Case Name: WHALEY v. GUARDIAN FIRE INSURANCE CO.
Court: Supreme Court of South Carolina
Jurisdiction: South Carolina
Decision Date: 1923-04-03
Citations: 124 S.C. 173
Docket Number: 11172
Parties: WHALEY v. GUARDIAN FIRE INSURANCE CO.
Judges: Mr. Ci-iiEE Justice Gary and Messrs. Justices Watts and Fraser concur.
Reporter: South Carolina Reports
Volume: 124
Pages: 173–195

Head Matter:
11172
WHALEY v. GUARDIAN FIRE INSURANCE CO.
(117 S. E., 209)
1. Insurance — Evidence of Waiver of Cumulative Insurance Clause After Loss Occurred Held Sufficient to Suefort Denial of Directed Verdict. — Evidence that after loss occurred insurer’s local agent asked for the policy and a statement of loss, and insured delivered both to him, and insurer retained the return premiums for about 40 days after the agent had knowledge that additional insurance had been procured, held sufficient evidence of a waiver of. a clause providing that the policy shall be void if insured procures additional insurance on the property covered thereby, to justify a refusal to direct a verdict for insurer.
2. Insurance — General Rule as to Waiver of Forfeiture by Insured. — Generally, where insurer, with knowledge of any act on the part of insured working a forfeiture, enters into negotiations with him, recognizing the continued validity of the policy, and thus induces insured to incur expenses or trouble under the belief that his loss will be paid, the forfeiture is waived.
3. Insurance — Retention of Unearned Premiums Evidence of Intention to Waive Forfeiture. — Where an insurance company has aright to cancel a policy, but fails to cancel it and return the unearned premiums, either before or after the fire, the jury may consider that as evidence of intention to waive the forfeiture.
4. Insurance — Conduct of Local Agent Admissible on Question of Waiver.' — -In view of Civ. Code 1912, §§ 2711, 2712, the statements and conduct of a local agent held admissible against insurer on the issue of waiver.
•5. Insurance — Clause Relating to Time of Payment after Proof of Loss Held Not to Affect Question of Waiver by Retaining Premiums. — A policy provision,, providing that damages should be payable 60 days after proof of loss, held not to exempt the insurer during the 60-day period from the presumption of waiver of forfeiture arising from retention of premium.
'6. Insurance- — Basis’of Doctrine of Waiver Stated. — Waiver is predicable on any acts or conduct of insurer, after knowledge of a breach, either before or after the loss, tending to show recognitipn of the validity of the policy, and an intent to relinquish the right to avoid it for the known breach.
Before N. G. Evans, Special Judge. Orangeburg, May, 1922.
Affirmed.
Action by William M. Whaley against Guardian Fire Insurance Co. Judgment for plaintiff and defendant appeals.
Messrs. T. Stokes Salley, M. M. Mann and Fowles & Bailey, for appellant.
Fowles & Bailey cite: Policy payable 60 days after fire: Hall Fire Ins., 53; 83 S. C., 13 ;■ 30 Fed., 356. And insurer has right to take that period for proper investigation: 113 S. C., 462 ; 44 Cal., 264; 45 Pac., 73; 22 N. W., 6; 152 N. Y. Supp., 1022. No waiver: 68 S. C., 387; 83 S. C., 262; 25 L. R. A., 4; 70 S. C., 75; 102 S. C., 115; 114 S. C., 183.
Messrs. Raysor, Moss & hide and Wolfe & Berry, for respondent,
cite: Acts of agent binding on company before and after fire: 1 Civ. Code 1912, Sec. 2712; 81 S. C., 160; 115 S. C., 58; 97 S. C., 379. Bvidence of waiver: 46 S. C., 91; 78 S. C., 396; 78 S. C., 444 ; 54 S. C., 602; 115 S. C., 59;-102 S. C., 125. '
April 3, 1923.

Opinion:
The opinion of the Court was delivered by
Mr. Justice Marion.
On January 22, 1921, the defendant-appellant, through its local agent, C. R. James, issued a policy of fire insurance for $2,000, to continue in force for one year, on the dwelling and household goods of the plaintiff. The policy, which was in the usual standard form, contained a clause providing that it was to "be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy. On or about May 12, 1921, the insured applied for and secured an additional policy for $2,000 on the same property in another company. The property was destroyed by fire June 8, 1921. Plaintiff recovered in an action upon the defendant's policy, which was contested by defendant upon the ground that the contract had been avoided or forfeited by the insured's action in subsequently taking out ad ditional insurance. The appeal raises the one question of whether the special presiding Judge, Hon. N. G. Evans, committed error of law in refusing defendant's motion for a directed verdict upon the ground that there was no- evidence of waiver by defendant of the undisputed breach of the additional insurance clause of the policy.
The testimony of C. R. James, a witness for the defendant, tended to establish that he was the local agent of the defendant company; that on the morning after the fire he learned of the other insurance for the first time; that he and Mr. Roryea, agent for the other insurance company, then went to where the house was burned; that he talked with Whaley there; that shortly after the fire he told Whaley to bring his policy and leave it in witness' office; that about a week after the fire he requested Whaley, the insured, to furnish him with a statement or "inventory of his losses"; that Whaley did so; that this document was accepted and kept by him; and that at the time of these occurrences no nonwaiver agreement had been signed. The testimony of J. E. Wallace, a witness for the defendant, tended to establish that he was the insurance adjuster to whom the loss was referred by the company; that in about a week or 10 days he went to St. Matthews, and accompanied by Mr. James, his local agent, and the other agent, went to see Whaley, the insured; that he then reported to the company; that he went back a second'time, about 44 days after the fire, tendered the insured the return premium, and told him the company denied liability. We think it fairly inferable from this evidence that after knowledge of the alleged forfeiture there was (1) a request for the policy and for what might be deemed proofs of loss from the insured; (2) the furnishing of information as to the loss by insured; and (3) the retention of the "inventory" furnished and of the so-called "return premium" for a period of about 40 days after knowledge of the breach.
A well-established general principle, recognized and applied by this Court in numerous decisions, is thus stated in 14 R. C. R. p. 1197, § 376:
"It is the general rule that when an insurer, with knowledge of any .act on the part of the insured which works a forfeiture, enters into negotiations with him which recognize the continued validity of the policy, and thus induces him to incur expense or trouble under the belief that his loss will be paid, the forfeiture is waived. This rule is most frequently applied to a request for proofs of loss from the insured after knowledge of the forfeiture," etc.
See Curnow v. Insurance Co., 46 S. C., 79; 24 S. E., 74. Norris v. Insurance Co., 57 S. C., 358; 35 S. E., 572. Kingman v. Insurance Co., 54 S. C., 599; 32 S. E., 762. Montgomery v. Insurance Co., 55 S. C., 6; 32 S. E., 723. Cobb v. Insurance Co., 78 S. C., 396; 58 S. E., 1099. McMillan & Son v. Insurance Co., 78 S. C., 444; 58 S. E., 1020, 1135.
In the case of Kingman v. Insurance Co., supra, the Court quotes with approval the following from the case of Titus v. Insurance Co., 81 N. Y., 410:
"It may be asserted broadly that if in any negotiation or transaction with the assured, after knowledge of the forfeiture, it [the insurer] recognizes the continued validity of the policy, or does acts based thereon, or requires the assured by virtue thereof to do some act, or incur some trouble or expense, the forfeitute is as matter of law waived; and it is now settled in this Court after some difference of opinion that such waiver need not be based upon any new agreement, or an estoppel."
It is also well settled in this state that:
"When an insurance company has a right to cancel a policy, and fails to cancel it and return the unearned premium, either before or after the fire, the jury may consider that as evidence of intention to waive the forfeiture." Norris v. Insurance Co., 57 S. C., 358; 35 S. E., 572. Powell v. Insurance Co., 97 S. C., 375; 81 S. E., 654. Scott v. In surance Co., 102 S. C., 115, 126; 86 S. E., 484. Spence v. Insurance Co., 104 S. C., 403; 89 S. E., 319. Porter v. Insurance Co., 107 S. C., 393; 93 S. E., 141.
Upon the issue of waiver the statements and conduct of the local agent were admissible in evidence against the company. Sections 2711, 2712, Civil Code 1912. Powell v. Insurance Co., supra; Hankinson v. Insurance Co., 80 S. C., 392; 61 S. E., 905. Norris v. Insurance Co., supra.
Unless some valid reason exists for not applying, or for limiting the application of, the foregoing principles to the case at bar, it would seem entirely clear that Judge Evans' ruling was correct. The contention of appellant's counsel, as we understand it, is that such reason may be found in the clause of the policy providing that "the amount Of loss or damage for which this company shall be liable shall be payable 60 days after proof of loss is recceived," etc. It is argued that, "construing the paper handed Mr. James, the agent, to be proofs of loss, 'then the company had 60 days thereafter to decide whether or not it would waive the breach of the policy and pay the claim, or declare the contract forfeited by the breach"; that the 60 days should be allowed the insurer as a reasonable time in which to decide, and that the conduct of the insurance company, and especially its nonaction in failing to return the premium, during that time should not be construed as a waiver of its rights. We are unable to perceive the logical connection between this 60-day stipulation as to time of payment of a loss and the doctrine of waiver. The obvious intent of that stipulation is merely to impose a limitation upon the insured's right of action upon the policy, postponing the maturity of the insurer's obligation and the accrual of the insured's right of action until after the lapse of the 60-day period specified. How the force and effect of a "nonwaiver agreement," exempting the insurer from the operation of the law of waiver for a period of 60 days, can be read into or reasonably attributed tO' this stipulation has not been pointed out, and, as we think, is not susceptible of demonstration.
Waiver is predicable upon any acts or conduct of the insurer, after knowledge of a breach, either before or after loss, tending to show recognition of the validity of the policy and an intent to relinquish the right to avoid it for the known breach. Kingman v. Insurance Co., supra; Norris v. Insurance Co., supra; Powell v. Insurance Co., supra. When even an express nonwaiver agreement is construed strictly against the insurer (Cobb & Seal v. Insurance Co., 78 S. C., 397; 58 S. E., 1099), certainly the effect of such an agreement is not to be extended by implication to a provision of the contract expressly referring to an entirely different matter.
The exception is overruled, and the judgment of the Circuit Court is affirmed.
Mr. Ci-iiEE Justice Gary and Messrs. Justices Watts and Fraser concur.