Liddle v. Market Fire Insurance — 17 N.Y. Super. Ct. 179

Majority

p. 179

Richard Liddle, Plaintiff and Respondent, v. The Market Fire Insurance Company of the City of New York, Defendants and Appellants.

Headnote

Although a poliey'of insurance for one year upon goods in one part of a building provides that if any person insuring shall make any misrepresentation or concealment, or if the budding' be occupied in any way so as to render the risk more hazardous than at the time of insuring, the insurance shall be void; and also that the insurance may be renewed for a further term, the risk not being changed, if the premium be paid and indorsed; and then declares that “ all insurances, original or renewed, shall be considered as made under the original representation in so far as it may not be varied by a new representation in writing, which in all cases it shall be incumbent on the insured to make, where the risk has been changed either within itself or by surrounding and adjacent buildings.”

1. Held, nevertheless, in an action on the policy, (the same having been renewed after a portion of the building had been appropriated to a specially hazardous use,) that parol evidence was competent to show that at the time of the application for renewal the insured verbally communicated to the Secretary of the Insurance Company that such change in the risk had taken place. And also held, that the renewal after such verbal communication was a waiver of the provisions above recited. (Woodruff, J., dissented.)

2. Where after a communication had been opened between the store, which contained the insured goods, and an adjoining store, then hired by the insured for the purposes of his business, the following indorsement was made on the policy: “ October 3d, 1855. The communication made with adjoining stores does not prejudice this insurance.” Held, that such indorsement did not operate to extend the insurance so as to cover or protect any goods in such adjoining store; and also that parol evidence to show that the parties intended by such indorsement to extend the insurance to such goods was inadmissible.

(Before Slosson, Woodruff and Pierrepont, J. J.).

Heard, October 7th, 1858;

decided, February 19th, 1859.

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This action came before the Court by appeal from the judgment rendered for the plaintiff on a verdict in his favor for $2,112. The action was tried on the 21st day of April, 1858, before Mr. Justice Slossou and a jury.

The complaint of the plaintiff prays judgment .for $2,000 and interest, being the amount insured by the defendants by policy, dated December 28th, 1856, on the plaintiff’s “stock, as a house and kitchen furnisher and dealer in stoves, manufacturer of tin and sheet iron ware; on his store fixtures, furniture and signs; on his tools appertaining to his business as manufacturer aforesaid; all contained in the premises occupied by him in the westerly end of the brick building known as City Central Hall, situate on the corner of Fulton avenue and Elm place, city of Brooklyn,’’ averring a loss by fire during the period of insurance exceeding that sum, proofs of loss, &c., &c.

The answer averred that the insurance was made by a policy dated December 28th, 1854, which was renewed for one year December 28th, 1855, and again for one year December 28th, 1856, by certificates of renewal. It denied that the plaintiff had lost by the fire the alleged amount of goods in the premises covered by the policy, and averred that the goods being at the time of the fire in that particular store were of small amount; and it further averred that when the policy was executed the building described therein was not in any part of it occupied for extra hazardous or specially hazardous purposes, but before the last renewal the building was put to a 'specially hazardous purpose, and the risk greatly increased by the use thereof for a bakery, of which, at the time of the last renewal, the defendants were ignorant ; and that the plaintiff, in violation of the conditions annexed to the policy, failed to give notice of such increase of the risk, and the alleged fire in fact originated in the said bakery. The other grounds of defense are not material to the case as considered on the appeal.

On the trial the plaintiff read the policy and certificates of renewal in evidence, bearing the dates alleged in the answer. It was part of the terms of the policy that “if the premises mentioned in the policy shall at any time after making, and during the time this policy would otherwise continue in force, be appropriated, applied, or used, to or for the purpose of carrying on or

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exercising therein any trade, business or vocation denominated hazardous or extra hazardous, or specified in the. memorandum of special rates, in the terms and conditions annexed to this policy; or for the purpose of storing therein any of the articles, goods or merchandise in the same terms and conditions denominated hazardous or extra hazardous, or included in the memorandum of special rates, except as herein specially provided for, or hereafter agreed to by this corporation, in writing, to be added to or indorsed upon this policy, then and from thenceforth, so long as the same shall be so appropriated, applied or used these presents shall cease, and be of no force or effect.” “And that this policy is made and accepted in reference to the proposals and conditions hereto annexed, which are to be used and resorted to, in order to explain the rights and obligations of the parties hereto, in all cases not herein specially provided for.”

“ This insurance (the risk not being changed) may be continued for such further term as shall be agreed on, provided the premium therefor is paid, and indorsed on this policy, or a receipt given for the same.”

Bakeries are mentioned in the policy as specially hazardous.

By the conditions annexed to the policy “applications for insurance must be in writing, and must specify the construction and materials of the building containing the property to be insured; by whom occupied; whether as a private dwelling or otherwise; whether any manufactory is carried on within it;” and “ if any person, insuring any building or goods in this office, shall make any misrepresentation or concealment; or if, after the expiration of a policy of insurance, and before renewal thereof, the risk of the building shall be increased by any means whatsoever within the control of the assured; or if such building or premises shall be occupied in any way so as to render the risk more hazardous than at the time of insuring, such insurance shall be void and of no effect.”

And the twelfth condition was as follows, viz.:

‘ ‘ XII. Insurances, once made, may be continued for such further time as may be agreed on; the premium required therefor being' paid and indorsed on the policy, or a receipt given for the same; and all insurances, original or renewed, shall be considered as made under the original representation, in so far as it may not

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be varied by a new representation, in writing, which, in all cases, it shall be incumbent on the party insured to make, where the risk has been changed, either within itself, or by the surrounding or adjacent buildings. And if, at or before the time of renewing any policy of insurance on property where the risk has been increased by the erection of buildings, or by the use or occupation of the premises insured, or of the neighboring premises, the assured shall fail to give information thereof, said policy and renewal shall be void and of no effect.”

In December, 1854, when the original insurance was effected, the plaintiff occupied but one store. The entire building was 120 feet long, and was a large hall divided into five stores, the ■plaintiff occupying the store at the corner. In October, 1855, the plaintiff took also the store next adjoining, and opened a communication between the two, and on application by him the defendants made a re-survey of the premises, which appeared to have been done in accordance with a memorandum on the policy in pencil marks, proved to be the handwriting of Mr. Birdsall, who was President of the defendants in 1855, in these words, “ connection with apartments next adjoining on Fulton avenue; re-survey.” After this re-survey, the following indorsement on the policy was made, “ October 3d, 1855. The communication made with adjoining stores does not prejudice this insurance.”

In the summer of 1856, one of the divisions of the building was taken for a steam bakery, and the oven and machinery con nected therewith were introduced and the business was carrier i on, which was proved to bring the building and goods insured therein within the denomination of specially hazardous risks, only insured at higher rates of premium than the plaintiff paid, and the fire in question was in fact caused thereby.

• The plaintiff in his testimony respecting the renewal of the policy stated that when he applied in December, 1856, for the last renewal, he informed the Secretary of the defendants that the bakery had been introduced into the building, and asked him “ whether he had not better send over some of his folks to see the building,” and that the Secretary said, “ yes, we’ll let our surveyor go over and see it, or re-survey it, of words to that effect.” The Secretary of the defendants being examined unqualifiedly denied that any such statements were made to him

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or that he ever had any conversation with the plaintiff on the subject of the bakery, or that he knew, when the policy was renewed, of the existence of a bakery in the premises, or of an oven or machinery of any kind, or that any resurvey was made in reference to the bakery, or to the said renewal.

The defendant moved for a nonsuit, on the ground that no statement in writing was made at the time of the last renewal, disclosing the increase of the risk.

The motion was denied, and the defendants excepted.

It appeared that about $5,000 worth of goods were'destroyed by the fire. These goods were at the time in both of the stores occupied by the plaintiff, and there was other insurance on the goods to the amount of $2,000. On the question, what proportion of the goods lost were in the corner store at the time of the fire, the evidence was conflicting.

During the examination of the plaintiff as a witness in his own behalf, his counsel inquired as follows :

“ Q. State what was said by you to the officers of the Company, at the time memorandum of Communication was indorsed, as to your intention thereafter to occupy both the stores ?

“ (Defendants’ counsel objects that the question asks for parol evidence to enlarge the construction of policy. Objection overruled and exception noted.)

' “ A. To the best of my knowledge, I stated I was going to separate my stock and keep a portion of it in the new store, and occupy both stores.”

At the close of the testimony the defendant renewed his motion for a nonsuit, on the ground of the non-compliance by the plaintiff with the twelfth condition of the policy, claiming that the conflict in the oral testimony presented a case which made that condition controlling. • The motion was denied, and the defendants excepted.

The Court thereupon charged the jury,- that the privilege inserted in the policy, October 3d, 1855, of connecting with the adjoining store, did not of itself extend the insurance over that store, nor by the language and terms of the policy, and of the renewal certificates, is the insurance necessarily extended to the stock in such adjoining store, but that the insurance was so extended, if the jury should find that such was the intention of the

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parties when the privilege was given, and the renewals made; and that in determining that intention, the jury might consider the verbal communication made by the plaintiff when he applied for the privilege of making the connection, the pencil indorsement on the policy, and the fact of the resurvey made by the defendants at the plaintiff’s request.

That if the jury should find, that the policy was intended by the parties to cover the goods in both stores, they would find for the plaintiff the amount of the actual loss he had sustained, but if they found that the policy covered only the corner store, they would find for the plaintiff no greater sum than the value of the goods lost in that store; in no event in either case exceeding the sum insured, and the interest thereon.

The Court further charged.the jury, that if they found that the risk to the premises had been increased by the erection in them of the steam bakery and machinery spoken of, they should find for the defendants, unless they found that at the time of obtaining the last renewal the plaintiff made a full and fair communication to the defendants of the facts so increasing the risk, so that the Company had full notice of that fact, and had.a full opportunity of re-surveying the premises before renewing the policy; that if they should find this to have been so, then he charged them for the purposes of this trial, that the policy was not rendered void by the plaintiff not having literally complied with the twelfth condition in the policy, in not making his representation or communicating his information in respect to the bakery in writing.

The defendants’ counsel duly and separately excepted to the portions of the charge, which allowed the jury, in determining the intention of the parties when the connection with the adjacent store was permitted, to take into consideration the verbal statements made at the time by the plaintiff. Also, to that portion in which the Court instructed the jury that if the plaintiff, on obtaining his last renewal, made a verbal statement of the facts which had increased the risk to the premises, the absence of a statement in writing did not rendet the policy void. And said exceptions were severally duly noted.

The jury having retired, returned into court with a verdict for the plaintiff of $2,112.

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Stephen P. Nash, for the defendants, (appellants.)

I. The extent of the risk covered by the defendants was to be ascertained from the policy, which originally embraced only the single store occupied by plaintiff, “in the west end of the City Central Hall.” Testimony was admissible to locate that store, but, clearly, evidence of verbal statements between the parties at the time the policy was written, would not be admissible to enlarge the meaning of its language. When plaintiff took an additional store, it was optional with the parties to include both stores in the insurance or not, as they might agree, but having put in writing what they did agree to, parol evidence to enlarge the terms of the writing was inadmissible. The writing was simply a permission to make a communication with the next store, an alteration in the premises, which, but for the permission, ‘might have avoided the policy. To make of this, by parol evidence, an extension of the risk so as to embrace both stores, was clearly a variation of the contract. (N. Y. Gas Light Co. v. Mech. F. Ins. Co., 2 Hall, 108 ; Angell on Fire Ins., 56, § 21.)

II. The twelfth condition of the policy made it incumbent on plaintiff, when he procured the last renewal, to make a representation in writing as to the increased risk caused by the steam bakery. He succeeded, however, in practically annulling this condition, by his own oath, unsupported by other evidence, that he had given verbal notice to "the defendants’ secretary of the facts which the contract required to be stated in writing.

1. The original contract of insurance had expired. When the plaintiff came to renew it he was required by the conditions in reference to which the policy was originally “ made and accepted,” to make a representation in writing if the risk were changed; the body of the policy providing for the case of a renewal, “ the risk not being changed.” The case stands, therefore, in the same position as if the Company were then applied to for the first time for an insurance, and the conditions required the application to be in writing, and to contain certain statements material to the risk. In such a case, where the application omits material facts, verbal notice of such facts to the agent effecting the insurance, does not cure the omission. (Jennings v. The Chen. Co. Mut. Ins. Co., 2 Denio, 75 ; approved in Gates v. Mad. Co. Mut. Ins. Co., 2 Comst., 43; and Wilson v. Herk. Co. Mut. Ins. Co., 2 Seld., 53;

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Westfall v. The Hudson River Fire Ins. Co., 2 Duer, 490 ; S. C., Ct. of Appeals, MS.)

2. The theory of the Court .upon the trial seems to have been that, assuming verbal notice of the increased risk to have been given to the Secretary, if he did not require a statement in writing he waived the condition.

Without disputing that a party to a written agreement may, in many cases, dispense by parol with conditions in his favor, which he might by the terms of the agreement insist upon, it is submit-' ted that such dispensations, to amount to a waiver, should be express, the ground upon which the Courts sustain them being that a party shall not be heard to insist upon a performance which he has prevented. In this case, the alleged waiver is a mere inference from the agent’s silence, under a notice which he denies receiving, and so the very object of the condition, the securing, that is, of written evidence of the transaction is destroyed. It is not pretended ¡that there was anything said in reference to a waiver, but the argument is that the benefits of the twelfth condition, which was already a part of the agreement, were lost, unless its requirements were verbally imposed anew.

3. But the defendants’ Secretary had no right to waive the requirements of the twelfth condition. His authority was to issue and renew policies in accordance with the terms and conditions expressed in them. The form of the policy, its clauses, provisoes and • conditions, expressed the terms upon which the corporation were willing to insure; its subordinate agents had no right to dispense with these.

III. The evidence in reference to the alleged notice of the increased risk, was the testimony of the plaintiff only. Had the claim been almost any other than one against an insurance company, it would hardly have received credit fróm a jury, unsupported as it was by all Other proof. It is not credible that an insurance company, with full notice of facts entitling it to a higher rate of premium, should not have claimed it. But if all the conditions companies may impose as safeguards against fraud and false swearing may be broken down by the kind of evidence that the contract they enter into excludes, they have little security against the grossest impositions, no matter how weak the evidence against them. ■

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I. T. Williams, for the plaintiff (respondent).

I. The renewal of the policy on the 28th day of December, 1856, was equivalent to the issuing of a new policy, as of that date, in the identical words of the old policy, save the dates.

1. If we read the policy as bearing date the 28th day of December, 1856, it is broad enough to cover all the property in both stores.

2. It is, then, immaterial whether the ruling of the Court upon the question, was correct or not.

3. The testimony was competent to show, that prior to the last renewal, the defendant knew that the plaintiff was occupying both stores, and that his stock was partly in one and partly in the other.

4. The ruling upon this point is immaterial, as it appears that the value of the property destroyed in the corner store amounted to more than the sum recovered.

IT. The Company clearly had the power to waive, and in fact did waive, their own rule, and issued the .policy—i. e., the renewal— upon the verbal representations of the plaintiff, and received his money, thereby waiving any latent rule to the contrary, which it may have prescribed for its own convenience. (See Mechanics’ & Farmers’ Bank v. Smith, 19 Johns., 115 ; Green v. Bateman, 2 M. & W., 359; Tuttle v. Love, 7 Johns., 470 ; Hutchinson v. Brother, 5 M. & W., 535; Pitt v. Smith, 3 Camp., 33.)

Had it clearly appeared by uncontradicted evidence that the verdict was not larger than the defendants’ proportion of the loss on the goods, fixtures, &c., actually destroyed by the fire in the corner store, I should not be disposed to disturb it. The whole question would then have turned on the correctness of the second proposition of the judge’s charge; and in respect to that, a majority of the Court hold that it is perfectly competent for a party to an instrument to waive a strict compliance with a condition of the contract in his favor, which we hold this condition to be, and'that, assuming Liddle’s testimony to have been true, and that a verbal communication of the erection of the bakery was in fact made by him to the

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Secretary, on his application to the Company for the last renewal, and assuming that the notice thus given to that officer was notice to the Company itself, in respect to which no point was made at the trial, but it was rather conceded—the Company, by renewing the policy after such notice, waived a strict compliance with the twelfth condition of the policy, which required such information to have been made in writing, and that in any event the Company, under such circumstances, are estopped from setting-up the increased risk in bar of the action. (Ames v. The N. Y. Mer. Ins. Co., 4 Kern. R., 253; Smith v. Gugerty, 4 Barb. S. C. R., 614; McEwen v. The Montgomery Co. Mut. Ins. Co., 5 Hill R., 101; Wilson v. The Genesee Mut. Ins. Co., 4 Kern. R., 418.)

The proof, however, if not conclusive the other way, leaves it at least in doubt whether the defendants’ pro rata proportion of the loss on the goods actually destroyed in the corner store, including the cellar and loft, was not considerably less than the verdict. In other words, whether there was an amount of goods destroyed in the corner store, which, on a pro rata division of the loss between the defendants and the Hew World Insurance Company, would make the defendants’ proportion equal to the amount of the verdict.

It becomes necessary, therefore, to consider whether there was error in the first portion of the charge, which was as follows: “ That the privilege inserted in the policy, October the 3d, 1855, of connecting with the adjoining store, did not, of itself, extend the insurance over that store, nor, by the language and terms of the policy and of the renewal certificates, is the insurance necessarily extended to the stock in such adjoining store, but that the insurance was so extended, if the jury should find that such was the intention of the parties when the privilege was given and the renewals made, and that in determining that intention, the jury might consider the verbal communication made by the plaintiff, when he applied for the privilege of making the connection, the pencil indorsement-on the policy, and the fact of the resurvey made by the defendants at the plaintiff’s request.’’

The privilege of communication between the two stores, was inserted in the policy October the 3d, 1855, in these words: “The communication made with adjoining stores, does not pre

Concurrence

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judice this insurance.” The verbal communication made by the plaintiff at the time he applied for this privilege, was, that he was going to separate his stock, and keep a portion of it in the new store, and occupy both stores, and the pencil indorsement on the policy, made by the Company’s then President, was, “ Connection with apartments next adjoining Fulton avenue—■ re-survey.

If, as the judge charged, and correctly, the privilege, as inserted in the policy, did not of itself extend the insurance over the goods in the adjoining store, and there was nothing in the language of the policy itself which necessarily embraced the stock in such adjoining store, then the admission of evidence of. what was said at the time the plaintiff applied for the privilege, .was the admission of parol evidence to enlarge the terms, scope and force of the written contract, and, in effect, to incorporate a new provision into it.

It is urged that the language of the policy was broad enough, to embrace both stores, as both stores in fact constituted the “ comer of ” the two streets named in the policy. The answer is, that when the policy was first executed, there was a corner store distinct from that which was subsequently connected with it, and its language must always be read in the sense in which it was then used. To admit the evidence objected to, would be to enlarge the meaning of these words, and to give to them another and different signification than that in which they were understood when employed by the parties. ( Jennings v. The Chenango Co. Mutual Ins. Co., 2 Denio R., 75; Lamotte v. The Hudson River Fire Ins. Co., 17 N. Y. Rep., 199 .)

There must be a new trial, costs to abide the event.

Pierbepont, J., concurred.

I am not able to concur in the conclusion, that the policy in this case was valid if the jury found that at the time of obtaining the last renewal the plaintiff made a full and fair communication to the defendant of the facts increasing the risk, notwithstanding the communication was not in writing.

The twelfth condition annexed to the policy of insurance was a reasonable condition, and one to which both parties to the

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insurance must be deemed to have agreed, as a part of the express contract.

It was designed to protect the defendants against liability upon renewals after a change in the risk, unless they had clear information of such change, and the particulars thereof, in such a form as amounted to a warranty of the then actual condition of the insured premises.

It was a voluntary agreement of the parties also in relation to the nature of the evidence which alone should be competent to show that the application of the plaintiff for insurance was altered when he sought a renewal.

The defendants had insured the plaintiff, upon his written ap plication representing the condition of the premises, and it was a wise and reasonable precaution, to stipulate that any renewal, of that policy should be considered as made upon the same representation, unless varied by anew representation in iwiting ; and this being assented to, the plaintiff knew when he accepted the renewal, that according to the express terms of the contract, such renewal was to be deemed and construed as an insurance made upon his written representations made when the policy was first issued.

Unless this be so, the requirement that such new representation should, in order to vary the rights of the parties be in writing, was' wholly useless and nugatory. Ko case can be stated in which, if an oral communication is equally effective, this stipulation could have any operation, and for the obvious reason-that the assured may wholly disregard it, and nevertheless recover.

It was surely competent for the parties to agree by what means alone the representation first made should be altered. Had the condition read in terms, that no merely verbal communication made to the Secretary of the Company shall have that effect, it could not, I think, be claimed that the Company had not a perfect right so to define and limit the power of their officer to act, and yet the doctrine contended for binds the corporation in the face of. their express refusal to be bound.

These conditions are not technical merely. The Company may very properly be taken to have had in view, just what has happened in this case, viz.: a conflict of evidence upon the very question, whether when this renewal was made, the assured rep

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resented to them that the risk had been changed by the introduction of the bakery, oven, &c.

•Their Secretary testified positively that no such representation was made to him, and that he did not know of the existence of the bakery, nor of an oven, nor of machinery, on the premises.

Hot only so, both parties were interested to guard against the uncertainty of human life and memory, and. the danger of relying upon means of proof seldom very accurate, often and. easily rendered unavailable. The assured himself had protection in this condition as well as the Company.

The mutuality of benefit to the parties in confining them both to the terms of the stipulation will be apparent, if we suppose that the defendants were here claiming that at the time of the renewal, the assured made to their Secretary an oral representation amounting to a warranty in some particular not mentioned in his original written representation, and also claiming that such warranty was broken; the plaintiff would himself then appreciate the- -benefit of a stipulation forbidding any such proof, that his original representation had- been altered or changed.

There is nothing in this case to warrant, a charge of fraud on the part of the defendants; it stands upon the single question: When the parties have expressly agreed that any renewal of the policy shall be deemed made in reliance upon the original written representations unless a new representation is made by the assured in writing, will an oral representation have the effect to create the exception?

It is not denied that if the renewal is to be deemed made upon the original representations, the policy is void. I think the agreement of the parties is binding upon both of them, and that the Court is bound to" give it effect.

The case of Ames v. The New York Mutual Insurance Company, (4 Kern. R., 253,) does not appear to me to conflict with this view of the subject. There no representation whatever in writing was made by the assured. What the defendants relied upon as a representation was a mere memorandum made by their own agent. The agent was fully apprised of all the facts. There was nothing in the conditions of the insurance that directly or impliedly imported that no policy issued by the officers of the

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Company should be valid or binding, unless based upon a written application by the assured.

If the Company chose to insure without any application whatever, containing the particulars, which, if an application was made, must be inserted therein, they might well be held bound. But, if’in fact, an application was made, a stipulation that such application should be deemed a continuing representation, unaffected by merely verbal statements to one of the officers of the Company, may yet be binding upon both parties. •

In the case cited no application was made by the assured. The agent of the Company had actual knowledge of the incumbrances on the property. The policy itself contained express mention of the other insurances on the same property.

. It is impossible to say in that case, that the assured had violated any condition upon which the insurance was made. Some of the language of the opinion may seem to sustain the plaintiff’s claim in this action, but the case itself is not inconsistent with the views above expressed.

I think, therefore, that for this reason, as well as for the reason that testimony was received to oral representations made at the time of renewing the policy, to alter and enlarge the operation of the permission then given to open a communication with the adjoining store, the judgment should be reversed and a new trial ordered, costs to abide the event.

Judgment reversed and a new trial ordered.