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ant to the leave given it by the court, and 13. EVIDENCE Omw 178(4) SECONDARY EVIthat proof was taken on the issue as to the

DENCE-LosT DEEDS. amount the bank owed the drainage district. of breach of warranty of sole ownership clause,

In action on fire policy defended on ground This is shown by the fact that the record the insured could testify as to the contents of shows that the case was heard upon the an- deeds from his son and daughter after testimony swer and cross-complaint of the bank, as that they were lost in the fire, in view of the well as the other pleadings in the case, and fact that they were executed prior to the fire,

when no motive except the perfection of sole that the court adjudicated the issue on this ownership existed. question from the proof introduced, and 4. INSURANCE Omw 328(2) - FIRE INSURANCE made a specific finding and a specific direc

CHANGE OF OWNERSHIP. tion in the decree on this question. In other

Where insured and his son and daughter words, we think the record of the proceed-daughter executed quitclaim deeds before the

purchased property on contract, and the son and ings in the chancery court shows that that deed from the seller was made, the simultaneous court expressly adjudicated the question of passing of the title from the seller to insured the amount due the drainage district by the and his son and daughter and from them to in

sured did not change the character of insured's bank. If the drainage district had preserv- title from sole and unconditional ownership. ed its exceptions to the action of the court 5. INSURANCE C 653 – FIRE POLICY - Evi- . in passing upon this question in the equity DENCE-ADMISSIBILITY. suit and had taken an appeal from an ad-ground of breach of warranty of sole ownership

In action on fire policy defended on the verse decision of the chancellor, it may be clause, insured's son, to whom with his father that, under the principles of law above de-a deed was made, could testify that he had cided, this court would have reversed the de- mailed a deed to his father of his own interest. cree. No appeal, however, was taken from 6. TRIAL Om253(5)—INSTRUCTIONS IGNORING that decree. Inasmuch as it expressly ad

ISSUE. judicated the questions now at issue, the of breach of warranty of sole ownership clause,

In action on fire policy defended on ground court in the instant case properly sustained requested instruction concluding with direction the bank's plea of res adjudicata.

for defendant if insured's interest was not as The decision of the chancellor in the equi- stated in the policy was properly refused as igty case was a final adjudication of the only noring effect of insurance agent's knowledge as question which is sought to be determined by 7. INSURANCE Cwm 668(2)—FIRE POLICY-QUESthis appeal. In the case of Church v. Gallic,

TION FOR JURY. 76 Ark. 423, 88 S. W. 979, the court quoted While an insurance agent may in some cirwith approval from Black on Judgments the cumstances become the agent of the insured, in following:

canceling the policy as directed by the insurer

he acts for the insurer, so that it was proper “The fact that a judgment was obtained after to submit to the jury the question whether his the commencement of the suit in which it is agency for insured was sufficiently broad to pleaded does not prevent its being a bar. It is include within its apparent scope the right to acthe first judgment for the same cause of action cept notice of cancellation which the agent himthat constitutes an effective defense, without self gave. regard to the order of time in which the suits were commenced. Hence it follows that a prior

8. PRINCIPAL AND AGENT Om 70 CONFLICT

OF INTERESTS. judgment upon the same cause of action sustains the plea of a former recovery, although the

The principle that one cannot serve two judgment is in an action commenced subsequent masters whose interests are antagonistic applies, , to the one in which it is pleaded.”

or by necessary implication; otherwise, where To the same effect, see Quellmalz Lbr. & the interests are conflicting, the agent acts only Mfg. Co. v. Day, 201 S. W. 125.

for the principal whose interests he promotes, or It follows that the judgment must be af- in whose behalf he acts. firmed.

9. INSURANCE CO 668(2)-POWERS OF AGENTAGENCY FOR INSURED.

Authority of an insurance agent to keep the (134 Ark. 52)

property insured for the policy holder did not, GEORGIA HOME INS. CO. V. BENNETT. as a matter of law, constitute him the holder's (No. 314.)

agent to cancel the insurance without notice.

10. APPEAL AND ERROR Omn1169(1) RE(Supreme Court of Arkansas. April 22, 1918.)

VERSAL.

That the insurance company might maintain 1. INSURANCE C264(1)-FIRE INSURANCE

action against its agency in the event that insurOWNERSHIP CLAUSE.

Requirements of fire policy that the insured ed recovered did not require reversal of the judgbe the sole and unconditional owner and agree

ment against the company, because the agents ment not to change ownership are valid and were not made parties, where no suit was then binding, and are warranties the breach of which pending against them, and, if it had been, there

could have been no consolidation, since the would cancel the policy.

right to recover in each of the cases depended 2. INSURANCE Omw 372, 378(1) – FIRE INSUR- upon different principles of law.

ANCE CHANGE OF OWNERSHIP CLAUSE
WAIVER.
Fire policy requirements of sole and uncon: Geo. R. Haynie, Judge.

Appeal from Circuit Court, Clark County; ditional ownership inserted for the insurer's benefit may be waived by it, and will be con- Action by T. J. Bennett against the Georsidered waived, if the issuing agent had knowl- gia Home Insurance Company. Judgment edge at the time that the insured's interest for plaintiff, and defendant appeals. ALthough insurable, was not sole and unconditional.

firmed.

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For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

On January 1, 1910, the Elk Horn Bank &, 17, 1915, received the deed which named him Trust Company contracted to sell to T. J. and his son and daughter as grantees, but at Bennett and H. G. Bennett a certain house the time of the delivery of this deed he had and lot for $5,800, upon which a cash pay- in his possession the quitclaim deeds from ment was made and the balance of purchase his son and daughter. money was to be made in 106 payments. It It is undisputed that the agent of the inwas provided in the contract of sale that surance company knew of this contract of when only $3,000 of the purchase money re- purchase, and knew that part of the purchase mained unpaid the bank would convey the money had not been paid; but the company property by warranty deed with lien reserv- denies that its agent knew that any one was ed, and this $3,000 was to be paid in annual concerned in the transaction except T. J. Benpayments of $1,000 each. Between the date nett alone, and it says the policy was void of that contract and January 5, 1915, T. J. because there was a change of ownership Bennett had Leslie Goodloe, manager of the after its issuance and because T. J. Bennett United Fire Insurance Agency, to insure the was not the sole and unconditional owner; house in the Ætna Insurance Company for the policy imposing requirements in both $5,000. To that policy there was attached a these respects. It is also said that prejudimortgage clause in favor of the bank. Oncial error was committed at the trial when January 5, 1915, T. J. Bennett had Goodloe the court permitted T. J. Bennett to testify write the policy here sued on covering the that he had received the letter from his son house for $1,500 and the personal' property disclaiming any interest in the land, and also therein for $500., Goodloe at the time knew in testifying that he had received the letter that $3,000 of the purchase money was un- inclosing the quitclaim deeds; the basis of paid when this policy issued. The house and the objection being that this testimony was its contents were totally destroyed by fire on hearsay, as the witness had not read the September 1, 1916, and judgment was recov- deeds and his knowledge in regard to them ered against the insurance company in the was based upon his recollection of what his suit brought on the last-mentioned policy. A wife had read to him. Bennett stated that reversal of this judgment is sought on the he received the deeds through the mail with grounds that Bennett was not the sole and the accompanying letter, and that his wife unconditional owner of the property, con- read them to him, and the deeds were also trary to the requirements of the policy that lost in the fire without having been recorded. such should be the case, and also that the In March, 1916, the company directed policy had been canceled prior to the fire. Goodloe to cancel this policy and all other

The bank's contract to convey was made policies it had in force under his agency. with T. J. Bennett and his son H. G. Bennett, This was not done, and on July 1st a special but an understanding existed between the fa- agent of the company was sent to Goodloe to ther and the son that the deed should be have the policy here sued on and all other taken in the name of the father alone, and policies issued by that agency canceled, and that the father should be the sole owner of at that time the agency of Goodloe and the the property. T. J. Bennett was practically United Fire Insurance Agency had been reblind, and his son had removed to Oklahoma voked, and the company had withdrawn from and had there secured permanent and profit- Arkadelphia and vicinity and it had written able employment, and in 1910 or 1911 wrote no new business there after July 1; 1916. his father that, while he intended to assist The policy sued on was taken up by Goodloe in meeting the payments, he expected to do so on July 24, 1916, and canceled and returned without thereby intending to acquire any into the home office of the company as a cancelterest in the property. This letter was de- ed policy. Goodloe testified that after issustroyed in the fire, but both father and son ing the policy he placed it in a vault at the testified to the fact that it was written. bank to which only representatives of the

When sufficient payments had been made United Fire Insurance Agency had access. to entitle Bennett and his son to a deed un- Goodloe also testified that Bennett had spokder their contract, Bennett wrote his son and en to him a number of times in regard to a daughter named Lois that he had had a keeping his property insured, and had stated deed prepared by the bank to the three Ben- to witness that he was expecting witness to netts. This deed recited the execution of look after his interests in this respect. It is notes by Bennett and his son for the unpaid argued that this testimony constituted Goodpurchase money, and the notes there mention- loe the agent of Bennett to receive notice of ed were executed by the son, but in the letter cancellation of the policy, and that the to his father in which the notes were return- knowledge of Goodloe fulfilled the requireed there were also inclosed quitclaim deeds ment of the policy that notice of an intention from the son and daughter to their father. to cancel be given five days before the cancelThe daughter had no interest in the transac-lation occurs. The testimony in regard to tion except such as resulted from the use of Goodloe's agency for Bennett is not undisputher name as a party grantee in the deed. Up-ed, however, as it was shown by Goodloe's on the receipt of these notes T. J. Bennett de- own testimony that he had considerable nego

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this policy and only issued it at last when he, nett's title from a sole and unconditional received directions from Bennett to that ef- one. The quitclaim deeds were transmitted .fect. In that connection Goodloe testified to Bennett and took effect upon the executhat Bennett stated the cost of the building tion of the bank's deed, and the deed from had been $8,500, but that he did not want any the bank became effective on its delivery, so additional insurance written until some in- that the title of the son and daughter passed spector of the company had stated that the from them to their father at the instant it property would carry additional insurance, vested in them under the deed from the and that finally Bennett gave directions for bank. writing the policy when Goodloe assured We think under the circumstances stated him that it would be satisfactory with the that the testimony of T. J. Bennett in recompany to issue the additional policy with gard to the deeds and their loss was not inout inspection. Other facts will be stated competent. But there can be no question as in the opinion.

to the competency of the testimony of. H. C. Slade & Swift, of Columbus, Ga., and Mc- Bennett as to the execution of the deeds and Millan & McMillan, of Arkadelphia, for ap- their delivery by mailing them to T. J. Benpellant. R. E. Stephenson, of Hugo, Oki., nett, and, as has been stated, the verdict of W. E. Atkinson, of Clarksville, and Hardage the jury shows that this testimony was cred& Wilson, of Arkadelphia, for appellee.

ited by them.

[6] Complaint is made of the refusal of SMITH, J. (after stating the facts as the court to give an instruction numbered above). [1-5] The requirements of the poli-4, which dealt with the breach of the condicy in regard to sole and unconditional own- tion of the policy in regard to sole ownerership and change of ownership are, of ship. But the instruction concluded with course, valid and binding, and are warran- the following statement: "Or if the interest ties the breach of which would cancel the of the insured in the property be not truly policy. But inasmuch as they were inserted stated therein, then you will find for the in the policy for the benefit of the company, defendant." This instruction was properthey could be waived by the company, and ly refused because it ignores the effect of will be held to have been waived if the agent the agent's knowledge in regard to the title, who issued the policy had knowledge at the and is in conflict with other instructions time that the insured's interest, which, of which presented the view that an insurable course, must be an insurable one, was not interest would support a recovery if the nasole and unconditional, Westchester Fire ture of that interest was known to the agent' Ins. Co. v. Smith, 128 Ark. 92, 193 S. W. 275. at the time he issued the policy. But if the testimony of Bennett and his son An instruction numbered 3 was given at is credited, Bennett was the owner of the the request of the company, but it was modequitable title when he caused payments to ified by the court by inserting the phrase, be made on the purchase price in a sum suf- “including the authority to cancel policies," ficient to entitle him to a deed pursuant to and exceptions were duly saved to this modthe agreement with his son that such should ification. As modified the instruction read be the effect of these payments. The only as follows: persons who could know whether such an

“You are instructed that under the terms of agreement had been made were the father the policy sued on herein, the defendant insurand the son, and they both so testified. We ance company had the right to cancel the policy

at any time by giving to the insured, plaintiff, think no prejudicial error was committed in five days' notice of such cancellation; you are permitting Bennett to testify as to his rec- further instructed that if the plaintiff had an ollection in regard to the deeds read to him arrangement, or an agreement with the United by his wife. The testimony is that the deeds which either was to keep the property of plain

Fire Insurance Agency or with Mr. Goodloe by were lost in the fire and could not be pro- tiff insured and giving said agency or Mr. Goodduced, and if they were ever executed at all loe the power to select the companies by which their execution occurred prior to the fire to all matters pertaining to his insurance, in

said property was to be insured, and to attend when no purpose would have been served cluding the authority to cancel policies, then thereby except to effectuate the agreement you will find that plaintiff constituted the said that the father should have the sole owner- insurance agency or Mr. Goodloe his agent and ship. The son testified to the execution of pany to the said agency or Mr. Goodloe of the

that notice from the defendant insurance comthese deeds by himself and his sister, and if cancellation of the said policy was notice to the they were executed they were intended to plaintiff, and if you further find that defendant become effective, and did become effective, Mr. Goodloe to cancel this policy sued on, and,

company notified the said insurance agency or as soon as the bank's deed was executed. in compliance with that notice, the said insurUnder the instructions given no recovery ance agency or Mr. Goodloe did, acting for could have been had unless the jury found plaintiff, deliver said policy and cancel same, that these two quitclaim deeds were execut- then you will find for the defendant.” ed. The simultaneous passing of the title [7] It is apparent that the purpose of this from the bank to Bennett and his son and instruction was to present the view that daughter and from the son and daughter to Goodloe could be the agent of both the insurBennett did not change the character of Bened and the insurer, and that notice to him would be notice to Bennett of any fact in- [10] It is finally insisted that error was cluded within the scope of the agency. We committed in refusing to make Goodloe and have held that the insurance agent may act the local agency represented by him parties as the agent of the insured in waiving no-to the suit on the theory that, if the policy tice of cancellation where a new policy was was not properly canceled in view of the insubstituted for the one canceled ; authority structions given to that effect, such gross for that purpose having been conferred by negligence would render the agency liable the insured. Allemania Fire Ins. Co. v. over to the company. Such may be the case, Zweng, 127 Ark. 141, 191 S. W. 903. And but we cannot decide that question here, as there was testimony in this case to warrant | the necessary parties are not before us. But the submission of the question to the jury if this be true, it does not follow that the whether Goodloe was not the agent of Ben- judgment against the company must be renett for the purpose of receiving the five versed because that company may call its days' notice of intention to cancel the policy. agent to account for infidelity or negligence. But the testimony is not so undisputed that No suit was pending at the time by the comthe jury must necessarily have found that pany against its agents, but had there been, Goodloe was the agent of Bennett for all no prejudicial error would have been compurposes. There was testimony from which mitted by refusing to consolidate that case the jury might have found that Goodloe had with this one, as the right to recover in each authority to issue the policy only after re- of the cases depends upon wholly different ceiving directions from Bennett so to do, principles of law. and that if any agency existed as between Finding no prejudicial error, the judgment Bennett and Goodloe the agency was special is affirmed. and not so general as to constitute him an agent for the purpose of both giving and

(134 Ark. 564) receiving notice of the cancellation.

BONNER v. CROSS COUNTY RICE CO. Here a conflict of interests arose as be

et al. (No. 336.) tween the insurer and the insured. It be

(Supreme Court of Arkansas. April 29, 1918.) came to the interest of the insurer to order

1. BONDS mm 58 the cancellation of the policy, and it ordered

RELEASE OF PROPERTY

CONSTRUCTION. that action taken. It was to the interest of

Where a company suing to confirm title to the insured that the policy be continued in lands obtained a favorable construction of the force. In the case of a conflict of this char- contract whereunder it claimed, so that it had acter Goodloe would be the agent of the prin-judgment, by a clause of a supersedeas bond

no occasion to execute bond to supersede the cipal in whose behalf or for whose advantage reading that in consideration of one dollar, and he acted, unless, indeed, a general agency the other consideration mentioned to release any existed sufficiently broad in its scope to au- and all claim of a defendant to the title of any

of the lands, the bondsmen bound themselves in thorize him to act even where the interests the sum of $23,000, the value of defendant's of his principals conflicted. It was not im- interest in the lands, as valued by him, to perproper, therefore, for the court to submit to form the judgment by paying to defendant any the jury the question whether Goodloe's sum which might be decreed to him and declared

a lien on the lands, the defendant released all agency for Bennett, if one existed, was suf- claim to title in the lands which might be adficiently broad to include within its apparent judged to him in consideration of the personal scope the right to accept the notice which he, liability of the bondsmen to pay him the value, himself, gave of the cancellation of the pol- 2. Bonds am 58-RELEASE OF LAND-EFFECT.

not to exceed $23,000.

Om icy.

In suit to confirm title to lands, it was im[8, 9] The principle that one cannot serve proper to charge defendant with expenses and two masters whose interests are antagonistic expenditures pertaining to the lands after the applies, unless the authority so to do is date of the supersedeas bond whereby his equi

. given expressly or by necessary implication; table interest passed to the plaintiff. otherwise, where the interests are conflict- Appeal from Cross Chancery Court; Jno. ing, the agent acts only for the principal E. Martineau, Chancellor. whose interests he promotes or in whose be- Suit by the Cross County Rice Company half he acts; and it is not true as a matter against A. W. Bonner and another. From of law that Goodloe's „authority to keep the the decree, defendant Bonner appeals. Reproperty insured, of itself, constituted him versed, and remanded for further proceedBennett's agent to cancel the insurance and ings in accordance with the opinion. leave the property uninsured without notify- Brundidge & Neelly, of Searcy, for appeling his principal that he had done so, and lant. Mann, Bussey & Mann, of Forrest it was not therefore prejudicial or improper City, for appellees. to submit to the jury the question of the extent of Goodloe's agency in this respect. HUMPHREYS, J. This cause was before Johnson v. North British & Mercantile Ins. the court for consideration on former appeal, Co., 66 Ohio St. 6, 63 N. E. 610; Body and and is reported at 113 Ark. page 54, 167 S. Another v. Hartford Fire Ins. Co., 63 Wis. W. 80. The original pleadings in the case 157, 23 N. W. 132; Edwards v. Sun Ins. Co., were fully set out in the statement of the 101 Mo. App. 45, 73 S. W. 886.

court in the former opinion, so we deem it unnecessary to set them out again. The , and described, but the same shall in no way afcourt was called upon at that time to de- fect the rights of the said A. W. Bonner to bring termine whether the contract for the pur- breach of contract:

suit against said individuals for damages for chase and sale of the land entered into be- "Now, therefore, know all men by these prestween S. D. Johnston, A. W, Bonner, and C. ents: That the Cross County Rice Company, a L. Sharp gave Bonner an interest in the corporation, as principal, and S. D. Johnston,

F. D. Rolfe, J. L. Hare, B. F. Hamilton, J. O. lands, or merely in the profits after the Hurt, E. L. 'Burke, and O. N. Killough, for and · lands were sold. The contract was constru- in consideration of the sum of $1 to us cash in ed as giving the three parties a joint inter-hand paid and the other consideration above est in the property. It was held that by the said A. W. Bonner to the title to any of the

mentioned to release any or all claim of the terms of the contract Bonner acquired an lands above mentioned, do hereby bond ourselves equitable interest in the lands, and that un- in the sum of $23,000, the same being the value der the allegations of the bill Johnston held of the interest in said lands as valued by the the legal title in trust for the benefit of the court in this cause by paying to the said A.

said A. W. Bonner, to perform the judgment of himself and two associates. The trial court W. Bonner any sum or sums which may be had construed the contract as giving Bonner decreed to him and which shall be decreed to be an interest only in the profits from the sale a lien upon the above lands.

"Witness our hands this 19th day of July, of the lands, and on account of the erroneous 1913." construction placed upon the contract by Bonner prayed that the signers of the the trial court the decree canceling the con- bond be made parties so that a personal tract and quieting the title in the Cross judgment might be rendered against them County Rice Company was reversed, and for the value of his interest in the lands. remanded for further proceedings not incon- Answers were filed by all the parties, denysistent with that opinion. Upon the remanding the material allegations in the original of the case, answer was filed by the Cross and the amended cross-bill, and it was allegCounty Rice Company, denying all the mate ed that Bonner still owned an undivided rial allegations in Bonner's cross-bill, and one-third interest in the lands, subject to alleging that the value of the land was in the payment of advances for purchase monsufficient to liquidate the liens for purchase ey, taxes, etc., and that the bond did not money, interest, and taxes, and requesting have the effect of substituting the personal the sale, of the lands for that purpose. liability of the bondsmen for his interest in Thereupon Bonner filed an amendment to the lands. The answers collectively set out his cross-bill, alleging that the Cross Coun- the amounts expended in the purchase of ty Rice Company and certain of its direc- the property, including interest, expenses, tors and stockholders, naming them, being and taxes; also set out the amounts that desirous of selling said real estate free had been received for the lands sold, and refrom his claim, bound themselves by bond quested that the lands be sold to pay the to pay him the value of such interest as he amounts advanced by Johnston, as purchase might have in the lands, to be thereafter money, for taxes, expenses, etc., and that if determined by the court, in consideration

any surplus remained that same be divided, of which he released his interest in the prop-one-third to Bonner and two-thirds to the erty.

He made the bond a part of his cross-Cross County Rice Company. The court bill. The bond is as follows:

heard the cause upon the pleadings, exhibits "Whereas, in the above-entitled cause A. W. Bonner claims to have an interest in the fol: thereto, an agreement or stipulation showing lowing described lands, to wit: All section the amounts advanced by Johnston on the twenty-five (25); east half of section twenty-six lands on April 23, 1910, and the evidence (26) ; northwest quarter of section twenty-six adduced at the trial, from which he found

southwest quarter of section twenty-nine (29); that the sale made by S. D. Johnston, on the east half of the northwest quarter of section 11th day of July, 1912, to F. D. Rolfe, was twenty-nine (29) ; east half of the southeast void, and that the conveyance from F. D. quarter of section thirty (30) ; east half of sec-Rolfe and wife, on the 30th day of July, tion thirty-one (31); all of section thirty-two (32); and the north half of the north half of 1912, to Cross County Rice Company, was section thirty-five (35); all being in township void in so far as the same undertook to nine (9) north, range one (1) east, and situated convey the interest of A. W. Bonner in said in Cross county, Ark.; and whereas, a decree has been rendered in this cause by the chancery lands; that A. W. Bonner owned an undividcourt at the May term, 1913, adverse to the ed one-third and the Cross County Rice Comclaim of the said A. W. Bonner, said decree pany two-thirds interest in the unsold lands, holding that the said A. W. Bonner has no in- subject to the mortgage lien in favor of the terest in the said above-described real estate, from which holding the said A. W. Bonner has Missouri State Life Insurance Company, and prayed an appeal to the Supreme Court; and to a lien for $2,894.35 in favor of S. D. Johnwhereas, it has been agreed between the parties ston for money advanced by him for the purhereto that, upon the making of a bond signed by the plaintiff and all the stockholders there- chase of the lands and expenses and taxes of, the said lands above described be released in holding same. Based upon the findings, from any claim of the said A. W. Bonner, and a decree for the sale of the unsold lands was that in case of reversal of the decree herein he entered, subject to the mortgage of the Mis

to claim which the said A. W. Bonner et al. may souri Life Insurance Company, for the purhave against the said lands herein mentioned pose of first paying S. D. Johnston for ad

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