Hubbard & Spencer v. Hartford Fire Ins.

Beck, J.

1. commencement of policy. i. Insurance : The policy, which is the foundation of this action, contains a condition in the following words: “ If the assured shall have or shall hereafter make any other insurance upon the property hereby insured, without the consent of the company written hereon, in such case this policy shall be void.” As a defense the defendant alleges that, in violation of this. condition, the insured, Howe, did cause the property to be insured by a policy issued by the Phoenix Insurance Company, January 21, 1867. The policy sued on is dated January 19, 1867.

It appears from the evidence that Howe applied to the agent of defendant on the 18th day of December, 1867, for insurance, and it was arranged that the policy should be *327 issued and sent to him on that day. Howe, not having received the policy from defendant’s agent, nor heard from him in regard to the business, on the 21st of the same/ month applied to the agent of the Phoenix Insurance}? Company for a policy covering his property. The terms}} of the insurance were agreed upon, but the agent, having}, no blank policies, executed a receipt to Howe for the amount of the premium then paid him, specifying the property to be 'insured, which was the same covered by the policy issued by defendant, and stipulating that a policy would be issued as soon as a blank should be received. The agent of the Phoenix Company was not informed by Howe of his application to defendant’s agent for insurance, and it appears that Howe, at the time, did not expect to receive the policy of defendant, as it had not been sent to him according to the prior arrangement. On the 22d, the day subsequent to the transaction with the agent of the Phoenix Company, the agent of defendant delivered to j Howe the policy sued on, dated on the 18th, and received} payment of the premium. Howe did not inform him of his}; transaction with the Phoenix Company. The property'1 covéred by these policies was destroyed by fire on the 26th. Hnder these facts defendant insists that the transaction with the Phoenix Insurance Company is in violation of the conditions of the policy against other insurance quoted above, and that defendant’s contract is avoided thereby.

The question here presented is of very great difficulty, and its solution, either upon principle or authority, is not entirely free from doubt. Two preliminary questions may be considered, the determination of which will aid in reaching the final conclusion upon this point.

1. Which was the prior insurance, that by the defendant or the Phoenix Company ? It quite satisfactorily appears to us that the policy issued by defendant must be considered as commencing on the 18 th, the day of its date. *328 It was, in fact, issued on that day and the premiums covered the time intervening between that date and the day of its delivery the 22d: Defendant after having collected the premium and delivered the policy, bearing date on the 18th, cannot be heard to deny that the policy did not operate until its delivery. If the policy did not bind defendant until the 22d, then has defendant received premiums for the time intervening before that date and the 18th which it has not earned. But this it cannot be permitted to claim.

2. What was the effect of the receipt given by the agent of the Phosnix Ins. Co. ? It must be conceded that, if it bound the company at all, and its binding effect cannot be denied, it raised a contract of insurance in all respects like the contracts of the company as expressed in the policies commonly issued by them. The agent was not clothed with power to vary or change the policies of the company and it cannot be presumed that such a thing was contemplated by either the agent or the assured when the receipt was executed. The transaction then was a contract for insurance upon the usual terms and conditions as expressed in the policy which the agent was empowered to issue. It is shown by the evidence that the policies of the Phcenix Company contained a condition similar to the condition of the policy sued on against prior or subsequent insurance, without consent'of the company indorsed on the policy, and declaring the same shall avoid the contract. It appears that the agents were authorized to issue policies of this form and that they embodied the contracts of insurance as commonly entered into by the company. The contract therefore between the Phoenix Company and Howe must be considered as containing a condition against other insurance as above stated.

We now have the case of two policies given at different dates covering the same property, each having a condition against other insurance, both prior and subsequent, and *329 providing that a breach thereof shall avoid the respective instruments. The question for us to determine is which, if either, of these instruments is valid, and which is avoided by the operation of a breach of the condition.

2_breach of againefc°other insurance. It will be remembered that a breach of the condition does not absolutely render void and of no effect the policy; ^ simply renders it voidable — its binding force and effect being subject to be defeated aj. the 0pj¿0n 0f the company issuing the instruments. If no objection be made by the company on account of the breach of the condition, the policy may be enforced as though no forfeiture had ever happened. The act of the company, whereby it is shown that the instrument is treated as avoided, must be shown in order to defeat recovery thereon. If no such act or objection on the part of the company be shown, the contract will be considered binding. It is not necessary here to state what will amount to an act avoiding the contract, or when it must be done, further than to observe that it must appear that the underwriter relied upon the breach of the condition to defeat the contract.

Of course the company issuing the subsequent policy could not rely upon the breach of the condition, in order, to avoid the instrument, until knowledge thereof was 1 acquired, and its acts treating the policy as avoided would be. sufficient if shown to have been done after such knowl-.i edgte. \ The same principles will apply to the prior policy. It was not absolutely void, on account of the subsequent insura&ce, but was voidable only. It was a binding instrument when executed, and would so continue until some( act done by defendant intended to avoid it, on account off the breach of the condition against the subsequent insurance: - But it could not be avoided on account of the Phoenix policy unless that instrument itself was valid. If it so happened that when the action was brought on defendant’s policv, or even at the trial, it was made to *330 appear that the Phoenix policy could not be enforced, was avoided on account of the breach of a condition therein, it is obvious that the existence of that instrument shown to be inoperative wo.uld not constitute a breach of the condition in defendant’s policy against subsequent insurance. That condition is against actual insurance to be subsequently made. The Phosnix policy created no insurance, it was avoided by the act of the company, and therefore did not constitute a breach of defendant’s policy. The general principle of law upon this point may be stated as follows: In order to avoid a policy on account of a subsequent insurance against an express condition therein, it must appear that such subsequent insurance is valid and that the policy upon which it is made is capable of being enforced. If it cannot be enforced it is no breach of the prior policy. This principle is substantially embodied in the fourteenth instruction given by the court to the jury. The instruction could have been more properly worded, but its import is quite clear, and to the effect that, if the Phosnix company treated its policy as avoided, after notice of the existence of defendant’s policy, it constituted no such subsequent insurance as would invalidate the policy in suit.

Our conclusion upon this branch of the case is not without support of the authorities. The following cases may be cited as sustaining the principles above stated. Jackson v. Massachusetts Mut. Ins. Co., 23 Pick. 418; Clark v. New England Ins. Co., 6 Cush. 343; Gale v. Belknap Ins. Co., 41 N. H. 170; Stacy v. Franklin Ins. Co., 2 Watts & Serg. 506; Philbrook v. New England Mut. Ins. Co., 37 Me. 137; Schenck v. Mercer County Mut. Ins. Co., 4 Zabr. 447; Jackson v. Farmers’ Ins. Co., 5 Gray, 52.

The doctrine which we have above announced does not go to the full extent of some of the cases just cited. It is held in Philbrook v. The New England Mutual Insurance Company, supra, that the prior policy is valid, even though the subsequent policy is not avoided by the under *331 writer issuing it, but tbe loss thereon is paid. And in others of these cases the rule is not expressly based upon the fact that the subsequent policy was treated by the underwriter issuing it as avoided.

The doctrine which we recognize here is based upon the fact that the subsequent policy was treated and considered as avoided by the company issuing it as soon as it had notice of the prior insurance. In our view this is a most important consideration, for, if the underwriter in the second policy does not treat it as avoided, it cannot so be considered by the insured or the company issuing the prior policy. The condition against prior insurance in the subsequent policy is for the benefit' of the insurer, who may, at his option, waive it or insist upon enforcing its terms. If he seeks to enforce the condition and treats the policy as a void contract, it is indeed difficult to see upon what grounds it may be regarded as valid, as an insurance that will defeat the prior policy. In this view our conclusion is not in conflict with David v. The Hartford Insurance Company, 13 Iowa, 69, and Bigler v. The New York Central Insurance Company, 20 Barb. 635, and same case, 22 N. Y. 402. In the first of these cases an action was brought upon a policy containing a condition against subsequent insurance. Other insurance, taken after the date of the policy, was relied upon to defeat recovery. The plaintiff claimed that the subsequent policies, on account of certain conditions therein which were violated, were void. It is held that these policies are not void, but, on account of the breach of their conditions, might have been avoided. As they were treated as valid contracts by both of the parties thereto, the losses occurring thereon having been paid by the companies executing the subsequent policies, the breaches of the conditions were regarded as waived, and the instruments held to be binding upon the respective underwriters. The argument supporting the conclusion reached by the court may not entirely accord with the *332 reasoning we have above adopted, but the result reached, we believe, is not inconsistent with the views we have herein expressed. Bigler v. The New York Central Insurance Company, 20 Barb. 635, and 22 N. Y. 402, in its facts very nearly resembles Devid v. The Hartford Insurance Company, the underwriter taking the subsequent risk having waived the forfeiture and paid the loss •under the policy. There are arguments and positions taken in the opinions in this case that are not consistent with the views we have adopted. They reach further than the mere support of the conclusion arrived at upon the facts involved in the case, the court of appeals holding (two justices dissenting) that the first policy would be defeated, even though the second was utterly void. This point was not in the case. While we may not be inclined to dispute the conclusion arrived at upon the facts presented, which we think is not at all in conflict with our views, we cannot assent either to the reasoning adopted by the court or the conclusions reached upon facts not before it for adjudication.

Carpenter v. The Providence Washington Insurance Co., 16 Pet. 495, is cited in support of the rule that when there are two successive policies, both containing conditions of avoidance on account of other prior or subsequent insurance without notice, the first may be avoided on account of the second insurance. This case we have observed is often cited in support of this rule, and is so referred to in Devid v. The Hartford Insurance Co., and Bigler v. The New York Central Insurance Co., supra. If such a rule be found in the case, but it does not so appear to us, its annunciation was not called for by the facts before the court, and made the basis of the decision. The policy upon which suit was brought is considered in the opinion the second instrument, and the court holds that it was defective by a condition therein against prior insurance, which in fact existed when it was issued. See *333 page 509. The conclusion arrived at, we think, is not in conflict with the course of argument adopted by us and the result reached in this case. The argument, however, adopted by the court, in reaching the conclusion, is hardly consistent either with our reasoning or its results. But inasmuch as the facts are dissimilar to those before us, and the point ruled not necessarily in conflict with our decision, the case cannot be regarded as an authority against the principles we herein recognize. .

5. 'Incumbbances. II. During the progress of the trial defendant offered to show that the property insured, was covered by a' chattel mortgage at the time the policy was issued. This evidence was offered to establish a forfeiture of a condition of the policy to the effect that, if the insured was not the “ sole <md 'unconditional ovmer” of the property, the policy should be void. The court excluded the evidence, holding it would not establish a breach of the condition. While under the statute (Rev., § 2217), the mortgagee holds the legal title to the personal property covered by a mortgage, the mortgagor is nevertheless'considered the owner. Such is the current of the authorities as to mortgages at common law which, as to the, title and ownership of the property conveyed, are not different from chattel mortgages under the statute above cited. See White v. Rittenmeyer, decided at the present term of this court. It is considered that the mortgage creates a lien, and that the title of the property is conveyed to the mortgagee for the purpose, and no other, of enabling him to enforce such lien. The ownership remains in the mortgagor. It is absolute and depends upon no condition, and-may therefore be said to be unconditional. It is true, his ownership may be defeated upon the happening of certain conditions, but this cannot be said to make his ownership conditional. The property of the chattels is absolutely and unconditionally in the mortgagor. This view finds support in the following authomfties: RolUns v. *334 Columbian Mutual Fire Insurance Co., 5 Foster (N. H.) 200; Pollard v. Somerset Mutual Fire Insurance Co., 42 Mo. 221; Rice v. Town, 1 Gray, 426 ; Shepherd v. Union Mutual Fire Insurance Co., 38 N. H. 232; Norcross v. Insurance Co., 17 Penn. St. 429 ; Conover v. Mutual Insurance Co., 3 Denio, 254. See S. C., 1 Comst. 290.

In our opinion the evidence- was properly excluded.

6. __ notice of loss: estoppel, III. The policy sued on contains a condition requiring the assured, in case of loss, “ to give immediate notice thereof,” and to render “ to the company a particular account of said loss under oath, stating * * * * other insurance, if any, and copies of all policies.” After the loss the insured, in compliance with this condition, in his proof of loss stated under oath as follows: “ There was also an insurance on the hardware stock of Clifton IL Howe by the Phosnix Ins. Co., the premium for the sum of $56.50 paid to said company and a receipt given by said company which reads as follows : Received of C. IL Howe $56.50, full premium, policy and survey fees on $2,000 insurance on his stock of hardware in frame building,” etc. * * * * Policy to be issued as soon as I receive blank policy, to bear date herewith. Geo. W. Miller, agent Phoenix Ins. Co.,” etc.

The defendant claims the act of Howe, in stating the insurance in the Phoenix Company in his proof of loss, estops him from denying the validity of the contract with that company, and that, so far as defendant’s rights are to be affected, it must be considered that there was a valid insurance by a policy of the Phoenix Insurance Company covering the property destroyed.

The law of estoppel is founded upon the obligation which rests upon every man to speak and act according to the truth and the just policy of the law which will not permit men to deny that which they have solemnly asserted or acted upon as true. The rule is intended to prevent great mischief and wrong resulting from the want of confidence *335 in the intercourse of men which would naturally exist if they were permitted to deny their admissions and contradict the proper inferences drawn from their acts in the business affairs of life. It is a rule established to secure truth and justice. Under its operation no one will be permitted to deny his assertions or admissions of fact which were designed to influence another’s acts and upon which , he has acted. But the doctrine must be applied in strict-1 ness and the admission or act ..relied on as an estoppel must | clearly appear to have been made or done by the party! who is sought to be bound .thereby. Hence, estoppels must be certain to every intent, for no one shall be denied setting up the truth, unless it is in plain and clear contradiction to his former allegations and acts. 1 Gbreenl. Ev., § 22.

In the light of these principles we will consider the act of Howe which 'is claimed'to operate as an estoppel. The proof of loss made by him states that there was an insurance in the Phcenix Company, and sets out the writing upon which the contract of insurance was founded. The facts stated were: 1. The existence of the insurance. 2. The existence of a receipt, which is claimed to be evidence of the contract with the Phcenix Company. These admissions of fact are not denied in this action. There were no others made by Howe. He does not pretend to state any other facts connected with the alleged insurance in the Phcenix Company, yet it certainly cannot be denied that many other facts connected with the transaction determined the validity of the contract of insurance. These faets, too, were extrinsic as to the receipt and other matters stated by Howe. Neither does Howe state the legal conclusion that the Phcenix insurance is valid and binding, and that is the very thing which defendant claims plaintiff is estopped to deny. The facts admitted by Howe are not denied in this action. The validity of the Phcenix insurance he did not claim or set up in the proof of loss; there is, therefore, no foundation for an estoppel as to that fact. *336 It may be claimed tbat by stating tbe fact of an insurance in the Phoenix Company, be must be understood as referring to a valid insurance. Sucb an inference is inadmissible. There is no complaint tbat tbe proof of loss is not in compliance with tbe condition in tbe policy sued on, or tbat under tbat condition tbe statement should have contained other facts tbat do not appear therein. It cannot, therefore, be said tbat any attempt at concealment was made by Howe in tbe proof of loss. Tbe language used by him in tbe proof of loss, referring to tbe Phosnix insurance, can fairly be understood in no other sense than tbat there was a contract of insurance with tbat company. It cannot, with any degree of justice, be claimed tbat be avers tbat contract to constitute a valid and subsisting insurance. These views lead us to tbe conclusion tbat tbe statements in tbe proof of loss did not operate as an estoppel against evidence tending to show tbat tbe Phoenix insurance was in fact invalid. Sucb evidence was properly admitted at tbe trial.

IY. Tbe court instructed tbe jury tbat, if tbe defendant treated tbe policy in suit as in force, after full knowledge of tbe subsequent insurance of tbe Pbosnix Company, sucb conduct will be regarded as a waiver of tbe forfeiture and an election to treat tbe policy as in force. And tbat, in order to determine whether tbe defendant did' treat tbe policy as in full force, “ it was proper for the jury to consider when tbe premium was paid byHowe and forwarded to tbe company, tbe acts of tbe company in reference to demanding and requiring tbe assured to answer certain questions propounded by tbe State agent, touching tbe loss, etc.; tbe acts of tbe defendant in selecting appraisers and all other facts in evidence bearing on the question.” These instructions, tbe defendant claims, are erroneous, or rather being inapplicable to tbe facts they were improperly given. So far as they embody principles of law, they are not objectionable, and are so regarded by defendant’s counsel; at least no objections are made to them.

*337 While it may be admitted that the, acts referred to in the instructions would, of themselves, considered separately, be no evidence of the waiver of the forfeiture of the policy, yet, when considered together, and in connection with all the facts of the case, they tend, though it may be slightly, to establish that fact. - And it may be admitted that some of the acts referred f° fo- the instructions were not established by the evidence, having been done by the agents of defendant, when not-' within the scope of their authority. But another instruction clearly informs the jury that such acts of the agents do not bind the defendant. The application of the instructions to the facts of the case, in our opinion, could have been correctly made by the jury; at' least it does not appear to us to have been a matter of so great difficulty, that there is a probability the jury were confused or misled in the attempt.

Y. Other instructions asked by the defendant, being in conflict with the principles we have announced in this opinion, were properly refused. They need not be separately considered. They relate to the validity and effect of the Phosnix insurance, and to the effect to be given the ' statements of Howe in the proof of loss. They present these questions in different views, all, however, embodying principles not in accord with the doctrines we herein recognize. Further discussion of these doctrines, and their special application to the several instructions, would not be profitable.

yi. One of the defenses to the action pleaded by defendant is, that the property insured.was burned by Howe himself, and the loss was not the result of accident or any other cause which would render defendant liable on the policy. Evidence was given to the jury which, it is claimed, tended to support this defense. For that purpose, defendant offered to prove the insolvency of Howe at the time of the loss of the property. The evidence was excluded as immaterial and not relevant to the issue, *338 Without passing upon the question here presented, we are of opinion that even if it be conceded that the evidence should have been admitted it is not such an error as will require the reversal of the judgment. If this evidence had been admitted, and upon it and the other evidence tending to support this defense, the jury had found that the property was burned by Howe, the verdict in our opinion could not have been sustained, and should have been set aside as being in conflict with the evidence. In our opinion, all of the evidence of defendant upon this point, considered together, is of such inconsiderable force as uncontradicted to be insufficient to warrant a presumption that the fire was the result of Howe’s own act. The exclusion of the evidence was therefore error without prejudice.

The judgment of the district court is

Affirmed.