Baker v. Union Assurance Society of London, Ltd.

*288 MR. JUSTICE' STARK delivered the opinion of the court. This is an action on a fire insurance policy in which plaintiff, as receiver of the Denton State Bank, seeks to recover <a judgment against the defendant for damages alleged to have been sustained on account of the destruction by fire of a certain frame building located at Denton, Montana, upon which defendant had issued a policy of insurance running to Claude Stanley, which damages and the right to recover the same it is alleged were assigned to Denton State Bank by said Stanley after the fire. The cause was tried to the court without a jury and judgment rendered and entered in favor of the plaintiff, from which the defendant has appealed. The policy in question was issued on August 13, 1921, became effective October 1, 1921, extended for a period of one year from that date, was in the sum of $3,000, covered a frame building and sheds appurtenant thereto used as a livery-stable, located on lots 5 and 6 in block 14 of Denton, Montana, and contained, amongst others, the following provisions: “This entire policy unless otherwise provided by agreement indorsed hereon or added hereto shall be void if any change, other than by death of an insured, take place in the interest, title or possession of the subject of insurance, whether by legal *289 process or judgment or by voluntary act of the insured or otherwise.” “That the policy is made and accepted subject to the following stipulations and conditions printed on the back hereof, together with such other provisions, agreements or conditions as may be indorsed hereon or added hereto, and no officer, agent or other representative of this Society shall have 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.” “This entire policy, unless otherwise provided by agreement jindorsed hereon or added hereto, shall be void * * * if, 'with the knowledge of the insured, foreclosure proceedings be commenced or notice given of sale of any property covered by this policy by virtue of any mortgage or trust deed.” There ¡was a mortgage clause attached to the policy, making the loss, ¡if any, payable to C. S. Harris as his interest might appear. (1) Counsel for defendant, by the first specification of error in their brief assert that the plaintiff is not the real party in interest and therefore not entitled to maintain this suit. The admitted facts in this connection are that the insured property was' destroyed by fire on or about November 27, 1921 • that thereafter defendant made settlement with the mortgagee, Harris, for the amount of his mortgage interest in the insured property; that subsequent to the date of the fire Stanley signed an indorsement which was printed on the back of the policy, reading as follows: “Assignment of interest by assured. The interest of Claude Stanley as owner of the property covered by this policy is hereby assigned to Denton State Bank subject to the consent of the Union Assurance Society of *290 London, Limited,” and thereafter the written consent of the defendant to such assignment was duly indorsed upon the policy. Counsel urge that by this indorsement Stanley merely assigned his interest in the property covered by the policy and that it is insufficient to transfer to the plaintiff any right to the proceeds of the policy or a right to maintain an action thereon to recover the same. An examination of the authorities shows that an assignment like the one signed by Stanley is treated as an assignment of the policy and carries with it the right of the assignee to maintain an action thereon. In Ober & Sons v. Manufacturing Co., 145 Ala. 625, 40 South. 278, an assignment of an insurance policy had been made by the assured after a loss by fire on a form identical with the one signed by Stanley in this case, and the court said: “This indorsement was sufficient to authorize an action on the policy by the assignee and, this court has held, transferred the policy when made after the fire although the policy contained the stipulation prohibiting the assignment.” (See, also, Hartford Ins. Co. v. Citizens’ Bank, 166 Ark. 551, 39 A. L. R. 1458, 266 S. W. 675; Georgia Co-operative Fire Assn. v. Borchardt & Co., 123 Ga. 181, 3 Ann. Cas. 472, 51 S. E. 429.) Under these authorities the plaintiff standing in the place of the assignee of the policy, has a right to maintain this action thereon. (2) Defendant’s answer alleged that the conditions of the policy had been broken and the same rendered void, for the reason that without any agreement therefor having been indorsed on the policy, (1) on or about the twenty-second day of October, 1921, all the property covered by the policy was sold by the sheriff of Fergus county under an order of sale issued out- of the district court of that county, in an action wherein C. S. Harris was plaintiff and Grace Miller, Cl-aude ¡Stanley et al. were defendants, and a -sheriff’s certificate issued thereunder, showing that C. S. Harris had become the purchaser thereof, and that thereby a change in the interest and *291 title of the subject of insurance took place without the knowledge or consent of defendant or any of its officers or agents; (2) that subsequent to the issuance of the policy, with the knowledge of the assured, notice was given and published of the sale of the insured property on October 22, 1921, under the proceedings above referred to, and that neither the defendant nor any of its officers or agents had knowledge thereof until after the destruction of the property by fire. To these matters the plaintiff by reply pleaded that by the acts and conduct of the defendant, which will be hereafter referred to, it had waived the same and was estopped from relying upon them as a defense to plaintiff’s action. There is no dispute over any fact leading up to or connected with the sale of the property by the sheriff above referred to. On July 9, 1921, C. S. Harris commenced an action in the district court of Fergus county to foreclose two mortgages held by him-covering the lots upon which the insured building was located and such proceedings were had that on September 22, 1921, a judgment of foreclosure and sale was duly given and made therein, whereupon an order of sale was issued in the action, by virtue of which the sheriff of the county duly advertised the property for sale on the twenty-second day of October, 1921, and on that day sold it to C. S. Harris and delivered to him a certificate of sale therefor. It is admitted that there was no agreement in writing indorsed upon or added to the insurance policy consenting to or recognizing the change of the interest and title of the insured property effected by the sheriff’s sale. We shall first consider the second of the defensive matters pleaded. The notice of sale therein referred to, and which it is claimed voided the policy, is the notice published and posted by the sheriff in connection with the sale of property under the foreclosure proceedings mentioned. The provisions of the policy do not apply to such a notice. The notice contemplated by the policy is one given in the enforcement of a mortgage under a power of sale which may be included therein and *292 •without, court proceedings. (Stenzel v. Penn Fire Ins. Co., 110 La. 1019, 98 Am. St. Rep. 481, 35 South. 271; 26 C. J. 239, and cases cited.) In 4 Joyce on Insurance, section 2270B, it is said: “But a condition in a policy that it shall be void if, with the knowledge of the insured, notice of sale of any of the insured property shall be given by virtue of any mortgage or trust deed, has reference to extrajudicial enforcement of a mortgage by means of notice to the mortgagor.” The publication and posting of this notice, therefore, did not operate to render the policy void under the provisions thereof above quoted. (3) This leaves for consideration only the questions arising as a result of the sale of the property on October 22, 1921. Upon the issuance of the sheriff’s certificate under such sale the title to the property passed to the purchaser, C. S. Harris, and Stanley had left only the right to redeem from the sale within the statutory period of one year. (McQueeney v. Toomey, 36 Mont. 282, 122 Am. St. Rep. 358, 13 Ann. Cas. 316, 92 Pac. 561; State ex rel. Hopkins v. Stevens, 63 Mont. 318, 206 Pac. 1094; Libby Lumber Co. v. Pacific States Fire Ins. Co., 79 Mont. 166, 255 Pac. 340.) However, Stanley’s right to redeem was an insurable interest in the property and continued to exist after the sale. (Baker v. Pennsylvania Fire Ins. Co., ante, p. 271, 263 Pac. 93.) The condition in the policy declaring that it should become void if any change other than by death of the insured should take place in the interest, title or possession of the subject of the insurance without the consent of the company indorsed thereon or added to the policy, is valid and enforceable. (Joyce on Insurance, sec. 2246; East v. New Orleans Ins. Assn., 76 Miss. 697, 26 South. 691.) But the condition in the policy may be waived by a subsequent parol agreement. (3 Cooley’s Briefs on Insurance, 2606; Mackintosh v. Agricul *293 tural Fire Ins. Co., 150 Cal. 440, 119 Am. St. Rep. 234, 89 Pac. 102.) Notwithstanding the further provisions of the policy that no officer, agent or representative of the defendant shall be deemed to have waived any condition or provision contained therein, unless such waiver shall be in writing indorsed upon or attached to it, an insured is not precluded from relying on a parol subsequent waiver by an authorized agent of the company. (3 Cooley’s Briefs on Insurance, 1st ed., 2607, and cases cited; Eagle Fire Co. v. Lewallen, 56 Fla. 246, 47 South. 947; Alexander v. Continental Ins. Co., 67 Wis. 422, 58 Am. Rep. 869, 30 N. W. 727.) It is conceded that the insurance policy became forfeited by reason of the sale of the insured property by the sheriff on October 22, and the failure to have an agreement and consent thereto indorsed upon the policy, unless this provision had been waived or the defendant otherwise placed in a position where it was estopped from urging such failure as a defense to the plaintiff’s action. To establish the fact that this provision of the policy had been waived and that defendant was estopped from urging it as a defense to this action, the plaintiff testified that the insurance policy was issued to Stanley by Walton Hood Grant, as agent of the defendant company at Denton; that the plaintiff is an attorney at law and as such was representing Stanley in the foreclosure proceeding instituted' by Harris above mentioned, and which was pending at the time the policy was issued on August 13, 1921; that before writing the policy the agent, Grant, went to the plaintiff’s office to make inquiry concerning the status of Harris’ mortgages; that the foreclosure proceedings were there discussed and Grant fully advised as to their exact status, and that about two weeks after the sale plaintiff had a conversation with Grant at his office in Denton, in which the fact that the insured property had been sold in the foreclosure proceeding was discussed. *294 The assured, Stanley, testified concerning the issuance of the policy in question by Grant on or about the thirteenth day of August, 1921, and that in a conversation with Grant at that time he explained to the agent that Mr. Harris had a mortgage on the premises which was being foreclosed, and that he was trying to make arrangements with Harris to remain in possession of the premises during the period of redemption; that Grant did not say anything about the foreclosure proceedings having anything to do with the insurance, and that Grant came to the insured premises to see him about the unpaid premium in the latter part of October. When the witness was asked about a conversation he had with Grant at that time, counsel for defendant objected to it solely “on the grounds that the same is not binding on the company as no indorsements relative to the same were placed on the policy in question.” The objection was overruled and the witness said: “He [Grant] came down to collect the premium and I told him about the foreclosure proceeding and that the property had been sold to Mr. Harris and Mr. Harris held the sheriff’s certificate of sale, and asked him if there should not be a notation placed upon the policy to that effect, and he said, no, the policy was all right. This conversation took place some time after the twenty-second day of October, 1921, about a month before the fire.” Upon cross-examination concerning this conversation the witness said that when he asked Grant if there should not be a notation about the foreclosure and sale placed on the policy, he replied that “it was not necessary.” After the sheriff’s sale Stanley remained in possession of the premises under an agreement by which he was to make monthly payments, which were to apply on the mortgage indebtedness and after he had paid back the money Harris was out on the foreclosure proceedings, the property should be deeded back to him. The agént Grant admitted knowledge of this agreement. While the testimony of Grant who testified on behalf of the defendant, was not in entire accord with the statements *295 made by tbe plaintiff and Stanley, upon the whole record the court could not have well found that the facts were other than as testified to on behalf of the plaintiff. The testimony showed that Grant was the agent of the defendant at Denton and as such had authority to accept risks, issue policies of insurance, and that he claimed authority to cancel the same; that he had authority to collect premiums on such policies and to consent to assignments thereof, and to insert therein conditions relative to the interests of a mortgagee in the insured property and, so far as the mortgage was concerned, to consent to a change of title on foreclosure. There is not in the record a showing of any restriction or limitation upon his power as agent and, under the evidence, there can be no doubt whatever that he had ample authority to have indorsed upon the policy in question an agreement for a consent to a transfer of the interest and title to the insured property under the sale thereof by the sheriff on October 22, 1921, in accordance with the terms of the policy so as to have avoided the forfeiture thereof, and that such an agreement and consent would have been binding upon the company. The authority of Grant is not shown to have been restricted and hedged about with limitations such as the agents were in the case of Careve v. Phoenix Ins. Co., 67 Mont. 236, 215 Pac. 235. In Wells-Dickey Co. v. American A. Ins. Co., 69 Mont. 586, 223 Pac. 489, it appeared from the agreed statement of facts that the insurance policy was written by one Farmer and that during the time in question he “was and now is the agent of the defendant company in Miles City, Montana.” In speaking of the authority of this agent, the court said: “The stipulation in the record that Farmer was the agent of the defendant is not restricted by any statement showing limitation of his authority. By section 7930, Revised Codes of 1921, it is provided: ‘An agent for a particular act or transaction is called a special agent. All others are general agents.’ *296 Therefore, in the absence of a showing to the contrary, and there is none, it must be held that Farmer was the general agent of the company, which implies that he was an agent having exclusive charge and control of his principal’s interests at Miles City and in the region tributary thereto; thus he stood in the position of a vice-principal.” In the instant case, Grant testified that he was the agent of the defendant company at Denton “for the soliciting and writing of policies and the collection of premiums.” Still, as above pointed out, he did much more than to merely write policies and collect premiums, and in the absence of a showing of limitations upon his authority we think he must be held to have possessed the powers of a general agent of defendant at Denton. (Bank of Anderson v. Home Ins. Co., 14 Cal. App. 208, 111 Pac. 507; 26 C. J. 287; Continental Ins. Co. v. Ruckman, 127 Ill. 364, 11 Am. St. Rep. 121, 20 N. E. 77; Manning v. Connecticut Fire Ins. Co., 176 Mo. App. 678, 159 S. W. 750.) As such agent, Grant knew before he wrote the policy that the insured property was mortgaged to Harris and that proceedings were pending to foreclose the mortgage. He knew that the property had been sold at sheriff’s sale and that Stanley was to remain in possession, at least during the period of redemption. This knowledge was imputable to the defendant. (Wells-Dickey Co. v. American A. Ins. Co., supra; sec. 7959, Rev. Codes 1921.) With this knowledge, Grant advised Stanley, the insured, that the policy was all right, and that it was not necessary that there be a notation thereon relative to the sale of the insured property under the foreclosure proceedings. This statement was binding on the defendant under the authorities above cited. The effect of a statement made under such circumstances is well set forth in West v. National Casualty Co., 61 Ind. App. 479, 112 N. E. 115, in these words: “It is well settled that, ‘when one party has by his representations or conduct induced the other party to a transaction to give him an ad *297 vantage which it would be against equity and good conscience for him to assert, he will not, in a court of justice, be permitted to avail himself of that advantage.’ ” In Alexander v. Continental Ins. Co., 67 Wis. 422, 58 Am. Rep. 869, 30 N. W. 727, it is said that the authority of the agent to waive the condition of an insurance policy has been frequently asserted and “this rule is absolutely necessary for the protection of the'insured. The insured deals with no one but the agent; the company cannot deal with its patrons in any other way. Justice and law, therefore, require that the company shall be held to sanction what the agent agrees to, and upon which the insured relies. To allow the company to enforce a condition or forfeiture of the policy for a neglect to do that which the agent informs the insured shall not avoid the policy, would work the greatest injustice.” Authorities to the same effect could be cited almost indefinitely and will be found referred to in the text-books and cases above mentioned. When Stanley directed the attention of the defendant’s agent to the fact that the insured property had been sold at the sheriff’s sale, he must have had in mind the provisions of the policy which declared that it would become void in the event of a change in the interest, title or possession of the subject of the insurance, unless otherwise provided by an agreement indorsed thereon, for he inquired of the agent whether there should not be a notation of the sale made upon the policy, but the agent advised him that the policy was all right, and that such a notation was not necessary. It would clearly be unjust and inequitable to allow the defendant to escape liability because no agreement concerning the change of title and interest of the insured property effected by the sheriff’s sale was indorsed on the policy, when, speaking through its agent, it had advised Stanley, the assured, that such indorsement was not necessary. *298 (Decided February 6, 1928.) We think the judgment should be affirmed, and it is so ordered. Affirmed. Mr. Chief Justice Callaway and Associate Justices Myers, Matthews and Galen concur.