Crown Point Iron Co. v. Ætna Insurance — 60 N.Y. Sup. Ct. 220

Majority

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CROWN POINT IRON COMPANY, Respondent, v. ÆTNA INSURANCE COMPANY, Appellant.

Headnote

Insurance policy — cancellation of, what is essential to — conditions of delivery for cancellation.

The owner of personal property, upon which a number of policies of insurance v had been issued, notified Page, the agent of one of the companies, that he desired to cancel the policies if the companies would return the pro rata premium for the unexpired term, and wrote a letter to such agent, inclosing the policy of liis company, together with other policies, stating: “I send you insurance policies on charcoal for cancellation. Our stock is nearly used up; we should he allowed for the unexpired term pro rata on amount paid.” The agent, Page, who received the policies, retained that of his own company, making no reply to the letter in which it was inclosed, and sent by mail to one Little, the agent of the other companies, the policies issued by them with a letter stating: “I inclose the following policies for cancellation as the stock of charcoal is used up. * * * Make the rebate as high as you can. * * * Please make out a bill stating the amount that you can allow on each policy for me to show to Mr. Reed, the agent of the Crown Point Company.” ,

The property having been destroyed by fire on the same evening that the last-mentioned policies were sent to Little, the owner of the property requested Page, to whom he had sent them, to telegraph for their return, which Page did, knowing of the fact of the fire, and the policies were accordingly returned by Little to the insured. Page also, after entering the word “ canceled ” on his registry, opposite the entry of the iEtna policy, returned that policy to the insured. The agents, to whom these policies were respectively sent, had authority from their respective companies to cancel policies.

Held, that the statements in the letters, in relation to the rebate, were not conditions attached to the surrender of the policies.

That as the policies contained provisions authorizing the insured to terminate them, the company retaining short rates for the time the policies had been in force, that

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such. cancellation could be made by tlie assured without any assent thereto on the part of the companies.

That such authority was also given to the assured by the provisions of section 8, chapter 110 of the Laws of 1880.

That, upon a surrender of the policies with a request for their cancellation, the insured, if payment of the rebate was refused, would have a right of action for the premium paid, less the short rate for the time which had expired.

Griffey v. New York Central Insurance Company ( 100 N. Y., 417 ) distinguished.

That, upon the receipt by Page of the policy in his company, an effectual surrender thereof took place, and that the subsequent redelivery by Page after the Are, and with knowledge of the fire, did not make the policy valid again.

Appeal by the defendant from a judgment in favor of the plaintiff, entered upon the report of a referee, in and by which he found that a policy of insurance issued by the defendant was in full force up to and at the time of a fire which took place on the 29th day of July, 1886, destroying the property insured; and that said policy had not been terminated upon surrender or canceled, and that the plaintiff was entitled to recover judgment upon the same.

The action was brought to recover upon a policy of fire insurance. The sole question was whether, before the fire, the plaintiff, the insured, had, by its own voluntary and intentional act, surrendered up to defendant, and had thus canceled, the policy.

This policy, with eleven other policies in other companies (five of which are involved in litigations similar to the present) was upon charcoal of the plaintiff. One Page, at Grown Point, was defendant’s agent. As such he had issued the policy in question. He had authority to accept policies of insurance for cancellation and to terminate insurance at the request of the insured, in accordance with the terms of their policies. Plaintiff’s policy contained this clause: “ This insurance may be terminated at any time at the request of the assured, in which case the company shall retain only the customary shorturates for the time the policy has been in force.”

Mr. Inman was the general manager of plaintiff and of another company, and lived at Plattsburgh. Mr. Reed had for three or four years been assistant general manager and had charge of certain matters at Crown Point. Mr. Inman looked after the matter of insurance.

Inman and Reed having previously visited the mines, had learned that the stock of charcoal, was greatly reduced. About

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tbe 25th or 26th of July, 1886, Reed informed Inman that they had more insurance than they had coal. Inman then told bim that if the companies would cancel them pro rata, he would cancel them all; if not, that they felt obligated to cancel some; Reed telling him that they had $12,000 to $15,000 insurance, and there was not half that amount of charcoal. According to the testimony of one witness, Inman directed Reed to return for cancellation all the policies on charcoal. The referee found that Inman directed Reed to cancel some of them.

In pursuance of that direction, and under such authority as he possessed, Reed, on the twenty-eighth day of July, wrote a letter to Page. The letter was written on paper bearing the name of the pla.int.ifF and of its several officers, among them Reed himself as assistant general manager. The letter is as follows, omitting the caption just mentioned:

“ CeowN PoiNT, July 28, 1886.

“ Geoege Page, Agent:

“ Dear Sib. — Herewith I send you insurance policies on charcoal for cancellation. Our stock is nearly nsed up. We should be allowed for the unexpired time pro rata on amount paid. The following are the policies. (Here - follow the names and amounts, etc., of the nine policies, including the HStna.) Please attend to it at once.

“ Tours,

“H. L. REED,

“ Assistant General Manager.”

Reed inclosed the policies in the envelope with the letter and sent the package to Page at Crown Point. Although Page was not the agent of the companies other than the .¿Etna, yet the policies had been received through him from Little, -the agent at Glens Falls of those companies, and Page had, as insurance broker and agent of plaintiff, procured the other eight policies.

On returning these nine policies there still remained three policies on the charcoal, viz. : In the American Central Company, the Orient Company and the Star Company, to the total amount of $2,833.34 The total amount before returning the policies was $14,000.

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Page received the letter and the nine policies July twenty-ninth at 1.30 p. m. and took out and retained the ¿Etna policy, making at that time, so far as appears, no reply to the plaintiff. Page had authority from the ¿Etna to cancel policies.

On the evening of July twenty-ninth at 10.30 the charcoal was destroyed by fire. The next morning, the thirtieth, between eight and nine o’clock, Reed called on Page, both of them having knowledge of the fire, to obtain a return of the policies. On the thirty-first day of July, Page returned the ¿Etna policy to Reed.

On the next day, or the second thereafter, Page saw Reed at plaintiff’s office and requested him to return the ¿Etna policy. Reed did so. Page thereupon entered on his registry the word “ canceled ” opposite the entry of this policy and returned the policy to the defendant company with his next monthly report.

On. the 2d of September, 1886, Page gave his check of twenty-four dollars to Reed for the annual premium, payable on return of the policy. Reed kept the check till October fifth, when he returned it to Page with a letter declining to accept it.

These are the material facts as to the ¿Etna policy. The additional facts affecting the other five policies were that on receiving the nine policies Page wrote to Little a letter July twenty-ninth, as follows:

“ Crown Point, N. Y., July 29, 1886.

“ M. B: Little, Esq.:

“ Dear Sir. — I inclose the following policies for cancellation as the stock of charcoal is used np. (Here follow the names and amounts of the eight policies.) Make the rebate as high as you can. * * * Please make out a bill stating the amount that you can allow on each policy, for me to show Mr. Reed as agent of the Crown Point Company.

“Yours, etc.,

“ GEORGE PAGE.”

This letter, containing the eight policies, was mailed by Page to Little that afternoon.

On the next morning, the thirtieth, between eight and nine o’clock, Page, having then been notified by Reed of the fire, at his request, telegraphed to Little to return all policies sent him the night before. It was Little’s impression that, about nine o’clock in the evening of

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the twenty-ninth, he went to the post-office at Glens Falls, opened his drawer there, saw the package sent by Page, opened it and saw the policies, replaced it in the drawer and went home. About nine o’clock on the morning of the thirtieth, he took the package from the post-office to his own office, read the letter of Page and laid it with other letters to be answered. About an hour or two after that he received Page’s telegram. lie then took the eight policies, inclosed them with the telegram (to save the trouble of writing a letter) and sent them by mail to Page, who received them July thirty-first, and delivered them with the .¿Etna policy to Reed. Little had authority to cancel policies of these companies. At the time when he received the telegram and sent the policies back to Page, Little had no knowledge of the fire. The 'other five policies have clauses relative to cancellation similar to that of the .¿Etna above-stated. The loss by fire on the charcoal proved to be over $4,600. After the fire Page notified the .¿Etna of the loss and in the proofs stated that the loss was $2,000. This action and the actions against five other companies whose policies were among the eight sent by Page to Little, as above-stated, were referred • to a referee, who reported in favor of the plaintiff. From his report the several defendants appealed.

A. H. Sawyer, for the appellants.

R. L. Hand and Waldo & McLaughlin, for the respondent.

It is evident that the examination by Inman and Reed satisfied them that the plaintiff had more insurance than was needed on the charcoal, and made Inman decide to reduce it largely or to give it up all together. The total amount was $14,000, and there is some indication that about $3,000 was considered to be sufficient. Certainly, Inman testifies that they had to cancel some, and would cancel all if they could do so on a full pro rata return. We cannot see, then, why Reed’s act was not fully authorized, even without reference to such authority as he may have had to act himself. He did not return all the policies. There were twelve and he returned nine. Inman does not state that he gave any direction how many should be canceled. It must, therefore, have been left to Reed’s

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judgment, who, with Inman, had examined the amount of charcoal remaining. And there is nothing in Inman’s testimony which indicates that if a part only of the policies were to be canceled, this must be done on a full pro rata return. In saying this we do not mean to imply that Reed’s act would not have been binding on the plaintiff, even if he had returned all the policies in his letter to Page. He • had been held out to the world as assistant general manager. He had procured policies for the plaintiff. He had general charge of business in the absence of Inman. And though it may have been in the power of Inman to direct Reed as to what insurance to procure, yet the evidence shows that the business as to the insurance companies was done by Reed.

Taking, then, Reed’s acts as the acts of the plaintiff in this respect, we come to his letter to Page: “ I send you insurance policies on charcoal for cancellation. Our stock is nearly used up.” Here we have a direct request that the policies be canceled, with the reason therefor, viz., that the plaintiff had not as much property as the insurance. They, therefore, wished to save something of the premium which they had paid. This was, then, a request for something which would benefit plaintiff. The next sentence is not a condition of the surrender, but is an asking for good terms. “We should be allowed for the unexpired time pro rata on amount paid.” That is, the plaintiff thinks it should be allowed pro rata. It appears that on canceling policies there is sometimes allowed a “ short rate ” and sometimes a “ ratable proportion.” By the condition in defendant’s policy, when the insurance is terminated at the request of the insured the company retains short rates for the time the policy has been in force. When by the company, it refunds ratably. The meaning seems to be that if the insured terminates the policy he pays for the time he has been insured at the rate usual for that short time. The plaintiff desired to pay only pro rata. Still that was not made a condition of the surrender. That had been decided upon by plaintiff, and the decision had been acted upon by Reed sending the policies.

Aside from the condition in these policies, it is provided by section 3, chapter 110, Laws of 1880, that any insurance company shall, at the request of the insured, cancel any policy, “ and shall return to

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said party or bis representatives, as aforesaid, tbe amount of premium paid, less tbe customary short-rate premium for tbe expired time.” Therefore, on thus surrendering tbe policies with tbe request for cancellation, tbe plaintiff, if payment was refused, would bave a right of action for tbe premium paid, less tbe short rate for expired time. Tbe plaintiff hoped that the defendant would do better than this. But the surrender of tbe .Etna policy was complete. Nothing remained to be done by plaintiff. Tbe defendant owed the plaintiff tbe amount provided by statute and might voluntarily pay more. But whether tbe defendant paid that or not, tbe plaintiff bad done in respect to tbe .¿Etna Company all that was needed. It bad given up its policy to a person authorized to cancel and bad requested cancellation. Tbe policy was no longer in plaintiff’s possession. (Train v. Holland Purchase Ins. Co., 62 N. Y., 598 .)

Tbe plaintiff urges that in order to effect a cancellation tbe insurance company must accept tbe policy, and perhaps must repay tbe premium. But this cannot be so. Tbe plaintiff bad paid tbe premium. In consideration of that payment tbe defendant had agreed to insure plaintiff for a certain time, Can it be that plaintiff could not, by some means or other, give up and surrender tbe benefit it bad thus paid for ? Suppose, after a person bad obtained bis ]3olicy, be should be satisfied that tbe company was insolvent, could be not give up or release this policy, so as to be able to procure one from a, solvent company ? Or could tbe company, byrefusing to accept bis surrender, prevent bis obtaining better insurance ? Certainly not. Whether tbe company, without some condition in tbe policy or some statute, would be obliged to return anything is a different question. Tbe plaintiff cites cases in which it has been held that, if an insurance company would cancel a policy, they must not only give notice but must return tbe premium or some proper part. (Griffey v. N. Y. Cent. Ins. Co., 100 N. Y., 417 .) But tbe position of tbe company is very different. It had bound itself to do certain acts for tbe insured, and bad received tbe consideration. It could relieve itself from tbe liability only by actually refunding tbe amount provided for, and not by promising to do so. If it desired to take away something from tbe insured, it must perform tbe condition. But tbe insured may give up what be possesses, even if the insurance company never pays back what it owes him therefor. We think,

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then, that tbe plaintifE bad effectually surrendered tbe LEtna policy on its receipt by Page, wbo bad authority to cancel. Hence no subsequent redelivery by Page to Reed after tbe fire, and witb knowledge of tbe fire, could make tbe policy valid. Sucb a redelivery was a wrongful and fraudulent act towards tbe defendant. Tbey could bardly bave thought it would change tbe rights of tbe plaintiff and tbe defendant, unless by its canceling what bad been actually done. There was no liability of tbe defendant on tbe policy at tbe time of the fire, except to return tbe proper part of the premium; and there can be no recovery in this action against tbe HCtna Company.

Tbe facts as to tbe other companies are similar. Whether we regard Page as tbe agent of plaintiff to send tbe policies to Little, or as Little’s agent to receive them, does not seem to be very material. Tbey were on their way in regular course of transmission by plaintiff’s order. Tbe referee does not find whether tbey reached Little at nine o’clock in tbe evening of tbe twenty-ninth, or in tbe morning of tbe thirtieth. At any rate, between 9 and 10 a. m. of #the thirtieth, Little received, tbe package and read tbe letter and laid it aside to be answered. We think that tbe language of Page’s letter, requesting a high rebate, is not a condition of tbe surrender. Tbe surrender was absolute. Page, considered as plaintiff’s agent (tbe most favorable view for plaintiff), mailed, by plaintiff’s request, tbe package tbe afternoon of July twenty-ninth, and before tbe fire. By that act plaintiff parted witb control of tbe policies, and did so for tbe purpose of obtaining their cancellation. That act was plaintiff’s surrender of tbe policies, because it was tbe decisive act which put tbe policies intentionally out of plaintiff’s possession, and even though tbey did not reach Little until after tbe fire, tbe surrender bad taken effect before. (Atlantic Insurance Company v. Goodall, 35 N. H., 328 .) Tbe plaintiff bad decided that it wished these policies canceled, and it at once did all it reasonably could to effect that result. It had tbe right to treat its acts as a surrender of the policies, and so bad tbe insurance companies. If this be so, then clearly tbe return of these policies by Little to Page could not give them vitality. A fraud was practiced upon Little, and on tbe companies through him, by asking tbe return of tbe policies and concealing tbe fact of tbe fire. Tbe property which tbey were

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intended to insure had already been destroyed, or partially destroyed. Even a new policy, issued in ignorance of that fact, would have been invalid, and in any case could have created no liability for such previous loss.

The judgment in favor of the plaintiff in the above-entitled action, and the similar judgments in the five other actions against other companies, are reversed, new trials granted, referee discharged, costs to abide event.

Landon and Ingalls, JJ., concurred

Judgment reversed, new trial granted, referee discharged, costs to abide event in each action.'