* Corpus Juris-Cyc. References: Appeal and Error, 3CJ, p. 1410, n. 42; 4CJ, p. 765, n. 93; p. 918, n. 42; p. 1025, n. 71; p. 1026, n. 85; p. 1068, n. 22; p. 1069, n. 23; Contracts, 13CJ, p. 781, n. 45, 46; Fire Insurance, 26CJ, p. 69, n. 88; p. 70, n. 91; Insurance, 32CJ, p. 1135. n. 12, 13, 15; 33CJ, p. 130, n. 41; p. 151, n. 12, 13; Motor Vehicles, 28Cyc, p. 50, n. 59 New; Trial, 38Cyc, p. 1511, n. 23; p. 1522, n. 1; p. 1523, n. 4; p. 1530, n. 9; p. 1531, n. 19. This is an action on a policy of fire insurance, issued by defendant, insuring plaintiff's automobile against loss by fire and theft. The verdict of the jury was in favor of plaintiff, and assessed the amount of his recovery on the policy at the sum of $500, together with the sum of $50 as a penalty for vexatious delay, and the sum of $100 for attorney's fees. From the judgment rendered on such verdict, defendant, after an unavailing motion for a new trial, has duly perfected this appeal.
The petition was in conventional form, alleging that the policy was issued on August 1, 1924, whereby plaintiff's automobile was insured against loss by fire and theft to the amount of $500, for a term of one year; that on December 21st following, the said car was totally destroyed by fire; and that the car at the time was of the value of $500 or more.
Defendant's answer, in addition to a general denial, pleaded that, by the terms of the policy, plaintiff warranted that there was no other insurance covering the insured property, and that it was provided therein that no recovery could be had if, at the time of the loss, there was any other insurance covering such loss that would attach if such prior insurance had not been effected. It was then alleged that, at the date of the issuance of the policy in suit, and at the time of the fire, there was a policy covering the said automobile, issued by the Export Insurance Company, and that by reason thereof the policy in suit had become void. It was further averred that the *Page 1117 policy had been avoided by reason of the concealment by plaintiff of the fact of this other insurance.
Although no reply was filed, it appears that the case was tried as though the new matter in the answer was at issue.
The evidence disclosed that on June 26, 1924, plaintiff purchased from the J.E. Lyon Motor Car Company, of Mexico, Missouri, a Star coupe, the list price of which was $735, which sum included certain extra equipment, consisting of bumpers and an extra tire. It developed, however, that the total purchase price of the car was $781, the sum of $46 in excess of the list price representing a service charge covering the interest on the unpaid balance, and the premium on insurance to be taken out in conformity to certain provisions in the chattel mortgage. Plaintiff paid part cash, and gave his note to the J.E. Lyon Motor Car Company for $390.50, for the balance due with interest, and at the same time executed to such company a chattel mortgage on the car to secure payment of the note. By the terms of such chattel mortgage it was provided that the mortgagor should keep the automobile insured against loss or damage by fire and theft, the loss to be payable to said mortgagee, as the mortgagee's interest might appear, and that in case the mortgagor should neglect or refuse to obtain such insurance, the mortgagee might, at its option, obtain the same, all sums of money thus expended to be repayable upon demand from said mortgagor to said mortgagee.
On the same day, the J.E. Lyon Motor Car Company sold the note to the Commercial Credit Trust, a finance company with its principal offices in Chicago, Illinois, and also assigned to the latter all its right, title, and interest in and to said chattel mortgage and the property covered thereby. Thereafter, and as of June 26, 1924, the Commercial Credit Trust secured a contract of insurance from the Export Insurance Company, issued under a master policy, which covered the risk against damage or loss by fire and theft upon any and all cars on which the finance company held mortgages. Such contract purported to cover the risk on plaintiff's car to the extent of $580, and provided that the loss should be payable to the Commercial Credit Trust and others, although not enough of the policy was read into the record to disclose what parties the term "others" would include. It was the usual custom upon the issuance of a master policy for the finance company to send what was termed a certificate of insurance to each mortgagor, although in this case plaintiff did not receive such certificate, nor did he have any recollection of having been informed at the time he purchased the car that it would be covered by insurance.
On July 29, 1924, plaintiff paid the amount of the note in full to the J.E. Lyon Motor Car Company, by whom the proceeds were immediately transmitted to the Commercial Credit Trust, and thereupon plaintiff drove the car to Palmer, Illinois, where he took up *Page 1118 with one of defendant's agents the question of securing insurance on his car from defendant company. On August 1, 1924, he obtained the policy upon which this action was brought. At the time of procuring same, plaintiff was unaware that there was other insurance upon his car, and in his testimony he did not recall that defendant's agent, in taking his application, had asked him about other insurance. Subsequently, plaintiff returned to Missouri, and on December 21, 1924, his car was destroyed by fire in the city of Auxvasse, having a salvage value thereafter of $10.
Shortly after the loss had occurred, plaintiff for the first time learned of the outstanding insurance with the Export Insurance Company, and informed such company of his loss on or shortly before January 19, 1925. However, the certificate of insurance from such company was not obtained by plaintiff until in the following May. The defendant company was also informed of the loss, and on January 21, 1925, one of its adjusters interviewed plaintiff relative to the matter. It was in this interview that defendant first became advised of the prior insurance in the Export Insurance Company. The adjuster testified that during this discussion he informed plaintiff that he was entitled to the return of his premium, but it appears that the premium was retained by defendant until September 14, 1925, when the same was deposited in court after this action had been brought.
In the policy in suit there was the following condition and stipulation:
"No recovery shall be had under this policy if at the time a loss occurs there be any other insurance covering such loss which would attach if this insurance had not been effected."
The first point made and most earnestly urged by defendant is that the court erred in refusing to give the peremptory instruction in the nature of a demurrer to the evidence requested by it at the close of the whole case. With commendable frankness learned counsel state in their brief the essence of their contention, namely, that the evidence showed conclusively that plaintiff had violated the clause of the policy forbidding double insurance, and that there was no attempt on his part to establish a waiver of such breach by defendant. If such contention is well taken, plaintiff clearly may not recover, because the law is well settled that additional insurance in violation of the terms of the contract will avoid the policy, since overinsurance by concurrent policies on the same property tends to cause carelessness on the part of the insured, and opens the door to fraud.
In determining the correctness of the court's ruling on the demurrer at the close of all the evidence, the rule to be applied is the same as in other actions — that plaintiff must be given the benefit of all evidence that was adduced in his behalf, as well as of all evidence *Page 1119 favorable to him offered by defendant, in addition to which he must be allowed the benefit of reasonable inferences of fact on all the proof. Moreover, plaintiff's evidence must be regarded as true, if not impossible, or entirely beyond reason, and defendant's evidence must be taken as false, where it is contradicted by that of plaintiff; and the court may not draw inferences of fact in defendant's favor to countervail or overthrow inferences tending to support plaintiff's cause of action.
To constitute insurance of the sort prohibited, both policies must be upon the same subject-matter, and upon the same interest therein. Both the mortgagor and the mortgagee have separate and distinct insurable interests in property covered by a mortgage, and, so long as the policy held by each covers only such respective interest, the provision in the policy against other insurance is not violated.
Though the above is the general rule, it has, nevertheless, been held, upon most respectable authority, that insurance procured by a mortgagee, covering his own and the owner's interests, but obtained without the knowledge, consent, orauthority of the owner, is not such other insurance as to avoid a policy subsequently obtained by the owner himself. [Titus v. Glens Falls Insurance Co., 81 N.Y. 410; Doran v. Franklin Fire Insurance Co., 86 N.Y. 635; Cannon v. Home Insurance Co., 49 La. Ann. 1367, 22 So. 387; Cowart v. Capital City Insurance Co.,114 Ala. 356, 20 So. 574.]
This holding seems to be entirely logical and eminently fair. Applied to the facts of the case at bar, we find abundant testimony, though contradicted, that plaintiff was unaware of the existence of the policy taken out by the Commercial Credit Trust from the Export Insurance Company until long after his loss had occurred. Accordingly, leaving out of consideration the element of plaintiff's knowledge, if it is to be held that the Commercial Credit Trust obtained its policy of insurance with plaintiff's consent or authority (and assuming only for the sake of argument that it covered his interest), such conclusion must be reached by virtue of the provision in the chattel mortgage that plaintiff should keep the automobile insured, the loss to be payable to the mortgagee, as such mortgagee's interest might appear, and that, in the event plaintiff should neglect or refuse to obtain such insurance, the mortgagee might, at its option, obtain the same and add the amount of the premium therefor to the mortgage debt.
In construing such clause, however, the cases we have cited above hold in no uncertain terms that such clause is inoperative as affording authority to the mortgagee to secure insurance upon the owner's interest until such time as the owner is actually shown to have been in default after notice or demand. While it is true that plaintiff in the case at bar did not take out insurance at the time the purchase *Page 1120 was made and the chattel mortgage executed, it was not shown that any demand was made upon him to do so, and, furthermore, he had no opportunity to become in default in respect to such obligation, for the reason that the Commercial Credit Trust, the assignee of the mortgagee, obtained its policy of insurance as of the very day of the sale.
Accordingly, in its final analysis, the whole question resolves itself into one of agency. On demurrer it is our duty to believe plaintiff's testimony that the matter of insurance was not discussed with him at the time the car was purchased. But even under defendant's theory of the transaction, there is no contention that plaintiff himself was actually expected to obtain such policy. Thus, it does not conclusively appear that the Commercial Credit Trust was authorized, either under the chattel mortgage, in the absence of a default on plaintiff's part, or otherwise, to procure a policy of insurance covering plaintiff's interest in the car and upon his account. Furthermore, it was provided in the Export policy that upon the occurrence of loss the proceeds should be payable to the Commercial Credit Trust (whose insurable interest in the car, incidentally, had ceased to exist prior to the issuance of the policy in suit by reason of the fact that the mortgage debt had been extinguished), so that upon the authority of the cases cited herein, which to our minds represent the best thought upon the question, we are inclined to the view that such Export policy was in effect insurance by the Commercial Credit Trust upon its own interest and account, and that its act in having procured such policy cannot be so far regarded as the act of plaintiff as to have constituted a violation of the provision against other insurance in the policy issued by defendant.
Defendant, however, makes the further suggestion that, assuming that the Export policy was taken out without the knowledge or consent of plaintiff, he, nevertheless, afterwards ratified it by making claim thereunder, and is now estopped to argue that it was not a policy insuring his interest. The cases we have cited above dwell at considerable length upon this proposition. The fact is that plaintiff did nothing affecting the Export policy until after the rights and obligations of both parties to this action had become fixed by reason of the loss. We appreciate, however, that a contract of insurance made on behalf of an insured, though without authority, may be ratified by such insured, even after a loss has occurred, provided the insurer has not meanwhile withdrawn its previous assent, although so far as our search has disclosed, we have found this rule to have been applied only in those cases in which the insured was seeking to recover under the policy, the unauthorized procurement of which he was held to have ratified. But here the reason for the stipulation in the policy against other insurance had ceased. Plaintiff's conduct subsequent to the loss could have exerted no influence on the action *Page 1121 of defendant in respect to the creation or continuance of the risk, for the reason that the policy had matured by reason of the loss, and had ceased to exist except for the purpose of collection. The moral hazard was no longer to be considered, and these elements could not be restored by ratification. The logical conclusion is, therefore, that, if the fact of the original procurement of insurance by the Commercial Credit Trust did not render the contract sued on void at its inception, such fact could not, after the loss, have such operation by relation.
It follows, therefore, that, for the reasons expressed, the case was properly one for submission to the jury.
It is next argued that the court erred in giving to the jury plaintiff's main instruction covering his theory of the case. The complaint made is that this instruction erroneously submitted a question of law to the jury, in that it required the jury to find that at the time the policy in suit was issued by defendant "there was no prior existing contract of insurance on said car for plaintiff's benefit." There is no doubt that the essentials of a contract should be determined by the court, and that an instruction is subject to criticism, and in certain instances may be prejudicially erroneous, when it leaves it for the jury to say whether the undisputed facts in evidence, or the facts found by the jury from the evidence, constitute a contract. But in the particular instance before us, the existence of a prior contract of insurance was a matter of defense which it was incumbent upon defendant to prove, and, consequently, the unqualified characterization by plaintiff of the Export policy as a contract of insurance in so far as it may have affected him, was a concession upon his part, and rendered the instruction more favorable to defendant than it had the right to expect.
Certain other points with reference to the court's refusal to give instructions requested by defendant have been assigned as error, but, inasmuch as they have not been preserved by counsel in their brief and argument, they may be regarded as having been waived. [Mercantile Trust Co. v. Dulle (Mo. Sup.), 282 S.W. 414; Compton v. Louis Rich Construction Co. (Mo. Sup.), 287 S.W. 474; Sitts v. Daniel (Mo. App.), 284 S.W. 857.]
Finally, defendant urges that it was error to submit to the jury the issue of vexatious refusal to pay, and we cannot escape the conclusion that such objection is well taken. It is agreed that the penalty for vexatious refusal to pay should not be inflicted unless the evidence and circumstances disclose that such refusal was willful and without reasonable cause, as the facts would have appeared to a reasonably prudent person before the trial. [Non-Royalty Shoe Co. v. Phoenix Assurance Co.,277 Mo. 399, 210 S.W. 37; Berryman v. Southern Surety Co.,285 Mo. 379, 227 S.W. 96; Miller v. Fireman's *Page 1122 Insurance Co., 206 Mo. App. 475, 229 S.W. 261; Zimmerman v. Southern Surety Co. (Mo. App.), 241 S.W. 95.]
In this case the evidence was conflicting as to plaintiff's knowledge of the existence of the Export policy, and that the same covered his interest at the time the policy in suit was obtained. Furthermore, it may not be denied that there is authority to support defendant's contention that the Export policy constituted such other insurance as to have avoided this policy. [Perry v. Liverpool London Globe Insurance Co., 34 N.B. 380.] Such being true, and, in view of all the circumstances in the case, we think that defendant had reasonable cause to refuse to pay the loss, and the right to litigate the questions involved, without being penalized for so doing. It follows, therefore, that the judgment is excessive to the extent of the allowance of $50 for vexatious refusal to pay, and $100 for attorney's fees.
Accordingly, the Commissioner recommends that, if plaintiff will within ten days remit the sum of $150, the judgment of the circuit court be reversed, and the cause remanded, with directions that a new judgment be entered in favor of plaintiff and against defendant in the sum of $500, with interest at the rate of six per cent per annum from March 17, 1926, the date of the original judgment; that otherwise the judgment be reversed, and the cause remanded for a new trial.