Kitch v. Northwestern National Insurance

Rosenberry, J. As indicated in the statement of facts, the sole question presented here for determination is whether or not the finding of the trial court to the effect that the defendants were estopped by their conduct to assert the forfeiture of the policies in question is sustained by the evidence. There is some indication that the defendant companies were suspicious as to the character of the fire and for a time thought there was reason to- believe that it was of incendiary origin. It appears that in addition to — 385 — the mortgage given to Elizabeth Fehr to secure the payment of $4,000, which mortgage was dated March 12, 1918, the property was further incumbered by a mortgage owned by Carl Jung in the amount of $3,780, dated October 26, 1921; by a mechanic’s lien amounting to $311.25 with interest from October 17, 1921; also one for $59.35; a third for $1,290.20; a-fourth for $1,021.38; a fifth for $343.40. In addition thereto there was a chattel mortgage upon the stock of merchandise for $1,150, dated September 27, 1922. It appears without dispute that Elizabeth Fehr commenced proceedings to foreclose her mortgage on August 23, 1922, and filed a Us pendens in the office of the register of deeds for Chippewa county on the 14th day of September, 1922. Judgment of foreclosure was entered in that action on October 20, 1922. On January 3, 1923, Mr. Moore, representing the Western Adjustment Company, which had charge of the loss, went to the scene of the fire to make investigation, and on that date was informed that the foreclosure proceedings under the mortgage of Elizabeth Fehr had been started before the date of the Northwestern National Insurance Company policy dated March 24, 1922, which was the.earliest in time of the four policies. Thereafter the plaintiffs prepared and filed proofs of loss under date of February 9, 1923. In the proofs of loss no reference was made to the foreclosure action, but under the title “Incumbrances thereon” there appeared the following: “Mortgage dated March 12, 1918, for $4,000 with interest thereon at the rate of seven per cent, per annum, owned by Elizabeth Fehr.” At this time it is undisputed that the mortgage had been reduced to judgment. Mr. Moore’s investigations having aroused some suspicion about the character of the loss, the matter was turned over to Mr. William P. O’Brien, attorney at law,' of St. Paul, Minnesota, who thereafter represented the insurance companies, including the Home Insurance Company. Mr. O’Brien went to Bloomer — 386 — on February 13, 1923, to continue the investigation. Relying upon the statement made to Mr. Moore that the foreclosure proceedings antedated the policies, no objection was made as to the payment of the loss on the realty; that the chattel mortgage upon the stock having been mentioned in the Home Insurance Company policy, that policy was valid; that as to the policy of the Mill Owners'Mutual Fire Insurance Company the existence of the chattel mortgage was not disclosed, and that as to the personal property that policy was for that reason void. It is claimed on the part of the attorney for the plaintiff, Mr. Prueher, that he exhibited to Mr. O’Brien at or about this time the foreclosure file, from which Mr. O’Brien made some memorandum. It does not appear what examination if any Mr. O’Brien made or whether or not the file contained information that would show when the foreclosure action was begun. In going over the records at a later , time Mr. O’Brien noted that the statement as to the commencement of the foreclosure was not supported by any documentary evidence and wrote the Lord Abstract Company and ascertained for the first time the true date of the commencement of the foreclosure. On May 31st Mr. O’Brien sent to Mr. Prueher a statement of the loss of the property by the fire and non-waiver agreement in duplicate and advised' Prueher, who represented the plaintiffs, as follows: “As to the insurance on the realty, you understand that the companies claim that, due to a foreclosure of the first mortgage without their consent in writing, their policies are void.” The loss upon the stock and fixtures was fixed at $3,703.42. The building was conceded to be of a value in excess of the total amount of the insurance thereon. Under the law it was necessary, in order to ascertain the amount of loss apportionable to the various policies of insurance, to have full information in respect to the value of the property. Mr. O’Brien, after the 13th day of February and at various — 387 — times down to and immediately preceding the time of the ascertainment of the true date of the foreclosure action, did request certain vouchers, inventories, etc., as found by the trial court. There is no evidence that after knowledge of the true date of the commencement of the foreclosure action came to the attention of Mr. O’Brien as representative of the companies he requested any other or further information or put the plaintiffs to any other or further expense in any respect whatever. Upon his recommendation the Home Insurance Company paid $2,601.37 with interest. Settlement having been made with the Home Insurance Company, we are not concerned with the circumstances in connection with that further than to note that, in order to make settlement under that policy upon which liability was admitted, it was necessary to have all of the information furnished by the plaintiffs. Considerable stress seems to have been placed by the parties on the trial, by the court in its findings, and upon the argument here, upon the fact that the companies “acted together in the adjustment of said loss, claimed that they suspected that the fire was of incendiary origin and that the amount of the loss on the personal property was much less than that claimed by the insured; and insisted that the loss claimed by the insured be adjusted together and at one time.” This raises the question of whether or not a request made for information, vouchers, etc., necessary and proper for the settlement of the liability admitted under the Home Insurance Company policy is referable to the other policies, the request not having designated on which account the information, vouchers, etc., were requested. As it has been often pointed out, a necessary element of estoppel is that the party relying upon it has done so to his disadvantage. We search the record in vain for anything that the plaintiffs have done or failed to do to their disadvantage which they should not have done nor failed to do had the Home Insurance Com — 388 — pany policy been the sole insurance upon the property. No appraisal of the building was required. Mr. O’Brien at the time of his visit to Bloomer satisfied himself that the construction cost far exceeded the insurance thereon, and no further demands were made. in that respect, nor was the insured put to a single cent of expense with reference to the insurance upon the real property. Under the terms of the statutory policy when the foreclosure proceeding was begun, the policy was thereby and without any further act on the part of the insurer forfeited, rendered void and of no force or effect. Macomber v. Minneapolis F. & M. Ins. Co. 187 Wis. 432, 204 N. W. 331; Keith v. Royal Ins. Co. 117 Wis. 531, 94 N. W. 295; Smeesters v. New Denmark M. H. F. Ins. Co. 177 Wis. 41, 187 N. W. 986. The plaintiffs can scarcely put forward the claim that the defendant companies were negligent in not ascertaining at an earlier date the time of the commencement of the foreclosure action. They received their information in that respect from the attorney for the plaintiff in the foreclosure action, and were not disposed 'to qufestion the accuracy of the information furnished by the attorneys in this action until their suspicions were aroused a short time before the discovery of the actual fact. There was nothing to indicate to them that they had not the right to rely upon the information which they received, for, if the foreclosure suit was begun prior to the issuance of the policies, the exact date of its commencement was immaterial. They would have had a right to act upon the information so given them, but so far as the real estate is concerned they did absolutely nothing after the time proofs of loss were furnished, February 9, 1923. The mere fact that the four companies were represented by a single attorney does not afford a basis for the claim that everything done by the attorney was done by him for each of the companies. The information asked for with respect to personal property was referable to the pol — 389 — •icies which purported to insure the personal property. This is a natural and reasonable construction to place upon the acts of the attorney. To claim that when he was seeking information in regard to personal property he was doing it for the benefit of defendants who had no interest therein, is to ignore the plain inference to be drawn from his acts. While every reasonable inference should be made to sustain insurance written and accepted in good faith, that does not mean that facts should be distorted and unnatural and unreasonable inferences resorted to. The correspondence between Mr. O’Brien and Mr. Prueher discloses that Mr. O’Brien asserted the invalidity of the Mill Owners Mutual Fire Insurance Company policy so far as it covered the personal property, because no notice of the execution of the chattel mortgage had been given. The statement that liability under that clause of the policy would be denied was repeated time after time. In order to make an adjustment, however, it was necessary, as plaintiffs well knew, for the companies to have full information in regard to the personal property. In order to adjust the loss they were entitled to have for the Home Insurance Company all the information requested. The plaintiffs were constantly advised that the Mill Owners Mutual Fire Insuran.ee Company was claiming that so far as its policy covered personal property it was void. They were not in any way misled by the conduct 'of the Mill Ozvners Mutual Fire Inswhnce Company. In the face of these repeated declarations they could not have believed that it was to be uncontested. Upon the whole case it- is considered that the policies upon the real estate in question were forfeited by the commencement of the foreclosure action without giving notice and procuring consent thereto, and that whatever was done by the attorney for the defendants in procuring information as to the value of the personal property was not referable to the insurance upon the real property and constituted no ground — 390 — of estoppel. As to that part of the Mill Owners Mutual Fire Insurance Company policy covering the stock of merchandise, the same was forfeited by the execution and delivery of the chattel mortgage without notice; that the plaintiffs, having been repeatedly advised of that fact, were not in any way misled by the conduct of the Mill Owners Mutual Fire Insurance Company, and the company is in no way estopped from asserting the forfeiture of the policy so far as it concerns the insurance upon the stock of merchandise. The mandate in each.case will be, therefore, that the judgment appealed from is reversed, and cause remanded with directions to dismiss the plaintiffs’ complaint. By the Court. — It is so ordered.