Couch v. Fidelity-Phoenix Fire Insurance

*803 Ouinion on the Court by Judge MoCanduess— Affirming. On the 5th day of October, 1922, the Fidelity-Phoenix Fire Insurance Company issued a fire insurance policy to W. T. Couch, covering a dwelling in the sum of $500 and a smokehouse in the sum of $50. The policy was a five-year farm policy, the premium being payable in installments, the first of which was paid in cash, and the other four being payable on the 1st day of January of each year, beginning January 1, 1924. The policy contained the usual provisions for suspension during the period of default in any of the installment payments after maturity, and also the stipulation: “If the property, or any part thereof, shall hereafter become mortgaged and incumbered, . . . then in each and every one of the above eases this policy shall be null and void.” Couch did not pay the premium installments maturing January 1, 1924, and January 1, 1925, and the property was destroyed by fire December 17, 1925. In the meantime the company had retained the premium note; but it does not appear that any communication passed between the parties in reference thereto until January 27, 1926, when, without any knowledge of the fire, the attorneys for the company wrote the insured, demanding payment of the three installments due thereon on the 1st day of January, 1924, 1925, and 1926. At that time the insured had not notified the company of his loss, and it is not claimed that it had any information in reference thereto. Later, on April 3, 1926, the insured furnished' proof of loss and demanded payment thereof, which was refused, whereupon he filed suit. The insurance company relied on two grounds of defense: (1) That in default of the payment of the premium notes the policy was suspended at the time of the fire; (2) that at the time the policy was issued the property was incumbered by a mortgage for $500, and that later, on the 28th of May, 1924, and after the policy was issued, plaintiff placed another mortgage on the property in the amount of $600, and thereby the policy was forfeited. *804 In Ms reply plaintiff pleaded the unconditional demand for payment of the past due premium notes as- a waiver of the suspension clause. He also pleaded that at the time of the execution of the mortgage, on May 28, 1924, he thought the policy was suspended, and that the company.was carrying his notes in order to afford him an opportunity to reinstate the policy by payment, if he de-. sired; that the mortgage was recorded, and gave constructive notice to the company; and that it thereafter elected to retain the notes as a subsisting demand at all hazards, and to continue the policy in force, thereby waiving the incumbrance provision. The lower court sustained a demurrer to the reply, and, upon the plaintiff declining to plead further, dismissed the petition. Plaintiff appeals. In the late case of Niagara Fire Insurance Co. v. Mullins, 218 Ky. 473, 291 S. W. 760, the court considered at length a policy provision similar to the one in this case, providing a forfeiture in the event the property was subsequently .mortgaged and incumbered. The validity of the provision was upheld, and it was also held that the placing of such incumbrance was material to the risk, and not -affected by section 639 of the Kentucky Statutes. It was further held, at least inferentially, that a failure to cancel the policy after the recordation of such instrument was not, in the absence of actual notice,' in itself evidence of an intention by the insurer to waive the forfeiture provision. No difference is perceived in the two cases. It is not intimated that insurer had actual notice of this incumbrance, and there is nothing in its conduct to intimate that it intended to waive it, and this is sufficient basis for the ruling of the trial court, and renders it unnecessary to -consider the effect of the mortgage that existed upon the property at the time the policy was issued, or of the alleged waiver of the suspension clause, resulting from nonpayment of premiums. Wherefore the judgment is affirmed.