Opinion
No. 32903.
September 12, 1938. Suggestion of Error Overruled, October 31, 1938.
1. INSURANCE.
An insurer, which for many months conducted in Tennessee litigation brought against insured hotel company for death of hotel guest who was killed in accident in hotel elevator, would be deemed to have waived right to claim exemption under clause of indemnity policy providing that policy did not cover loss caused by any elevator while in charge of any person under age fixed by law for elevator attendants, notwithstanding that elevator operator had stated to insurer that he was 19 at time of accident when he was in fact under 18, the minimum age for elevator operators under city ordinance, where an hour's investigation of public records would have disclosed operator's true age, and insurer had relied on operator's statement and not on hotel company's statement.
2. ACTION.
The rules of substantive law of a state where a cause of action arises are to be applied by the court of the forum, but the quantum of proof required is governed by the law of the forum.
3. INSURANCE.
For a waiver of forfeiture of policy to be applied, it is unnecessary that an insured has been misled, or that the facts constitute an estoppel.
4. INSURANCE.
Slight circumstances of intention to waive forfeiture of insurance policy are sufficient to support finding of waiver, and the law will seize on them as evidence of an intention.
ON MOTION. (Division A. Jan. 9, 1939.) [185 So. 564. No. 32903.]1. COSTS.
Where trial court's judgment was rendered on January 11, 1937, for $25,000 with 6 per cent. interest per annum from April 14, 1934, until paid, Supreme Court affirming judgment properly allowed $1,455.63 damages, being statutory 5 per cent. of the aggregate of $25,000, plus 6 per cent. per annum interest thereon from April 14, 1934, to January 11, 1937, the date of rendition of trial court's judgment (Code 1930, sec. 3387).
2. COSTS.
The sum of money on which statute authorizing 5 per cent. damages on affirmance of judgment contemplated damages are to be rendered is that which appears from the judgment to be due when judgment was rendered, and for which a recovery was awarded, and it does not contemplate damages or interest which thereafter accrues (Code 1930, sec. 3387).
APPEAL from the chancery court of Amite county; HON. R.W. CUTRER, Chancellor.
J.T. Lowrey, of Gloster, and Wm. G. Hall and Wm. M. Hall, both of Memphis, Tenn., for appellant.
The Supreme Court of Mississippi declared at an early date that the courts of Mississippi would not hold the law of a sister state and acts thereunder invalid where the courts of a sister state had not previously so held.
Dwight v. Richardson, 12 S. M. 325; Newsom v. Cocke, 44 Miss. 352.
The general rule is that doubts must be resolved in favor of the validity of municipal ordinances.
43 C.J. 570, sec. 908.
The courts of Tennessee and Mississippi, following the Supreme Court of the United States held that such ordinances are "law" within the meaning of such exclusion clauses in Phoenix Indemnity Co. v. Barrett, 167 Tenn. 116, 67 S.W.2d 135; Hunter v. Western, etc., Indemnity Co., 19 Tenn. App. 589, 92 S.W.2d 878; Sommerville v. Keeler, 165 Miss. 244, 145 So. 721; and the uncontroverted evidence was that Ensley was born April 10, 1914, and was therefore under the age of eighteen on May 14, 1931, when the elevator he was operating killed Robert Payne.
Appellant's representatives, through whom it would have obtained actual knowledge about Ensley's non-age, Caldwell, the adjuster who investigated the case, and Hume Armistead, the attorneys who under its employment assumed and conducted the defense of Payne's suit against the Noel Hotel Operating Company, testified that they did not know Ensley was under the age of eighteen at the time of the accident, until he so testified upon the trial of the case shortly before its close, and there was no contradiction or attempt at contradiction of their testimony to that effect. The court's finding that appellant had actual knowledge of Ensley's non-age when it assumed the defense of Payne's suit, would in consequence be unwarranted by and contrary to the undisputed evidence.
There was no proof of anything to put appellant upon inquiry about the date of Ensley's birth until he testified with reference to it upon the trial of the case shortly before its close.
When Payne's representative brought suit against the Noel Hotel Operating Company, claim for liability in none of the four counts of the declaration was predicated upon the Hotel Company's having had an operator in charge of the elevator under the age of eighteen contrary to the city's ordinance. Without something of that sort appearing in the record, there was and is no basis for a finding that appellant was put on inquiry as to the date of Ensley's birth and that appellant is chargeable with the knowledge of what the inquiry would have led to with the use of the facilities shown for obtaining it.
The Court of Appeals of New York expressly declares that an insurance company is not bound to inquire whether the law was valid before it undertakes a defense unless it is put upon inquiry, and that it is not put upon inquiry where it is given information upon which it might rely.
S. E. Motor Hire Corp. v. New York Indemnity Co., 225 N.Y. 69, 174 N.E. 65.
In Fulton Co. v. Mass. Bonding Insurance Co., 138 Tenn. 278, 197 S.W. 866, the Supreme Court of Tennessee makes no such express statement of the rule as does the Supreme Court of New York in the above case, but it is clear from its decision that it recognized that an insurer had to be put upon notice by something before it could be charged with the knowledge to which its inquiry might lead, and that the insurer when it relied upon information given it, did not have to make further inquiry and was not chargeable with the knowledge to which the inquiry would lead.
Stearns Lbr. Co. v. Travelers Ins. Co., 159 Wis. 627, 154 N.W. 991.
In 39 C.J., page 1074, sec. 42, the following statement is found: "Estoppel to deny that an injury to an employee resulting from a cause not covered by the policy may be asserted notwithstanding lack of actual knowledge of the facts on the part of the insurer, where it appears that there was negligence in not obtaining information as to the facts." That statement on its face would appear to support the Chancellor's decision, but upon examining the cases cited in support of that statement it was found that it did not, and that those authorities are in line with those cited above, as it clearly appeared that in those cases the insurer was put upon notice or inquiry and negligently failed to pursue the inquiry. Those cases are Fairbanks Canning Co. v. London Guaranty, etc., Co., 154 Mo. App. 327, 133 S.W. 664; Globe Nav. Co. v. Maryland Cas. Co., 39 Wn. 299, 81 P. 826.
It is apparent from the undisputed evidence in this case that appellant's attorneys could not have retired from the case immediately upon the disclosure by Ensley of his correct age, without doing injustice and damage to the assured. The disclosure came just before the close of the evidence. Assured had no counsel in the case who could have stepped into the shoes of insurer's counsel and completed the trial. There is hardly room for anybody to doubt that if the insurer had withdrawn from the case in such circumstances, it would have made itself liable for any verdict and judgment that would have been rendered against the assured. The insurer, therefore, was not free to withdraw from the case. That is a necessary element to hold that one has waived or been estopped from asserting a right of the sort here involved.
In the case of Morrison v. Royal Indemnity Co., 167 N.Y.S. 732, 181 App. Div. 709, a similar situation was considered and the court held that the insurer's failure to withdraw in such circumstances did not constitute a waiver or estop it from subsequently disclaiming liability under the exclusion clause of its policy.
In the case at bar, counsel remained in the case and argued the case to the jury and then notified assured that it disclaimed liability, and that the assured then entered into a stipulation with them that their filing and submitting motion for new trial would be without prejudice to appellant's rights. That was probably not necessary according to the decision in the New York case, but it set beyond question their right to do those things without waiving the insurer's right to set up the exclusion clause. It has been held in Tennessee and Mississippi that an insurer may defend under a reservation without waiving any rights under a policy.
Foreman v. Union Indemnity Co., 12 Tenn. App. 89; Travelers Indemnity Co. v. Holiman, 174 Miss. 220, 164 So. 36; Gray v. Houck, 167 Tenn. 233, 68 S.W.2d 117; Travelers Ins. Co. v. Inman, 157 Miss. 810, 126 So. 399.
The Supreme Court of New Jersey expressly held in Suydam v. Public Indemnity Co., 161 A. 499, that it was not necessary for an insurer to give notice of reservation to the injured party, because of his lack of interest in the contract prior to judgment and the issuance and return of execution unsatisfied. The Supreme Court of Mississippi doubtless had that principle in mind in rendering the decision it did in Travelers Indemnity Co. v. Holiman, 174 Miss. 220, 164 So. 36. That was a suit between the injured party after judgment and the insurer, and was based upon a judgment recovered in a suit that the insurer had defended under notice to the assured of a reservation of its rights, and it was held that the insurer had the right to set up therein against the judgment holder, breach of a policy condition which the assured was obligated to comply with, because the judgment holder had no greater rights under the policy than the assured had.
Waiver is generally but another term for estoppel. There can be no estoppel where the assured has not been misled to his prejudice.
Boyd v. Ins. Co., 90 Tenn. (6 Pickle) 212; Fulton v. Mass. Bonding Ins. Co., 138 Tenn. 278.
Ensley being under the permissible age fixed by the Nashville ordinance and operating the elevator which caused the injury and death of Payne, there was causal connection within the meaning of the law between the non-age of Ensley and Payne's injury and death.
Phoenix Indemnity Co. v. Barrett, 167 Tenn. 116, 67 S.W.2d 135; Hunter v. Western, etc., Indemnity Co., 19 Tenn. App. 589, 92 S.W.2d 878; Hossley v. Union Indemnity Co., 137 Miss. 537, 102 So. 561; Baker v. Supreme Lodge K. of P., 103 Miss. 374; Guaranty Co. v. Hood, 124 Miss. 548; Union Indemnity Co. v. Hossley, 142 Miss. 783, 107 So. 548; Maryland Casualty Co. v. Adams, 159 Miss. 88, 131 So. 544; Adams v. Casualty Co., 162 Miss. 237, 139 So. 453; Lynch v. Commercial Cas. Co., 108 A. 188; New York Fidelity, etc., Co. v. Palmer Hotel Co., 179 Ky. 518, 200 S.W. 923, L.R.A. 1918C 808.
Price McLain, of McComb, and Green, Green Jackson, of Jackson, for appellee.
There was a waiver, or estoppel, by the Guaranty Company of its attempted defense that the operator of the elevator was under the age permitted under the terms of the contract of insurance.
The complainant contends that there was waiver of the breach of the condition, if any, and an estoppel against the insurance company for the following reasons:
1. It was the duty of the adjuster, and of the attorneys for the insurance company, not only to investigate the claim against the Hotel Company, but to investigate the claim of the Hotel Company against the insurance company on the contract, and to then and there ascertain whether there had been any breach of the conditions of the policy, and by a failure to ascertain until the trial, and by undertaking the defense of the case, there was a waiver of the breach and an estoppel to assert that the contract was not in force.
2. Having discovered the breach of the condition during the trial of the case, it was the duty of the attorneys for the insurance company to withdraw from the case, after notification to the Hotel Company, and to John C. Payne, Administrator, plaintiff in that case, and after giving the Hotel Company an opportunity to further defend, but not having so done, and having continued to defend after discovery of the breach of the condition, a waiver and estoppel arose.
3. By entering into the contract with the Hotel Company after Payne, administrator, had secured a judgment against the Hotel Company and had thus become vested, under the terms of the policy, with a vested right against the insurance company, without notice to or the consent of Payne, and by filing the motion for a new trial and arguing the same, and obtaining the grant of the new trial, and refusing to continue to defend, there was a waiver, and the company is estopped to assert the breach of the condition.
4. By agreeing to continue to defend the Noel Hotel Operating Company, after the discovery of the alleged breach of the condition, under a written stipulation, as shown in Exhibit C-1 to the answer of the Guaranty Company, wherein the Guaranty Company was to continue to defend, but with reservation of its rights, as required by Agreement I of Exhibit A-1 to the answer of the Guaranty Company, and then permitting a default judgment to go against the Noel Hotel Operating Company on all counts of the declaration.
It is said that a forfeiture is repulsive to the court, and that a forfeiture is hateful.
Morgan v. Independent Order, etc., 90 Miss. 864, 44 So. 491; Columbia National Ins. Co. v. Money, 26 F.2d 580; In re Baum Rubin, 27 F.2d 191; In re Ehrhardt, 19 F.2d 406; Fidelity Phoenix Fire Ins. Co. v. Benedict Coal Corp., 64 Fed. 2d 347, 289 U.S. 762.
For the breach of a condition amounting to a forfeiture, there is no contemplation that a forfeiture occurs absolutely at all events. The provision of exception or condition is for the benefit of the insurer and the insurance becomes void or not, at the insurer's option. Therefore, the courts have held that these stipulations for forfeiture of a policy mean only that the policy shall be voidable at the option of the company.
Knights of Pythias v. Quin, 78 Miss. 531, 29 So. 826; Grigsby v. Russell, 222 U.S. 149, 56 L.Ed. 133; Reliance Life Ins. Co. v. Wolverton, 296 P. 793.
Therefore, the insurer may, and with great frequency does, waive the breach of these conditions. The cases have held that it is unnecessary that such a waiver be based upon a consideration, or that it be founded upon any new agreement, but it may be implied.
Knickerbocker Life Ins. Co. v. Norton, 96 U.S. 234, 24 L.Ed. 689; Equitable Life Assurance Society v. Ellis, 147 S.W. 1152.
It is not necessary for the insurer to have been mislead for the waiver of the forfeiture to be affected, and it is not necessary that the facts depended upon for the waiver of a forfeiture shall constitute an actual estoppel.
U.S. Order, etc. v. Hooser, 49 So. 359; U.S.F. G. Co. v. Miller, 34 S.W.2d 938, 76 A.L.A. 12; 32 C.J. 1341, par. 615; 37 C.J. 534; Bailey v. Sovereign Camp, etc., 47 A.L.R. 876; Kansas City Life Ins. Co. v. Elmore, 226 S.W. 709; Martin v. N Y Life Ins. Co., 40 A. L.R. 406; 6 Couch, Cyclopedia of Insurance Law, par. 1369.
The question of whether there has been a waiver of the breach of condition or of the forfeiture of the policy is a mixed one of law and fact, and many of the courts have held that the issue is purely one of fact.
Couch, Cyclopedia of Insurance Law, sections 678 and 693; Stonewall Life Ins. Co. v. Cook, 144 So. 217; McConnell v. Southern States Life Ins. Co., 31 F.2d 715; Fulton v. Massachusetts Bonding Ins. Co., 138 Tenn. 278, 197 S.W. 866; Tozer v. Ocean Accident Guarantee Corp., 94 Minn. 478, 103 N.W. 509; Brooks' Transportation Co. v. Merchants' Mutual Casualty Co., 171 Atl. Rep. 211; Jusiak v. Commercial Casualty Ins. Co., 169 Atl. Rep. 552; 5 Couch, Cyclopedia of Insurance Law, sec. 1165A; 36 C.J. 1127, sec. 125; Bowen v. Cote, 69 F.2d 136; General Tire Co. v. Standard Acc. Ins. Co., 65 F.2d 237; Meyers v. Continental Casualty Co., 12 F.2d 52; Royle Mining Co. v. Fidelity Casualty Co., 161 Mo. App. 185, 142 S.W. 442; Continental Ins. Co. v. Fortner, 25 F.2d 398; New Jersey Fidelity Plate Glass Co. v. McGillis, 42 F.2d 789; Employer's Liability Assurance Corp. v. Chicago, etc., Co., 141 Fed. 962; Empire State Surety Co. v. Pacific Nat. Lbr. Co., 200 Fed. 224; Graham v. U.S.F. G. Co., 162 A. 904; Lewis v. Fidelity Casualty Co., 156 A. 74; Oehme v. Johnson, 231 N.W. 817, 81 A.L.R. 1308; West v. MacMillan, 152 A. 105; Kocher v. Kocher Estate, 150 A. 468; Fairbanks Canning Co. v. London Guarantee Accident Co., 133 S.W. 666; National Battery Co. v. Standard Accident Ins. Co., 41 S.W.2d 604; 8 Cooley's Briefs on Insurance (2 Ed.) 4528; 5 Cooley's Briefs on Insurance (2 Ed.) 3959; Chicago Fire Marine Ins. Co. v. Sharpensteen, 289 P. 988; Couch, Brief on Insurance, sec. 1175 E. Supp.; Western Casualty Surety Co. v. Independent Ice Co., 190 Ark. 684, 80 S.W.2d 626.
There was no causal connection between the age or non-age of the operator of the elevator at the time of the accident and the injury and death of Robert L. Payne.
McGee v. Globe Indemnity Co., 175 S.E. 849; Hossley v. Union Indemnity Co., 137 Miss. 537, 102 So. 561, 72 A.L.R. 1072; Accident Ins. Co. of North America v. Bennett, 16 S.W. 723; Southern Ins. Co. v. Graham, 280 S.W. 31; 6 Cyclopedia of Insurance Law, page 4512, sec. 1236; Bridal Veil Lbr. Co. v. Pacific Coast Casualty Co., 75 Or. 57, 145 P. 671; Baker v. Supreme Lodge, Knights of Pythias, 103 Miss. 374, 60 So. 333; U.S.F. G. Co. v. Hood, 124 Miss. 548, 87 So. 115; Townsend v. Commercial Travelers Accident Assn., 231 N.Y. 148, 131 N.E. 871, 17 A.L.R. 1001; 17 A.L.R. 1005, annotations; Baker v. Supreme Lodge, 103 Miss. 374, 60 So. 333; Accident Ins. Co. v. Bennett, 90 Tenn. 256, 16 S.W. 723, 25 Am. St. Rep. 685; Rowe v. United Commercial Travelers Assn., 186 Iowa 454, 172 N.W. 454, 4 A.L.R. 1235; Fischer v. Midland Casualty Co., 189 Ill. App. 486; Bloom v. Franklin Ins. Co., 97 Ind. 478, 49 Am. Rep. 469; Bradley v. Mutual, etc., Co., 45 N.Y. 432, 6 Am. Rep. 115; Cluff v. Mutual Benefit Life Ins. Co., 13 Allen 308; U.S.F. G. Co. v. Guenther, 281 U.S. 34, 74 L.Ed. 683; Mutual Life Ins. Co. v. Johnson, 293 U.S. 335, 79 L.Ed. 398.
Not only is there a failure on the part of the Guaranty Company to show any causal connection between the age or non-age of Ensley and the death of Payne in the elevator, but the record conclusively demonstrates that the judgment here sought to be enforced against the Guaranty Company was entered upon a declaration specifically averring negligence of construction or maintenance, irrespective of the negligence of the operator of the elevator, and the record demonstrates that the age or non-age of Ensley did not, in any manner, contribute to the accident, because he was man for all intents and purposes having the appearance of one from twenty-one to twenty-five years of age, of full stature, excellent physique, and full mental development. The ability of an elevator operator, such as Ensley, cannot be determined by the mere passing of years, but must be determined from the extent of the experience of the operator. Therefore, when the motion for a new trial was granted, all of these issues were presented for determination, and the question of the age or non-age of Ensley did not appear in the second trial. The effect of the granting of the motion for a new trial was to place the case in the same position as to all issues as it stood upon the date of the original filing of the declaration.
46 C.J., pages 461, 462, 463, 464; U.S. v. Young, 24 L.Ed. 153; Home Life Ins. Co. v. Dunn, 22 L.Ed. 69; U.S. v. Ayers, 19 L.Ed. 627; Wright v. Jackson Construction Co., 138 Tenn. 145, 196 S.W. 488; Hardy v. O'Pry, 59 So. 73, 102 Miss. 197; Dean v. Board of Supervisors, 99 So. 563, 135 Miss. 268; Bates v. Strickland, 103 So. 432, 139 Miss. 636; Gaines v. Kennedy, 53 Miss. 102; Love v. Yazoo City, 138 So. 600, 162 Miss. 65; Watkins v. Miss. State Board of Pharmacy, 154 So. 277, 170 Miss. 26; Miller v. Ewing, 8 S. M. 421; Miller v. Buckley, 38 So. 99, 85 Miss. 706; Hardy v. Gholson, 26 Miss. 70; Von Zondt v. Town of Braxton, 115 So. 559; 15 R.C.L. 973; 34 C.J. 868; Y. M.V.R. Co. v. Sibley, 111 Miss. 21, 71 So. 167; 50 C.J. 408; Pickett v. Ford, 5 Miss. (4 How.) 247; Denny Co. v. Wheelwright Co., 60 Miss. 741; Cartwright v. Carpenter, 7 How. 336.
Argued orally by Wm. G. Hall, for appellant, and by Forrest B. Jackson and W.G. McLain, for appellee.
John N. Yost, administrator of the estate of Robert L. Payne, deceased, filed a bill for discovery and attachment, as against a non-resident corporation, seeking to recover from the appellant, hereinafter called the "insurer," $25,000, the amount of a judgment the predecessor administrator had recovered from the Noel Hotel Operating Company, hereinafter called the "insured." This judgment had been recovered in a court of competent jurisdiction in Nashville, Tennessee, the basis of the suit being a contract of indemnity insurance issued by the insurer to the insured, covering accidents occasioned by the operation of its electric elevators. Attachment was levied on lands of the insurer, and it appeared and answered, setting up, as a defense, a clause of the policy as releasing it from liability. After hearing the evidence, the court found the issues in favor of the administrator, and the insurer appeals to this court.
On May 14, 1931, Robert L. Payne was a member of a flying squadron in the service of the United States Government, and his squadron was spending the night at Nashville. While being transported upward from one floor to another of the Noel Hotel in an elevator operated by Gaines Ensley, Payne was thrown or fell to the floor due to a sudden jerk of the elevator, and its inner door being open, his head was caught between the floor of the elevator and the beam at the rise of the next floor, resulting in the instant death of Sergeant Payne.
Prior to that time the insurer had issued its policy of indemnity to the insured providing for a coverage of a minimum of $50,000 and a maximum of $200,000. The provision on which the defense of this action is based is Condition "A" thereof, which is in these words: "This policy does not cover loss from liability for, or any suit based on, injury and/or death (1) Caused by any elevator while in charge of any person under the age fixed by law for elevator attendants, or if there is no legal age limit, under the age of Sixteen (16) years . . ."
Condition "H" of the policy provides that the insolvency or bankruptcy of the insured does not release the insurer from the payment of damages for injuries sustained, or loss suffered by any person or persons as the result of an accident while the policy is in force, and in case execution against the insured is returned unsatisfied in an action brought by the injured, or his personal representative in case of death resulting from the accident, then an action may be maintained against the insurer under the terms of this policy.
Immediately after the death of Payne, on the same night, the insured notified the general agents of the insurer, and they, in turn, notified its agent and the adjuster, who began an investigation thereof, and, among other things, took a written statement from Gaines Ensley, showing that, at the time of the accident, he was 19 years old, and born on April 10, 1912. The insurer's adjuster relied upon his own investigation; made a report promptly to the insurer, and the management of the suit was immediately turned over to the attorneys who represented the insurer in that vicinity. These attorneys likewise made an independent investigation, but made no further effort to ascertain the age of Ensley, relying solely on his own statement made to the adjuster as to his age. The insured made no representations whatever as to the age of Ensley, but the adjuster saw his application to the hotel for employment, showing his age to be as stated to the adjuster.
The administrator of the estate of Robert L. Payne caused summons to be served on the insured on November 25, 1931, and filed his declaration seeking damages for Payne's death against the insured on January 5, 1932. The attorneys for the insurer took control of the litigation, and retained it until the termination of the trial in September, 1932, when the attorneys representing the insurer, having charge for the insured, placed Gaines Ensley on the witness stand, and, for the first time, it was ascertained that he was born on April 10, 1914, and, at the time of the accident, was a little over the age of 17 and under 18. Ensley was well developed and no one suspected, from a physical view of him, that he was under 18 years of age when the tragedy occurred. Thereupon, the attorneys for the insurer sent the adjuster to the Vital Statistics Bureau, a few blocks from the courthouse, to ascertain from the records that Ensley was not 18 years of age on May 14, 1931. His mother also testified that he was born April 10, 1914. This public record was easily available, and Ensley's father and mother, and the attending physician at his birth, were at Waverly, Tennessee, within a few hours drive from Nashville.
After the attorneys for the insurer ascertained the truth, they notified the insured that they would no longer conduct the defense and would withdraw from the case, but it was agreed that they would make a motion for a new trial, a verdict having been rendered for $17,000. They were successful in having the court set aside the judgment and order a new trial of the case. The attorneys for the insurer had no further connection with the case, and in 1934, the insured having in the meantime gone into bankruptcy, and no one appearing in defense, the case was again submitted to a jury which rendered a verdict for $25,000 on all issues, and judgment was entered accordingly.
On the trial of the case at bar, one of the attorneys for the insurer, who conducted the case on the first trial, testified that, from talks with Gaines Ensley, they found they could not rely upon his statements. The attorney made this statement in giving his explanation as to why he had the record in the Bureau of Vital Statistics examined before the attorneys withdrew from the case. This record discloses that neither the insured, nor the insurer, actually knew anything about Ensley's age except his statement before the trial. In this case there was introduced the public record of the Vital Statistics Bureau showing his age. The record of the first trial was also introduced in evidence in this case, as well as the ordinances of the City of Nashville, which made it unlawful for a person under 18 years of age to be employed in the operation of elevators, or to operate them.
No question was ever raised between the insurer and the insured as to the nonage of Ensley until September 26th, 1932. No investigation whatever was conducted by the insurer relative to the age of Ensley until after he delivered his testimony in court. An hour's investigation before the insurer took charge of the case would have revealed the nonage of Ensley. In other words, the insurer rested content upon Ensley's bare statement as to his age.
We will not go into details as to the liability of the hotel company to the administrator, save to state that the declaration charged negligence in two general particulars only, the defective construction of the elevator so that the gate or inner door would not close when it was put in motion, and the negligence of the operator in giving it a sudden jerk causing decedent to fall to the floor, and putting the elevator in motion without closing the inner door.
We shall assume in this case, without deciding the very interesting question as to whether or not the judgment in the Tennessee court is res adjudicata as to the liability of the insurer for the accident, independent of the nonage of the operator of the elevator. In the first trial, the court gave a peremptory instruction that the hotel company was not liable on the evidence as to a defective elevator and so entered its judgment. A new trial was then granted at the instance of the insurer, and the court set aside the verdict and the judgment thereon.
Another very grave question is presented by the appellee in his contention that there was no valid ordinance of the City of Nashville in reference to the age of persons operating elevators, the main objection being that the Legislature had not granted that municipality authority to enact such an ordinance. Another serious question presented by appellee is that the nonage of Ensley was not a proximate cause of the death of Payne.
We think the court below held correctly, under the facts of this case, that the insurer waived its right to claim exemption because of anything in Condition "A" of the policy hereinabove set forth. Tersely stated, the insurance company conducted the litigation, having taken charge immediately after the injury, and retained exclusive control thereof, without reservation, from about May 14th, 1931 to September 26, 1932; made its own investigation; was not induced by the insured, by word or deed, not to prosecute the investigation to a final conclusion, if it desired to plead exemption on account of the nonage of Ensley.
It must be remembered that under the contract of insurance, during these many months in which the insurer had exclusive control of the litigation, it rested content upon its own investigation, and exercised its own prerogative, as shown by the activities of its attorneys. In such case, under such circumstances, when the insurer took charge of the litigation, conducting it in court which revealed the horror of the accident — the decapitation of a young aviator in the service of his country — thus taking from the insured the right to compromise or control its law-suit, the advertising by public litigation of such a tragedy was injurious to a hotel, and the insured was forced, by its contract, to permit the insurer to remain in exclusive control of the litigation. The loss of the power to manage and control his own case as he wills, as he chooses, is, in all cases, harmful to an insured, and in this case was even more prejudicial.
We are of the opinion that the conduct of the insurer in this case waived Condition "A" of the contract. If the insurer desired to avail itself of Condition "A" the facts were easily obtainable by the exercise of due investigation; and we want to stress the fact that the insured made no representation to the insurer which caused it to take exclusive charge of the litigation and retain it for fifteen months.
This cause of action arose in the State of Tennessee, and it is necessary for us to ascertain whether or not the Supreme Court of that State recognizes the doctrine of waiver or estoppel as to forfeiture, such as is here invoked, on the part of an insurer. That court has answered this question in the affirmative. It was so held in the case of Fulton Co. v. Massachusetts Bonding Insurance Company, 138 Tenn. 278, 197 S.W. 866, approving Tozer v. Ocean, etc., Co., 94 Minn. 478, 103 N.W. 509, which case is often cited by courts and text books as authority for this doctrine of waiver of forfeiture. However, in the Tennessee case it was shown that the insured had represented to the insurer that the employee therein was over 16 years of age, and that fact could be proven, and thereby induced the insurer to take charge of the litigation.
Our own court has recently recognized the doctrine of waiver of forfeiture in the case of Stonewall Life Ins. Co. v. Cooke, 165 Miss. 619, 144 So. 217.
It cannot be disputed that the rules of substantive law of a state where a cause of action arises to be applied by the court of the forum, but the quantum of proof required is governed by the law of the forum. See Restatement of the Law, Conflict of Laws, Section 595 and comments; Boothe v. Teche Lines, Inc., 165 Miss. 343, 143 So. 418; Interstate Life Accident Co. v. Pannell, 169 Miss. 50, 152 So. 635. Our court holds that it is not necessary for an insured to have been misled for a waiver of forfeiture to be applied, and that the facts need not constitute an estoppel. Stonewall Life Ins. Co. v. Cooke, supra. Slight circumstances of intention to waive a forfeiture will be sufficient; the law will seize upon them as evidence of intention. Stonewall Life Ins. Co. v. Cooke, supra.
But the insurer says we did not know of the operator's nonage until we were in the midst of the trial, therefore, we had a right to change our position. We think this has been generally and correctly determined to mean that even if an insurer ought to have known the facts, or with proper attention to its own business it would have been apprised of them, and cannot set up ignorance as an excuse. General Tire Co., etc. v. Standard Accident Ins. Company, 8 Cir., 65 F.2d 237; Knights of Pythias v. Kalinski, 163 U.S. 289, 16 S.Ct. 1047, 41 L.Ed. 163; Brooks Transportation Co. v. Merchants' Mutual Casualty Co., 6 W.W. Harr. 40, 36 Del. 40, 171 A. 207, 211; Western Casualty Surety Co. v. Independent Ice Co., 190 Ark. 684, 80 S.W.2d 826; Malley v. American Indemnity Corp., 297 Pa. 216, 146 A. 571, 81 A.L.R. 1322; Suydam v. Public Indemnity Co., 161 A. 499, 10 N.J. Misc. 868; Jusiak v. Commercial Casualty Ins. Co., 169 A. 551, 11 N.J. Misc. 869; Empire State Surety Co. v. Pacific National Lumber Co., 9 Cir., 200 F. 224; 36 C.J. 1127; Cooley's Briefs On Insurance, 2d Vol. 5, page 3959.
The case of S. E. Motor Hire Corp. v. New York Indemnity Co., 255 N.Y. 69, 174 N.E. 65, 81 A.L.R. 1318, is strongly relied upon by the insured for its position that it did not waive the right to avail itself of Condition "A" of the policy. Under the circumstances of that case, the court therein laid stress upon the fact that the insured furnished the insurer with an affidavit of the operator that he was 18 years old, and that the insurer had a right to rely upon the information furnished by the insured that the insured had employed a chauffeur of lawful age.
In the case at bar it is not contended that the insured, by word or deed, induced the insurer to take its position as to its liability for the death of Payne. It took its position from its own investigation, from which it learned that Ensley's statements could not be relied on, and the evidence of his true age was easily accessible, and, really, the insurer made no investigation on that point until Ensley testified on the trial. With a little diligence, and within an hour's time, the insurer could have obtained the facts from a public record. They knew, or should have known, that Ensley had his employment at stake.
Applying our own rules as to the quantum of proof requisite to establish a waiver, we could not be controlled by the opinion of another court which applies a different rule of evidence thereasto.
We think most of the cases cited by counsel for appellant upon this point show affirmatively that the insured induced the insurer to take control of the litigation and recognize its liability. In none of the cases which we have examined, and which have been cited by industrious counsel, have we found one on all fours with the case at bar.
Applying the controlling legal principles to the evidence, we are of the opinion that the Chancellor did not err in holding that the insurer herein had waived its right to plead Condition "A" of the policy.
Affirmed.
The appellants suggest that our judgment affirming the judgment of the court below is erroneous as to the damages allowed the appellee under Section 3387, Code of 1930, which provides: "In case the judgment or decree of the court below be affirmed, or the appellant fail to prosecute his appeal to effect the Supreme Court shall render judgment against the appellant for damages, at the rate of five per centum and costs, as follows: If the judgment or decree affirmed be for a sum of money, the damages shall be upon such sum." The judgment of the court below was rendered on January 11, 1937, and was for $25,000 "with six per cent (6%) interest per annum from April 14, 1934, until said sum is paid, together with all costs accrued or to accrue herein." This judgment was affirmed by us on September 12, 1938. The damages allowed were $1,455.63, being 5% on the aggregate of $25,000 plus 6% per annum interest thereon from April 14, 1934, to January 11, 1937, the date of the rendition of the judgment in the court below. The appellant says the damages should have been allowed only on the $25,000.
The sum of money on which the statute contemplates damages to be rendered is that which appears from the judgment to be due when the judgment was rendered, and for which a recovery was awarded. It does not contemplate damages on interest which thereafter accrues. If the court below, instead of rendering its judgment in the present form, had added the interest then due on the $25,000 thereto, and rendered a judgment for the aggregate amount, the damages thereon would of course be 5% on this aggregate amount. This difference in the form of the judgment does not change its substance. The request to correct the judgment will be overruled.