April 13, 1923. The opinion of the Court was delivered by Two actions tried together upon two separate policies of fire insurance covering a Ford coupe and a Ford sedan. Verdict in each case for the plaintiff. The defendant appeals.
As there is a differentiating circumstance in one of the cases, they will be considered separately upon this appeal. First, the Ford coupe suit: On November 3, 1920, the defendant issued a policy insuring the plaintiff against loss or damage by fire, in an amount not exceeding $900, to his automobile described as a Ford coupe. The policy covered a period of one year, expiring on November 3, 1921. The car was totally destroyed by fire on September 7, 1921. On the following day the plaintiff gave due notice of the fire, and on September 16, 1921, submitted proofs of loss as required. In his proofs of loss the plaintiff stated: *Page 469
The original cost of the car at ________________ $1,035 00It appeared beyond dispute that the accessories were placed upon the car at the time the plaintiff purchased it, and were upon it at the time the policy was issued. He claimed, accordingly, the full amount of the policy, $900. Among the warranties, "Statements of facts known to andwarranted by the assured to be true," upon which "thispolicy is issued by the company relying upon the truththereof," is this statement:Less depreciation ______________________________ 343 52 __________ Present value __________________________________ $ 691 48
Accessories ____________________________________ 219 50 __________ Actual cash value at time of loss ______________ $ 910 98
The facts with respect to the purchase of the automobile described are as follows: "Purchased by the assured September, 1920, new; actual cost to insurer including equipment $1,035.00."
The policy also contained a stipulation, as a condition, that it should be null and void, "if the subject of this insurancebe or become incumbered by a lien or mortgageexcept as otherwise indorsed hereon."
It was conceded that, at the time of the issuing of the policy, there was a chattel mortgage upon the car executed and delivered by the plaintiff to one W.Z. Ayer on September 24, 1920, recorded September 29, 1920, to secure a note for $225 due December 1, 1920, the unpaid portion of the purchase price of the car. The plaintiff testified that at and before the issuance of the policy he informed the agent who issued the policy of the existence of the mortgage. This was denied by the agent.
The defendant denied all liability upon the policy upon the ground that the admitted existence of the chattel mortgage constituted a breach of the policy; and insisted that in *Page 470 no event was it liable for the accessories itemized in proofs of loss aggregating $219.50, or that they were entitled to be considered in estimating the amount of the plaintiff's loss.
As to the effect of the existence of the chattel mortgage the Circuit Judge properly charged the jury:
"If a mortgage was [had been?] given by the plaintiff at the time he obtained the policy in question, or subsequent to its issuance, and the said mortgage was unpaid at the time the said policy was issued, that then, in the event and by reason of the giving of the mortgage, the policy would be deemed canceled and void by such act on the part of the defendant [plaintiff]; in other words, the giving of such an incumbrance by the plaintiff is contrary to the provisions of the policy of fire insurance issued to him, and vitiates it, unless waived by the Insurance Company, and the question of waiver is for you to decide."
And, in view of the positive testimony of the plaintiff that he had notified the agent of the existence of the mortgage at the time the policy was issued, a fact denied by the agent, the Circuit Judge was entirely right in submitting this issue to the jury as determinative of the question of waiver.
In view, however, of the sharp conflict of testimony upon this point, it was reversible error to charge the jury that, if the defendant, by the exercise of ordinary care, could have discovered the existence of the mortgage, the waiver of that condition would as effectually be established as if the plaintiff had informed the defendant of it, and in suggesting to the jury certain channels of inquiry open to the defendant, particularly the record of the mortgage in the clerk's office.
The nonexistence of a mortgage upon the car was a statement of a fact by the plaintiff, a part of the conditions in the policy and of the warranty upon which the company acted issuing the policy. The plaintiff bound himself to the truth of that statement, and agreed that, if it was not *Page 471 true, the policy should be canceled. There was no duty incumbent upon the defendant to do otherwise than act upon that statement; no duty arose to doubt it and verify it by any independent inquiry whatever.
In 14 R.C.L. 1172, it is said:
"In general it may be said that the knowledge of an insurer which will form the basis for a waiver must beactual notice either to the insurer or its authorized agents, and not mere constructive notice. Accordingly a notice deposited in the mail is ineffective unless received and theconstructive notice imparted by the record of instrumentsis insufficient."
In a note to this text is cited Mutual Fire Ins. Co. v.Deale, 18 Md., 26, 79 Am. Dec., 673; monographic note 107 Am. St. Rep., 108.
To the same effect, see 26 C.J., 296, and numerous cases cited in the note.
Mr. Freeman in his monographic note exhaustively reviews this question in 107 Am. St. Rep., 108. Under the head "Constructive Notice to Insurers," he says:
"The statutes providing for the registration in some public office of instruments affecting the title to real property usually, if not universally, provide that such registration shall impute notice of the contents of the writing so registered to subsequent purchasers and incumbrancers. Insurersare neither, and hence are not, when issuing policies, chargeable with notice of such registered instruments, and may therefore seek and find protection in conditions in such policies exempting insurers from liability in case the condition of the title to the property insured has not been truly disclosed, or incumbrances existed which have not been noted on the policy, though the condition of such title or the existence of such incumbrances appears on the public records, and must have been disclosed had any examination been made thereof. Orient Ins. Co. v. Williamson, 98 Ga. 464,25 S.E., 560; Shaffer v. Milwaukee Mut. Ins. Co., *Page 472 17 Ind. App. 204, 46 N.E. 557; Phoenix Ins. Co. v.Overman, 21 Ind. App. 516, 52 N.E. 771; Milwaukee M.Ins. Co. v. Niewedde, 12 Ind. App. 145, 39 N.E. 757;Wicke v. Iowa State Ins. Co., 90 Iowa, 4, 57 N.W., 632;Mutual Fire Ins. Co. v. Deale, 18 Md., 26, 79 Am. Dec., 673; AEtna Ins. Co. v. Holcomb, 89 Tex., 404,34 S.W., 915; U.S. Ins. Co. v. Moriarity (Tex.Civ.App.)36 S.W., 943."
See, also, the observations of the writer in his dissenting opinion in the case of Gibbes v. Ins. Co. (S.C.),111 S.E., 805, 21 A.L.R., 1460, upon this subject, which do not conflict with the opinion of the Court.
As to the other contention of the defendant that they are not liable for the value of the accessories: I do not find that the defendant raised any such question upon the trial or requested the Circuit Judge to charge thereupon; and, even if it had, I cannot see that the defendant was prejudiced by the fact that the insured underestimated the actual cost of the car and equipment which included the accessories.
As to the Ford sedan case: It is precisely upon the same footing as the coupe case except that no question of a chattel mortgage is involved. The exceptions relating to that question not being applicable to the sedan case no valid objection appears to the judgment.
The exceptions involving criticisms of the Judge's charge apply only to the question of waiver which arises only in the coupe case, and, my opinion being that the judgment in that case should be reversed upon other grounds, it is not necessary for me to express an opinion about them.
The judgment of this Court is: (1) That the judgment in what has been designated as the Ford coupe case be reversed, and the case remanded to the Circuit Court for a new trial: (2) that the judgment in what has been designated as the Ford sedan case be affirmed. *Page 473
MESSRS. JUSTICE FRASER and MARION concur.