Hough v. Anchor Fire Insurance

Sherwin, C. J. The policy in suit contained a stipulation known 'as the iron-safe clause, which, in the instant case, is as follows: The assured under this policy hereby covenants and agrees to keep a set of books, showing a complete record of business transacted, including all purchases and sales, both for cash and credit, together with the last two inventories of said business, which shall be taken annually, and further covenants and agrees to keep such books and inventories securely locked in a fire-proof safe at night, and at all times when the store mentioned in the within policy is not actually open for business, or some secure place not exposed to a fire which would destroy the house where said business is carried on; and in case of loss, the assured agrees and covenants to produce such books and inventories, and in event of failure to produce the same, this policy shall be null and void, and no suit or action at law shall be maintained thereon for any such loss. There was a breach of this condition of the policy, and [577] the defense is based thereon. The trial court instructed that the failure to comply with the provision of the policy as to keeping books and inventories and keeping the same in a safe place would not defeat the right of recovery, but that the ■ provision requiring the production of such books and inventories in case of a loss made it incumbent on the plaintiffs'to reasonably and substantially comply therewith when called upon to do so, and that a failure to produce such books and inventories would defeat recovery, unless a waiver of the breach of the condition was shown. As we understand the argument on rehearing, the appellant does not now contend that the instruction is erroneous, though on the original submission such was in its contention. The appellees have not appealed, and, of course, cannot be heard to complain thereof, and this narrows the controversy to the question of waiver alone. On this question, the jury was instructed that, in order to establish the waiver, plaintiffs must prove that defendant, with full knowledge of the inability of plaintiffs to comply with the stipulation of the policy requiring them to produce the books and inventories, u neglected to declare its intention of insisting on the forfeiture, but by its acts recognized and treated.the policy as a valid and subsisting contract between it and the plaintiffs, and induced plaintiffs to act in that belief, and that plaintiffs thereupon did in fact incur trouble and expense.” The statement that if the defendant “ neglected to declare its intention,” etc., was not a correct statement of the law, be-, cause mere neglect to insist upon a forfeiture would not alone ■constitute a waiver. Ervay v. Fire Ass'n, 119 Iowa, 304; Keeman v. Missouri State Mut. Ins. Co., 12 Iowa, 126. To constitute a waiver, there must be some affirmative act on the part of the insurer, .and it must be conduct which induces the insured to “ rest on the well-founded belief that strict performance of a condition will not be insisted upon.” Lake v. Farmers' Ins. Co., 110 Iowa, 473. But, when such conduct is shown, the insurer cannot in good faith set up [578] the breach of the condition as a bar to recovery. See same case. Mr. .Kirkham, the secretary and general adjuster of the appellant, went to Ottumwa to investigate and adjust the loss. He went to the residences of the plaintiffs, and made inquiries of Mrs. Hundell and Mrs. Hough as to the whereabouts of their respective husbands. They were not within reach, and he was so informed. He then inquired of Mrs. Hundell as to tire time of the fire, by whom it was discovered, and her husband’s first knowledge thereof, which of the two plaintiffs was in the store last the night of the fife, and the time that Mr. Hundell reached home. He also asked the amount of money that Mr. Hough had in the storp at the time of the fire, and about the books, accounts, invoices and safe. He was told by Mrs. Hundell that there was no safe, that the books and accounts were burned, and that there was an invoice, but the date thereof was not known to her. Mrs.’ Hundell also described the books kept by her husband. Mr. Kirkham then told her to tell her husband to send in proofs of loss, and she did so, tell him on the same day. In answer to his inquiries on the same day, Mr. Kirkham was also told by Mrs. Hough that there was no safe and that the papers were burned, and he then told her that “ they would have to send in their proofs of loss,” and that “ he didn’t think there would be any trouble about insurance, because he had been talking to several, and they spoke well of Mr. Hun-dell.” Two days after these conversations Mr. Kirkham returned to Ottumwa. He again called at Mr. Hough’s residence, asked for him, and, on being told by Mrs. Hough that he had not returned, told her ,to tell Mr. Hough that they “ would have to send in their proofs of loss.” ■ Under the instruction of the trial court the breach of the condition consisted in not being able to produce the books and inventories as stipulated. This being true, if the plaintiffs had themselves told Mr. Kirkham that the books and inventories [579] were destroyed .by tbe fire, so that they could not produce them, there can be no question that the defendant would have had full and explicit information on the one vital question, and, if after the lapse of sufficient time for further investigation, it had waived the condition, it could not thereafter say that the waiver was without full knowledge of the breach of the contract, and not binding. If, therefore, the statements of the wives should be treated as if made by the plaintiffs, the same result would follow, because of the second conversation with Mrs. Hough, in which no reservation whatever was made by Mr. Kirk-ham. We know of no authority holding that the knowledge on which a waiver is based must come from any particular person: It is the knowledge itself which' is essential, and not its source. It may be true that Kirkham, in conference with the women, was not bound to assume that they had full information of the facts, or that they were speaking by authority of their husbands, and yet, if their information was correct, and they did in fact impart to him the knowledge that the books and inventories were burned and could not be produced, he was then in possession of all the knowledge necessary on the vital question, and if he then or afterwards chose to act thereon, the defendant cannot complain of the source of such knowledge. The appellant contends, however, that the plaintiffs were bound to send in their proofs of loss, and that Kirk-ham did not therefore induce them to incur any expense or trouble which they need not otherwise have incurred. The fallacy of this argument is apparent, when we consider the fact that the plaintiffs knew, as well as the defendant the condition of the contract, and that they could not recover thereon because of the loss of their books and inventories, and that such being the case they need not have incurred the expense of sending proofs of loss. Hence, if they sent them in response to Kirkham’s request, and by so doing incurred expense or trouble, all of which the' record showed they did, [580] -tbey are within the principle of the cases in which .it has been held that similar acts constituted a waiver of the conditions of the policy. Hollis v. State Ins. Co., 65 Iowa, 454; Brown v. State Ins. Co., 74 Iowa, 428; Corson v. Mut. Fire Ins. Co., 113 Iowa, 641; Lake v. Ins. Co., 110 Iowa, 473; Hudson v. N. P. Ry. Co., 92 Iowa, 231; Ostrander on Fire Insurance (2d Ed.), section 225; May on Insurance (4th Ed.), section 504. This principle is well established by our own cases, and is not in conflict with the rules laid down in Fitchpatrick v. Ins. Co., 53 Iowa, 335, and Antes v. West. Assurance Co., 84 Iowa, 355. The question of waiver was, therefore, properly submitted to the jury, and the judgment is affirmed.