Lewis v. Council Bluffs Insurance

Beck, J. 1. Insurance: violation of condition of policy by the assured: waiver by company. I. The policy upon which the action is-brought obligates defendant to pay to plaintiffs all loss resulting from fire, to the amount of twelve hundred dollars, upon the property and m the sums described and specified by the following-language; [194] “ $150 on stock of wines, liquors and cigars. “ $200 on bar and bar furniture and fixtures. “ $50 on ice cooler. “$150 on billiard and pool table. “ $50 on pictures and their frames (in case of loss not to exceed their actual cash value). All contained in the one story frame, shingle roof building, situated, on the east side of Main street, No. 626, Council Bluffs, Iowa.” The instrument contains the following, among other conditions: (1) “ If the interest of the assured in the property be any other than the entire, unconditional and sole ownership of the property, for the use and benefit of the assured, * * * it must be so represented to the company, and so expressed in the written part of the policy, otherwise the policy shall be void. (2) “Any omission to make known every fact material to the risk, or any over-valuation, or any misrepresentation whatever, either in a written application or otherwise; (3) “ Or if the property be sold or transferred, or if any change takes place in title or possession, whether by legal process, judicial-decree or voluntary transfer or conveyance, it shall render the policy void. (4) “If this policy is made payable, in case of loss, to a third party, or held as a collateral security, the proof of loss shall be made by the party originally insured, unless there has been actual sale of the property insured. (5) “ All frauds or attempt at fraud, by false swearing or otherwise, shall cause a forfeiture of all claims on this company under the policy.” Violations of these conditions were, with other matters, pleaded as defenses to the action. THE SAME. II. The evidence discloses that the assured, prior to the issuing of the policy, had executed a chattel mortgage upon the pool tables covered by the, con tract of insurancen to the J. M. Brunswick & Balke Co., and [195] there is no evidence tending to show that defendant, when the policy was issued, was informed of the incumbrance, which then and up to the trial was a lien upon the property. It is insisted by defendant that, under the first condition of the policy above set out, the contract is avoided by the incumbrance. It is, however, shown that, about ten days after the policy was executed, and more than two and a half months before the loss, the defendant, by its secretary, máde and signed an indorsement thereon in the following language, viz: “Loss, if any, on pool tables payable to the J. M. Brunswick & Balke Co., as interest may appear.” While the indorsement does not show the interest in the property held by the parties mentioned, yet it does show that they did hold an interest therein, and that plaintiffs did not hold “ the entire, unconditional and sole ownership of the property.” The defendant was advised of this fact by the indorsement, and the condition requires nothing more ; it does not provide that the defendant shall be informed of the extent and nature of the interest held by persons other than the assured, but simply that the assured do not hold the “entire, unconditional and sole ownership” of the property. We are of the opinion that, by permitting the policy to stand without objection or claim that its terms were violated by the failure of the plaintiffs to communicate information of the existence of the incumbrance when the policy was issued, the defendant waived the breach of the condition. The act of making the indorsement recognized the existence and validity of the contract. It could not have been made without the defendants 'obtaining knowledge that the assured did not hold the.entire and unconditional ownership of the property. By this recognition of the validity of. the policy,' with this knowledge, there was a complete waiver of the right to declare the instrument forfeited for the breach of the condition. An instruction to the jury to the effect that the existence of the mortgage did not avoid the policy, is correct. [196] 2. -: -: policy forfeited. III. Under the indorsement of the policy, the J. M. Brunswick & Balke Co. were entitled to recover from defen d-ant the amount due on their mortgage, upon the happenings of the loss. This the court below held in the instructions. The plaintiffs made two separate applications under oath for the whole amount due from defendant on account of the loss, claiming that they were entitled to recover it; and they have brought this action to recover it. They cannot now claim that they did not know 'that the Brunswick & Balke Co. was entitled to receive and recover the amount due on their chattel mortgage. Had they been successful in their claim, defendant would have been defrauded. It follows that the making of these claims was an attempt to defraud, which, under the express words of the -fifth condition above quoted, avoids the policy. THE SAME. IY. The fourth of the conditions above set out require the party originally insured to make proof of loss. But this does not mean that he may claim and recover ag hig 0wn the full amount of the loss. While making proof of the loss, he should show the interest held by others under assignments or indorsements, to the end that the defendant could pay those entitled to payment. The court should have presented to the jury in proper instructions the rules and principles involved in these views. The instructions given on this branch of the case are in conflict therewith, and are, therefore, erroneous. Other questions discussed by counsel, upon one of which we are not wholly agreed, need not be considered, as the points we have determined are decisive of the case. On account of the errors pointed out, the judgment of the district court is Reversed.