Opinion
No. 21524.
February 5, 1951.
APPEAL FROM THE JACKSON CIRCUIT COURT, JACKSON COUNTY, THOMAS J. SEEHORN, J.
Alvin C. Trippe, Hogsett, Trippe, Depping, Houts James, all of Kansas City, for appellant.
Hammond C. Woods and White Hall, all of Kansas City, for respondents.
This is a suit to recover on a fire insurance contract for loss of personal property. Plaintiffs recovered a verdict and judgment for $1,000 for loss of property, $200 interest, and $500 attorney fees for alleged vexatious refusal to pay. The defendant has appealed.
The material part of the petition alleges:
"Plaintiffs further state that on or about November 8, 1946, for a valuable consideration paid to it, the defendant contracted, agreed and did insure plaintiffs against loss and damage to their household goods and personal property for the sum of One Thousand Dollars ($1,000.00) while located in the premises at Lot 33, Block I, Lake Lotawana. That it was intended and understood by the parties that said agreement would be reduced to writing by the defendant and evidenced by a written policy in the Missouri standard form. That in reducing said agreement to writing, the defendant's agent, by mistake, error or otherwise, provided for said insurance coverage to begin November 27, 1946, instead of November 8, 1946, as had been agreed upon between the plaintiffs and the defendant insurance company, and defendant issued its written policy designated as No. 379130 which renewed the insurance on the building, but failed to express the agreement of the parties insuring the household goods as above set out.
"That plaintiffs received said policy on or about November 9, 1946, and thereupon notified defendant that they had no insurance on said property and wanted it insured as previously ordered from November 8, 1946, and defendant's agent then orally agreed to issue a binder in conjunction with said policy adding the coverage and insuring said property against fire loss from November 8, 1946, until November 27, 1946."
The evidence discloses that the plaintiffs were husband and wife at the time of the issuance of the insurance contract and of the fire, but at the time of the trial they had been divorced and Mrs. Ewing's maiden name of Sammons was restored. They had bought a house at Lake Lotawana from Edwin W. Blair and Jessie E. Blair, his wife, who carried a $2,000 insurance policy in another company on the house only. This policy, which expired November 27, 1946, was assigned to the plaintiffs. Prior to the fire plaintiffs moved some household goods and personal property into the house and decided they should have some fire insurance on these items. On November 8 Mrs. Ewing called defendant's agent and asked him to increase the insurance on the house from $2,000 to $3,000 and to write $1,000 insurance on the household goods located at the Lake. "I said `I want that to go into effect right away; when the whole policy expires I want that renewed.' * * * He said he would." In the same conversation she requested a $1,000 fire insurance policy on the household goods in the apartment where plaintiffs lived at 722 West 44th Street in Kansas City. Both policies were issued and mailed by defendant's agent to the plaintiffs and were received by them November 9. Both policies were dated November 8, and the one insuring the household goods in the apartment became effective on that date, but the policy which covered the Lake property and household goods was to become effective on November 27. When Mr. Ewing examined this policy he noted that the insurance on the household goods at the Lake did not become effective until November 27 and he called defendant's agent advising him that he had made a mistake and that he and his wife wanted the $1,000 insurance on the household goods at the Lake to become effective on November 8, as Mrs. Ewing had requested. "I told him we would like to have that started the 8th of November, the day my wife called up. He said, well, he could take care of that with what he called a binder. He said it would be taken care of, and after the 27th the other thousand on the house and the furniture would all go together. If we wanted insurance on the furniture to that time, he would take care of it by a binder. I asked him if that was all we needed, and he said yes, and he said it would all be taken care of, and I supposed it was taken care of." The agent denied this conversation and said he issued the policies according to the instructions given him by Mrs. Ewing. However, he testified: "Q. * * * If he had called you and asked you to cover, that they wanted the household goods out there covered from the 8th, you could have taken care of that by issuing an endorsement? A. That's right. Q. There is no reason that you know of now why you wouldn't have done it had he requested it? A. No." No binder or endorsement changing the effective date was issued. On November 26 a fire occurred totally destroying the building and household goods. Plaintiffs collected $2,000 for the building under the Blair policy, but the defendant refused to pay the insurance on the household goods on the theory that the insurance did not become effective until November 27. After the fire Mr. Ewing called defendant's agent to inquire about the binder or endorsement and the agent said he forgot to issue it. The agent denied this conversation. The agent testified that he extended credit to the plaintiffs for the premium and that it was paid January 18, 1947. It is conceded that the agent was a general agent of the defendant.
Defendant contends that its motion for a directed verdict should have been sustained because (a) the petition is founded upon an oral contract to insure and does not allege a consideration for such contract and is therefore defective; and (b) that the evidence fails to prove any consideration for such oral contract. The crucial hinge in this controversy is whether plaintiffs' petition, evidence and instructions were founded on the theory that the insurance was an oral contract of insurance covering the period from November 8 to November 27, or whether the suit was based on the written contract, the effective date of which had been changed from November 27 to November 8.
The cases cited by defendant support the proposition that a petition founded upon an oral contract of insurance must allege, and the evidence must prove, a consideration therefor. Swift v. Central Union Fire Ins. Co., 279 Mo. 606, 216 S.W. 935. However, we do not believe such cases are controlling because we do not consider this to be a suit upon an oral contract of insurance. By giving the petition the liberal construction that it is entitled to after verdict, we think it states a cause of action upon a written contract of insurance, the effective date of which was changed and modified by defendant's general agent who, after the issuance of the policy and before plaintiffs finally accepted it, agreed to attach a binder or endorsement thereto which would make the provisions of the policy effective from November 8 instead of November 27, in so far as the household goods were concerned. The policy did not become a final contract until it had been issued in accordance with plaintiffs' directions and accepted by them. According to the petition and the evidence they retained the policy on the representation of defendant's general agent that a binder would be issued, making the effective date of the insurance on the household goods November 8 instead of November 27. This became the contract between the parties and is the one sued on.
The policy expressly contemplated and authorized subsequent changes and modifications by providing: "Insurance is provided only against such perils and coverages indicated below by premium charges and against other perils and for other coverages when endorsed hereon or added hereto. * * * This policy is made and accepted subject to the foregoing provisions and stipulations and those hereinafter stated, which are hereby made a part of this policy, together with such other provisions and agreements as may be added hereto. * * *" (Italics supplied.)
The petition alleges that "for a valuable consideration paid to it, the defendant contracted, agreed, and did insure plaintiffs against loss and damage to their household goods and personal property * * *." We think this allegation related to the written policy as modified, and therefore pleads a consideration. We hold that the petition was not defective for the reason assigned.
Defendant next contends that its motion for a directed verdict should have been sustained because the evidence did not prove any consideration for the oral contract of insurance sued on. From what we have said, there can be no merit in this contention because the suit was not based on an oral contract of insurance. The evidence does show that plaintiffs paid the full amount of the premium demanded by defendant after the property had been destroyed by fire, which premium the defendant retained. If, as contended by the defendant, the policy did not become effective until November 27 and the property had been destroyed on November 26, then upon what theory could defendant collect and retain the premium for insurance on property which did not exist? Under such circumstances, there would be no risk. At least this is a circumstance to indicate that defendant considered the policy effective prior to the date of the fire.
However, defendant contends that the effective date of the policy cannot be changed to November 8 by an oral agreement between the plaintiffs and the defendant because such evidence would vary the terms of the written instrument and the date of the policy would control. It cites Burner v. American Ins. Co., 221 Mo.App. 1193, 300 S.W. 556. The issue in that case presents an entirely different question than the one now under consideration. The court was not considering the admissibility of oral evidence to vary a written contract or whether a general agent could modify an insurance policy by attaching a binder changing the effective date where the policy contained provisions similar to those quoted, supra. Defendant fails to take into consideration the full authority of a general agent of an insurance company. In Bergerson v. General Ins. Co. of America, 232 Mo.App. 549, 105 S.W.2d 1015, at page 1018 we said: "* * * it was the general agent of the defendant and had authority to transfer the insurance without the consent being indorsed on the policy, although the policy provided otherwise. (Citing many cases) H. E. Clark Company was the general agent of the defendant and had as much authority to make admissions for it relative to that part of the business of the defendant intrusted to it, while in the act of attending to that business, as any of defendant's officers or even its board of directors." (Citing many cases.)
Our courts have upheld somewhat similar agreements by the company's general agent to issue endorsements affecting the insurance where the contract is executory, as in this instance, even though in fact the agent forgets to make the endorsement or it is not attached to the policy at all. In Bealmer v. Hartford Fire Ins. Co., Mo.App., 193 S.W. 847, at page 849, the agent agreed to transfer the insurance to a subsequent purchaser of the insured property and although no new or additional consideration was given, the court upheld the agent's oral agreement, saying: "The fact that no actual writing had been made transferring or assigning the policy would not affect the actual agreement transferring it, as the writing, if it had been made, would have been only evidence of the contract of transfer." See Kratchman v. North British Mercantile Ins. Co., Mo.App., 203 S.W.2d 483, 488.
We hold that the general agent could, and the evidence shows that he did, change the effective date of the policy in so far as the household goods were concerned.
Defendant next criticizes plaintiffs' instructions Nos. 1 and 2 because they did not require the jury to find a consideration for the oral agreement to insure. What we have said disposes of this contention. The suit is not based on an oral agreement to insure. Being a written contract, it imports a consideration. Sec. 3345, R.S. 1939, R.S. 1949, § 431.020; White v. Prudential Ins. Co., 235 Mo.App. 156, 127 S.W.2d 98; Shapiro v. John Hancock Mut. Life Ins. Co., 232 Mo.App. 396, 107 S.W.2d 829. Furthermore, plaintiffs paid the full premium demanded by defendant.
Defendant's last assignment is that the court erred in submitting the question of vexatious refusal to settle the claim. We think this contention must be sustained.
It is well settled in this state that "Where there is an open question of fact determinative of the insurer's liability, the insurer, acting in good faith, may insist upon a judicial determination of such issue without being penalized therefor." Spillman v. Kansas City Life Ins. Co., 238 Mo.App. 419, 180 S.W.2d 605, 607. "An insurance company's right to resist payment upon one of its policies cannot be determined by the facts as found by the jury, but must be determined by the facts as they reasonably appeared to it before the trial. It has the right to refuse payment and to defend a suit with all of the weapons at its command, so long as it has reasonable ground to believe its defense is meritorious. It is only when it persists in its refusal to pay the policy after it is aware that it has no meritorious defense that it becomes subject to penalties for vexatious delay." State ex rel. John Hancock Mut. Life Ins. Co. v. Hughes, Mo.Sup., 152 S.W.2d 132, 134. In the instant case the face of the policy provided that the insurance should not become effective until November 27, and it is conceded that there would be no liability if the policy became effective on that date. However, plaintiffs sued and recovered on the theory that defendant's agent had agreed to issue a binder changing the effective date to November 8, and that this agreement was binding on the company and the date effectively changed even though the binder was not issued and attached to the policy. That was the primary point litigated and the evidence was sharply conflicting on that issue. Plaintiff, Wayne Ewing, testified that the agent had agreed to issue the binder changing the effective date, but the agent denied any such conversation or agreement. We think the defendant had the right to litigate that issue without being subjected to the penalty provided for by Sec. 6040, R.S. 1939, R.S. 1949, § 375.420. See, also, Longo v. John Hancock Mut. Life Ins. Co., Mo.App., 153 S.W.2d 805; Bandy v. East West Ins. Co., Mo.App., 163 S.W.2d 350. There was no other evidence of defendant vexatiously refusing to pay the claim.
The case was well tried, save and except the matter of penalties under our statute, supra. This can be cured by remittitur, as the amount is fixed by the verdict. If within ten days the plaintiffs will remit the sum of $500 as of the date of the judgment, then the judgment is affirmed for the sum of $1,200 as of the date of the judgment. If no remittitur be filed as required above, then the said judgment shall be reversed and the cause remanded. Aufrichtig v. Columbia National Life Ins. Co., 298 Mo. 1, 18, 249 S.W. 912.
All concur.