Opinion
No. 41473.
April 11, 1960.
1. Insurance — fire policy — increasing hazard as an avoidance of policy — whether sale of intoxicating liquors and related activities constitute an increase in hazards was for jury.
In action by person named as mortgagee in fire policy against fire insurer for fire loss to insured premises, which were described in policy as being occupied as a grocery, when in fact they were being used as night club in which illegal whiskey and gambling operations were conducted, question whether sale of intoxicating liquors and related actvities constituted an increase in hazards which mortgagee was bound by policy to have noted on policy, and for which mortgagee was bound to pay additional premium, was for jury.
Headnote as approved by McGehee, C.J.
APPEAL from the Circuit Court of Washington County; ARTHUR B. CLARKE, JR., Judge.
Taylor Biggers, Greenville; Creekmore Beachma, Jackson, for appellant.
I. It may be stated as a general rule that though there may have been a change of risk at some time during the life of the fire insurance policy by reason of an increased hazard which would be sufficient to avoid the policy, yet where the company has not declared the policy forfeited on that account, and such former increase of hazard has ceased to exist and has in no way affected the risk when the loss occurs, the policy will be enforced as if there had been no such increase of risk. Bacot v. Phoenix Ins. Co., 96 Miss. 223, 50 So. 729; Camden Fire Ins. Assn. v. Koch, 216 Miss. 576, 63 So.2d 103; Continental Ins. Co. v. Thrash, 223 Miss. 344, 78 So.2d 344; Globe Rutgers Fire Ins. Co. v. Pruitt, 188 Ark. 92, 64 S.W.2d 91; Insurance Co. of South America v. Pitts, 88 Miss. 587, 41 So. 5; Liverpool London Globe Ins. Co. v. Delaney, 190 Miss. 404, 200 So. 440; Mississippi Home Ins. Co. v. Stevens, 93 Miss. 439, 46 So. 245; Mutual Fire Ins. Co. v. Coatesville Shoe Factory, 80 Pa. 407; North British Mercantile Ins. Co. v. Union Stock Yards Co., 120 Ky. 465, 87 S.W. 285; Phoenix Ins. Co. v. Haney, 235 Miss. 60, 108 So.2d 227; Sumpter Tobacco Warehouse Co. v. Phoenix Ins. Co., 76 S.C. 76; 29 Am. Jur., Sec. 620 pp. 498, 499; 26 C.J. 318; 45 C.J.S., Secs. 436, 444, 451b pp. 60, 76, 100. Farish, Keady Campbell, Greenville; Watkins Eager, Jackson, for appellee.
I. The jury was justified in finding an increase in hazard within Frisby's knowledge or control. Aetna Ins. Co. v. Cowan, 111 Miss. 453, 71 So. 746; Bacot v. Phoenix Ins. Co. 96 Miss. 223, 50 So. 729; Boston Ins. Co. v. Read, 166 F.2d 551, 2 A.L.R. 2d 1155; Colker v. Connecticut Fire Ins. Co., 224 Ky. 837, 7 S.W.2d 502, 16 S.W.2d 761; Connecticut Fire Ins. Co. v. Manning, 160 Fed. 382; Davenport v. Firemen's Ins. Co. (S.D.), 199 N.W. 203; East v. New Orleans Ins. Assn., 76 Miss. 697, 26 So. 691; Home Ins. Co. v. Currie, 54 F.2d 203; Jackson v. American Eagle Fire Ins. Co. (Tenn.), 92 S.W.2d 874; Knowles v. Dixie Fire Ins. Co. (La.), 149 So. 528; La Course v. Firemens Fund Ins. Co., 90 N.H. 424, 10 A.2d 229; Miller v. Union Assurance Soc., 39 F.2d 25; Mitchell v. Home Ins. Co., 32 Iowa 421; Newark Fire Ins. Co. v. Pruett (Colo.), 227 P. 823; Orenstein v. Star Ins. Co. of America, 10 F.2d 754; Patriotic Ins. Co. of America v. Franciscus, 55 F.2d 844; Phoenix Ins. Co. v. Haney, 235 Miss. 60, 108 So.2d 227; Public Fire Ins. Co. v. Crumpton (Fla.), 148 So. 537; Rio Grande Nat. Life Ins. Co. v. Hardware Dealers Mutual Fire Ins. Co. (Tex.), 209 S.W.2d 654; Schaffer v. Hampton Farmers Ins. Co., 183 Minn. 101, 235 N.W. 618, 236 N.W. 327, 245 N.W. 425; Shelby County Trust Banking Co. v. Security Ins. Co., 66 F.2d 120; Southern States Fire Cas. Ins. Co. v. Napier (Ga.), 96 S.E. 15; State v. Dupuis (La.), 118 So. 697; Taverna v. Palatine Ins. Co., 228 App. Div. 33, 238 N YS. 389; Trust Co. v. Insurance Companies (Maine), 145 A. 243; Trust Co. of St. Louis County v. Phoenix Ins. Co. of Hartford, Conn. (Mo.), 210 S.W. 98; Western Assur. Co. v. McPike, 62 Miss. 740; Anno. 2 A.L.R. 2d 1160; 29 Am. Jur., Insurance, p. 778; 45 C.J.S., Insurance, Secs. 547, 559; 4 Couch Cyc. of Insurance Law, Sec. 960.
II. The jury was justified in finding that Frisby misrepresented a material fact in procuring the policy. American Cent. Ins. Co. v. Antram, 86 Miss. 224, 38 So. 626; Claflin v. Commonwealth Ins. Co., 110 U.S. 81, 28 L.Ed. 76, 3 S.Ct. 507; Home Life Ins. Co. v. Madere, 101 F.2d 292; New York Life Ins. Co. v. Burris, 174 Miss. 658, 165 So. 116.
This is an appeal by Dr. Noble R. Frisby from an adverse judgment rendered in favor of the appellee, Central Mutual Insurance Company, by a jury in the County Court of Washington County, which was appealed to and affirmed by the Circuit Court of said county.
The lawsuit involves an insurance policy in the sum of $2,500, issued on February 12, 1957, covering a "building occupied as grocery."
(Hn 1) Dr. Frisby had purchased the property in July 1953 and had sold the same to Lexie and Cordye Forrester on July 26, 1957, for the sum of $5,500. $500 was paid on the purchase price and a note and deed of trust was given by the Forresters for the benefit of Dr. Frisby for the balance due. The policy involved as originally issued showed Dr. Frisby as the insured, but the same was later endorsed so as to insert the names of the Forresters as the insured and Dr. Frisby as the mortgagee. The insured premises, although described as being occupied as a grocery, were in fact intended to be used and were used as a night club where illegal whiskey and gambling operations were conducted, and where dancing was carried on and beer, etc., sold and "skin ball" games played three times a week.
The place was opened only in the late afternoon and generally closed about midnight, and the proof clearly showed that it was not operated as a grocery store at all. There was a little house on the outside where packaged goods were kept and sold.
The proof further disclosed that Dr. Frisby was a frequent visitor to this place through a year prior to its loss by fire, and the jury was warranted in believing from all the facts and circumstances that he knew that the place was not being operated as a grocery store but as a a "juke joint." The mortgage clause in the policy contains this language: "Loss or damage, if any, under this policy, shall be payable to * * * mortgagee, as interest may appear, and this insurance as to the interest of the mortgagee * * * shall not be invalidated by any act or neglect of the mortgagor or owner * * * nor by the occupation of the premises for purposes more hazardous than are permitted by this policy * * *.
"Provided, also that the mortgagee * * * shall notify this Company of any change of ownership or occupancy or increase in hazard which shall come to the knowledge of said mortgagee * * * and, unless permitted by this policy, it shall be noted thereon and the mortgagee * * * shall on demand pay the premium for such increased hazard for the term of the use thereof; otherwise this policy shall be null and void."
It is universally accepted that the question whether the sale of intoxicating liquors and related activities constitute an increase in hazards is properly a question for determination by the jury. Boston Ins. Co. v. Read, CCA 10, 166 F.2d 551, 2 A.L.R. 2d 1155; Mitchell v. Home Ins. Co., 32 Iowa 421; La Course v. Firemen's Fund Ins. Co., 90 N.H. 424, 10 A.2d 229, and anno. 2 A.L.R. 2d 1160.
The jury in the instant case resolved the issue against the mortgagee and we are unable to find that any reversible error was committed upon the trial. Therefore, the case must be affirmed.
Affirmed.
Lee, Kyle, Holmes and Ethridge, JJ., concur.