Source: https://openjurist.org/185/f2d/771/columbia-fire-ins-co-v-boykin-and-tayloe
Timestamp: 2019-04-22 22:03:16+00:00

Document:
Tazewell Taylor, Jr., and W. R. Ashburn, Norfolk, Va. (Ashburn, Agelasto & Sellers, Norfolk, Va., on brief), for appellant.
Charles L. Kaufman, Norfolk, Va. (Hamilton Plack, Norfolk, Va., on brief), for appellee.
Boykin and Tayloe, Incorporated, (hereinafter called insured) brought a civil action in the Circuit Court of the City of Norfolk, Virginia, on a fire insurance policy against The Columbia Fire Insurance Company of Dayton, Ohio, (hereinafter called insurer) which civil action was removed by insurer to the United States District Court for the Eastern District of Virginia.
Insured is a merchant and its inventory was destroyed by a fire occurring on March 18, 1949. Insured was then insured under what is known as a value reporting policy issued by insurer.
The maximum limit of coverage under said policy was $20,000.00, and the last value which insured had reported prior to the fire was $12,539.54 at August 31, 1948. After the fire, insured reported an inventory value of $24,015.90 as of February 28, 1949, and asserted claim for $20,000.00, the maximum policy coverage. Insurer offered to pay $12,539.54, contending that its liability was limited to the last value reported prior to the fire. Insurer filed an answer admitting liability at $12,539.54, and it moved for summary judgment under supporting affidavit of its general adjustor. Insured countered with a motion for summary judgment upon the contention that insurer had waived the contract provision that the amount payable under the policy should be no more than the value last reported prior to the fire, by its course of conduct, and its motion was supported by affidavits of the agent who wrote the policy at Norfolk, Virginia, and the insured's president.
After the argument of these cross-motions for summary judgment, and after the District Court announced its opinion that insurer's motion for summary judgment should be denied that insured's motion for summary judgment should be granted, insurer contended that the affidavits filed in support of insured's motion for summary judgment were not sufficient to support a finding that insurer had waived or was estopped to rely on the contract provisions, and insurer moved the Court to permit it to take the deposition of affiant John B. Norfleet and one of his office employees as provided in Federal Rules of Civil Procedure, rule 56(e), 28 U.S.C.A. in order to supplement the contents of Norfleet's affidavit, and in order to show pertinent factual matters not dealt with in Norfleet's affidavit. This motion was denied and judgment entered for the insured for $20,000.00 without any oral testimony in the cause. Insurer has appealed to us.
'Monthly reporting insurance is a device whereby the amount of insurance under the policy fluctuates with the value of the changing stock of merchandise in a going business. It is designed to afford complete coverage and at the same time to avoid the maintenance of insurance in excess of the value of the property insured, so that the amount of the insurance, and the amount of the premium to be paid, are in direct proportion to the value of the goods on hand. Such a policy is obviously more favorable to the insured than a policy for a specified amount where the premium is calculated on the amount of insurance named in the policy although the amount of the risk may be materially less from time to time during the life of the contract. See the opinion of Judge Chesnut in Federal Intermediate Credit Bank of Baltimore v. Globe & Rutgers Fire Ins. Co., D.C. Md., 7 F.Supp. 56.
With this we agree and we think, further, that the equities in this case are entirely on the side of the insured.
On May 6, 1947, Norfleet issued to the insured the insurer's policy for $8,000.00 of the straight premium type covering said stock of merchandise. This policy was cancelled on August 1, 1947, and in its place Norfleet issued on that date the insurer's reporting form of policy for $14,000.00, which was immediately increased to $20,000.00. When this policy expired on August 1, 1948, Norfleet issued, in renewal thereof, the insurer's policy on which this suit is based, which is substantially identical to the policy of August 1, 1947.
The agent wrote all the insurance carried by the insured and he was fully informed respecting the insured's property and insurance coverage at all times, except, of course, 'the cash values of inventory for specific months as to which he made the aforesaid inquiries from time to time and was thereupon immediately advised of the exact value sought.'At no time prior to the fire 'did Defendant, or said Agent, or any person whatever, notify, advise, instruct or complain to insured of any alleged failure to make reports in a form, manner or at times expected by and satisfactory to Defendant, or make protest or give caution with reference to any non-compliance' with the terms of the policy.
The reports under said policies were sent to the insurer, not within thirty days after the end of each month, but irregularly. The agent prepared reports for September, October and November, 1947, signed them in the name of the insured, and then sent them simultaneously to the insurer's home office. The reports for December, 1947, and January, February, March, April and May, 1948, were similarly prepared and signed by the agent, and were sent simultaneously by him after May. The reports for June and July, 1948, were similarly prepared and signed by the agent and then were forwarded together by him in September, 1948. 'All of said reports were accepted by said defendant without protest, comment or criticism by or on the part of Defendant,' and on the basis of such reports the premium due under said policy of August 1, 1947, was finally computed and adjusted on or about October 8, 1948.
The insured complied with all the requirements of said policy respecting notice and proof of its said fire loss of $22,677.06 and demanded payment by the insurer of the sum of $20,000.00. This demand was refused, and moreover, no sum has ever been tendered by the insurer to the insured. Although in its answer and motion for summary judgment, the insurer took the position that 'if it be liable for any amount' its liability cannot exceed $12,539.54, it now (as in the hearing before the District Court) admits liability for that amount.
The law of Virginia is here controlling. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188. And the Virginia law, as declared by the highest court of the State, is favorable to insured, on the points of waiver and estoppel. Thus, in Virginia Fire & Marine Insurance Co. v. Richmond Mica Co., 102 Va. 429, 46 S.E. 463, the Supreme Court of Appeals of Virginia flatly refused to follow the decision of the United States Supreme Court (which was favorable to the insurer and against the insured on waiver and estoppel) in Northern Assurance Co. v. Grand View Building Association, 183 U.S. 308, 22 S.Ct. 133, 46 L.Ed. 213. To us, the recent Virginia cases (both cited in 1948) of State Fire Insurance Co. v. Rakes, 188 Va. 239, 49 S.E.2d 265, 4 A.L.R.2d 862, and Virginia Automobile Mutual Insurance Co. v. Brillhart, 187 Va. 336, 46 S.E.2d 377, seem to require that we affirm the instant decision of the District Court.
'There is no suggestion in either of these provisions that a change of ownership of the car worked a forfeiture of the policy. Their manifest purpose is to require the consent of the company in order to effect a transfer of coverage from the named 'insured' to another.
We do not here hold that the mere failure of the insurer to notify the insured of its omission to make monthly reports, standing by itself, amounts to a waiver by the insurer of the provisions of the policy. Since the insured has the right, if it sees fit, to omit making a monthly report and thereby reduce its insurance, the insurer may well infer that the insured desires to limit its insurance to the amount shown by the insured's latest report, and, consequently, there is no duty on the insurer to jog the memory of the insured. Our conclusion of waiver and estoppel is based not merely on the acts of insurer's agent with respect to the monthly reports but also upon the approval of the agent's acts by the insurer, which is indicated by the evidence in this case. We are not holding that the insurer is liable merely because the agent of insurer represented to the insured that he (the agent) would take care of the monthly reports, but also because the insurer was aware of the agent's course of conduct and approval of it. We have here a waiver based not entirely on the acts of the insurer's agent but a waiver by the insurer itself.
Finally, in this connection, the equities in the Peters case strongly favored the insurer; here, we think the equities are on the side of the insured, which apparently, in perfectly good faith, relied on, and acted in accordance with, the representations and assurances of Norfleet, insurer's agent.
In the Brillhart Case, 187 Va. at page 345, 46 S.E.2d at page 381, Justice Eggleston quoted with approval the following extract from Coles v. Jefferson Insurance Co., 44 W.Va. 261, 23 S.E. 732: "The insurance agent, within the general scope of the business he transacts, is pro hac vice the insurance company. What he knows they know. What he does, they do. He has power to bind and to loose, and no limitation on his power unknown to strangers will bind them."
Norfleet, here, was clearly the insurer's agent; his conduct was thus the insurer's and the insurer is thereby bound. See, also, the cases of Aetna Insurance Co. v. Rhodes, 10 Cir., 170 F.2d 111; Home Insurance Co. of N.Y. v. Hightower, 5 Cir., 22 F.2d 882, certiorari denied 276 U.S. 634, 48 S.Ct. 339, 72 L.Ed. 743; Royal Indemnity Co. v. Hook, 155 Va. 956, 157 S.E. 414; Royal Insurance Co. v. Poole, 148 Va. 363, 138 S.E. 487.
'Each side moved for summary judgment, the case was argued and submitted, the plaintiff prevailed, and the defendant now asks leave to take discovery depositions of its agent and another. The Court thinks the request cannot be allowed.
Defendant conceded at the argument, and now, that the record posed no genuine issue of fact. No hint of undevelopment in the evidence was previously made. For the first time, in its present request, the defendant suggests the possibility of the existence of material evidence not developed in the case. But the possibility was as well known before the submission as afterwards.
'Reason for such discovery was as well known to the defendant prior to submission as now. Even now, however, the results of such an inquiry are conceded to be wholly speculative. Finally, the evidence actually shows the contrary of the defendant's position- it shows, in Boykin's affidavit, that the plaintiff always answered the agent's inquiries 'forthwith' and 'immediately."
And, see, Lewis v. Atlas Corporation, 3 Cir., 158 F.2d 599; Hartmann v. Time, D.C., 64 F.Supp. 671; Allen v. Radio Corporation of America, D.C., 47 F.Supp. 244.

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