Baumgartel v. Providence Washington Insurance — 39 N.Y. St. Rep. 627

Majority

p. 627

L. H. Baumgartel, Resp’t, v. The Providence Washington Ins. Co., App’lt.

(Supreme Court, General Term, Third Department,

Filed July 11, 1891.)

Headnote

Insurance (eiee)—Other insurance—Waiver of teems by agent.

Defendant’s policy prohibited other insurance under penalty of • forfeiture unless by consent endorsed therein, and also provided that no officer of the company could waive any. conditions of the policy, unless by endorsement of such waiver. Plaintiff met the agent in the street and informed him that he had $1,000 additional insurance, and the agent replied, “All right, I will attend to it,” but failed to do so before the fire-

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occurred. Held, that it was equivalent to a promise to endorse the proper consent upon the policy, upon which plaintiff had the right to rely, and defendant was liable upon the policy.

(MXyham, J., dissents.)

Appeal from a judgment entered upon the verdict of a jury in favor of the plaintiff, and from an order denying a motion for a new trial on the minutes of the judge at the trial.

I. N. Ames, for app’lt; Dudley & Thorn, for resp’t.

—The plaintiff did obtain other insurance upon this property after the date of the policy issued to him by defendant. Such subsequent insurance made this policy void if the defendant’s consent thereto was not endorsed upon this policy, unless the defendant waived the endorsement, or so acted as to be equitably-bound to make the endorsement, or be estopped from taking advantage of the fact that it was not made.

The plaintiff, after obtaining the subsequent insurance, told the defendant’s agent that he had obtained it The agent, then being upon the street, replied to the plaintiff, “All right, I will attend to it.” He failed to attend to it before the fire occurred, and now the defendant claims that that declaration of its agent under the terms of the policy has no effect. I think it was equivalent to a promise to endorse the proper consent upon the policy, a promise upon which the plaintiff had the right to rely, and did rely upon, and which the defendant cannot now repudiate to its own gain and the plaintiff’s loss, and which the defendant is estopped to refuse to perform, and could be compelled specifically to perform, if necessary, but since no such circuity is necessary the law will re.gard as done what the defendant ought to have done and will declare the rights of the plaintiff accordingly and hence hold the present policy valid. Walsh v. Hartford Ins. Co., 73 N. Y., 5 , is •cited in opposition. But in that case the agent performed all he promised to perform; the plaintiff’s misfortune consisted in relying upon the supposed legal effect of the full performance of the promise and he was mistaken in that respect.

It is not quite correct to call the transaction between the plaintiff and defendant’s agent a waiver, since that could, under the terms of the policy in respect to further insurance, only be made in writing; but the agent had the power to make the necessary •endorsement in writing and consequently he had the power to make the preliminary oral executory agreement that he would make it; an agreement which must be enforced, or regarded as enforced, in order to prevent a failure of justice. But as it is the duty of the court to declare the legal effect of the transaction upon the lights of the parties, and as it practically amounts to the same result whether called one thing or another, no error to the prejudice of the defendant was committed by the court in speaking of it as a waiver.

Evidence was given tending to show a waiver of proofs of loss within the time fixed by the policy.

The policy being valid, and a loss having occurred, subsequent proceedings are mere procedure to ascertain the amount due plain

Dissent

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tiff upon the policy, and the consent of the parties may regulate it, notwithstanding specific regulations in the policy. The plaintiff acted as defendant consented he might, and defendant cannot now withdraw that consent to plaintiff’s injury.

The judgment should be affirmed, with costs.

Learned, P. J., concurs.

—This was an action upon afire insurance policy for $1,000, divided as follows: $700 stock of clothes, trimmings and manufactured garments, and $300 on sewing machines, tools, fixtures, wearing apparel, beds, bedding, etc., issued by the defendant on the 26th day of September, 1887, for one year. The policy contained several conditions, among which are the following, under which questions arise in this action:

First. A condition prohibiting other insurance, without the consent of the defendant endorsed on the policy.

Second. Either party has the right to cancel the policy on giving the other party five days’ notice before the cancellation took effect.

Third. Proof of loss must be given by the insured to the company within sixty days after the fire, unless the time is extended by the company in writing.

Fourth. The policy provided that there can be no waiver of any of its conditions except by Written agreement endorsed thereon or added thereto.

On the 12th of April, 1888, the plaintiff procured from another insurance company a policy of insurance for $1,000 on his stock of clothes and trimmings, materials and supplies, used in and incident to his business as a merchant tailor, to run for one year from that date. On the 15th day of August, 1888, a fire occurred which damaged or destroyed the property covered by the policy issued by the defendant.

On the 15th day of January, 1889, the plaintiff served upon defendant papers purporting to be proofs of loss and defendant referred them to the local agent F. E. Morton, and notified plaintiff of that fact, reserving all rights under the policy. On the 28th of January, 1889, this agent of the defendant wrote plaintiff declining to accept them as proof of loss, on the ground that they had not been served within sixty days after the loss, and that •they were imperfect and incomplete, and in that communication stated that he held them subject to the plaintiff’s order. On the conclusion of the plaintiff’s evidence and also at the conclusion of the whole evidence in the case the defendant moved for a dismissal of the complaint upon the ground that the plaintiff had violated the terms of the policy, in procuring further insurance without the written consent of the defendant and in failing to serve proof of loss within the time fixed in the policy; which motion was denied by the court and the case submitted to the jury, who found a verdict for the plaintiff.

The policy contained this clause relating to further insurance:

“ This policy unless otherwise provided by agreement endorsed hereon, or added hereto, shall be void if the insured now has or

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shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy." • It seems to be clearly established in the case that the plaintiff did procure other insurance on this property or some portion of the same, and that the consent of the defendant was not endorsed in writing on this policy; this was a valid provision in the policy and one which the defendant had a right to incorporate in it, and to enforce as a part of the contract, and unless-the company by some valid act has waived this condition, its violation by the plaintiff is such a breach as to prevent a recovery in this action on the policy. Allen v. The German-American Ins. Co., 123 N. Y., 6 ; 33 N. Y. State Rep., 216. The plaintiff insists-that this condition was waived by the oral interview had between, the plaintiff and the defendant's agent.

That interview is given by the plaintiff in his testimony* as follows : “ I came out of my office and was on my way to the post-office ; I saw Mr. Ufoung (defendant’s agent), at the corner talking with another gentleman; I walked up to him and said, I have-another insurance out, of $1,000; as I said that he turned tome slightly and said: “All right I will attend to it.”

In examining whether the agent could waive the condition of this policy, we must also look at the condition contained in the last paragraph before its attestation clause, which reads as follows : “ This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements as may be endorsed hereon, or added hereto, and no officer, agent, or other representative of this Company shall have power to waive any provisions or conditions in this policy, except such as may by the terms of this policy be the subject of agreement endorsed hereon or added hereto, and as to such provisions and conditions no officer, agent, or representative shall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting-the insurance under this policy exist, or be claimed by the insured unless so written or attached.” The case at bar is in many respects like Pechner v. Phoenix Ins. Co., 65 N. Y., 195 ;• and the learned counsel for the plaintiff cites that as an authority in support of bis contention here. But it does not appear in that case that the policy contained an express prohibition upon all the officers and agents of the company prohibiting them from making any waiver or consent, nor does that case proceed upon the ground of any disability of the agent to contract or waive the conditions of the policy, but rather upon the-ground that as general agent of the company his acts as to the-policyholder were deemed to be the acts of the company.

So, also, in the case of Parker et al. v. Arctic Fire Ins. Co., 59 N. Y., 1 , the general agent of the company who issued policies-renewed the policy with knowledge of the increased risk, and his knowledge was deemed that of the company; and having authority to issue or renew policies with a knowledge of the risk, he and the insured could waive the condition that a statement o£

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the increased risk must be in writing. The rule that the principal is bound by the acts of its agent within the general scope of his authority, and as to third persons within the apparent scope of his authority, is too elementary to require the citation of authorities. But can that rule be carried to the extent that an agent may bind the principal by his acts when both the agent and the party with whom he contracts have notice that the agent is expressly prohibited from making the contract, or waiving a condition in it? We think not. While it is true that knowledge of the agent is deemed to be knowledge of the principal, yet that rule does not go to the extent that knowledge of the agent amounts to consent of the principal, especially when the agent is expressly prohibited from giving consent that will bind the principal. In Walsh v. Hartford Fire Ins. Co., 73 N. Y., 5 , it was held that a principal is only bound by an act of his agent in excess or abuse of his authority when a third person, believing, and having a right to believe, that the act was within the authority, has acted, or refrained from acting, in reliance thereon, and would sustain damage if the act of the agent was not considered that of the principal. In this case, Andrews, J., in delivering the opinion of the court of appeals, uses this language: “ The company could itself dispense with the condition by oral consent as well as by writing * * * 19 N. Y., 305 ; and Carpenter, unless especially restricted, would have possessed, in this respect, the power of the principal. But the policy contains the provision that no agent of the company shall be deemed to have waived any of the terms or conditions of the polic)r unless such waiver is endorsed on the policy in writing. This is a plain limitation upon the power of the agent, and can mean nothing less than that agents shall have no power to waive conditions except in one mode, viz., by an endorsement on the policy.

“ The plaintiff is presumed to have known what the contract contained, and the proof tends to the conclusion that this provision was brought to his notice. He saw fit, however, to accept the assurance of the agent that an entry in the register was sufficient. It was difficult to see how, upon the law of contracts and agency, the plaintiff can recover. The entry in the register was. not an endorsement on the policy. The oral contract was an act in excess of the known authority of the agent. The provision was designed to protect the company against collusion and fraud and the dangers and uncertainty of oral testimony. The case seems a hard one for the plaintiff, but the court cannot make contracts for parties; nor can they dispense with their provisions. ”

Applying the doctrine of this case to the one at bar, it is difficult to see how, upon the evidence as it stands, the plaintiff can recover. If we assume that the condition in this policy was not waived, then its terms have been violated by the plaintiff in a-material part which the court cannot disregard and which, by the terms of the policy itself, renders it void. If we undorAke to find that its provisions have been waived we are met with the utter inability of the agent to effect such waiver, within the very letter of the policy. In any aspect of the case we think as the

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evidence stood the learned trial court erred in not dismissing the complaint on the motion of the defendant. This conclusion makes it unnecessary for us to examine in detail the other questions raised by the defendant as to the sufficiency of the proof of loss. But as the dealings in that regard were .with the company directly, and by them referred to their agent, it may be doubted whether by not writing them at once, or calling attention to the claimed defect, they did not waive the question of delay in the presentation of such proofs. But as a determination of that question is rendered unnecessary by reason of the view we have taken of the other questions we refrain from determining the question-raised as to proof of loss. The judgment, I think, must be reversed upon the other question.

Judgment affirmed, with costs.