Miller v. Eagle Star & British Dominions Insurance

June 11, 1928. The opinion of the Court was delivered by This action by A.H. Miller, as plaintiff, against the above-named defendant, Eagle, Star British Dominions Insurance Company, etc., which, for convenience, will be referred to herein as Insurance Company, was commenced in the Court of Common Pleas for Dillon County by service of summons and complaint January 14, 1925, for recovery on a fire insurance policy issued by the defendant to the plaintiff on the 2nd day of August, 1924, to be of force for a period of one year, covering a certain frame building and leaf and scrap tobacco contained in said building, located on the plantation of plaintiff's father in the said County of Dillon. The building and its contents were destroyed by fire August 23, 1924. The defendant paid to the plaintiff the sum of $100 for the loss of the building, but refused to pay for the destruction of the tobacco and offered to return the insurance premium. Thereupon this suit by the plaintiff against the defendant was commenced for the sum of $1,000 for the alleged value of the tobacco thus destroyed, together with interest from the date of the fire. The defendant, by way of answer, in addition to denying certain allegations of the complaint, interposed an affirmative defense as follows: *Page 126 "(3) Alleges that the policy of insurance involved in this case contains a provision that, `unless otherwise provided by agreement in writing added thereto, this Company shall not be liable for loss or damage to any property insured hereunder while incumbered by a chattel mortgage.' "(4) Alleges that without notice to this defendant, the plaintiff before a loss, incumbered the tobacco covered by the policy by two chattel mortgages to the First National Bank of Dillon." Upon the trial of the case before his Honor, Judge W. H. Townsend, and a jury, both parties to the cause introduced testimony, at the conclusion of which, on motion of defendant's counsel, his Honor, Judge Townsend, directed a verdict, for the defendant. From the judgment entered on the verdict, the plaintiff has appealed to this Court, and asks a reversal of the judgment of the lower Court on the grounds set forth under his exceptions. The appellant's exceptions — four in number — raise the following questions: "(1) The Court erred in directing a verdict for the defendant, Insurance Company, in that there was evidence of waiver of the mortgage clause of the policy, which should have been submitted to the jury. "(2) The Court erred in directing a verdict for the defendant, Insurance Company, because the alleged mortgage was a paper given by the plaintiff on his interest in crops to be cultivated by him as a laborer on shares, and was not a chattel mortgage within the meaning of the insurance policy, and, in any view, it did not purport to cover but one-half of the property." In considering the first question above presented, we shall refer to the testimony adduced at the trial in connection with the provision contained in the policy upon which his Honor, the presiding Judge, based his order directing a verdict for the defendant. The provision in the policy involved under this question is contained in this language: *Page 127 "Unless otherwise provided by agreement in writing added hereto, this Company shall not be liable for loss or damage to any property insured hereunder while incumbered by a chattel mortgage, and during the time of such incumbrance this Company shall be liable only for loss or damage to any other property insured hereunder." The following is an agreed synopsis of the alleged chattel mortgage executed by the plaintiff: "A.H. Miller to the First National Bank of Dillon, S.C. Instrument in writing in the form and ordinary shape of chattel mortgage, with note attached. Dated February 14, 1924, for the sum of $150.00, due October 1, 1924, with discount before and after maturity at 8%. Said instrument is signed by A.H. Miller, witnessed by F.M. Fitts, probated by notary public, and recorded February 15, 1924, in Book 37, page 373, of Chattel Mortgage Book in the office of the Clerk of Court of Dillon County. "Description of property follows: "My one-half interest in five acres of tobacco and eight acres of cotton and all interest in four acres of corn to be grown on the land of E.W. Miller ; also one bay mare horse about seven years old, named `Bell'." Appellant takes the position, assuming for the sake of argument that this paper so executed by the plaintiff is a chattel mortgage within the purview of the provision of the policy, that the testimony adduced at the trial showed waiver of this provision of the policy. The plaintiff on this point testified, in referring to conversation had with Mr. Stevens, agent of the Insurance Company who issued the policy: "Q. Now, Mr. Miller, did you have a conversation with Mr. Stevens, the agent for the Company, along about that time? A. Yes, sir; had one about every week. "Q. The Company had sent this gentleman or some gentleman down who had gone into the value of the stuff *Page 128 and all that, and it was November before you turned it over to me, was it not? A. Some time; I know it was a good while, Mr. Lane. "Q. Before that time did you go to Mr. Stevens continually about collecting the insurance? A. Yes, sir. "Q. Did you ask him what was the matter? A. I did. "Q. What did he tell you? A. He said he thought it was tied up on account of the mortgage, but he said he did not think it would amount to anything. He said he knew there was a mortgage on it, but he never asked me about it, and forgot to put it in. He thought they would settle, he said." It is true, as contended by respondent, that a mere statement by an agent of the Insurance Company to the effect that he hoped and thought the insured would be paid for his loss, even though there was an outstanding mortgage against the insured property at the time of the fire, will not bind the Company, does not constitute waiver, and is not evidence to be considered on that question; but testimony tending to show that the agent of the Insurance Company had knowledge of an existing mortgage at the time of issuing the policy is evidence on the question of waiver of such provision in the policy. In this connection we call attention to this statement in the testimony of the plaintiff in answer to the question as to what Mr. Stevens, the insurance agent, told the plaintiff: "He said he knew there was a mortgage on it, but he never asked me about it, and forgot to put it in." Clearly, this statement on the part of Mr. Stevens had reference to the time the policy was issued, and, according to our view, tends to show that the agent, Mr. Stevens, had knowledge of the existing alleged mortgage at the time of the execution and delivery of the insurance policy, and, under the well-recognized rule, made an issue for the jury on the question of waiver. If the agent of the Insurance Company had knowledge of the existing mortgage at the time the *Page 129 policy in question was issued, and, notwithstanding such knowledge, issued the policy, then, in that event, the Insurance Company would be held to have waived the provision in the policy pertaining to mortgages. Respondent calls attention to the fact that the agent, Mr. Stevens, in his testimony, stated that he did not acquire knowledge of the existing chattel mortgage until after the fire. This, in our opinion, simply made a conflict in the testimony and a question for the jury, but furnished no basis for a direction of a verdict. Again, we do not agree with respondent's contention that the letter written by the plaintiff in which the plaintiff stated he did not mention the mortgage when he made application for the policy was decisive on the question and warranted his Honor, the presiding Judge, in directing a verdict for the defendant. This letter, according to our view, was simply additional testimony to be considered by the jury on the question of waiver. We are clearly of the opinion that there was some testimony from which the jury could have reasonably inferred that the agent of the Insurance Company had knowledge of the alleged existing mortgage when the policy in question was issued, and that the issue of waiver should have been submitted to the jury. As to the second question presented by appellant's exceptions, under which appellant takes the position that the alleged mortgage was not a mortgage for the reason that it was "a paper given by the plaintiff on his interest in crops to be cultivated by him as a laborer on shares within the meaning of the insurance policy," we do not agree with appellant's position. There seems to be no dispute that the plaintiff, in the year 1924, was working for his father as laborer on the share crop basis, and that he was to be paid for his said services one-half of the crops made by him, and that the alleged mortgage was executed by the plaintiff to the First National Bank of Dillon, February 14th of that year, covering the interest of the plaintiff in the crops *Page 130 to be cultivated by the plaintiff under said laborer's contract; the description of the property being as follows: "My one-half interest in five acres of tobacco and eight acres of cotton and all interest in four acres of corn to be grown on the land of E.W. Miller; also one bay mare horse about seven years old, named `Bell'." As contended by appellant, under the decisions of this Court, a share cropper has no title to any portion of the crop until there is an division and he has received his share of the crop. For this reason, a share cropper cannot maintain an action at law for the possession of his share of the crop, but he has an equitable interest and can maintain an action in equity for a settlement and division of the crop. Further, an equitable interest in property may be mortgaged, and therefore there is nothing to prevent a share cropper from executing a mortgage over his interest in the crop, subject, however, to any claim that the landlord may have against him for advances, and when a division is made and the share of the share cropper has been delivered to him, the mortgage may enforce his mortgage against the same. These views are in accord with the decisions of this Court in the following named cases: Neal v. Suber, 56 S.C. 302;33 S.E., 463. Clerks' Benevolent Union v. Knights ofColumbus, 70 S.C. 547; 50 S.E., 206. Mayfield v. Bessinger, 87 S.C. 370; 69 S.E., 673. Malcolm MercantileCo. v. Britt, 102 S.C. 499; 87 S.E., 143. State v. Sanders,110 S.C. 487; 96 S.E., 622. Lipscomb v. Johnson, 123 S.C. 44,115 S.E., 753. Birt v. Greene, 127 S.C. 71; 120 S.E., 747. In this connection, we also call attention to the following definition of "Chattel Mortgages" given in 11 C.J., 398: "A chattel morgage is a conveyance of some present legal or equitable right in personal property, as security for the *Page 131 payment of money, or for the performance of some other act." We therefore agree with the position of respondent on this proposition that the mortgage in question comes within the provision contained in the policy as to incumbrances by chattel mortgages, but we do not agree with respondent as to the contention that the mortgage in question covered all of the property covered by the policy. Before the insurance policy was issued, according to the undisputed testimony, the tobacco crop had been gathered and the plaintiff's father had traded to the plaintiff his interest in the tobacco crop for the interest of the plaintiff in the other crops, cotton, corn, etc., so that at the time the policy was issued the plaintiff had in his possession as owner all of the tobacco that had been raised under the contract between the father and the son, and the mortgage was, at that time, in a position to enforce his mortgage against the property covered by the mortgage. The position of the respondent is, although the chattel mortgage given to the bank covered only the interest of the plaintiff in said crop, which was a one-half interest, when the plaintiff received in the trade with his father all of the tobacco that the bank's mortgage was, by operation of law, centered upon all of the tobacco, because the plaintiff had become owner of all of the tobacco. We do not agree with this position. The chattel mortgage in question also covered a bay horse. Suppose, for instance, the plaintiff had traded the bay horse for a white horse, it would hardly be contended that the bank, under the mortgage, could take the white horse in the place of the bay horse. The bank would have to follow the bay horse, and, as we view the case, the mortgage in question, covering only one-half of the tobacco covered by the policy, could not be extended to cover the tobacco which the plaintiff got in a trade with his father, but, certainly, in no event, was the mortgage in question an incumbrance over but one-half of the tobacco which was insured *Page 132 against fire by the defendant, and the other half was free from incumbrance. Under such conditions there is recognized authority (See 26 C.J., 185) for the position that the alleged mortgage does not fall within the provision contained in the policy as to incumbrances by chattel mortgage. In any event, according to our view, his Honor, the presiding Judge, was in error in directing a verdict for the defendant. It is, therefore, the judgment of this Court that the judgment of the Circuit Court be reversed, and the case remanded for a new trial. MR. CHIEF JUSTICE WATTS, and MESSRS. JUSTICES BLEASE and STABLER concur. MR. JUSTICE BLEASE: I concur in the result of the opinion of Mr. Justice Carter reversing the lower Court in this cause. While I find no fault with the authorities cited by Mr. Justice Cothran in his dissenting opinion as to the testimony of the conversation of the agent of the Insurance Company with the plaintiff, I think the case of Williams v.Western Union Telegraph Co., 138 S.C. 281;136 S.E., 218, is conclusive that the testimony was competent, and that such testimony was sufficient to carry the case to the jury. This Court decided in the Williams case: "When there is any question about whether matter is within scope of agent's employment at time of act done, it is usually question for jury." Syl. In the case at bar, there is a question whether the alleged statements of the agent to the plaintiff were within the scope of his agency at the time they were made, and under the authority cited this question was one for the jury to determine.