Buxton v. International Indemnity Co.

This is a,n appeal by the defendant from a judgment for the plaintiff in an action to recover upon a contract of insurance. The court found that the contract of insurance entered into between the parties to this action consisted of a written agreement in the form of a letter dated June 8, 1916, signed by the secretary of the defendant company and addressed to the plaintiff, and of a policy of insurance set out in the. complaint.

Plaintiff was a dealer in automobiles and entered into a contract with one Suttle, by which Suttle was to purchase a Stearns-Knight automobile for $2,250, the purchase price to be paid in installments as provided in the contract, and the automobile to remain the property of the vendor until all payments had been made. Plaintiff applied to the defendant for insurance upon this automobile so contracted to be sold, and a policy was issued by the defendant on June 12, 1917. The insured named in the policy was “W. A. Suttle and/or N. R. Vail.” According to the testimony and the findings, at the time of the issuance of the policy, the automobile covered thereby was the property of the plaintiff and said N. R. Vail had no interest whatever therein, but his name was inserted in the policy at the suggestion of the defendant’s agent because plaintiff stated to said agent

The testimony upon which the findings of the trial court are based shows that prior to June 8, 1916, Mr. Hallenbeek, who was soliciting business for the defendant, had a conversation with the plaintiff regarding his insurance business. Hallenbeek was seeking plaintiff’s business and plaintiff complained to him about the technical defenses raised by insurance companies and the inadequate protection given by their policies, and told him that he desired to be fully protected in all eases of lease contracts. Hallenbeek promised that his company would -fully protect the plaintiff if he would insure his automobiles with it, and stated, according to the plaintiff’s testimony, that the policies of his company would be protection against “fire, theft, and wrongful conversion,” and that he would have the company write to plaintiff to this effect. In accordance with this understanding, on June 8, 1916, H. Perk, Jr., secretary of defendant company, wrote to the plaintiff as follows: “I wish to advise you that the International Indemnity Company will from this date extend policies on all cars in which you may have an equity to cover any claims arising under the following conditions: . . . Third: If the conditional buyer of an automobile or any member of his immediate family should steal any automobile insured under our policies and thereby commit a felony, upon warrant being secured for the arrest of such party or parties, the company hereby agrees that your equity in any automobile insured by this company will be fully protected.” Plaintiff’s secretary testified that reliance was placed upon this letter and policies

This instrument was never recalled, and plaintiff had received no notice at the time the policy in suit here was issued, nor thereafter, that this communication was not in full force and effect.

On or about September 15, 1917, Suttle, the vendee of the car, disappeared from Los Angeles, taking the car with him. The .evidence regarding his alleged misconduct we shall discuss later. [1] Our first consideration is the contention of the appellant that the evidence does not support the finding of the trial court that the two documents mentioned here—the letter of June 8, 1916, and the policy issued June 12, 1917—constitute one contract. We think it clearly appears from the testimony of the plaintiff and his secretary that the policy was taken out in reliance upon and in consideration of the agreement made in the letter of June 8th, and that said letter became a part of each and every contract of insurance entered into between, the parties after its date unless expressly excluded from said contracts. The policy of insurance itself provides, among other things, insurance against: “Theft, Robbery or Pilferage, excepting by any person or persons in the assured’s household or in the assured’s service or employment whether the theft, robbery or pilferage occur during the hours of such service or employment or not, and excepting also the wrongful conversion or secretion by a mortgagor or vendee in possession under mortgage, conditional sale; or lease agreement, . . . ”

[2] It was the contention of the plaintiff upon the trial that the language hereinbefore quoted from the letter of June 8th was intended to obviate the exception italicized above with reference to wrongful conversion or secretion by vendee in possession under conditional sale; and that the language of said letter: “If the conditional buyer . . . should steal any automobile insured under our policies . . . your equity will be fully protected,” was intended by the parties and understood by them to cover wrongful conversion by said conditional buyer; that the word “steal” is used in its broad, general sense, and not in the technical sense of larceny. Plaintiff asked that the portion of the contract of insurance appearing in the letter be reformed to express the true intent and understanding of the parties.

Section 3401 of the Civil Code provides that in revising a written instrument the court may inquire what the instrument was intended to mean, and what were intended to be its legal consequences, and is not confined to the inquiry what the language of the instrument was intended to be. Section 504a of the Penal Code provides that every person who shall fraudulently remove, conceal, or dispose of any personal property or effects of another in his possession under a contract of purchase not yet fulfilled is guilty of

Furthermore, if the contract contained in said letter be construed as appellant desires, merely to cover a technical theft by a conditional purchaser, or, as stated by the appellant: “Only to cover a case where there was a felonious intent at the time that the automobile purchaser acquired possession,” then the owner was already protected against such a situation by the policy proper, and without the addition of the letter of June 8th, and therefore the portion of the contract contained in the letter is meaningless and useless. For the policy itself provides against theft by any and every one excepting only persons in the assured’s household or employment. There is no exception made as to theft by one having a conditional contract of purchase, and if we concede the possibility of such an offense, then no exception is made of it in the policy. The only thing that is excepted with regard to the conditional purchaser is “wrongful conversion.” Therefore, it appears that if the letter of June 8th added any protection against the actions of the conditional purchaser, it must have been by making inoperative this exception against wrongful conversion.

It may be appropriate to point out here, in answer to certain arguments made by appellant, that the finding of the trial court is that in drawing the contract between the parties to this action, it was the intention of the parties that this contract should cover and fully protect the plaintiff against the embezzlement or wrongful conversion of any automobile covered by any insurance policy issued by the defendant, and that said letter or contract of June 8, 1916, was given by defendant company to the plaintiff for the purpose and with the intention to protect the said plaintiff against wrongful conversion or embezzlement of any automobile so sold by plaintiff under conditional sales contract. This finding is sufficient to sustain the judgment, and it is immaterial whether or not the other portion of the finding to the effect that by inadvertence and mistake the word “steal” was used instead of the words “wrongful conversion and embezzlement” is technically sustained by the evidence or not. If the parties intended that the word “steal” should be used in its broad and colloquial sense and cover certain risks out of which this loss grew, that is sufficient, and it is unnecessary that the record show the parties actually intended to use the express words, “wrongful conversion,” but by mistake used the word “steal.”

Many of the other objections of the appellant are technical ones, and we shall discuss them briefly. Appellant contends-that its demurrer should have been sustained because the complaint contains two causes of action which were not separately stated. The court found, contrary to appellant’s premise upon this argument, that the letter and contract constituted one and the same contract. As before stated, we are in accord with this conclusion. [3] A complaint seeking to revise or reform a contract and also to recover upon or enforce the same states but one cause of action. (Messer v. Hibernia Sav. & Loan Society, 149 Cal. 122 , [ 84 Pac. 835 ].)

[4] Appellant also contends that the complaint does not sufficiently allege the conversion of the automobile by Suttle, and therefore fails to allege loss. The complaint alleges: “As this plaintiff is informed and believes, and therefore

[5] Appellant also contends that the complaint is insufficient because no proof of loss is pleaded. Plaintiff pleaded facts which constitute a waiver of proof of loss, and these facts were not denied by the defendant. Plaintiff alleged that on September 24, 1917, he notified the defendant in writing of the loss or disappearance of the automobile and that within sixty days from the date of the loss the defendant denied liability upon the policy upon the ground that the policy did not cover embezzlement or wrongful conversion. Appellant seeks to avoid the effect of this waiver by asserting that its denial of liability was under the policy alone, and it did not have in contemplation the letter of June 8, 1916, which was held by the trial court to be a part of the policy; that, therefore, they never denied liability under the contract recovered upon here and therefore never waived proof of loss. The answer to this contention is that the defendant was aware of all the facts and is presumed to know the law. Since the court has held that the two instruments constituted one contract, defendant’s denial of liability under the contract was a denial of liability under both instruments.

[6] Another objection of appellant is that the finding of the trial court with relation to the intention of the parties to the contract in using the word “steal” is outside of the issues made by the pleadings. This argument is made because the complaint alleged, among other things, that the de

The only other objection of the appellant which we find it necessary to discuss here is that the evidence does not justify the finding that Suttle converted the automobile to his own use and removed the same from the state of California and does now retain and conceal the same with intent to injure and defraud the plaintiff. The evidence in the case shows (and there is no evidence to the contrary) that Suttle took the automobile out of this state without the consent or knowledge of the plaintiff; that he concealed the same so that the plaintiff is unable to locate it, although he employed detectives who followed Suttle about to several cities and endeavored to locate the ear; that plaintiff demanded of Suttle either payment of the installments due or possession of the car, and this demand has not been complied with; that the payment due on September 15, 1917, the day when the automobile was taken from the state has

[8] The objection that the plaintiff should not have recovered the $126.26 paid to the detective agency in attempting to recover the automobile is met by the express terms of the policy that any act of the assured in recovering, saving, and preserving the property in ease of loss or damage shall be considered as done for the benefit of all concerned and all reasonable expenses thus incurred shall constitute a claim under this policy. The portion of the contract contained in the letter of June 8th provides for • the protection of plaintiff’s equity in the car. [9] Plaintiff’s equity in the car was the amount of the unpaid installments plus interest thereon; for the terms of the conditional contract of sale provided for the payment of interest upon all deferred payments from the date of the contract. Appellant may not, therefore, object to the allowance of such interest in the judgment.'

The judgment is affirmed.

Brittain, J., and Nourse, J., concurred.

A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on July 19, 1920.

All the Justices concurred, except Wilbur, J., and Lennon, J., who were absent.