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Insurance Company of North America v. Williams

Supreme Court of Arizona

October 23, 1933

PAT H. WILLIAMS, as Trustee of REED LUMBER COMPANY, a Corporation, SOUTHWEST SASH, DOOR & GLASS COMPANY, a Corporation, and CRANE COMPANY, a Corporation, Appellees

APPEAL from a judgment of the Superior Court of the County of Maricopa. G. A. Rodgers, Judge. Judgment affirmed.

Messrs. Frazier & Perry, for Appellant.

Mr. L. J. Cox and Messrs. Phillips, Holzworth & Phillips, for Appellees.


Page 118

[42 Ariz. 332] LOCKWOOD, J.

This is an appeal from a judgment rendered against Insurance Company of North America, a corporation, hereinafter called defendant, and in favor of Pat H. Williams, as trustee, hereinafter called plaintiff, on a certain fire insurance policy. Defendant recognizes our rule that on an appeal the evidence must be construed as favorably as possible in support of the judgment, and taken thus the facts may be fairly stated as follows:

William J. Fellows and his wife were the owners of a certain dwelling-house upon which Win Wylie held a mortgage. On this building Fellows had obtained two fire insurance policies, each of which contained a mortgagee clause in favor of Wylie. Thereafter, and on February 8, 1932, he obtained from Bruce Darling, a local agent of defendant, the policy on which this action was based, which does not contain any mortgagee clause and states upon its face: "Notice is hereby accepted that this is excess insurance [42 Ariz. 333] over amount of mortgage and policy is not required by mortgagee." The policy also contains the following provisions which are part of the New York Standard form of fire insurance policy as it existed at the time of the adoption of the Revised Code of 1928:

"This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void if . . . , with the knowledge of the insured, foreclosure proceedings be commenced or notice given of sale of any property covered by this policy by virtue of any mortgage or trust deed," and: "No one shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement added hereto, nor shall any provision or condition be held to be waived unless such waiver shall be in writing added hereto . . ."

Fellows testified that before the issuance of the policy Darling had been notified by him that Wylie was threatening to foreclose his mortgage, and that he (Fellows) wanted to protect his equity in the property, and "he asked me about a rider on there and I said, 'You are the insurance man'; I said, 'You have been handling my insurance; you do it your way to protect me.'" Shortly after the issuance of the policy Wylie did commence foreclosure proceedings and summons was properly served upon Fellows and his wife. A few days later Fellows had a conversation with Darling in which he used language, which, taken in consideration with his previous conversation, might fairly be said to give information to Darling that the foreclosure proceedings had been commenced. On March 7th a fire occurred on the premises, causing the damage which is the basis of this suit. Fellows did not pay the premium for the policy at the time it was taken out, and testified that he had taken out a number of insurance policies of various kinds with Darling which were carried by [42 Ariz. 334] the latter in a general account, and that it was his custom to make payments on the general account without specifying any particular policy to which the payment was to be applied. Darling never, according to Fellows, asked for the payment of any particular premium before sixty days after the policy had been issued. He further testified, however, that there was always a balance due Darling on the general account, and that at some time after he had informed Darling in regard to the mortgage foreclosure the latter asked him for a payment on the general account, but did not specify payment of the premium on the particular policy involved herein. It further appears that Fellows never did pay his full indebtedness on the general account and that there is a balance still due Darling thereon. We think this states the facts of the case sufficiently so that we can consider the propositions of law raised by this appeal.

The first is whether or not the policy became void when the foreclosure proceedings were commenced, unless the insurer waived the forfeiture or is estopped from its conduct from asserting it. We have had this question before us in the case of Peterson v. Hudson Ins. Co., 41 Ariz. 31, 15 P.2d 249, and said:

". . . the policy becomes void at such time after the suit is actually filed as the insured knows of its existence, unless the insurer, with knowledge of the changed conditions, either waives the clause in question or is estopped from asserting it."

Under the foregoing statement of facts, therefore, the policy became void before the occurrence of the fire unless the insurer had either waived the forfeiture or was estopped from asserting it, nor indeed does plaintiff question this as a general rule of law; his contention being that the facts show both a waiver and an estoppel.

[42 Ariz. 335] The second question for our consideration is: Do the foregoing facts show a waiver by the insured? It is evident on reading the many cases which discuss the question ...

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