Ætna Insurance v. Mount

Mates, J., delivered the opinion of the court. The controversy in this ease is as to policies No. 3,694 for the sum of $1,000, and No. 3,786 for $1,750, covering a stock of — 662 — merchandise owned by appellee. It was conceded in the argument of this case, by counsel representing appellant, that the other policy mentioned in this record, No. 4,050, is not in controversy, and therefore what we say only applies to the two policies.in question. The first question which we consider is: Was there a breach of the iron safe clause contained in the policy? The policy of insurance contained the following, clause with reference to that subject, viz.: “(1) The assured will take a complete itemized inventory of stock on hand once in each calendar year, and, unless such intentory has been taken within twelve calendar months prior to the date of this policy, one shall be taken in detail within thirty days of 'issuance of this policy, or this policy shall be null and void from such date, and upon demand of the assured the unearned premium from such date shall be returned. (2) The assured will keep a set of books, which shall clearly and plainly present a complete record of business transacted, including all purchases, sales and shipments, both for cash and credit, from date of inventory, as provided for in the first section of this clause, and also from date of last preceding inventory, if such has been taken, and during the continuance of this policy. (3) The assured will keep' such books and inventory — and also the last preceding inventory, if such has been taken — securely locked in a fireproof safe at night, and at all times when the building mentioned in this policy is not actually open for business, or, failing in this, the assured will keep such books and inventory in some place not exposed to a fire which would destroy the aforesaid building; and unless such books and inventories are produced and delivered to this company for examination, after loss or damage by fire to the personal property insured hereunder, this policy shall bo null and void, and no suit or action shall be maintained hereon. It is further agreed that the receipt of such books and inventories and the exami — 663 — nation of same shall not be an admission of any liability under this policy, nor a waiver of any defense to the same.” By the above clause the insured is required by the contract to “keep a set of books, which shall clearly and plainly present a complete record of the business transacted, including all purchases, sales, and shipments, both for cash and credit, from the date of inventory, as provided for in first section of this clause.” The insurance under policy No. 3,694, was effected about the 1st of July, 1904, and the inventory is claimed to have been taken about the 1st of August of the same year. By the terms of the contract it became the duty of the insured to keep a set of books, presenting a complete record of business transacted, including all purchases, sales, and shipments, from the date the inventory is required tó be taken, or through the life of the policy. There was a change of bookkeepers about the 1st of January, 1905, and a change in the method of keeping the books from a double entry to a single entry. When this change in the system of keeping books was made, the books kept prior to January 1, 1905, were footed up, and the aggregate amount of the footings of the old books, showing the purchases, sales, shipments, etc., brought forward and placed in the new books, so that the new books only contained the footings of the amount shown by the old books. From January 1, 1905, to the date of the fire, these new books containing these footings seem to have been kept down.to the date of the fire, together with the inventory taken on the 1st of August, and were kept in the iron safe and produced after the fire. The old books were placed on top of the safe, and when the fire occurred they were burned, so that when the adjuster reached the premises the only books that were produced were the books kept from January 1, 1905, containing the footings brought forward from the books kept from July, 1904, to January, 1905. It is not a matter of dispute that the books kept from the date of the issuance of the policy to the 1st of January were not kept in the safe and were destroyed — 664 — in the fire. We think, under these facts, there was no compliance with the iron safe clause. The reasonable enforcement of iron safe clause in insurance policies has been universally upheld by the courts. Indeed, to prevent fraud, and for protection of the rights of insurance companies, some such clause seems necessary. This case presents on its face quite a different case from that of Insurance Co. v. Sheffy, 71 Miss., 919, 16 South., 307. In the Sheffy case the court said: “The evidence shows very clearly that the application oí the insured for the policy in suit was completed and signed, and the policy delivered, not earlier than the 17th day of December, 1892. We may properly assume, so far as the rights of the insurer are affected by the date of the contract, that it was actually made on the day named. On that very day the insured took a new inventory of his stock of goods, and this last inventory, as well as the two preceding ones, dated, respectively, September 17, 1892, and December 17, 1891, were kept in the iron safe, and were produced after the loss. On the 17th day of December, 1892, the insured opened a new set of books, transferred to them all the footings or balances from his old books, and thereafter, from said 17th day of December, entered fully in the new set of books itemized statements of every transaction occurring in the conduct of the business. The forfeiture under the iron safe clause is, by the appellant, contended for because of the failure of the appellee to keep in the iron safe the old books, showing the itemized statements of the transactions antedating the policy sued on, and to produce them after the loss occurred. Why these old books of account were not kept in the safe, but were left outside and consumed in the fire which occasioned the loss is made clear by the evidence. It is perfectly apparent that the insured did exactly what this iron safe clause required him to do. This clause made it obligatory upon him to keep a set of books showing a record of business transacted, including all purchases and sales, both for cash and credit, and — 665 — to keep the inventory and books securely locked in a fireproof safe, and this condition the insured fully complied with. His duty was to show a set of books showing a record of business thereafter transacted, including future purchases and sales. He did not consent to preserve indefinitely his old books, showing all the past transactions. So far as this contention may be concerned, it was immaterial whether he had any books of account antedating the policy. He had his inventory, showing the amount of stock he had when the policy was issued, and he was to keep a record of his future business transactions, with a view of disclosing, when necessary, when and where and how the stock went. We repeat, the duty laid upon him was prospective, and he fully met it.” The decision in the Sheffy case, supra, will readily be distinguished from the facts presented by this case. Mount did not keep a record of his books prospectively, such as were required by the iron safe clause. From the date of the issuance of the insurance up to January, 1905, the books covering that period having been destroyed by fire, it was impossible for the insurance company to tell anything about the condition of the stock of goods, except from the balances brought forward and placed in the new books. There was no record kept during that time of sales, purchases, and shipments, as is required by the clause of the insurance policy referred to. We come, now, to the next question involved: When there has been a forfeiture under the policy, known to the insurance company only after loss, and no act done by the insurance company which could mislead the insured in any way, or occasion him any inconvenience or trouble, and the insurance company has done nothing to waive its rights, either impliedly or expressly, except merely fail to return the unearned premium, will this single fact be considered as a waiver of the breach ? The particular clause of the policy involving this question is as follows, viz.: “This policy shall be canceled at any time at the request of the insured, or by the company by giving five days’ notice of such cancellation. If this policy shall be canceled as here — 666 — inbefore provided, or become void or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy or last renewal, this company retaining the customary short rate, except that, when this policy is canceled by this company by giving notice, it shall retain only the pro rata premium.” It is contended by appellee that a mere failure to return or offer to return the unearned premium, after loss has occurred and denial of liability on the part of the company, because of a breach of the conditions of the policy by the insured, will constitute a waiver on the part of the company to claim the forfeiture; and in support of this proposition appellee cites the Dobbins cases in 81 Miss., 623, 33 South., 504, and 81 Miss., 630, 33 South., 506. We do not understand that this court has ever held, in any case, that the mere fact of the failure of the insurance company to return the unearned premium after a loss has occurred, and until there has been a demand made upon it by the insured for this unearned premium and an offer to surrender the policy, will in itself, unaccompanied by any other fact, constitute a waiver of the forfeiture. In the case of Dobbins v. Insurance Co., 81 Miss., 623, 33 South., 504, the court said: “The facts show that the fire occurred on the 23d of October. Dobbins notified the agent, Montague, on the 24th. Without knowledge at that time of the additional insurance, but six hours thereafter, on the same day, when there had been no change whatever in the condition of the parties, he was fully informed of the additional insurance. The insured, Dobbins, lived in the same town within a few minutes’ easy communication. After full knowledge, on the 25th, of the other insurance, the agent had another conversation with Dobbins, in which he told him that the policy had been forfeited on account of the additional insurance, but that he would report the matter to the company; and, more than that, when Dobbins came to get blank proofs to make -proof of loss, he furnished them. He furnished them, of course, for proofs to be made. There would have been no — 667 — sense in the act otherwise. Furthermore, he testifies himself that he had power to cancel the policy, and was under no necessity to send it to the company for cancellation. The policy had been in force about one month. The insured had paid the premium for three years.' No portion of the unearned premium was returned or offered to be returned.” And the court, under these facts, because of the acts and conduct of the agent acting for the company, held that the insurance company was estopped to set up the forfeiture. It will be seen in this case that the question presented was not the single question of whether or not the mere retention of the premium by the company estopped the company from setting up the forfeiture on that ground. The decision is based upon the acts and conduct of the agent, and holds that under the facts in the case his acts and conduct estopped the insurance company to set up the forfeiture. In the second case of Fire Ass’n v. Dobbins, 81 Miss., 630, 33 South., 506, Dobbins sued the insurance company, and it defended on the ground that he had taken out other insurance on the same property, subsequent to taking out the policy sued on, without the knowledge and consent of the defendant company, and in violation of the terms of the contract of insurance which rendered the policy sued on void. In this case there was a conflict of testimony, and the case was tried before the court without a jury; both parties waiving a jury. The evidence for defendant was that the policy sued on was issued in July, 1901, and the premium paid to the company on September 1, 1901, by the local agents, and the fire occurred October 23, 1901, and plaintiff came into the office of the local agents October 24th, the next day after the fire, and notified them of the fire, when he was told that the premium due had not been paid by him. The premium was then paid to the local agents, and for the first time the agents found out that Dobbins had another policy on the same property; the agent testifying that he did not recollect whether it was before or after the premium was paid that Dobbins informed him of — 668 — the existence of the other policy. The agent also testified that he then told Dobbins that the taking out of the other policy avoided the policy sued on, but that he would send in the report of it to the company. On the other hand, the plaintiff testified that he informed the local agents of the fire on the 24th of October, and then informed them of the other policy, and went back the next day and paid the premium and got a receipt. The insurance company never returned or offered to return any part of the premium. On these facts, there being a conflict in the evidence, the plaintiff claiming that he informed the local agents of the fire on the 24th of October, and that he then informed them of the other policy, about which they made no objections so far as the facts show, and after notifying them of the loss, and informing them of the other policy, went back the next day and paid the premium and got a receipt,, and still, though the insurance company under these facts declared the policy forfeited, it did not offer to return the premium, the court said, because the insurance company held onto the premiums with full knowledge of the loss, having taken the premiums after the loss, it could not set up the forfeiture. We do not think that either one of the cases in 81 .Miss., and 33 South., holds, or intended to hold, that the mere fact, unaccompanied by any other circumstancos, where knowledge comes long after the premiums are paid and the insurance effected and loss occurs, and when the only contest that exists between the parties is as to liability under the policy, that the insurance company does not offer to return the unearned premiums will estop it from claiming the forfeiture; nor do we find any other case that holds this. In both the Dobbins cases it clearly appears that the insurance compány had done something affirmatively changing the condition -of the insured, and thereby creating an estoppel on the part of the insurance company to claim the forfeiture. In both those cases premiums were received by the insurance company after the loss had oc — 669 — curr'ed, and when it was manifest that the company knew of the loss, or knew such facts and circumstances as would bind it with knowledge. No such case is presented here. The premiums in this case were paid at the time the policies were issued, and the breach of’condition was not discovered until after the loss had occurred. The insurance company denied liability as soon as the adjuster reached the place where the loss occurred. In this case, under its facts, it was not necessary for the insurance company to tender the unearned premium until there was a demand made upon it for same and an offer on part, of insured to surrender the policy. No demand having ever been made for the unearned premium, and no offer having ever been made to surrender the policy, the insurance company had a ’right to wait for this. When it was sued on the policy by the insured for its full amount, it had a right to rely upon the breach of the iron safe clause, and plead it, and then and there tender with their plea the unearned portion of the premium; and this delay, under the facts in this record, created no waiver or estoppel. If they denied liability as to all the policies, and tendered the unearned premium as to all, and liability was established as to some of them, the tender was nevertheless good as to that policy on which they were not liable. It was the duty of appellees to accept such part of the tender as appellants could lawfully make. Policy No. 3,786 is not invalidated as to that part of it which covers fixtures in the store, but is invalidated only to the extent that it covers the stock of goods. See Mitchell v. Insurance Co., 72 Miss., 53, 18 South., 86, 48 Am. St. Rep., 535. Reversed and remanded. SUGGESTION OE ERROR. After the rendition of the foregoing opinion the appellant-company filed a suggestion of error asking for a reconsideration of the decision in so far as the court held that the policies should not be invalidated as to such parts as covered the fur — 670 — niture and fixtures in the store building; appellant suggesting that the policies should be invalidated in toto; that, although the court had held, in Mitchell v. Insurance Company, 72 Miss., 53, 18 South. Rep., 86, that policies such as these in controversy, when issued and delivered in Mississippi were divisible as to goods and fixtures, yet the law in Louisiana, as shown in the case of St. Landry v. Insurance Company, was different, the Louisiana supreme court, in that case, having held that such policies were entire and indivisible; and that, as the policies in controversy were issiled and delivered to the appellee in Louisiana the Louisiana law should govern. In response to which suggestion of error, Mayes, J\, delivered the following supplemental opinion: It appearing on suggestion of error that the policies of insurance sued on were made in the state of Louisiana, it is the opinion of the court that the judgment should be modified, so as to invalidate that part of policies No. 3, 786 and No. 4,050, covering the fixtures in the store, as well as that part which covers the stock of goods, in conformity to the decision of the Louisiana courts upon this subject. The case of Mitchell v. Insurance Company, 72 Miss., 53, 18 South., 86, 48 Am. St. Rep., 535, is not applicable here, since the contract of insurance is a Louisiana contract, merely brought into this state for purposes of suit; the Louisiana courts having held contrary to the Mitchell case, supra. To the extent indicated in this opinion, the suggestion of error is sustained.