138 A. 39 | R.I. | 1927
This case is heard on exceptions of plaintiff to a decision for defendant after trial by the Superior Court sitting without a jury.
The parties have discussed briefly whether the written decision impliedly found disputed facts in favor of defendant. We shall not determine this because the legal questions upon which the decision rested are controlling, even if the facts asserted by plaintiff be accepted.
The action was on a standard form of fire insurance policy covering personal property. G.L. 1923, C. 258. It contained the condition: "This entire policy unless otherwise provided by agreement endorsed hereon or added hereto shall be void . . . if the subject of the insurance be personal property and be or become encumbered by a chattel mortgage;" "no agent . . . shall have power to waive any condition of this policy except such . . . as may be subject to agreement endorsed hereon" and *323
further that no privileges or permissions affecting the insurance shall be claimed unless written upon or attached to the policy. In legal contemplation knowledge of such terms is possessed by the insured, Parsons v. Lane,
After issuance of the policy in February, 1925, it always remained in plaintiff's possession and no request ever was made for permission to mortgage the property. A chattel mortgage was placed July 22, 1925, without the knowledge of the company. July 30 the company, learning of said mortgage, notified its Boston agent who wrote to Fuller, its agent in Rhode Island, that information had been received that a chattel mortgage had been filed and if so ordering an immediate cancellation of the policy. Fuller on August 3 wrote plaintiff as follows: "We have received a letter from our insurance company requesting cancellation — because of the fact that they have information that a chattel mortgage has been placed — On this account they ask to be relieved of this risk and wish their policy cancelled . . .
". . . Insurance companies do not like to insure stock covered by chattel mortgages but if you will write us the circumstances for which the money is to be used and when and how it is to be paid up we will advise the company and they may allow the insurance to remain in force.
"Kindly let us hear from you at once and in case this company cancels the policy after giving them this information, we may be able to place it in another company."
To this communication plaintiff, an unlettered man, made no reply. Some time in August, in response to a `phone call from Fuller, plaintiff says he got his brother to write a letter giving Fuller the information "why the mortgage was taken out, how payable and how much was paid already." The contents of this letter were proved by the recollection of plaintiff's brother. Fuller denied the receipt of any such letter and plaintiff admitted he had kept no copy of it. The *324 brother of plaintiff also testified that two weeks after writing the alleged letter he saw Fuller and asked him how he made out on plaintiff's policy, to which Fuller replied, "You needn't worry about that. Everything is well taken care of." This conversation Fuller denied. Plaintiff did nothing to have the policy validated and prior to loss did not again communicate with Fuller.
November 9, 1925, a fire occurred and later defendant offered to return the full premium, claiming misrepresentation in procuring the policy as well as its avoidance by reason of the chattel mortgage. Fuller's commission shows that his authority was to effect insurance and renew policies, consent to assignments and transfers and collect premiums. He was more than a mere local agent or solicitor of insurance. He was the general agent through whose hands defendant's Rhode Island business passed.
Plaintiff's contentions are (1) that the policy was voidable not void; (2) that the company waived the right to insist that the giving of the chattel mortgage avoided the policy, and (3) that, irrespective of the alleged waiver, the company was estopped to assert invalidity of the policy.
It is true that this court has often referred to insurance policies as "void" when conditions have been broken. But in no case was the court construing the legal meaning to be given to the word "void." The great weight of authority is that the word "void" is to be read as voidable when the condition is for the advantage of one party only. Williston on Contracts, § 746; 32 C.J. 1317; 14 R.C.L. 1155; that the condition against encumbrances and other conditions in the same group are for the benefit of the insurer with the consequent right to elect after knowledge of the breach of condition whether to treat the policy as of no effect or as still in force. Insurance Co. v.Norton,
We therefore conclude that the policy by the placing of the chattel mortgage was not void beyond the possibility of reinstatement without new consideration. The placing of the chattel mortgage rendered the policy voidable at the option of the insurer.
Did the insurer waive plaintiff's breach of condition? No contention is made that it did so in writing. The policy's terms concerning the method of waiving the rights of the insurer are not ambiguous. Such waiver must be written and attached to the policy. We recognize the existence of but can not agree with authorities holding that an oral waiver of the conditions of an insurance policy against encumbrances may be made by a general agent in spite of the explicit terms of the policy to the contrary. Rediker v. Queen Ins. Co.,
In Rhode Island, however, as applying to insurance policies, waiver and estoppel have been differentiated. In Metcalf v.Phenix Ins. Co.,
By the terms of the policy, which is a contract made by and binding upon the parties, Imperial Fire Ins. Co. v. Coos Co.,
Conceding that the policy was voidable at the election of the insurance company and that there was no waiver of right to assert invalidity because of the chattel mortgage, the question still remains whether anything said or done by the company or its agent Fuller induced plaintiff to act or fail to act as a result of which plaintiff was damaged. If so, although the terms of the policy were not waived, the authorities generally prevent the company from using the breach as a defence. Agricultural Ins.Co. v. Potts,
Plaintiff seeks to rest this quasi estoppel on three grounds: (a) Fuller's letter above quoted; (b) Fuller's alleged oral statement to the brother that everything was well taken care of: (c) failure of the insurer to return the unearned premium.
The only way the company can act is through an agent but we have held that the knowledge of a special agent of insured's partial ownership which vitiated a policy was not the knowledge of the company. Salvate v. Firemen's Ins. Co.,
An examination of Fuller's actual authority as shown by his commission does not indicate that he had any power to act for the company in electing not to insist upon invalidity for a condition broken after issuance. With knowledge of these limitations, however, plaintiff was not chargeable, 14 R.C.L. 1158, and it might be urged that as general agent through whom defendant was required to act in Rhode Island such power was within his ostensible authority. Sharman v. Ins. Co., 167 Calif. 117. In fact it is a fair inference from Fuller's testimony that it was he who indorsed written waivers on the policy when so directed by the company. The limitations on the face of the policy are, however, notice to the insured of the agent's want of authority *329 to waive conditions except in writing attached to the policy. 14 R.C.L. 1162; Brown v. Mass. Mutual Life Ins. Co., 59 N.H. 298. In the face of these limitations it is difficult to see how the insured reasonably may claim that he was lulled into belief that Fuller's letter indicated that the broken condition would not be asserted. 14 R.C.L. 1158.
Assuming, however, that a general agent might so act as to render it reasonable for the insured to believe that the broken condition would not be asserted by the company to avoid the policy, viz., as where in excess of actual authority the agent indorsed a written waiver upon the policy, Fuller's letter to plaintiff distinctly indicates that decision of whether or not to treat the policy as void because of the mortgage was to be made not by Fuller but by higher authority whose answer he required before he could act. The letter before us resembles that in the case of Allemania v. Hurd,
Assuming that Fuller told plaintiff's brother in response to a question as to how Fuller was coming on in regard to plaintiff's policy, that he needn't worry because "everything is well taken care of," we find no evidence that this statement was communicated to plaintiff. At the time of the alleged remark Fuller was at the brother's place of business on other matters and the inquiry was a casual one at the end of the conversation as Fuller was leaving. It was not made by the brother in the course of any business he was attending to for plaintiff. It was an inquiry solely for information of the brother. Moreover, if communicated, the language is far from an assertion that defendant company would not insist that the policy before us had been avoided. It might mean that Fuller had placed or would place plaintiff's insurance in other companies. The inquiry indicates, at least, that the brother understood that the breach had not been waived at the time he wrote the letter to Fuller in August. If the brother understood that the question of validity was in abeyance, it is fair to infer that plaintiff so understood. Plaintiff, himself, after this letter never saw or communicated with Fuller prior to the fire. He sought no indorsement on the policy and it always remained in his possession. Fuller's oral reply to plaintiff's brother, therefore, while capable of two interpretations, when taken in connection with the known necessity for a written waiver of breach did not estop the defendant company from using the breach as a defence. Plaintiff was not entitled to neglect the plain requirements of his contract with defendant simply because defendant's agent told his brother that everything would be all right and then claim that the agent's conduct misled him and is to be attributed to defendant. As said by Williston on Contracts, p. 1443: "The terms of the policy preclude the supposition of authority on the part of an agent to make parol promises and also preclude the reasonableness of reliance thereon." Cass v. Lord,
Plaintiff urges that failure to return the unearned premium after knowledge of the breach and before loss created an estoppel. He is not without support. Glens Falls Ins. Co. v.Michael,
Plaintiff's exceptions to the decision of the Superior Court are overruled.
The case is remitted to the Superior Court for entry of judgment on the decision.