
    Farmers Mutual Insurance Association of Ala. v. Tankersley.
    
      Assumpsit.
    
    (Decided June 30, 1915.
    Rehearing denied July 19, 1915.
    69 South. 410.)
    1. Insurance; Fire; Cancellation. — Where the Mutual fire policy provided that the contract might be terminated at the request of the member in all cases where the premium or the premium note had been paid, in which case the association should retain the expense of writing the risk and the customary short rates, and also provided that the association might terminate the contract at any time by notice to that effect, and in such event it should return the unearned premium, and the' member had not paid the premium notes, a cancellation could only-be effected by special agreement with the association, but the association could not cancel the policy without giving the notice provided in the contract.
    2. Appeal and Error; Harmless Error; Pleading. — Where defendant’s plea setting up cancellation was insufficient, but demurrer thereto was overruled, defendant cannot complain that a proper issue was raised by the replication.
    3. Insurance; Fire; Defenses. — Where the policy contained a clause that if the property was encumbered, it avoided the policy and when the insured noticed the clause he returned the policy with the ordinary “lost payable clause” providing that the insurance should be paid to a bank as mortgagee, and requested insurer to make the necessary entries, and insurer returned the policy after unpinning the mortgage clause, but without further comment, and agent of insurer had notice of the mortgage, the insurer waived the right to claim a forfeiture on that ground.
    4. Same; Acts of Agent. — Where the agent of insurer had knowledge that the property was encumbered, but concealed that fact from the insurer, the insurer is charged with the agent’s knowledge, and cannot avoid the policy under a clause forfeiting the policy if the property should be encumbered.
    5. Pleading; Rejoinders; Striking. — Where defendant’s rejoinders to plaintiff’s replication were mere copies of its pleas, the rejoinders were properly stricken.
    6. Appeal and Error; Assignment; Sufficiency. — An assignment is too general which complains that the court erred in overruling defendant’s objection to the testimony, of insured as to a conversation he had with the agent of the insurer.
    7. Same; Sliotoing Error. — Under rule 45, Supreme Court Practice, a judgment will not be reversed on account of the erroneous admission of evidence, where it does not appear that the party complaining was injuriously affected thereby.
    
      8. Insurance; Fire; Authority of Agent. — Where the insured received a letter in due course of mail signed by one styling himself as President of the Insurer’s Association, and referring to a special agent, who had been attempting to induce insured to return his policy, such fact warranted the admission of evidence that insured, who thereafter notified the company that he had decided to cancel his policy, later notified the agent that he had changed his mind.
    9. Evidence; Best and Secondary. — A letter is the best evidence of its contents, and secondary evidence of such a letter, sent to the defendant, is not admissible until plaintiff has made a demand on defendant to produce the letter.
    10. Appeal and Error; Harmless Error; Evidence. — The improper admission of secondary evidence of the contents of a letter, offered for the purpose of showing that notice of loss was given to the insurer, is harmless, where the proofs of loss, and a letter written by the insurance adjuster, which were received in evidence, showed that insurer had received such notice.
    11. Evidence; Presumptions; Mail. — There is a presumption of law that the postal authorities deliver registered mail, and that the person who signs a receipt have authority; hence, the returned postal registry receipt is admissible in evidence.
    12. Insurance; Policies; Proof of Loss. — Where insurer receives proof of loss occasioned by fire, and retains such proof without objection, it waives the right to question the sufficiency of the proof.
    Appeal from Coosa Circuit Court.
    Heard before Hon. S. L. Brewer.
    Action by J. W. Tankersley against Fenners’ Mutual Insurance Association of Alabama, upon a fire policy. Judgment for plaintiff, and defendant appeals.
    Affirmed.
    Strother & Nolan, for appellant.
    George A. Sorrell, for appellee.
   BROWN, J.

This is an action on policy of fire insurance issued by tbe defendant to tbe plaintiff insuring tbe plaintiff’s dwelling and articles therein against loss by fire. Tbe complaint contains but one count, wbicb is in Code form. To this count tbe defendant interposed tbe general issue and ten special pleas setting xip in varying form and phraseology: (1) That tbe policy was canceled by tbe defendant at tbe plaintiff’s request before tbe loss occurred; (2) representations made by tbe plaintiff that tbe unincumbered title to tbe property was in tbe plaintiff, when in fact there was a mortgage on it held by tbe Alexander City Bank; and (3) failure of the insured to file proof of loss in accordance with tbe terms of tbe policy. Tbe plaintiff by special replication to tbe pleas setting up tbe cancellation of tbe policy, and in avoidance of that defense, set up that after tbe plaintiff bad returned tbe policy direct to tbe defendant, requesting its cancellation, one Walton, a special agent of tbe defendant, came to the plaintiff about said policy and “persuaded him to keep bis policy, wbicb be agreed to do provided tbe policy was returned at once;” that thereafter tbe defendant returned tbe policy accompanied by a letter in these words: “We take pleasure in returning tbe above-numbered policy as per request of our special agent Mr. Walton, who advises that you have decided to retain same. Wfe wish to thank you for decision to- keep your insurance, and assure you that you have made no mistake; and should an accident occur to your property, we will give you just and honorable treatment.”

This letter was dated March 20, 1913, and was received by tbe plaintiff on March 22, 1913, but on March 21st, as shown by tbe replication, before tbe plaintiff received this letter returning tbe policy, be sent tbe defendant another letter, demanding tbe cancellation of the policy and requesting tbe return to bim of tbe unearned premiums, and bis unpaid notes not yet due, wbicb was mailed to the defendant at its home office' Memphis, Tenn., postage prepaid, on March 21, 1913; that after receiving tbe policy with letter above quoted be notified Walton in person that be would retain tbe policy; that the defendant did not reply to the letter of March 21, 1913; that it retained the premiums and the notes given for premiums, and gave no notice of cancellation of the policy.

The clause of the policy relied on as the defendant’s authority to cancel the policy on plaintiff’s request is this: “This contract may he terminated at the request of the member in all cases where the premium or note given for premium has been paid, in which case the association shall retain the expense of writing the risk, and the customary short rates from the date of the contract up to the time it is terminated. The association may terminate this contract at any time by giving notice to that effect, and in such event it shall return the unearned premiums.”

The notes given for the premiums not having been paid by the plaintiff, the plaintiff, had no right under this clause to demand the cancellation of the policy, and could not cancel it without an express agreement with the insurer. The insurer had a right to ignore, as it apparently did, the demand of the insured to cancel the policy.

The plaintiff not having the right to demand the cancellation of the policy, because of the fact that the notes given for the premium were not paid, the cancellation under these conditions could only be effected by special agreement of the parties, and such special agreement could not arise or be inferred from the failure of the defendant to respond to the demand of the plaintiff. To effect such special agreement required that the proposition of the plaintiff to cancel be accepted and the unearned premiums and notes returned as embodied in the proposition.—Lakeside Co. v. Dromgoole, 89 Ala. 505, 7 South. 444; Hart v. Bray, 50 Ala. 446; Cham bliss v. Smith, 30 Ala. 366; Sanford v. Howard, 29 Ala. 684, 68 Am. Dec. 101; Hodges v. Sublett, 91 Ala. 588, 8 South. 800; Hammond v. Winchester, 82 Ala. 470, 2 South. 892.

Under this clause in the policy the insurer could not cancel the policy without notice to the insured and a return of the unearned premiums and premium notes.—Insurance Co. v. Raden, 87 Ala. 311, 5 South. 876, 13 Am. St. Rep. 36; Savage v. Phoenix Ins. Co., 12 Mont. 458; Farnum v. Phoenix Ins. Co., 83 Cal. 246, 23 Pac. 869, 17 Am. St. Rep. 233; Taylor v. Ins. Co., 25 Okl. 92, 105 Pac. 354, 138 Am. St. Rep. 906.

While it was essential to a good plea setting up cancellation that it state facts showing the right of the insured to cancel the policy, or a special contract between the parties founded on sufficient consideration, or the right of the insurer to cancel and a return of the unearned premiums, yet the defendant has no ground to complain, after demurrer overruled, that a correct issue is- presented by replication. There was no prejudicial error in overruling the demurrer to the third special replication.

To the defendant’s pleas setting up misrepresentations of the plaintiff in application for the insurance as to the character of his title to the property insured, the plaintiff replied in the sixth replication that, after he received the policy and noticed the clause avoiding the policy if the property was incumbered, he returned the policy to the defendant with the ordinary “loss payable clause” providing that the insurance in case of loss be paid to the Alexander City Bank, as mortgagee, as its interest might appear, and requested the defendant to make the necessary entry in compliance with the facts stated therein; that the defendant unpinned the mortgage clause ancl returned the same with the policy, without comment. And, in the eleventh replication it is averred that the defendant’s agent Walton, who solicited the insurance, filled out the application; that at the time the application was filled out plaintiff stated to the defendant’s said agent that the Alexander City Bank had a mortgage on the property for $1,500, and, notwithstanding this information given by the plaintiff to said agent in response to the question as to incumbrances on the property, he inserted the answer, “No;” and that when plaintiff signed said application he did not know but that the answer ivas written as ■ given, by him to said agent, the said Walton stating that he had filled out the application according to the information given.

If, as averred in the sixth replication, actual notice was given the insurer that the property was mortgaged before the loss occurred and the policy delivered to it for insertion of the proper mortgage clause, it had the option to insert this clause-as requested by the insured or cancel the policy and return the unearned premiums, but it could not return the policy to the insured and continue it in force and retain the benefits resulting from the premiums earned, and yet in case of loss insist upon the misrepresentation as to the incumbrance as a defense. By its conduct in returning the policy without cancellation or change, it is estopped from making this defense, as by this act it impliedly at least elected to waive the defense and continue the policy in force.—19 Cyc. 789, 790; Alabama State Mutual Assurance Co. v. Long Clothing & Shoe Co., 123 Ala. 667, 26 South. 655.

The averments of the eleventh replication are meager as to the charactér of Walton’s agency, and as to his right to bind the defendant in the matter of taking the application for the insurance; but this point is not taken by the demurrer to this replication. It sufficiently appears from this replication that the plaintiff was not guilty of making fraudulent representations as to the character of his title, but that the concealment was on the part of the defendant’s agent who solicited the insurance and took the application.

-‘In such cases the defendant will not be permitted to take advantage of the wrongful acts or misconduct or mistakes of its own agent and avoid the policy.”—Williamson v. New Orleans Ins. Co., 84 Ala. 106, 4 South. 36; Phoenix Ins. Co. v. Copeland, 86 Ala. 551, 6 South. 143, 4 L. R. A. 848; Brown v. Commercial Ins. Co., 86 Ala. 189, 5 South. 500; Western Ins. Co. v. Stoddard, 88 Ala. 606, 7 South. 379; Triple Link Ass’n v. Williams, 121 Ala. 138, 26 South. 19, 77 Am. St. Rep. 34: Pope v. Glen Falls Ins. Co., 130 Ala. 359, 30 South. 496.

The tenth and eleventh replications were not subject to the objections pointed out by the demurrers.

The demurrers to the eighth replication were properly overruled.—Central Ins. Co. v. Oates, 86 Ala. 568, 6 South. 83, 11 Am. St. Rep. 67; Insurance Co. v. Ogburn, 175 Ala. 357, 57 South. 852, Ann. Cas. 1914D, 377.

The first, second, third, and fourth rejoinders undertook to set up matters contained in the alleged application for insurance not set out in the pleadings nor in the rejoinders, by mere reference to the application, which is not permissible, and they were properly stricken on motion of the plaintiff. The fifth rejoinder was but mere repetition in effect of one of the defendant’s pleas, and the court did not err in granting the plaintiff’s motion to strike.

The eighth assignment of error is as follows: “The court erred in overruling defendant’s objection to the. testimony of J. W. Tankersley as to the conversation he had with Mr. Walton. — Record, p. 28.”

The only statement testified to by plaintiff with Walton set out on this page was, “I told him the policies wasn’t like I bought them.” This assignment of error is too general, as has been repeatedly held, to invite consideration.—Wade Smith v. The State, infra, 69 South. 406; Jones v. Adkins, 151 Ala. 316, 44 South. 53; Mobile Co. v. Bromberg, 141 Ala. 258, 37 South. 395; Driver v. King, 145 Ala. 585, 40 South. 315.

Furthermore, no prejudice is shown by this remark of the witness, and for its admission, even if it was improper, the judgment would not be reversed.—Rule 45 (175 Ala. xxi, 61 South, ix).

In connection with the evidence showing that the policy sued on was placed in an envelope addressed to the defendant and that it was deposited in the United States mails, postage prepaid, previous to March 20, 1913, that the policy was returned to the plaintiff through the mails accompanied by the letter written on the stationery of the defendant and signed by “R. M. Henry, President,” the same person who signed the policy of insurance, the letter accompanying the policy when it was returned to the plaintiff was properly admitted in evidence.

' The testimony of the plaintiff showed that Waltoncame to him representing that he was acting for the defendant, to induce plaintiff to withdraw his notice to cancel the policy and retain the policy, and the letter of March 20th purporting to have been written by the defendant’s president, Henry, refers to Walton as “our special agent Mr. W. L Walton.” This, was sufficient as a predicate to justify the admission of the testimony of the plaintiff that he notified Walton after receiving this letter that he had decided to keep the policy, and jn refusing to exclude this testimony.

The court erred in allowing Tankersley and Brown to testify to the contents of the letter mailed to the defendant on April 14, 1913. This letter was presumably in the possession of the defendant and was the best evidence of its contents, and before secondary evidence was admissible the defendant should have been given notice to produce the original. However, this testimony was to the effect that it was stated in that letter that the house was destroyed by fire April 13, 1913, and was a total loss, and its only purpose was to show notice of „the loss to defendant. The original proof of loss furnished by the plaintiff to the defendant was produced in court by the defendant, together with the letter accompanying it signed by the adjuster, Fuquay, showing the same facts, and no prejudice could have resulted from the admission of the testimony as to the contents of the letter.

It was not error to admit the return postal registry receipt. The presumption of law is that the postal authorities -delivered the registered letter to the defendant and that the person who signed the defendant’s name had proper authority. — Jones on Ev. § 45.

There Avas no error in overruling the defendant’s objection to the original letter attached by the defendant to the ansAvers to the interrogatories. There was no dispute that it was the original letter, nor that it accompanied the- proof of loss when that proof was mailed to the defendant.

The statement in the oral charge of the court, to the effect that if the defendant received the proof of loss and retained it without objection as to its sufficiency this was a waiver of further proof, was sound.—Central Ins. Co. v. Oates, 86 Ala. 568, 6 South. 83, 11 Am. St. Rep. 67; Insurance Co. v. Ogburn, 175 Ala. 357, 57 South. 852, Ann. Cas. 1914D, 377.

Under the evidence in the case, it was a question for the jury whether plaintiff had been guilty of fraud in procuring the insurance in that he concealed the fact 'of the incumbrance on the property, and the affirmative charge and charge 4 were properly refuesd.

We find no reversible error in the record, and the judgment is affirmed.

Affirmed.  