Title: Taylor v. FIREMAN'S FUND INSURANCE COMPANY
Citation: 306 So. 2d 638
Docket Number: 47743
State: Mississippi
Issuer: Mississippi Supreme Court
Date: December 23, 1974

306 So. 2d 638 (1974) Cecil F. TAYLOR v. FIREMAN's FUND INSURANCE COMPANY. No. 47743. Supreme Court of Mississippi. December 23, 1974. Rehearing Denied February 10, 1975. *639 Davey L. Tucker, Jackson, for appellant. Watkins &amp; Eager, Jackson, for appellee. ROBERTSON, Justice: Cecil F. Taylor brought suit against Fireman's Fund Insurance Company in the Circuit Court of the First Judicial District of Hinds County, Mississippi, to recover $10,000, the full amount of the coverage on a house that had burned. Taylor claimed that he was the sole owner of the house, that it was a total loss, and that in addition to the $10,000 coverage he was entitled to recover $390 loss of rent and $5,000 punitive damages. Fireman's Fund pleaded as an affirmative defense the failure of Mr. Taylor to comply with these provisions of the insurance policy: When both sides rested, the defendant moved for a peremptory instruction, and the court sustained defendant's motion. Appellant assigns as error: Cecil F. Taylor testified that on April 25, 1972, he called Matthew W. Thomas, Jr., of the Statewide General Insurance Agency, and said: The policy issued in accordance with Taylor's request shows "Mr. Cecil Taylor, 1840 Barrett Street, Jackson, Mississippi" as the sole insured. The amount of insurance against fire shown in the policy was $10,000. The Warranty Deed dated May 6, 1972, and recorded on May 10, 1972, recited that the property was conveyed to "MAUDE L. TAYLOR, A SINGLE WOMAN, AND CECIL F. TAYLOR, as joint tenants with full rights of survivorship and not as tenants in common,". Cecil Taylor testified at the trial that he went all through the house on May 13, 1972. The house was completely destroyed by fire about 3:00 A.M. May 15, 1972. Taylor testified at the trial that he contacted his insurance agent, Thomas, and Thomas had R.L. Hewitt of the General Adjustment Bureau get in touch with appellant. Taylor testified that after the fire he went through the house and that the kitchen was almost burned off from the rest of the house. Taylor, on May 23, 1972, signed a Non-Waiver Agreement, which recited: Taylor testified that Hewitt advised him that he had found from the Land Records that Cecil Taylor only owned a 1/2 interest in the property at 1840 Barrett Street, and that Fireman's Fund could not pay him over $5,000 as a part owner. Taylor testified that he refused to accept that amount and demanded $10,000, the full amount of the policy. Appellant testified that the appellee gave him notice of a hearing to be held in accordance with the terms of the policy, and that such hearing was held on August 18 and 21, 1972. Taylor was placed under oath and questions and answers were reduced to writing and subscribed to by Taylor before his attorney, Davey L. Tucker, on August 28, 1972. At the close of the direct examination of Taylor at the trial in lieu of cross-examination, appellee offered as an exhibit the written transcript of the hearings on August 18 and 21, 1972, and the entire transcript was admitted into evidence. The transcript recites in part: The questions asked were about these material and important matters: 1. The title to the property. 2. The amount paid for the property. 3. The source of the funds used to purchase the property. 4. The consideration for the quitclaim deed. 5. The validity of the quitclaim deed. 6. The circumstances surrounding the fire which occurred twenty days after the effective date of the policy and five days after the recording of the warranty deed to Taylor and his aunt. The insured was required to answer these questions fully and completely, to give the best information he had about these matters. In Southern Guaranty Insurance Co. v. Dean, 252 Miss. 69, 172 So. 2d 553 (1965), the insurance policy involved contained the exact same provisions for a sworn examination of the insured before trial. In Southern, the trial court held that the policy had not been voided by the actions of the insured. This Court, in reversing, said: The definitive case in Mississippi on this subject is Standard Insurance Co. v. Anderson, 227 Miss. 397, 86 So. 2d 298 (1956). In Anderson this Court quoted with approval from Claflin v. Commonwealth Insurance Co., 110 U.S. 81, 3 S. Ct. 507, 28 L. Ed. 76 (1883): To the same effect is Anderson v. American &amp; Foreign Ins. Co., 227 Miss. 324, 86 So. 2d 303 (1956), a companion case. In Boston Insurance Co. v. Mars, 246 Miss. 36, 148 So. 2d 718 (1963), we closed our opinion with these words: The circuit court was correct in peremptorily instructing the jury to find for the defendant. The appellant next contends that the appellee was estopped by its conduct from denying liability on appellant's claim. There is no merit to this contention. Also we note from the record that the appellant signed a non-waiver agreement on May 23, 1972, and this Court upheld the validity of similar non-waiver agreements in Standard Insurance Co. v. Anderson, supra, and Anderson v. American &amp; Foreign Ins. Co., supra. Appellant also contends that the trial court erred by admitting into evidence appellee's answers to appellant's interrogatories, and by admitting into evidence the transcript of the pre-trial contractual examination under oath. Appellee's answers were properly admitted under the authority of Maness v. Illinois Central Railroad Company, 271 So. 2d 418 (Miss. 1972) and *646 Standard Life &amp; Accident Insurance Company v. Tinney, 73 Miss. 726, 19 So. 662 (1896). When the transcript of appellant's examination under oath was offered into evidence, the appellant identified the transcript and the only comment made by appellant's counsel was "No objection, Your Honor". In addition, this Court held these examinations admissible for examination by the trial court and by this Court on appeal in Southern Guaranty Insurance Co. v. Dean, supra; Boston Insurance Co. v. Mars, supra; Anderson v. American &amp; Foreign Insurance Co., supra; Standard Insurance Co. v. Anderson, supra, and Claxton v. Fidelity &amp; Guaranty Fire Corp., 179 Miss. 556, 175 So. 210 (1937). The judgment of the trial court is affirmed. Affirmed. GILLESPIE, C.J., and PATTERSON, SMITH and BROOM, JJ., concur. RODGERS, P.J., and INZER, SUGG and WALKER, JJ., dissent. RODGERS, Presiding Justice (dissenting). The instant appeal arises from a suit by the appellant, Cecil F. Taylor, against the appellee, Fireman's Fund Iusurance Company. Mr. Taylor sued Fireman's Fund in the First Judicial District of the Circuit Court of Hinds County, Mississippi, for collection on a fire insurance poicy issued by Fireman's Fund which covered a house owned by Mr. Taylor which had burned. At the close of the case, the court granted the defense's request for a peremptory instruction. Verdict and judgment were in favor of the defendant. From this judgment Mr. Taylor appeals. In February of 1972, the appellant, Cecil F. Taylor, and his aunt, Maude L. Taylor, began negotiations to purchase a house and lot located at 1840 Barrett Street, Jackson. On April 24 or 25, these parties entered into a purchase contract with James R. Jefferson, the owner of the house and lot. The house was purchased for nine thousand five hundred dollars ($9,500.00). Five hundred dollars ($500.00) had been paid previously to the realtor. Maude L. Taylor supplied the nine thousand five hundred dollars ($9,500.00). On April 25, appellant, Cecil F. Taylor, purchased from Matthew W. Thomas, Jr., an agent for Fireman's Fund Insurance Company, a ten thousand dollar ($10,000.00) fire insurance policy on the house at 1840 Barrett Street. On May 6, Mr. Jefferson executed the warranty deed. The grantees were Cecil F. Taylor and Maude L. Taylor as joint tenants. On May 8, Maude L. Taylor quitclaimed all of her interest in the property to Cecil F. Taylor. The warranty deed from Mr. Jefferson was recorded on May 9. The quitclaim deed had not been recorded as of the time of trial. At the time Maude Taylor and Cecil Taylor purchased the house it was being rented to Mr. Roy Perry. Sometime around May 11 or 13, Mr. Perry moved out of the house without notifying Mr. Taylor. Mr. Taylor visited the house on May 13 and found Mr. Perry had gone. At approximately 3:00 A.M. on the morning of May 15, the house burned. It is said that some unknown firemen reported evidence of an inflammable in the kitchen, but no such evidence was offered by the insurance company. After Mr. Taylor was notified of the fire, he contacted Mr. Matthew Thomas who had sold him the fire insurance policy on the house. Mr. Thomas told Mr. Taylor that he would have an agent of Fireman's Fund contact him. R.L. Hewitt, an adjuster with General Adjustment Bureau, contacted Mr. Taylor that same day. After talking to Mr. Hewitt, Mr. Taylor had an estimate of repair made on the house. This estimate was nine thousand six hundred thirty-seven dollars and fifty cents ($9,637.50). On May 23, Mr. Taylor and *647 Mr. Hewitt, on behalf of Firemen's Fund, entered into a non-waiver agreement. Approximately one month later, around July 1, Mr. Hewitt informed Mr. Taylor that according to the land deed records, Mr. Taylor owned only a one-half (1/2) interest in the property and could be reimbursed for only one-half (1/2) of its value, or five thousand dollars ($5,000.00). Subsequently Mr. Taylor's attorney sent Mr. Hewitt a copy of the quitclaim deed from Maude Taylor to Cecil Taylor. After the copy of the quitclaim deed was sent, Mr. Watkins, attorney for Fireman's Fund, requested Mr. Taylor to submit to an examination under oath as required in the fire insurance policy. The policy of insurance involved contains the following provisions: On August 18, 1972, Fireman's Fund exercised its right to examine the insured, Mr. Taylor, under oath in the presence of his attorney. During the examination it developed that Mr. Taylor's attorney had not brought the correct file with him and the examination was recessed until August 21. In the early part of the examination the following request was made by appellant's attorney: The meeting was recessed. In the course of the examination, Mr. Taylor, on advice of his attorney, refused to answer several questions propounded by the attorney for Fireman's Fund. Due to the refusal of Fireman's Fund to pay his insurance claim, appellant, Mr. Cecil Taylor, brought suit in the Circuit Court of Hinds County. The defendant/appellee, Fireman's Fund Insurance Company, filed as an affirmative defense to the suit the refusal of Mr. Taylor to answer certain questions under oath in violation of the terms of the policy. During the course of the trial, the trial court *648 allowed interrogatories submitted by the plaintiff/appellant (and the answers thereto) and the contractual examination under oath of Mr. Taylor to be admitted into evidence. A peremptory instruction was granted in favor of the defendant/appellee at the close of testimony and a judgment rendered in its favor. From this adverse judgment Mr. Taylor appeals. The trial judge granted a peremptory instruction and made the following statement: The issue, then, is whether or not a peremptory instruction in favor of the insurance company should have been given without proof. The appellee insurance company contends that the appellant wilfully refused to answer the following questions which, it contends, were material facts, and that the appellant wilfully concealed material facts: (1) The identity of the bank or banks in which he had accounts at the time he bought the property. This was later answered. (2) The amounts in his bank account at all times since he gave his aunt a check for nine thousand five hundred dollars ($9,500.00). (3) How he repaid the four thousand dollars ($4,000.00) to his aunt, Maude L. Taylor. (4) Why the quitclaim deed of May 8, 1972 from Maude L. Taylor to him was executed. (5) Whether said quitclaim deed was acknowledged before Davey L. Tucker, Notary Public, on May 8, 1972. (6) The consideration for the quitclaim deed of May 8, 1972. (7) Whether the quitclaim deed of May 8, 1972, was actually executed in July, 1972. (8) Whether he was in the house described in the policy during April, 1972. He later testified that he was in the house on April 13. (9) When he was last in said house before the fire on May 14, 1972. (10) Whether he knew of an inflammable in the kitchen at the time of the fire. He said he didn't know. (11) His financial condition at the time of the fire. (12) Copy of his 1971 income tax return. The appellee argues on appeal that the mere failure to answer these questions automatically voided the policy, and in support of this argument the appellee has cited the following cases: Standard Insurance Co. v. Anderson, 227 Miss. 397, 86 So. 2d 298 (1956), and Southern Guaranty Insurance Co. v. Dean, 252 Miss. 69, 172 So. 2d 553 (1965). We have examined these two cases in detail. The original record in the Anderson case has been lost and we were unable to read the testimony from the record. The opinion, however, shows that the facts were developed before a jury. The trial judge did grant a peremptory instruction at the close of the testimony as to part of the claim. On appeal to this Court we held that the trial judge should have granted a directed verdict on the whole case because of the failure of the insured to answer *649 questions as to the amount paid for the property, and when he purchased the property; or the amount of acreages; or whether he attempted to sell the property before the fire; or whether he attempted to obtain additional insurance; and similar questions. Under the facts developed in that case, this Court determined that the questions were material and that the failure to answer to show whether the claimant owned the goods or not and what his interest may have been in the property, was material. The Court in the Anderson case quoted from 45 C.J.S. Insurance § 1024, at 1254-1255 (1946), as follows: The point is: The court had before it the evidence as to whether or not the questions were material. We do have the original record in the case of Southern Guaranty Insurance Co. v. Dean, 252 Miss. 69, 172 So. 2d 553 (1965). This case brings into focus a clear picture of the proper procedure to be followed when an affirmative defense is offered based upon the refusal of an insured claimant to answer material questions. In Dean, the insurance companies offered twenty (20) witnesses to show the materiality of the questions previously propounded to the insured. They not only showed that the questions were material, but they also showed sufficient evidence to establish fraud and concealment. They offered much evidence to show that the fire was caused by an explosion; that the explosion was caused by open gas jets; that the insured obtained additional insurance on the property; that she tried to sell the property; that it was not the property of the insured; that before the fire, claimant's husband was seen to enter the building on Sunday afternoon before the fire; all of which she denied. They also showed that the additional insurance was an excessive amount. The chancellor pointed out that there were many serious circumstances in the case "which [this Court said] certainly justified the defenses of arson and over-insurance." 252 Miss. at 76, 172 So. 2d at 555. From the evidence in the record this Court could reasonably determine that the questions asked the claimant were not only material, but that a concealment of the information was in fact fraud. The case of Boston Insurance Co. v. Mars, 246 Miss. 36, 148 So. 2d 718 (1963), is not applicable here because in that case the insured refused to answer any questions except those presented in writing. Moreover, in that case the insurer tendered to the insured his premiums previously paid to the insurer. I am of the opinion that the trial court was in error in granting a directed verdict in favor of the insurance company at the close of the complainant's testimony in the instant case for the following reasons. *650 First the defense pleaded by the insurance company is an affirmative defense, and the burden of proof is upon the insurance company to show not only that the questions asked were not answered, but also to show that the questions were material and that the failure to answer amounted to willful concealment of a material fact. In 44 Am.Jur.2d Insurance § 1494, at 359-60 (1969), the author has this to say: See also 29A Am.Jur. Insurance § 1413, at 522 (1960). 14 G. Couch, Cyclopedia of Insurance Law § 49:732, at 198 (2d ed. 1965), has this to say: I am aware that our Court said in Standard Insurance Co. v. Anderson, supra, that a letter written by the attorney for the insured offering to submit the claimant for examination came too late after one trial had commenced against another company. I do not conceive that this ruling changes the general rule, because the offer came after the insured had a reasonable opportunity to answer the questions in court. Moreover, it will be noted that the Court in Anderson adopted the general rule mentioned above in 45 C.J.S. Insurance § 1024, at 1255 (1946), wherein it is said that the "insured's refusal to submit to an examination is not final, and may be retracted within a reasonable time by a subsequent offer to submit... ." 123 Miss. at 406, 86 So. 2d at 301. The appellant had notice that the insurance company contended that he owned only a one-half (1/2) interest in the property destroyed by fire. Consequently any questions that indicated he did not own more than a one-half (1/2) interest in the property were relevant and perhaps material, but it was for the court to determine whether or not they were a fraudulent or willful concealment. The questions asked and refused an answer were as follows: (1) "Q. In what Banks did you have bank accounts at the time you bought this property?" Defendant refused to answer. He said he had an account in First National Bank of Jackson. (2) Appellant said he got the $9,500.00 from his aunt. He was asked: "Q. How did it happen to be in cash. Where did she keep it?" The attorney advised the appellant to refuse to answer. *651 (3) He was asked if he had as much as the amount of the check in the bank since he signed a check to his aunt. He refused to answer. (4) He also refused to state whether he had that much in the bank at the time of the examination. He later said he did not. (5) He was asked how he paid the four thousand dollars ($4,000.00) which he paid to his aunt. He refused to answer. (6) He was asked why the quitclaim deed was executed. He refused to answer. (7) He was asked if the quitclaim deed was acknowledged before his attorney. He refused to answer. (8) He refused to say what the consideration was for the quitclaim deed. (9) He refused to answer whether the quitclaim deed was made until July, long after the fire of May 14, 1972. (10) He refused to say that he would submit his aunt for examination under oath. (11) He was asked if he was in the house in April. He refused to answer. He later said he was last in the house after his tenants had moved before the fire, but not the day before the fire; however, on advice of his attorney, he refused to answer. On the trial, he said he was in the house on May 13, 1972. (12) He was asked if there were any inflammables in the house on May 14. He said, "I don't recall, not that I recall." (13) "Do you know that there was evidence of an inflammable in the kitchen at the time of the fire?" Appellant said: "I refuse to answer." But, on trial, he said he did not see anything out of the ordinary. (14) He was asked: "What was the cause of the fire?" His lawyer said, "No answer," but he answered, nevertheless: "I don't know. I refuse to answer." It will be observed that all of the questions except the last three were addressed to the appellant by appellee to determine whether or not he owned the entire property. There has been no indication to insured that the deed to him did not convey a one-half (1/2) interest. In fact, appellee's second defense admits that the insured owned a one-half (1/2) interest in the property. But, the insurance company says: "There was evidence of an inflammable in the kitchen of said house at the time of the fire." In an effort to determine the materiality of the interrogatories propounded to the insured, he propounded certain interrogatories to the insurance company. Interrogatory No. 5 is in the following language: *652 The answers were hearsay, evasive and inadmissible into evidence. Moreover, the insured had no way of knowing that the questions asked about arson were material, since there was no indication that the fire was caused by arson. He asked the insurance company why they were material, but the attorney for the insurance company refused to tell him at the time the interrogatories were propounded. During the trial of the case the appellant tried to go into the questions and answers given at the insurer's examination so as to explain his answers, but the trial judge would not permit the insured to give any testimony as to the interrogatories and none was offered by the insurance company. There was no evidence offered as to whether or not they were material to the issues. 5A J. Appleman, Insurance Law and Practice § 3552, at 564-565 (1970), has this to say on this subject: The insurance contract beginning with line 157 has this to say: This paragraph simply means that any suit brought before the interrogatories are answered is prematurely brought. 14 G. Couch, Cyclopedia of Insurance Law § 49:731, at 197-98 (2d ed. 1965), has this to say on the subject: In the case of George v. Connecticut Fire Insurance Co., 84 Okl. 172, 182, 201 P. 510, 512, 23 A.L.R. 80 (1921), the Oklahoma Supreme Court had the following to say on this point: The Oklahoma court further said in the George case by quoting from Porter v. Traders' Insurance Co., 164 N.Y. 504, 58 N.E. 641, 52 L.R.A. 424 (1900): The Court then stated: In the case of Humphrey v. National Fire Insurance Co., 231 S.W. 750 (Tex. Com.App. 1921), where the policy does not expressly permit a forfeiture, the exact provision that no suit may be maintained until all the requirements of the policy have been met was interpreted to mean that the case could not be maintained until the questions were answered. The policy in Humphrey contained the exact paragraph set out in the instant policy in the lines following line 157 above mentioned. In the case of North British &amp; Mercantile Insurance Co. v. Rose, 228 F. 290 (3d Cir.1916), Headnote No. 3 is in the following language: The issue as to whether or not the insured "wilfully concealed or misrepresented any material fact" is a question for the trial court on proof offered and at that time one may explain his refusal to answer on the ground that the question is not material or that he did not wilfully conceal or misrepresent any fact. In the case of Mulkey v. United States Fidelity &amp; Guaranty Co., 243 S.C. 121, 132 S.E.2d 278 (1963), the Court said: "In order to avoid a policy for false swearing in the proof of loss, the false statements must be of a material fact and intentionally and willfully made with the intent to deceive and defraud the insurer." 243 S.C. at 126, 132 S.E.2d at 281. In Porter v. Traders' Insurance Co., 164 N.Y. 504, 58 N.E. 641, 52 L.R.A. 424 (1900), the court held: In Insurance Companies v. Weides, 81 U.S. (14 Wall.) 375, 20 L. Ed. 894 (1872), the Court held: "Where the policies stipulated that fraud or false swearing on the part of the assured should work forfeiture of all claim under them, statements in the proofs of loss honestly made, although subsequently discovered to be mistaken, will not work a forfeiture." 20 L. Ed. at 894, Headnote No. 5. In Merchants Insurance Co. v. Lilgeomont, Inc., 84 F.2d 685 (5th Cir.1936), where the forfeiture clause was the same as in the instant case, the Court held: It is a general rule of law of universal acceptance that forfeitures are not favored by the law. *655 The text writer of 12 Am.Jur. Contracts § 436, at 1016-17 (1938), has the following to say on this subject: In Kyser v. Southern Building &amp; Loan Ass'n, 224 Ala. 673, 141 So. 648 (1932), it was held: In Protective Life Insurance Co. v. Thomas, 223 Ala. 106, 134 So. 488 (1931), it was said: In Caledonian Insurance Co. v. Indiana Reduction Co., 64 Ind. App. 566, 115 N.E. 596 (1917), the court stated: In Johnson v. Life Insurance Co. of Georgia, 52 So. 2d 813 (Fla. 1951), the Florida Supreme Court said: There is still another compelling reason why the judgment in the instant case should be reversed. It has for time immemorial been a rule of law that before any contract can be rescinded the party offering to rescind must place the opposite party in status quo. See 12 Am.Jur. Contracts § 451, at 1031 (1938). In the instant case, however, the insurance company is not offering to rescind the contract, but on the contrary, it invokes a paragraph in the contract whereby the contract declares itself to be void if the insured refuses to answer material questions about the ownership of the property. It claimed that the insured never owned but a one-half (1/2) interest in the property, and that the policy from the beginning only covered his one-half (1/2) interest. It did not tender back the premiums collected for the half never insured. It had no right to declare a forfeiture of the policy, and at the same time, retain premiums it says it was never entitled to receive. It has been held generally that "[a]n insurer seeking to forfeit a policy has been required to make a prompt tender to the insured of unearned premiums." 6A J. Appleman, Insurance Law and Practice § 4149, at 458 (1972). See cases collected under Note 47, at 458. I am of the opinion that this case should be reversed and remanded to the trial court so that the appellant may be given a fair chance to explain his answers given at the examination conducted by the insurance company. If found to be material from the evidence offered, the court may permit him to answer the questions. The chancellor may then continue the case so as to give the insurance company a fair opportunity to examine the answers to determine whether or not there has been any fraudulent concealment of facts or circumstances. The court may then determine from the proof offered whether or not there was any fraudulent concealment of the ownership of the property; and, if so, whether to all or only half of the owned title. It seems to me that, in any case, not more than one-half (1/2) of the policy should be forfeited, otherwise, the insurance company is given a license to entrap an insured. INZER, SUGG and WALKER, JJ., join in this dissent.