163 Ind. 651 | Ind. | 1904
This is a suit by the appellee against the appellant on a policy of fire insurance upon a stock of goods owned by the appellee, destroyed by fire. Issues were formed, and a trial by the court resulted in a finding for the appellee in the sum of $1,000. A motion for a new trial was overruled, and judgment was rendered on the finding.
Errors are assigned (1) upon the refusal of the court to strike out parts of the second paragraph of the reply t'o the second paragraph of the answer; (2) the overruling of a demurrer to the second paragraph of the reply to the second paragraph.of the answer; (3) the overruling of a demurrer to the third paragraph of’the reply to the second paragraph of the answer; and (4) the overruling of a motion for a new trial.
The complaint alleged the ownership of the merchandise by the appellee, the issuing of the policy by the appellant (a copy of which was made an exhibit), the payment of the premium, the loss, the performance of all the conditions of the policy by the appellee, and the failure of the appellant to indemnify the appellee for his loss. The answer was (1) a denial; (2) a plea that at the time the policy was issued the goods insured were encumbered by a mortgage, which fact, by the terms of the contract, rendered the insurance void; and (3) a partial answer founded upon a clause in the policy requiring the loss, if any, t'o be borne pro rata by all companies issuing policies on the property, alleging other insurance, and a consequent diminution of the amount for which the appellant was liable. Reply, (1) a denial; (2) that the agent of the
The policy of insurance issued by the appellant contained these provisions: “This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void * * * -if the subject of insurance be personal property, and be, or become, encumbered by a chattel mortgage. * * * This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, ,any material fact or circumstance concerning the insurance, or the subject thereof, or if the interest of the insured in the property be not truly stated therein. * * * This policy is made and accepted subject to the foregoing stipulations and conditions * * * and no officer, agent, or other representative of this company shall have power to waive any provision or condition- of this policy except such as by the terms of this policy may be the subject of agreement indorsed 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
The second paragraph of appellee’s reply to the second paragraph of appellant’s answer admits that, at the time the policy was executed, the goods insured were encumbered by a mortgage, but it seeks to avoid the effect of this circumstance by the averment that the agent of the appellant accepted the premium with full knowledge of the existence of the encumbrance. It is not claimed by the appellee that the condition concerning encumbrances was one which, by the terms of the policy, was a proper subject of agreement to be indorsed on that instrument, nor that the agreement to waive this condition was indorsed on the policy or attached to it.
It is contended by counsel for the appellant that the legal effect of the supposed waiver of the condition in regard to encumbrances on the goods insured is to enable the insured to add to and contradict the written instrument by a parol agreement, or by matter in pais. It is also insisted that even if such waiver may be shown, it does not appear from the reply that the agent who issued the policy had authority to consent to the waiver.
A policy of insurance is a somewhat unique species of contract. Its principal, or at least its most conspicuous, elements are the payment of a premium by the insured, and the agreement of the insurer to indemnify the insured against loss on a certain subject against certain perils. The-numerous conditions often inserted, which are intended to defeat the risk and create a forfeiture of the right to demand the indemnity in the event of loss, are to some extent collateral to the principal undertaking, and are not essential to it. These conditions are usually inserted exclusively for the benefit of the insurer, and, as a matter of fact, are seldom read or seen by the insured until a loss occurs. The
It is true that most of the numerous conditions contained in the ordinary policy of fire insurance are intended to protect the insurer against fraud, and they may be necessary to accomplish that object. Such are the conditions relative to other insurance, full disclosures concerning the title to the subject of the risk, and the existence or creation of encumbrances and liens thereon. These circumstances affect the moral hazard assumed by the insurer. That moral hazard is nothing more nor less than the probability or improbability that the insured will designedly destroy his property, or negligently suffer it to he destroyed, to obtain the insurance. If he did so destroy it, that fact, if shown, independent of any condition to that effect in the policy, would constitute a complete defense to an action on the contract. But the burden of proving the fact would rest on the insurer, and in most cases it would be difficult or impossible to establish it. By inserting in the contract conditions rendering the policy void and the insurance forfeited if all facts affecting the title of the property insured are not fully disclosed by the policy holder, or if other insurance is taken out without notice to the insurer, or if the property is, or shall become, encumbered .by mortgage or other lien, the insurer not only, escapes all danger from the moral hazard in such cases, but is enabled to defeat the recovery of the
Considerations of this character have induced the courts to hold that even where the contract contains a condition that “the policy shall be void if the subject of insurance be personal property, and be or become encumbered by a chattel mortgage,” the company will not be permitted to defeat a recovery by proving the existence of such an encumbrance as would render the policy void, where it had full knowledge of the encumbrance when the policy was issued by it. And such has been held to be the rule, also, where there are other provisions in the policy declaring that notice of the existence of all encumbrances must be indorsed on the policy, and that no agent shall be deemed to have waived any condition unless the waiver is so indorsed. So, too, it is generally held that if an insurer accepts payment of a premium with knowledge that a fact exists which, by the terms of the policy, will render the contract of insurance void, the acceptance of the premium is a waiver of the right to avoid the policy for that breach. 16 Am. and Eng. Ency. Law (2d ed.), 940; Phoenix Life Ins. Co. v. Raddin (1887), 120 U. S. 183, 7 Sup. Ct. 500, 30 L. Ed. 644; Mutual, etc., Assn. v. Cleveland Woolen Mills (1897), 54 U. S. App. 290, 82 Fed. 508, 27 C. C. A. 212; Home Ins. Co. v. Duke (1882), 84 Ind. 253; Indiana Ins. Co. v. Capehart (1886), 108 Ind. 270; Moffitt v. Phenix Ins. Co. (1894), 11 Ind. App. 233; Masonic, etc., Assn. v. Beck (1881), 77 Ind. 203, 40 Am. Rep. 295; Phenix Ins. Co. v. Boyer (1891), 1 Ind. App. 329; Union Cent. Life Ins. Co. v. Jones (1897), 17 Ind. App. 592; Keenan v. Dubuque, etc., Ins. Co. (1862), 13 Iowa 375; Viele v. Germania Ins. Co. (1868), 26 Iowa 9, 96 Am. Dec. 83; Bloom v. State Ins. Co. (1895), 94 Iowa 359, 62 N. W. 810; Towle v. Iowa, etc., Ins. Co. (1892), 91 Mich. 219, 51 N. W. 987; Singleton v. Prudential Ins. Co. (1896),
In Behler v. German Mut. Fire Ins. Co. (1879), 68 Ind. 347, 350, it was said: “The delivery of the policy to the insured, after its execution by the insurer, as averred in the complaint, was a waiver of the condition precedent, or a warranty, as it is sometimes called in insurance law, of requiring the premium note of the insured to be delivered before the policy would take effect, and affords no ground of defense against the policy.” ,Many cases supporting this proposition are cited in the opinion.
In Masonic, etc., Assn. v. Beck, supra, the court said: “The logical and necessary deduction from this doctrine [i. e., that after default in the conditions of a contract by one party, the other may waive the forfeiture and treat the instrument as of binding force upon himself] is, that a
In Excelsior Mut. Aid Assn. v. Riddle (1883), 91 Ind. 84, 87, the same principle is expressly recognized by the court where it is said: “We are of opinion that the court committed no error in overruling appellant’s demur'rers to these paragraphs of reply; for, although the matters alleged by appellant in the second paragraph of its answer were such as avoided the contract of insurance by its terms, y.et, in effect, they simply rendered such contract voidable at the election of the appellant; and, notwithstanding the existence of those matters, it was competent for the appellant to waive the forfeiture thereby authorized, and continue the contract of insurance in full force.”
In Northwestern, etc., Ins. Co. v. Hazelett (1886), 105 Ind. 212, 55 Am. Rep. 192, it was said by Mitchell, J.: “Courts will construe a contract of insurance liberally, so as to give it effect rather than to make it void. Conditions which create forfeitures will be construed most strongly against the insure?*. Only a stern legal necessity will induce such a construction as will nullify the policy;” citing authorities.
In Aetna Life Ins. Co. v. Deming (1890), 123 Ind. 384, 387, it was said: “It is well-settled law that all conditions in policies of insurance which when violated work a forfeiture as against the assured are to be construed liberally in favor of the assured and strictly against the insurer;” citing authorities.
Elliott, J., in Continental Ins. Co. v. Vanlue (1891), 126 Ind. 410, 414, 10 L. R. A. 843, states the law thus: “The ground upon which rests the distinction between contacts of insurance and other contracts is a solid one, fox*
The facts in Robbins v. Springfield Fire Ins. Co. (1896), 149 N. Y. 477, 44 N. E. 159, ar.e very similar to those in the present case, especially in regard to the knowledge of the agent of the insurer at the time of the issuing of the policy of facts which would render the contract void. In that case there was a chattel mortgage on the goods, and the assured, orally, so informed the agent of the company when he applied for the insurance. The condition in that policy, as in the one before us, was that “this entire policy, unless otherwise provided by agreement indorsed hereon, or added hereto, shall be void if the subject of insurance be personal property and he, or become, encumbered by a chattel mortgage.” The policy also contained a provision to the effect that no officer, agent, or other representative of the company should have power to waive any condition or provision of the policy, except such as might by the terms of the policy be subject to waiver upon the terms indorsed thereon or; added thereto, and that, as to those conditions and provisions, no officer, agent, or representative should be deemed or held to have waived any of them, unless the waiver was written upon the policy. Upon the trial, the existence «of the chattel mortgage was established. The plaintiff proved that when he applied for the insurance he informed the agent of the company that there was a mortgage on the property, and that he was prepared to pay it off. At the close of the testimony, counsel for the defendant company asked the court “to direct a verdict for the defendant on the ground that at the time
Our conclusion upon this branch of the case is that if the appellant issued the policy sued upon, and accepted and retained the premium for the insurance, with knowledge that there was a chattel mortgage on the subject of the risk, it must be taken to. have waived the condition declaring the policy void if the property insured should be so encumbered, and also those provisions of the contract requiring the waiver to be indorsed upon the policy.
The next question is whether the second paragraph of the reply to the second paragraph of the answer shows that the agent of the appellant who issued the policy had authority to waive the condition relative .to a forfeiture where the subject of the insurance was personal property which was, or which became, encumbered by a chattel mortgage.
It seems to be well settled by the decisions of this court and of the courts of many other states that’ an agent of an insurance company, who has authority to issue policies of insurance and to collect the premium upon the same, has the power to waive conditions of the policy which would render it void from the beginning, and which are, in some measure, collateral to the principal agreement to insure the property in consideration of the payment of a certain premium. The’ appellant was a foreign corporation, and its agent in this case, who dealt on its behalf with persons seeking insurance by it, who issued its policies, and col
It is averred in direct terms in the second paragraph of the reply to the second paragraph of the answer that the agent who wrote the policy and collected the premium did so with full knowledge of the existence of the encumbrance on the property. These averments sufficiently show the authority of the agent to- waive a condition of this character.
The third paragraph of the reply to the second paragraph of the answer alleged that the corporation itself issued the policy, and accepted the premium with full knowledge of the existence of the mortgage. In the light of the authorities already referred to, it was competent for the appellant to waive the conditions in regard to a forfeiture by reason of existing encumbrances, and there can be no question of the sufficiency of the paragraph.
The averments of the second paragraph of the reply to the second paragraph of the answer which appellant moved to strike out were mere surplusage. They were to the effect that the appellee had no notice that the encumbrance would avoid the policy, and that the provision for a forfeiture in such case was in fine print, and was not known to the appellee until after the fire and the delivery of the proofs of loss. The paragraph of reply was sufficient without
The last error assigned is upon the overruling of the motion for a new trial. There was some evidence in support of all the material allegations of the complaint. It was shown by the proof that the appellee Teagley was a merchant of Thorntown, Boone county, Indiana. He owned a stock of merchandise, etc., worth at least $8,000. July 16, 1900, and while he was residing at Thorntown, he took out a policy of fire insurance for $2,000 on his stock of goods, with the Fire Association of Philadelphia. Mr. Charles Underwood was the agent of this company, and his offices were at LaFayette, Indiana. Underwood was an insurance agent of long experience, and was conducting a large business. At the time the policy was issued by him as the agent of the Fire Association of Philadelphia, Teagley informed -him that there was a mortgage on his stock of goods, and Underwood inserted in the policy a clause in these words: “Payable in case of loss to E. C. Voris as his interest may appear.” Sometime after July 16, 1900, the appellee removed his stock of goods from Thorntown, Boone county, Indiana, to the town of Bunker Hill, in Miami county. In May, 1901, he wrote to Underwood at LaFayette, directing the latter to give him $1,000 insurance in addition to the policies already issued by Underwood on his said stock of goods. Underwood answered this letter, and asked Teagley whether the mortgage on his stock was paid off. Teagley wrote him that it was not. Underwood, acting as agent of the appellant, then sent him the policy sued on, dated May 24, 1901, and running to May 24, 1902, stating in the letter accompanying it that he did not think the mortgage would make any material difference. Underwood wrote in another letter to Teagley that it was hard for him to carry a policy on a
It appeared from the proof that on April 11, 1900, Yeagley executed a mortgage on his stock of goods to one E. C. Voris, to secure a debt amounting to $2,525; that this mortgage was in force; and that a part, at least, of the debt so secured was unpaid when the policy sued on was issued. The mortgage to Voris was the encumbrance referred to in the correspondence between the appellee and Underwood, the agent of the appellant, at the time the policy sued on was applied for and delivered. The - fact that Underwood, who issued the policy and collected the premium from the appellee, was the general agent of the appellant, with very full powers to represent the nonresident company, was manifest. The proof that he had notice of the existence of the mortgage on the stock of goods when he issued the policy and collected the premium was clear. The evidence relative to the delivery of proofs of loss by the appellee justified the court in finding that there had been a sufficient compliance with the condition of the policy upon that subject, or that the delivery of such proofs was unnecessary because of the assertion of the forfeiture of the insurance by the appellant, and its denial of the right of the appellee to demand anything under the policy. In view of the other facts established by the proof, the supposed errors of the court in admitting certain evidence offered by the appellee were not, in our opinion, of sufficient importance fi> require a reversal of the judgment. Nor is it clear that the court erred in any of these rulings.
Counsel for appellant, amorig many other decisions, especially press upon our attention the case of Northern Assur. Co. v. Grandview Bldg. Assn. (1902), 183 U. S. 308, 22 Sup. Ct. 133; 46 L. Ed. 213. If the correctness of the propositions stated in that opinion relative to the binding character of conditions in a policy providing for "forfeitures, and the duty of courts to enforce them, is conceded, the opinion fails to sustain the position of the appellant.
The case before us falls directly 'within the exception stated in. Insurance Co. v. Wolf (1877), 95 U. S. 326, cited by Shiras, J., who delivered the opinion in Northern Assur. Co. v. Grandview Bldg. Assn., supra, such exception being in these words, at page 356: “It is essential that the company should have had some knowledge of the forfeiture, before it can be held to have waived it. It is true that, where an agent is charged with the collection of premiums upon policies, it- will be presumed that he informs the company of any circumstances coining to his knowledge affecting its liability; and, if subsequently the premiums are received by the company without objection, any forfeiture incurred will be presumed to be waived.” Our statement of the law corresponds very closely with the view expressed in this opinion.
We find no error in the record. Judgment affirmed.
All concur except Gillett, J., not voting.