C. K. STUART et al.
v.
UNITED STATES FIRE INSURANCE COMPANY.
No. 7320DC298.
Court of Appeals of North Carolina.
June 27, 1973.*252 Jones & Deane, by W. R. Jones, Rockingham, for plaintiff appellants.
Leath, Bynum & Kitchin, by Henry L. Kitchin, Rockingham, for defendant appellee.
BALEY, Judge.
The key question involved in this appeal is whether the insurance company had knowledge of the non-occupancy of the insured premises prior to the issuance of the insurance contract. If so, it would be estopped to assert this defense, and plaintiffs would be entitled to recover.
It is the general rule that if an insurance company has knowledge through its agent prior to the issuance of a policy of fire insurance that the premises are vacant or unoccupied, the issuance of the policy waives any provision as to vacancy or non-occupancy, at least so far as it concerns the existing vacancy. Fire Fighters Club v. Casualty Co., 259 N.C. 582, 131 S.E.2d 430; Johnson v. Insurance Co., 172 N.C. 142, 90 S.E. 124; Annot. 96 A.L.R. 1259 (1935).
*253 In Johnson v. Insurance Co., supra, the court cites with approval from Wood v. American Fire Ins. Co., 149 N.Y. 382, 386, 44 N.E. 80, 81 (1896):
"The restrictions inserted in the contract upon the power of the agent to waive any condition, unless done in a particular manner, cannot be deemed to apply to those conditions which relate to the inception of the contract when it appears that the agent has delivered it and received the premiums with full knowledge of the actual situation."
Conceding, arguendo, that both the dwelling and the barn covered by this insurance policy were unoccupied, the defendant knew of such non-occupancy prior to the issuance of its policy. The record shows that the defendant had carried insurance coverage upon the premises here involved for at least ten years. On 5 August 1967, immediately prior to the issuance of the standard three year policy which preceded the policy upon which suit was brought, the agent of defendant was notified in writing that no one was living on the premises and that it was being looked after by a caretaker who lived a few miles from the farm. With full knowledge of the factual situation then existing, the defendant issued its policy effective 27 August 1967 and, without further notice from plaintiffs or any apparent investigation, subsequently issued its renewal policy effective 27 August 1970. The notice that a caretaker who lived a few miles from the farm was in charge of the premises was ample notice to defendant that the premises were unoccupied and gives rise to a logical inference that they would remain so unoccupied unless defendant was notified of any changed conditions.
It is undisputed that the defendant accepted premiums after notice of non-occupancy. The premium for the policy period beginning in 1967 and for the renewal period beginning in 1970 were conceded to have been paid.
It cannot be assumed that the defendant intended to accept premiums upon a policy which it knew did not extend coverage. Williams v. Insurance Co., 209 N.C. 765, 185 S.E. 21.
Ordinarily waiver and estoppel must be pleaded as affirmative defenses. Rule 8(c), Rules of Civil Procedure. However the plaintiffs presented their evidence and the case was tried on the theory that the defendant had accepted its premiums with knowledge of the non-occupancy of the premises. The letter specifically setting out the notice of such non-occupancy was admitted in evidence without objection. In a liberal construction of the pleadings upon the theory under which the case was tried and under the factual circumstances here appearing, we hold waiver and estoppel were proper elements for consideration by the court. Laughinghouse v. Insurance Co., 200 N.C. 434, 157 S.E. 131; Horton v. Insurance Co., 9 N.C.App. 140, 175 S.E.2d 725, cert. denied 277 N.C. 251.
In Willis v. Ins. Cos., 79 N.C. 285, 289 (1878), the Supreme Court made this practical observation:
"Insurance contracts are prepared by insurers who have at their command in their preparation the best legal talent and business capacity, and every precaution is taken for their protection. This is made necessary to prevent the frauds of bad men. But on the other hand the insured are generally plain men without counsel, or the capacity to understand the involved and complicated writings which they are required to sign, and which in most cases probably they never read. What they understand is that they are to pay the insurers so much money, and if they are burnt out the insurers pay them so much. Where therefore there has been good faith on the part of the insured and a substantial compliance with the contract on their part, the Courts will require nothing more."
*254 This makes good sense today as it did in 1878 and is applicable to the present case.
The judgment appealed from is reversed and a new trial ordered.
New trial.
BROCK and VAUGHN, JJ., concur.