Opinion
June 4, 1929.
1. INSURANCE: Vexatious Delay: Honest Opinion. When an insurance company has, without reasonable or probable cause or excuse, obstructed the insured by refusing to pay a loss, the insured may, in his suit on the policy, be allowed the penalty prescribed by statute (Sec. 6337, R.S. 1919). And ordinarily the vexatious delay must begin or occur before the filing of the suit. But this does not deprive the company from entertaining an honest difference of opinion as to its liability on the policy, and where its liability for the full amount of the policy sued for is a matter of honest doubt, or does not exist, there can be no allowance of fees and penalty for vexatious delay.
2. ____: ____: Vacant Building: Full Amount of Policy. The insurance company has a reasonable ground to question the right of the insured to the full amount of the policy, where it provides that in case of fire while the building is vacant it will be liable for only two-thirds of said amount, and it was destroyed while vacant; and where judgment for the full amount was allowed, and that judgment in the appellate court is reduced by one-third, the judgment for attorney's fees and penalties for vexatious delay in paying the full amount should be disallowed.
Corpus Juris-Cyc. References: Courts, 15 C.J., Section 511, p. 1079, n. 42. Insurance, 33 C.J., Section 863, p. 130, n. 41; Section 887, p. 149, n. 72; Section 890, p. 151, n. 13, 21.
Certiorari to Kansas City Court of Appeals.
RECORD QUASHED ( in part).
A.L. Burns and C.C. Crow for relator.
The Court of Appeals in its opinion finds that Hoffman not only demanded of defendant the full face of the policy, but that he obtained a judgment therefor, and it was necessary for the relator to appeal the case from the decision of the circuit court to obtain relief. The decision is that Hoffman was at all times demanding one-third more than he was entitled to under the law, and yet the Court of Appeals holds that the circuit court did not err in penalizing relator. Before an insurance company can be penalized for refusing to pay, it must appear from the evidence that it refused wrongfully, wilfully and vexatiously and, in fact, without any real excuse. The decision on this question is in direct conflict with controlling decisions of the Supreme Court. Kusnetzky v. Ins. Co., 281 S.W. 52; Non-Royal Shoe Co. v. Ins. Co., 277 Mo. 399; State ex rel. v. Ins. Co., 298 S.W. 91.
L.E. Atherton for respondents.
(1) The relator knew that the house was vacant and failed to enforce the forfeiture clause and return the premium. The insurer is estopped to deny liability. McCollum v. Ins. Co., 67 Mo. App. 66. (2) Failure to enforce forfeiture and return premium until after loss and until almost a year after the breach, shows willful, vexatious and wrongful delay. (3) No tender of any amount is shown at any place in the agreed statement of fact and if relator is liable at all by reason of their failure to enforce forfeiture, they are liable for damages, attorney's fees, etc. Manning v. Fire Ins. Co., 159 S.W. 752; Stix v. Indemnity Co., 175 Mo. App. 171.
Certiorari to quash the record of the Kansas City Court of Appeals in the case of Hoffman v. N.W. National Insurance Company.
Hoffman had a three-year fire policy for $500 in the insurance company on a building. A judgment in his favor in the trial court was affirmed by the Court of Appeals. The ruling of the latter is assailed on the ground of conflict of rulings.
The policy is not set forth in the petition for this writ. Enough appears, however, in the agreed statement of the facts set forth in the opinion of the Court of Appeals to show it was provided therein that upon the building becoming vacant a permit for the continuance of the policy would be granted by reducing the amount of the insurance one-third, if application for a continuance of the policy was made within sixty days after the vacancy began. More than sixty days after this event occurred Hoffman applied to the company for a continuance of the policy for sixty days and the same was granted and the policy left with the company's agent to enter thereon future continuances of the policy. The agent kept the policy in his possession, but did not enter the subsequent continuances. A year after the expiration of the first period of extension the building was destroyed by fire. When this occurred the three-year period for which the building was insured had not expired. In Hoffman's suit on the policy the trial court rendered judgment for $500, the full amount of the policy, fifty dollars for vexatious delay in the payment of same, and one hundred dollars attorneys' fees, provisions for these additional findings having been made in the agreed statement of facts. Upon appeal to the Court of Appeals that court reduced the amount of the principal judgment by one-third, but followed the findings of the original judgment as to the penalty and attorneys' fees, and directed the trial court to enter judgment in accordance therewith. In the Court of Appeals the insurance company contended, as disclosed in the opinion, that the court was not authorized in reducing the principal amount of the judgment, which to that extent was a ruling in its favor, and at the same time in affirming the trial court's rulings as to attorneys' fees and the penalty for vexatious delay. It is upon these grounds that this writ is prayed for.
While vexatious delay on the part of a defendant is ordinarily a question for the jury under the statute and rulings thereon (Sec. 6337, R.S. 1919; Kusnetzky v. Security Ins. Co., 281 S.W. (Mo.) 47, l.c. 52 and cases cited), this does not deprive the defendant of the right to entertain an honest difference of opinion in regard to the correctness of the court's ruling and of his right to litigate the matter in an effort to establish his conclusion, [Non-Royalty Shoe Co. v. Assurance Co., 277 Mo. l.c. 422, 210 S.W. 37; Berryman v. Southern Surety Co., 285 Mo. l.c. 397, 227 S.W. 96.]
The meaning of the statute (Sec. 6337, supra) is that when an insurance company has, without reasonable or probable cause or excuse, obstructed a beneficiary by refusing to pay a loss under its policy, the plaintiff may, in his suit, be allowed thereon the penalty prescribed in the above section. [Block v. U.S. Fid. Guar. Co., 290 S.W. (Mo.) 429, 441.]
Ordinarily the vexatious delay must begin or occur before the filing of the suit. [State ex rel. Gott v. Fidelity Deposit Co., 317 Mo. 1078, 298 S.W. 83, 91.]
Facts at bar bring this case within the purview of these rulings. The right of the defendant insurance company to contest the validity of this claim cannot be questioned. When questioned the Court of Appeals found it necessary to modify its opinion as to the principal amount of the judgment sued for but persisted in its finding that attorneys' fees and a penalty should be adjudged against the defendant. The latter, as it had a right to do, persisted in contesting the legality of this part of the judgment and in so doing was not guilty of vexatious delay. In holding to the contrary, the Court of Appeals contravened the rulings of this court in the cases above cited and its record in that respect should be quashed. It is so ordered. All concur.