This case involves the effect under the evidence in this case of the "value reporting clause" in a policy of fire insurance.
General Insurance Company of America, a corporation (appellant), filed its bill for a declaratory judgment in the Circuit Court of Limestone County, in Equity, against M. S. Killen and Minnie Sharp Killen, doing business as Sharp and Killen Department Store (appellees). The allegations of the bill in substance show the following.
On January 31, 1956, the appellant issued a reporting form policy of fire insurance to the appellees. The policy provided coverage against loss by fire through January 31, 1957, at a declared location towit 206-208-210 West Market Street, Athens, Alabama, the aforesaid address being the store of the appellees, and at any other location acquired if included in the next succeeding monthly report of values as provided in the value reporting clause of the policy. The value reporting clause reads as follows:
The exclusion clause of the policy excludes coverage
Reporting Form A of the policy reads as follows:
"`A'—After deducting the amount of specific insurance, if any (not exceeding however, the amount of value reported) at each location, an average of the total remaining values reported at
A fire occurred on October 17, 1956, at the Limestone County Livestock Yards, a location separate and removed from the premises of Sharp and Killen Department Store. As a consequence of this fire the appellees claimed payment for the loss of a substantial amount of merchandise stored in the livestock yard premises.
The appellant denied coverage of said loss and assigned the following grounds:
The appellant prayed that the court declare the Limestone County Livestock Yards excluded from coverage under the terms of the policy and that it was under no obligation to pay the aforesaid loss to the appellees.
Demurrer to the bill of complaint was overruled and the appellees then filed their Special Plea I to the bill of complaint in which the appellees allege that the appellant is estopped to set up the grounds for denial of coverage recited in the original bill in that pursuant to the Premium Adjustment Clause of the policy, a copy of such policy with all endorsements thereon being attached to the plea as Exhibit A and made a part thereof, a provisional premium of $373.50 was paid to the appellant prior to the fire loss in question and that, "immediately after the said fire which occurred on October 17, 1956, in Athens, Alabama, at the Limestone County Stockyards located at the corner of West South and South Marion Street (said livestock yard premises being known and designated as 111 West South Street, Athens, Alabama), these respondents notified complainant of the occurrence thereof and that they, doing business as partners under the name of Sharp & Killen Department Store, had sustained by reason thereof a fire loss of Sharp & Killen Department Store dry goods and merchandise stored by them on said livestock yard premises of the actual cash value of $8,295.00, and that Complainant was liable to them on the policy for the said $8,295.00 total actual cash value of said stored dry goods and merchandise; that Complainant at once caused to be made a thorough investigation of said fire occurrence and said fire loss which Respondents had sustained, including an investigation and inspection of all the monthly report
Respondents further allege in substance that on or about March 19, 1957 (three days after the instant bill of complaint was filed in this cause) and with full knowledge and notice of all the matters, facts and things which are set out in the bill of complaint herein as its grounds for denial of coverage the Complainant company did prepare and present to respondents a "Premium Adjustment" form on said policy pursuant to the aforementioned and above quoted premium adjustment Clause 11, Reporting Form "A", and did therein compute and charge up to Respondents a regular premium charge on the said $8,295 total values of said dry goods and merchandise stored in the livestock yard premises on October 17, 1956, and destroyed on that date by the fire and further therein expressly described the total values of the dry goods and merchandise as being stored by Respondents in October, 1956, at 111 W. South Street, Athens, Alabama, acquired location. A true copy of the "Premium Adjustment" form as prepared and presented to the Respondents by Complainant is attached thereto as Exhibit "D" and made a part hereof. Respondents further aver that Complainant at the time of the presentation of the premium adjustment form to Respondents demanded and requested from Respondents an additional premium payment to it of $108, which additional premium included the premium charge of Complainant for the $8,295 total values of said stored dry goods and merchandise of the Respondents at the livestock yard premises at the time of the fire loss on October 17, 1956, and Respondents promptly paid the additional premium in full as demanded and requested by the complainant.
Respondents further aver that Complainant cannot by this suit for a declaratory
It is further alleged that the appellees assert, on the basis of the above allegations, that appellant is "estopped to now deny coverage for the said $8,295.00 fire loss." The aforesaid plea was set down to test its sufficiency and after hearing the court ruled that said plea "is good in form and substance and that if the matters pleaded therein are true, same constitutes a full bar to the bill of complaint."
The appellant amended its original bill of complaint by adding thereto paragraphs ten and eleven. Paragraphs ten and eleven in substance allege that the premium charge made by the appellant was made in reliance on the appellees' value report dated October 31, 1956, in which the appellees listed goods in value of $8,295 as of October 31, 1956, at a location given as 111 W. South Street, Athens, Alabama; that appellant did not know that this was the location in which was stored the goods totally destroyed by fire on October 17, 1956, and that the report was false and misleading if it was intended by appellees to have such meaning and, therefore, could not be the basis of an equitable estoppel. The appellant also offered to do equity by returning the premium and interest in question.
To the bill as amended the respondents refiled their demurrer which was overruled.
The respondents then filed special Pleas designated as Plea A and Plea B. Plea A adopted by reference each and every allegation of Special Plea One, including the exhibits attached thereto.
The court in its final decree states that Plea B raises the same issue as set forth in Plea I "but does it more elaborately and more argumentatively."
After the aforesaid pleadings had been filed the case was heard on testimony taken orally before the court. The court found that Special Pleas A and B interposed by the respondents constitute a full and complete answer to the contentions made by the complainant in its bill of complaint and that complainant had failed to satisfy the court reasonably by the evidence offered of the matters embraced in either paragraphs 10 or 11 of the bill of complaint as amended. The court thereupon ordered, adjudged and decreed that the complainant is not entitled to the relief prayed for and that the bill of complaint as amended be and the same is hereby disallowed and dismissed out of court.
We think this case can be analyzed and should be considered in connection with the denials of coverage asserted by the complainants as "A", "B" and "C". We have heretofore set forth these three grounds on which there was a denial of the coverage but at the expense of repetition, shall for the purpose of clarity set them forth again.
In connection with the denial of coverage designated at "A", the record shows that there were twelve (12) monthly Reports of Value and Insurance introduced by the appellees as Exhibits 1 through 12, inclusive. Each of these reports for the month of January through September 1956 state nothing but the general location. "Athens, Alabama." The January, February and March reports were not received by the appellant until May 14, 1956. The April, May and June reports were not received by the appellant until July 9, 1956. The July and August reports were not received by the appellant until October 8, 1956. The September 1956 report was not received by the appellant until October 18, 1956, one day after the occurrence of the loss in question.
It has been held that with respect to a contract of insurance as with other contracts, the parties thereto may at their pleasure alter, modify or rescined the contract, so long as the same is supported by their mutual assent and such alteration, modification or rescission may extend to a waiver of any right either party might have under the original contract. Life & Casualty Ins. Co. v. Eubanks, 19 Ala.App. 36, 94 So. 198; Mutual Life Ins. Co., Inc. of New York v. Lovejoy, 201 Ala. 337, 78 So. 299, L.R.A.1918D, 860.
So far as Ground A of Denial of Coverage is concerned, we think that the appellees did in fact "report" to the appellant their so-called acquired location of 111 West South Street in their September 1956 monthly report of values by listing in their overall actual values the total actual value of dry goods and merchandise stored by them in September 1956 at 111 West South Street, Athens, Alabama. The listing of the general location of "Athens, Alabama," seems to us to be a substantial compliance with the policy provisions as including the main location
Ground B of the Denial of Coverage states that
It is obvious that if the evidence in the case does not reasonably tend to establish Ground A, Ground B is without merit.
Ground C of the Denial of Coverage states that
It is obvious that Ground C of the Denial of Coverage is based upon the allegation that appellees falsely and incorrectly declared the location and cash value of their stock, materials and supplies and the amount of specific insurance to the insurer in writing on October 15, 1956, for the month ending September 30, 1956, in violation of the terms of the policy and therefore was not entitled to recover a loss at a location other than the Sharp & Killen Department Store, 206-210 West Market Street, Athens, Alabama. This particular ground is centered around the filing by appellees with appellant of the September 1956 Monthly Report of Values which set out only the general location "Athens, Alabama," and showed total values of $90,685 which include the total actual values of dry goods and merchandise stored by appellees in September 1956 at their 111 West South Street location.
It will be recalled that the Value Reporting Clause reads in part as follows:
The September 1956 Monthly Report of Values while dated October 15, 1956 was not received by the appellant until October 18, 1956, one day after the occurrence of the fire loss. The uncontradicted evidence shows that the loss occurred at approximately 2:00 A.M. on October 17, 1956. The record does not show the time and date on which the appellees mailed the September 1956 Monthly Report of Values to the appellant. Accordingly as of the time and date of the actual occurrence of the fire of October 17, 1956, the appellees had not made their September 1956 Monthly Report of Values to the appellant. When the appellees actually sustained their $8,295 loss by fire at 2:00 A.M. on October 17, 1956, they had not violated the thirty day reporting provision and actually had thirteen days more, that is until October 31, 1956, in which to report the aforesaid acquired location and the total cash values so stored therein in the month of September 1956. According to the testimony of Sam Stephens, witness for the appellant, the appellant company would have accepted liability immediately after the loss for the dry goods stored by appellees in the livestock yard premises in the month of October 1956 if the month of October was the first time appellees had used that acquired location. Immediately following the investigation
According to the evidence the investigating adjusters examined appellees' copies of the Monthly Report of Values and not the originals sent to the appellant by the appellees, which were introduced in evidence. Accordingly, the adjusters had no knowledge as to when the reports had been actually made to the appellant.
Under the facts in this case appellees had not violated the thirty day reporting clause provision and since the appellees had thirteen days in which to report their September 1956 acquired location to the appellant, when they actually sustained their loss on October 17, 1956, full liability for the entire loss became fixed upon the appellant immediately following the loss. The subsequent receipt by appellant, on the day following the fire, of the September 1956 Monthly Report of Values, did not alter or change the rights or liabilities of the parties, even if it can be said that such September report was not in compliance with the reporting clause provision of the policy. We consider that appellant's liability under the contract must be measured at the time of the loss under the circumstances. There seems to be no doubt to us that the appellees within the thirty day period following September 30, 1956, had the legal right to amend its September 30, 1956 Monthly Report of Values so as to clearly show the 111 W. South Street acquired location with the total values stored therein as of September 30, 1956. The immediate investigation instituted by appellant through its adjuster Grisham on the day of the fire disclosed to the appellant this acquired location, when it was first acquired and the total actual cash value of the goods and merchandise stored therein as of the last day of the preceding September.
Following this investigation the appellant by letter dated October 25, 1956, written to the appellees, expressly denied liability for the loss. As a result thereof the appellant waived any necessity, if there was any, for the appellees to amend their September 1956 Report of Values. It should be noted here that the denial of liability dated October 25, 1956, was well within the thirty day period following September 30, 1956, within which the appellees could have reported their September acquired location. We make this statement because a denial of liability by a fire insurance company made within time for presenting proof of loss, waives proof of loss. Continental Insurance Co. v. Parkes, 142 Ala. 650, 39 So. 204; Ray v. Fidelity-Phoenix Fire Ins. Co., 187 Ala. 91, 65 So. 536; United States Fire Ins. Co. v. Smith, 231 Ala. 169, 164 So. 70, 103 A.L.R. 1468; Home Ins. Co. v. Jones, 231 Ala. 484, 165 So. 211.
As we have pointed out the court found the evidence sufficient to sustain Pleas A and B to the amended bill of complaint. The basic principle is declared to be as follows:
In the case of Washington Nat. Ins. Co. v. Scott, 231 Ala. 131, 164 So. 303, 304, this court said:
See Bradford Funeral Service v. Burks, 38 Ala.App. 111, 76 So.2d 783; Southern States Life Ins. Co. v. Dunckley, 226 Ala. 588, 148 So. 320, 323. In this last mentioned case this court quoted a rule of law stated in 14 R.C.L. p. 1181, 1190, as follows:
See also Scottish Union & National Ins. Co. v. Wylie, 110 Miss. 681, 70 So. 835; Mechanics' & Traders Ins. Co. v. Smith, 79 Miss. 142, 30 So. 362.
Three days after the original bill of complaint in the instant case was filed by the appellant, the appellant demanded of, received and accepted from appellees a premium for the very coverage it was seeking to avoid in the instant suit. In the case of Mutual Life Ins. Co. of New York v. Childs, 64 Ga.App. 658, 14 S.E.2d 165, in dealing with a similar situation, it was held that such action precluded and estopped the insurance company from urging any defense based on fraud or material misrepresentations in the procurement of the policies which were the subject of the litigation. See also Kleiber Motor Truck Co. v. International Indemnity, 106 Cal.App. 709, 289 P. 865; 45 C.J.S. Insurance § 716, pp. 699-700.
We have carefully considered the evidence in this case in connection with Pleas A and B. We consider that Pleas A and B were legally sufficient and constituted an answer and defense to the allegations of the bill of complaint as amended. Further we do not consider that the evidence sustained the bill of complaint as amended. The trial court heard the evidence orally, had an opportunity to observe the witnesses before he concluded that the appellant had failed to satisfy reasonably the court by the evidence on the matters embraced in either paragraph 10 or 11 of the bill as amended. As we have often said, this finding or conclusion will not be disturbed by us unless palpably wrong. Wilfe v. Waller, 263 Ala. 110, 81 So.2d 614; Trans-American Ins. Co. v. Wilson, 262 Ala. 532, 80 So.2d 253.
The appellant insists that the Monthly Report of Values and Insurance as of October 31, 1956, is false and intentionally wrong. In other words, it is the insistence that the appellees were intentionally wrong and fraudulent in submitting their October 1956 report after the fire loss of October 17, 1956. The evidence shows, however, that the appellant's own General Agent, Jennings, advised the appellees following the fire to send in the report in question and to include the location and value of the goods destroyed.
We consider that the foregoing facts demonstrate that appellant had or was charged with knowledge that 111 West South Street, Athens, Alabama, and the Limestone County Livestock Yards were one and the same location when appellant demanded and received from appellees a premium for coverage on the destroyed dry goods.
The appellant cites the case of Security Ins. Co. v. Laird, 182 Ala. 121, 62 So. 182. This court in that case rightfully held that the plaintiff was estopped. We do not consider, however, that the case here mentioned is apt authority against the appellees because of different factual situations. We do not understand that the principle stated in the Western Grain Co. Cases, 264 Ala. 145, 85 So.2d 395, is apt authority here. In the Western Grain Cases this court was referring to estoppel by misrepresentation. We do not understand that the appellees have ever contended that the appellant misrepresented facts to them when it demanded of and received from them the premium for coverage on the destroyed dry goods.
Before concluding we wish to note that the appellant tendered back into court the premium in question on October 7, 1958, over one year and six months from the time it was collected from the appellees and almost one year from the time appellees filed in this case their special Plea I, alleging waiver and estoppel based on the collection of the premium by the appellant after the fire loss with full knowledge of all the facts. It seems to be a generally accepted principle that the offer to return an insurance premium by the insurance company must be made within a reasonable time to be effective. What is a reasonable time ordinarily is a question of fact. Under the holding of the court the tender back of the premium in this case came too late. Mechanics' & Traders' Ins. Co. v. Smith, 79 Miss. 142, 30 So. 362. While Brown v. Supreme Lodge, K. P., 225 Ala. 114, 142 So. 388, calls attention to what is now § 7, Title 28, Code of 1940, with reference to return of premiums where life insurance is involved, it indicates approval of the general principle "that one who seeks a rescission of a contract for fraud must act with
Upon a consideration of the matter we think that the decree of the lower court should be upheld.
LAWSON, GOODWYN and MERRILL, JJ., concur.