Prose v. Hawkeye Securities Fire Insurance

GATES, J. Defendant insured' plaintiff's auto against loss hy theft. From a judgment for plaintiff upon the policy of insurance an-d from an. order denying new trial, defendant appeals. It was conceded at the trial that, at the time the policy was issued, and at the time of making proof of loss, the car was mortgaged, and that there -was 'due thereon the sum- of $790. The evidence tended to show that respondent met Searls, the local agent of appellant, on- the street, and- a-slce'd- him to- write a policy of insurance on the car; that respondent furnished- Searls -with the numbers of -the car on the next day,and, without securing a Written application, Searls wrote the policy, and 'at respondent’s direction placed it in the part of the safe in Searls’ office in which .respondent kept his papers; that the safe was owned -by respondent but was used jointly -by respondent and Searls; that about a month thereafter Searls learned of the existence of the mortgage, but did not communicate such knowledge to appellant; that.thereafter the premium was paid to Searls by respondent; that the car was stolen; that, after the loss, 'Searls made out a p-roof of loss, which was signed and sworn to by respondent and sent to appellant; and that the proof contained a recital that the car -was not incumbered. There was a dispute in- the testimony of respondent and Searls as to the conversation- that occurred at the time of making the proof of loss. It is -conceded in respondent’s brief that appellant did not have knowledge of the mortgage at the time the policy was issued, •but respondent contends that, by collecting the premium after knowledge of the mortgage .came to the local agent, the company was estopped to assert a forfeiture of the policy. Appellant challenges the correctness of that theory. In support of his contention respondent cites, among other cases, Lyon v. Ins. Co. of [5] Dak., 6 Dak. 67, 50 N. W. 483; Harding v. Norwich Union Fire Ins. Soc., 10 S. D. 64, 71 N. W. 755; Vesey v. Com. Union Assur. Co., 18 S. D. 632, 101 N. W. 1074; and Fosmark v. Eq. Fire Ass’n. 23 S. D. 102, 120 N. W. 777, but in each of those cases the local agent had knowledge of the incumbrance at the time the policy was issued. To the same effect in the recent decision in Lummel v. Nat. Fire Ins. Ass’n (S. D.) 210 N. W. 739. Respondent also cites the following from Lawyer v. Globe Mut. Ins. Co., 25 S. D. 549, 127 N. W. 615: “The vital question, then, is whether the defendant had knowledge or notice of the existence of this mortgage prior to the loss. If it had such notice or knowledge, and failed to cancel the policy, the forfeiture is waived, and' cannot be asserted as a defense in this action.” Taken out of its setting, the above quotation might seem to support respondent’s contention, but in that case the mortgage was given after the policy was written, and, by the verdict, tifie jury found that the plaintiff had given written notice of the mortgage by United States mail to the home office of the insurance company prior to the loss. Such quotation, therefore, must be understood to relate to the situation then before the court. Under the designation of “Representations,” the policy in the present case contains the following: “No. 3. The facts with respect to the purchase of the automobile described as follows: Purchased by the assured. Month: April. Year: 1919. New or Second: New. Actual cost to assured, including equipment: $1,435. The Automobile described is fully paid for by the assured, and is not Mortgaged or otherwise encumbered, except as follows.” No exception thereto is stated in the policy. Under the designation of “Exclusions,” the policy contains the following: “It is a condition of this policy that it shall be null and void: “‘(c) If the interest of the assured in the property be other than unconditional and sole ownership, or if the subject of this insurance be or become incumbered by any lien or mortgage except as stated in the representation No. 3 or otherwise indorsed hereon.’ ” The policy also contains the following provision: [6] “This policy is made and accepted subject to the provisions, exclusions, conditions and representations set forth herein or indorsed hereon, together with such other provisions, exclusions, conditions or representations, as may be indorsed hereon or added hereto, and upon acceptance of this policy the assured agrees that its terms embody all agreements then existing between himself and the company or any of its agents relating to the insurance described herein and no officer, agent or other representative of this company shall have power to waive any of the terms of this policy except such waiver be written upon or attached hereto, nor gha'11 any privilege or permission affecting this insurance under this policy exist or be claimed by the assured, unless so* written or attached.” In view of the fact that this policy was issued and delivered before knowledge of the mortgage came even to the local agent, and in view of the above-quoted provisions of the policy, and in view of the provisions of section 1431, Rev. Code 1919, the settled rule of this state is that respondent may not recover upon the policy. Peet v. Dak. F. & M. Ins. Co., 7 S. D. 410, 64 N. W. 206; Hronish v. Home Ins. Co., 33 S. D. 428, 146 N. W.. 588. To attribute to the company the knowledge of the local agent as to the existence of the mortgage under circumstances here disclosed would violate the above provisions of the policy which the parties had the right to make. The trial court should 'have sustained appellant’s motion for a directed .verdict. In this view a consideration of the other questions raised becomes unnecessary. The judgment .and order appealed from are reversed, and the cause is remanded, with direction to dismiss the action.