false records or make false statements regarding material matters for the purpose of defrauding the insurer. The defense as to the value claimed consisted, as movant contends, of evidence of falsification of books by plaintiffs and of falsification of tickets alleged to represent purchases, upon which books and tickets plaintiffs’ claim was based. Movant avers that said verdict is irreconcilable within itself because of the facts hereinabove set forth.” This ground is without merit for the reason that there was opinion evidence of one witness as to the value of the property burned, which evidence was in no way dependent on the proof of loss or the books of the plaintiffs. In addition to this the jury could have considered the nature of the property and other circumstances illustrating its value. Overvaluation does not bar a recovery as a matter of law. 20 A. L. E. 1173. In the cases cited by plaintiff in error there was no opinion evidence of value. In them there was no such basis to explain the difference between the amount claimed in the proof of loss and the amount found by the jury as the loss sustained. It is true that the witness who testified as to his opinion of the value of the tools, machinery, and merchandise stated that the condition on which he agreed to testify was that he be paid debts from the recovery in the case, but the question of his credibility was solely a question for the jury, and it can not be said as a matter of law that the jury did not believe him credible and yet differed with him on his opinion of the value of the property. It would certainly be a mistake to say that every witness who gave an opinion as to value was falsifying because the jury did not make a finding in accordance with his opinion. There are approximately 200 pages of evidence in this case *194 and it is unnecessary to set it forth to encumber the record and the books. The jury was authorized to find as it did. There was evidence which tended to show that the books and tickets were falsified, and there were explanations of the suspicious circumstances which, though they might seem less reasonable to some than to others, were not impossible. The jury saw most of the witnesses and saw fit to accept the explanations given, and we are powerless to overthrow the verdict on the general grounds of the motion. The court did not err in overruling the motion for new trial. Judgment affirmed. Stephens, P. J., concurs specially. Sutton, J., dissents.