Title: Southern Sash v. US Fidelity and Guar.
Citation: 525 So. 2d 1388
Docket Number: N/A
State: Alabama
Issuer: Alabama Supreme Court
Date: May 6, 1988

525 So. 2d 1388 (1988)
SOUTHERN SASH OF COLUMBIA and Southern Sash Sales and Supply Company, Inc.
v.
UNITED STATES FIDELITY AND GUARANTY COMPANY and Garner, Meshad and Wood Agency, Inc.
87-75.

Supreme Court of Alabama.
May 6, 1988.
*1389 James D. Hughston of Hughston, Hughston &amp; Hughston, Tuscumbia, for appellants.
C. William Gladden, Jr., of Balch &amp; Bingham, Birmingham, for appellee U.S. Fidelity &amp; Guar. Co.
Steve A. Baccus of Almon, McAlister, Ashe, Baccus, and Tanner, Tuscumbia, for appellee Garner, Meshad and Wood Agency, Inc.
SHORES, Justice.
This is an appeal from a summary judgment in favor of the defendants, United States Fidelity and Guaranty Company ("USF &amp; G") and Garner, Meshad, and Wood Agency, Inc. ("GMWA"). We affirm.
The plaintiff, Southern Sash Sales and Supply Company ("Southern Sash"), operates a building supply business in six cities. Southern Sash of Columbia is a division of Southern Sash, which has its corporate headquarters in Colbert County. In 1985, Southern Sash contacted GMWA for the purpose of replacing the property insurance that was then in force covering its businesses. Southern Sash provided GMWA with a copy of the policy then in force, which GMWA submitted to USF &amp; G. On August 19, 1985, USF &amp; G insured Southern Sash under a special multi-peril policy of insurance. The policy insured Southern Sash against all direct losses to buildings, contents, and inventory caused by fire.
On June 14, 1986, a fire severely damaged the buildings, contents, and inventory of Southern Sash of Columbia. USF &amp; G and Southern Sash settled the building losses, but failed to agree on the amount to which Southern Sash was entitled for its inventory losses. As a consequence, Southern Sash filed suit against USF &amp; G and GMWA for breach of contract.
The contract provisions here in dispute read as follows:
The last report of values filed prior to the fire indicated that the Columbia store had inventory of $809,625.00. The actual inventory on hand at that time, however, was $1,095,132.40. Applying these provisions of the contract of insurance, the trial court entered judgment for 74% of the claimed loss. Southern Sash appeals, *1390 claiming that it is due the entire amount of the loss.
Southern Sash argues that these provisions are inconsistent with the "Supplemental Declarations Endorsement" contained within the policy, which appears to designate its coverage as blanket coverage. Southern Sash readily admits that these provisions are not ambiguous on their face, and become ambiguous only when read in conjunction with the "Supplemental Declarations Endorsement." That provision reads in part as follows:
We find no inconsistency between these provisions, and no ambiguity within this policy, when the policy is viewed in its entirety. The language of the Supplemental Declarations Endorsement does not act a subversion upon the clear meaning of the policy as a whole. The value reporting clause has become a standard clause in policies of insurance covering businesses, and courts have been called upon in the past to interpret provisions virtually identical to the ones here contested. The value reporting clause in these policies is often referred to as the "honesty clause." Judge Edwin R. Holmes, writing for the United States Court of Appeals for the Fifth Circuit, in possibly the most often cited case dealing with the clause, explained it in the following way:
Camilla Feed Mills, Inc. v. St. Paul Fire &amp; Marine Ins. Co., 177 F.2d 746, 749 (5th Cir.1949).
177 F.2d 746, 748 (5th Cir.1949); see, also, Annot., 13 A.L.R.2d 713 (1950); Quality Foods, Inc. v. United States Fire Ins. Co., 715 F.2d 539 (11th Cir.1983); Ron Henry Ford, Lincoln, Mercury, Inc. v. Nat. Union Fire Ins. Co., 8 Kan.App.2d 766, 667 P.2d 907 (1983); Watchung Pool Supplies v. Aetna Cas. &amp; Sur. Co., 169 N.J.Super 474, 404 A.2d 1281 (1979); Six L's Packing Co. v. Florida Farm Bur. Mut. Ins. Co., 268 So. 2d 560 (Fla.Dist.Ct.App.1972).
We reach the same conclusion as did these courts and as did the trial court. It is apparent from the insured's witness, who was experienced and knowledgeable in the field of insurance, that she knew that inventory reports were required and that she knew that the premiums were calculated with reference to such reports. She acknowledged that the reports were not timely filed as required by the policy.
The trial court found that this witness, the insured's agent, "was aware of and understood the said reporting clause and the consequences of said clause, understood the terms of the policy and knew that Plaintiff [insured] was not in compliance with said terms."
Southern Sash also argues that because it was consistently late in filing its inventory reports with USF &amp; G, without any objection from the insurer, that USF &amp; G should be held to have waived the filing requirements and should be estopped from relying upon those reports. It argues that at the very least the undisputed facts present a scintilla of evidence as to the question of waiver and estoppel.
Indeed, the undisputed facts clearly show that Southern Sash was consistently late in filing its inventory reports with USF &amp; G. Equally clear from the depositions presented to the trial court is the fact that Southern Sash was aware that it was not in compliance with the reporting provisions of the contract. In fact, Southern Sash had an officer whose duty it was to assure compliance with the terms of the contract. USF &amp; G supplied Southern Sash with the policy that had been requested.
Southern Sash contends that under these facts USF &amp; G has waived the reporting provisions of the policy or should be estopped to raise the issue. This argument has also been made and rejected in other jurisdictions in similar cases.
Commonwealth Insurance Co. v. O. Henry Tent &amp; Awning Co. (cert. den.), 287 F.2d 316 (7th Cir.1961), involved a policy of insurance that was identical to the present policy. Inventory was insured at various locations and, when a fire occurred on March 28, 1956, reference to the last report of values, filed before the fire, showed that the insured reported $14,360.76. In fact, the actual inventory present at the time of that report was more than $32,000.00. After the fire, the insured attempted, on April 27, 1956, to report the actual value of the inventory, contending that it had 30 days from the end of March to file reports of values. In the belated report of values, a full disclosure of inventory value was made.
The insured in that case, as here, attempted to avoid application of the "honesty" clause by contending that the insurance agent was responsible for submitting reports of values; that the insurer had never insisted upon reports of values; and that the insurer had waived its right to enforce the policy provision by accepting frequently tardy reports.
The Seventh Circuit Court of Appeals addressed the issue as follows:
287 F.2d 316, 319 (7th Cir.1961). (Emphasis added.)
We agree with the trial court's conclusion that the policy provision under consideration is absolutely unambiguous, and that the doctrine of waiver is not applicable. The judgment of the trial court is affirmed.
AFFIRMED.
JONES, ADAMS and STEAGALL, JJ., concur.
HOUSTON, J., concurs in the result.