Shawnee Fire-insurance v. Knerr

The opinion of the court was delivered by Greene, J.: On the 7th day of October, 1903, Mrs. E. I. Knerr, being the owner of a general stock of merchandise contained in a building situated in Manchester, Kan., procured a policy of insurance in the Shawnee Fire-insurance Company, of Topeka, Kan., on the stock in the sum of $2000. On the night of February 2, or the morning of February 3, 1904, the stock was totally destroyed by fire. The company paid the plaintiff $1500 by way of settlement. This [386] action was brought to recover the remaining $500 of the policy, on the ground that the settlement was obtained by duress. Of the many questions argued by the plaintiff in error, the one.that is decisive of the case in this court arises under the following condition of the policy: “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 inventory of said business; and further covenants and agrees to keep such books and inventory securely locked in a fire-proof safe at night, and at all times when the store mentioned in the within policy is not actually opened for business, or .in some secure place not exposed to a fire which would destroy the house where such business is carried on; and, in case of loss, the assured agrees and covenants to produce such books and inventory, and in the event of a failure to produce the same this policy shall be deemed null and void, and no suit or action at law shall be maintained thereon for any such loss.” The insured neglected to keep a safe. She permitted the books used in conducting the business to remain in the store where the insured stock was kept at night, where they could not escape destruction if the stock and building burned. The building and stock were destroyed by fire on February 2 or 3, 1904. The ledger, the cash-book, the day-book of credit sales, the bank-book, the invoices — in fact, all of the books pertaining to the business, except a book called a “ledgerette,” which is said to have contained the credit accounts — were in a desk in the building and were destroyed. The company contends that by the failure of the insured to comply with this condition of the contract of insurance she forfeited her right to recover anything under the policy. This provision was inserted in the policy so that if a fire should occur the company would have some data from which it might approximate the [387] actual value of the stock destroyed. It is not an unreasonable precaution; it is one with which the insured might very easily have complied. In any event, the parties making the contract agreed that it should be performed by the insured, and since it is a part of the contract it cannot be ignored or arbitrarily set aside. It is generally held that neglect on the part of the insured substantially to comply with a clause in an insurance policy to keep the books used in conducting the insured’s business in an iron safe, or in some place where they will not be destroyed in case the place in which the insured stock is kept is consumed by fire, will avoid the policy. (Hanover Fire Ins. Co. v. Crawford, 121 Ala. 258, 25 South. 912, 77 Am. St. Rep. 55; Shoe Co. et al. v. Insurance Co., 8 Tex. Civ. App. 227, 28 S. W. 1027; Standard Fire Ins. Co. v. Willock, 29 S. W. [Tex. Civ. App.] 218; Goldman et al. v. Insurance Co., 48 La. Ann. 223, 19 South. 132; Keet-Rountree Drygoods Co. v. Ins. Co., 100 Mo. App. 504, 74 S. W. 469.) We see no good reason for not adhering to this rule in the present case. The binding force of this clause and the consequent effect on the plaintiff’s right to recover in case of noncompliance therewith are not strongly denied. The insured contends that the company, by the conduct of its agents and adjuster, waived the performance of this condition. The fire occurred in the night of February 2, or early in the morning of February 3, 1904. Notice was given the company, and its adjuster appeared in response thereto on the morning of February 8. After the most common preliminary talk about the fire and the loss, and .a disclosure that the books were destroyed, the adjuster refused to enter into a general investigation looking to an adjustment until the insured would sign a non-waiver agreement. Knerr, who was acting for his wife, hesitated to sign such an agreement until he had consulted a lawyer; and after having consulted his lawyer and his wife, [388] the plaintiff, he returned and both parties signed the following agreement: “NON-WAIVER AGREEMENT. “It is hereby mutually understood and agreed by and between E. I. Knerr, of the first part, and the Shawnee Fire-insurance Company, of Topeka, Kan., and other companies signing this agreement, part— of the second part, that any action taken by said party of the second part in investigating the cause of fire or investigating and ascertaining the amount of loss and damage to the property of the party of the first part caused by fire alleged to have occurred on February 3, 1904, shall not waive or invalidate any of the conditions of the policy of the party of the second part, held by the party of the first part, and shall not waive or invalidate any right whatever of either of the parties to this agreement. % “The intent of this agreement is to preserve the rights of all parties hereto, and provide for an investigation of the fire and the determination of the amount of the loss or damage without regard to the liability of the part— of the second part. “Signed in duplicate, this 8th day of February, 1904.” By the terms of this agreement the insured said to the company: “Your acts while investigating the cause of the fire and the amount of damage or loss sustained shall not be construed into a waiver on your part of the performance by me of any of the conditions of the policy — either those which should have been performed in the past or those which it may become my duty to perform in the future.” The acts of the company while investigating these two questions must be construed with reference to this agreement. Thus construed, there is no evidence of a waivei by the company of conditions which should have been performed by the insured previous to the fire. It is also contended that the company’s local agent, who insured the property, was perfectly familiar with the store and the stock carried by the insured, and knew when he issued the policy that the insured had no iron safe and did not keep one in the store and [389] could not comply with the condition, and, therefore, that the acceptance of the risk with this knowledge es-topped the company to plead the non-performance of this condition of the policy. The clause referred to required the insured to keep the books in a fire-proof safe in the building at night and at all times when the store was not open for business, • or in some secure place not exposed to a fire that would destroy the house where such business was conducted. Conceding that the agent issuing the policy was familiar with the insured store building and stock, and knew that the insured did not keep an iron safe, and that he issued the policy knowing the existence of these conditions, that could not be construed into a waiver of the obligation of the insured to keep the books at night, and when the store was not open for business, in some secure place not exposed to a fire that would destroy the building in which the insured property was kept. (83 Pac. 613.) From ány view that may be taken, we are unable to sustain the judgment of the court below. It is therefore reversed, and the cause remanded for further proceedings. All the Justices concurring.