Hartford Fire Insurance v. Wilson

after making the foregoing statement, delivered the opinion of the court.

The question is whether at the time of the fire there was a valid arid subsisting contract of insurance. The negotiations in respect to the policies were not between the insurer and the insured directly, but between agents of eách. As shown by paragraphs 2 and 3 of the agreed statement of facts, the agent of the insurer delivered the policies to the agent of the insured upon a condition, which was agreed to by both. That condi-, tioh failed, notice of which was given by the former to the latter, accepted by the latter as putting an end to the policies, and the former notified to come and get the policies. Several times the former went to the office of the latter to receive the policies, but failed to obtain them owing to the absence of the latter from his office. Both agents treated the policies as dead, and no charge for premiurris was presented on the one hand or asked for on the other. Unintentionally the policies were on the day before the fire handed in a package with other papers to the treasurer of the Ivy City Brick Company.

In view of these facts thus agreed upon the question broadly stated above narrows itself to one whether there can be a conditional delivery of a policy of insurance ? If there can be, then (as there is no question of estoppel and as there was a failure of the condition) these policies had no binding force at

If an instrument containing an .absolute promise to pay may be conditionally delivered, it is difficult to perceive any good reason why an instrument containing a promise to pay upon a contingency may not likewise be conditionally delivered. If the failure of the condition in the one case prevents the instrument from becoming definitely operative, why not in the other ? The rule as to conditional delivery and the effect of a failure of the condition has not been limited to promissory , notes, but has often been applied to other instruments, as, for instance, a deed of land; Leppoc et al. v. National Union Bank of Maryland, 32 Maryland, 136; Clark v. Gifford, 10 Wend. 310 ; a

But, coming closer to the case at bar, let us see what has been decided in respect to insurance policies. In Brown v. The American Central Insurance Company, 70 Iowa, 390 , the plaintiff applied to an agent of the defendant for a policy of fire insurance. The agent doubted his authority to insure the particular property but executed a policy therefor, and, with the consent of the plaintiff, placed it, after receiving the premium, in the hands of a third party to hold until he could communicate with, his principal and ascertain whether the risk would be accepted. The defendant refused to accept the risk. The property was destroyed by fire before the notice of its refusal had been received. The court held that there, was no delivery of the policy save upon the condition that the insurance company accepted the risk, and that, as it did not accept it, the policy never became operative.

In Millville Mutual Marine & Fire Insurance Company v. Collerd, 38 N. J. Law, 480 , Perrin, the lessee of Collerd, the owner of a mill, applied for fire insurance, as required by his lease. Three policies, each in a different company, were sent him by the insurance agent to whom he had applied. He retained the policies, paying the premium on two, and sent word to the agent to the effect that he would look into, the standing of the other company, and if satisfied about that would pay the premium on its policy. The property having been destroyed by fire before any notice or other action by him, he went to the agent and offered to pay the premium, which the latter declined tó accept. In an action on the policy it was held that the company was not liable: In the. course of the opinion the court said (p. 483) that Perrin “ merely held the policy in his possession until he could examine it; or, to use his own expression, ‘ look into the standing of the company.’ He distinctly refused to accept the policy and settle for it, until he was satisfied. This was, in effect, postponing the delivery, the acceptance, and the payment of tibe premium until a future time, and to this the company, by their agent, Buckley, assented.

In Harnickell v. New York Life Insurance Company, 111 N. Y. 390 , the plaintiff, who was the owner of several policies of life insurance issued by different companies, was applied to by. the agent of the defendant to take out policies in his company. The result of the negotiations between the plaintiff and the agent was an agreement to take out policies in the defendant company, providing he could surrender .the policies he already had to the companies issuing them and obtain satisfactory surrender values thereof. In pursuance of an application duly prepared by the agent and signed by the plaintiff, the defendant company issued two policies, and sent them to its agent. The latter, under the agreement, delivered them to the plaintiff, who gave two notes and a check in payment therefor, which were retkrned by the agent to the company. The plaintiff, having after some effort failed to make any satisfactory arrangement with the other companies, returned the policies to the defendant and demanded a surrender of his notes and the check. The company declining to make such surrender, this action was brought, and it was held that the policies were delivered only conditionally, that the condition had failed, and that, therefore, the plaintiff could rightfully surrender the policies and obtain a return of his notes and check. The opinion of the court in that case was delivered by Judge Peckham, now a justice of this court, and in it, after referring to the agreement, it was said (p. 398):

“ This, we think,- was clearly a condition precedent to the full delivery and acceptance, of these policies issued by the defendant, and until such condition precedent was complied with or waived, no fully executed and Valid contract of insurance existed between these parties.” . ,

See also Nutting v. Minnesota Fire Insurance Co., 98 Wisconsin, 26.

“ The contracts and instruments involved in those cases are very different from the policies of insurance sued upon. These are elaborate instruments and abound in stipulations and conditions. Among these, note the following, that is embraced in the general clause recited in the preliminary statement: ‘.This policy is made and. accepted subject to the' foregoing stipulations and conditions, together with such other provisions,, agreements or conditions as may be endorsed hereon or added hereto:’

“ This and other clauses limiting the powers of agents and requiring all additional, terms and contitions to be endorsed in writing upon the policies, were devised by the insurance company, itself, to prevent questions concerning the conditions upon which its policies shall be ‘ made and accepted ’ from being left to the vagueness and uncertainty of oral proof.

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“ The condition in this case was one in addition to those contained in the policies and upon which they were ‘ made and accepted,’ and was not in writing endorsed upon them or executed simultaneously therewith. ■

“ Our conclusion is, that by reason of the nature and terms of the policies, it is not competent to show their delivery to the insured upon a verbal condition,' making their existence as contracts depend upon the subsequent ratification • of another agent.”

The argument is that because the policies contained various stipulations restricting the power of the agent, it is incompetent to prove that the contract never came into operative force by a final unconditional delivery. But these stipulations apply only to a contract which has become executed and do not apply where the contract has not been completed by an absolute delivery of the instrument. No instrument could be more absolute than a promissory note, yet it is elear from the

“ The provisions contained in the policies, which are above quoted, relate to the policies themselves after they should become executed instruments, between the parties. All negotiations had before such event, and all parol agreements between .the assured and the agent of the defendant, would have been merged in the contract evidenced by the policies themselves, had the negotiations been carried • out as intended, and such policies been absolutely delivered to and accepted by the plaintiff. Hence any oral representation or statements made by the agent of the company,- and not contained in the contract of insurance, would have formed no part thereof, and could not have been insisted upon by the plaintiff as agáinst the defendant company. . . . Insurance companies may, with entire propriety, provide in. the same manner as the defendant provided in, the policies in question, in cases-where the contract of insurance becomes executed. There it is highly'necessary and important for the company to know exactly how far they are bound and the entire' nature of the contract whieh has been made between them and the assured. ' But an agreement between an individual and the agent of a-company, by which the policy is accepted only upon, conditions relating to the same,

and an agreement to hold the policy until the performance of those conditions, or a failure to perform, cannot, as we think, result in any serious inconvenienpe to the company. But whether that is so or not cannot alter the right of an individual to refuse to be bound by a policy of insurance until he has absolutely received and accepted it.”

For these reasons we are of opinion that the facts found show that there was no final and absolute delivery of the policies; that the condition upon which they were deposited with the agent of the insured failed, and, therefore,- that at the time of the fire there was no subsisting contract of indemnity between the company and the insured.

The judgment of. the Court of Appeals is reversed amd the .ease remanded to that court with instructions to set aside its judgment and enter one affirming the judgment of the trial cou/rt.'

Me. Justice Beowh concurred in the result.