Smith v. National Ben Franklin Fire Insurance, 193 N.C. 446 (1927)

March 30, 1927 · Supreme Court of North Carolina

193 N.C. 446

KIRBY SMITH et al. v. NATIONAL BEN FRANKLIN FIRE INSURANCE COMPANY.

(Filed 30 March, 1927.)

1. Insurance, Fire — Policies—Contracts—Breach of Condition That Invalidates the Policy — Waiver.

A breach of the condition of a policy of fire insurance, statutory form (O. S., 6437), that the policy is void if the insured has not the sole and unconditional title is valid and enforceable by the company without the necessity of disclaiming liability upon notice or knowledge of its infraction, and inaction on its part in this respect is not a waiver thereof.

2. Same — Mortgages—Notice to Company.

Where a policy of fire insurance upon a dwelling contains the condition making the policy void if the ownership of the property is not sole and unconditional, and the property is mortgaged at the time with the loss payable clause incorporated, notice to the agent of a second mortgage on the dwelling given some time after the second mortgage was given, but before the occurrence of the fire occasioning the loss, will not alone render the insurer liable on the policy contract.

S. Insurance, Fire — Principal and Agent — Conditions—Waiver.

The rule that the agent of a fire insurance company may waive conditions affecting the validity of a policy generally apply to such conditions existing at the time of the issuance of the policy.

Civil action, before Granmer, J., at October Term, 1926, of Wayne.

On 21 September, 1924, tbe plaintiff secured a policy of fire insurance for $3,000 from tbe defendant upon bis dwelling and household and kitchen furniture. Tbe plaintiff resided about' eight miles from Goldsboro. The form of tbe policy was in accordance with tbe provisions of C. S., 6437, and expired at noon on 21 September, 1925. On 10 January, 1921, tbe plaintiff and bis wife executed a deed of trust to Julian Price, trustee, for tbe benefit of tbe Jefferson Standard Life Insurance Company. On 26 February, 1921, tbe defendant and bis wife executed a mortgage on tbe premises to H. B. Parker to secure an indebtedness of $306.00. Default was made in tbe payment of tbe indebtedness due tbe Jefferson Standard Life Insurance Company and said company advertised and sold tbe property of tbe plaintiff on 19 May, 1925, and tbe deed for tbe property was made by Julian Price, trustee, to II. B. Parker under and by virtue of tbe terms of said deed of trust. On tbe morning of 20 September, 1925, tbe dwelling-house and barn and stables of plaintiff were destroyed by fire. Tbe plaintiff testified that more than thirty days prior to 20 September, 1925, be notified Z. T. Brown, agent of tbe defendant, that tbe Jefferson Standard Life Insurance Company was offering bis property for sale, and that be further notified tbe agent of tbe Parker mortgage. This was tbe first notice tbe plaintiff bad given of tbe Parker mortgage, and was given after tbe land bad been sold under deed of trust, and tbe deed therefor delivered to H. B. Parker.

. At tbe conclusion of tbe evidence tbe trial judge allowed a motion of nonsuit, and tbe plaintiff appealed.

J. Faison Thomson for plaintiff.

D. G. Humphrey, Dichinson & Freeman for defendant.

Brogden, J.

The policy of insurance in controversy contained, in accordance with statutory requirement, tbe usual clauses rendering tbe policy void if tbe interest of tbe insured should be other than unconditional and sole ownership or of sale of tbe property by reason of any mortgage or deed of trust. In order to obviate tbe legal effect of these clauses tbe plaintiff relies upon tbe doctrine of waiver. This contention rests upon tbe fact that a short time prior to tbe fire, and long after tbe policy bad been issued, tbe plaintiff bad notified tbe agent of tbe defendant of tbe existence of tbe Parker mortgage and tbe advertisement of tbe property. In Hardin v. Insurance Co., 189 N. C., 423, Adams, J., states tbe rule of law applicable, as follows: “It has been held in a number of cases that in case of a breach of condition which invalidates tbe policy, the company is not bound at its peril, upon notice of such breach, to declare the policy forfeited or to do or say anything to make the forfeiture effectual, and a waiver will not be inferred from mere silence or inaction on its part. It may wait until claim is made under the policy, and then rely on the forfeiture in denial thereof or in defense of a suit brought to enforce payment of it.”'

The notice given by plaintiff to the agent was not at the time the policy was written and delivered, but long after it had been in force.

The rule applying to such a state of facts is thus stated in Bullard v. Insurance Co., 189 N. C., 34: “The provision restricting the agent’s power to waive conditions does not, as a general rule, refer to or include conditions existing at the inception of the contract, but to those arising after the policy, is issued. Conditions which form a part of the contract of insurance at its inception may be waived by the agent of the insurer, although they are embraced in the policy when it is delivered; and the local agent’s knowledge of such conditions is deemed to be the knowledge of his principal.” Hayes v. Ins. Co., 132 N. C., 702; Weddington v. Ins. Co., 141 N. C., 234; Johnson v. Ins. Co., 172 N. C., 142; Ins. Co. v. Lumber Co., 186 N. C., 269.

Applying the well established rules of law to the facts as disclosed by the record, we conclude that the judgment of nonsuit was correct.

Affirmed.