21 Misc. 285 | N.Y. App. Term. | 1897
The action is' on a Lloyds policy, issued in the name of the defendant and nineteen other underwriters, doing business as an insurance association under' the name and title of the Metropolitan Lloyds. The policy insured the Kaufman.Milling Company, in the sum of $4,000 against loss or damage by fire, to certain merchandise of that corporation contained in the store and frame elevator of the President Mills, situated at Bethalto, Madison county, Illinois. The form of policy was the usual one issued by Lloyds companies, and the liability of each of the twenty underwriters was severally fixed at $200, making the total amount insured.
Upon the trial .the parties admitted (1) the.corporate existence of the -insured, (2) the issuing of the policy, (3) the interest of the insured in the property, (4) that a fire occurred during the lifetime of the policy whereby the property insured was damaged to the'amount of $2,675.57, (5) that the proportionate part of the loss for which the defendant was liable, if at all, amounted to $133.77, and that the right of action had been duly transferred to the plaintiffs. .
Two questions were reserved for litigation: . (1) whether the proofs of loss were properly served. This was to be determined, from the evidence. (2) Whether the action was properly brought against the defendant as one of the underwriters, or should havi been brought against the attorneys in fact of all the underwriters — a question which as presented is a mixed one of law and fact.
The second question reserved is in the. nature of an objection to the form of the action based on that part of the policy which provides that •“ Ko action shall be brought- by the assured to en
This provision has been before the courts in actions on similar policies, and it has been decided that where the attorneys in fact are not underwriters such provision is contrary tó public policy and void (Knorr v. Bates, 14 Misc. Rep. 501; 12 id. 395; Farjeon v. Fogg, 16 id. 219), but where the attorneys in fact are underwriters, and liable as such on their contractual obligation, the stipulation that only one of their number should be sued, to prevent a multiplicity of suits and an unnecessary accumulation of costs, is valid. N. J. & Penn. C. W. v. Ackermann, 6 App. Div. 540; Stieglitz v. Belding, 20 Misc. Rep. 297; Lawrence v. Schaefer, 20 App. Div. 80; 46 N. Y. Supp. 719. So that in this case unless there were one or more attorneys in fact who were underwriters, against whom the action should have been instituted, it was properly brought directly against one of the underwriters, for since the contract is several in its terms each obligor should be separately sued. Barb. Parties, 117.
The defendant claims that William O. Beecher and Arthur White are underwriters, as well as attorneys in fact of all the underwriters, and that the suit should, therefore, have been against them as such attorneys, in which event, judgment might have gone against them in the one action for the entire loss, thtis binding all the underwriters for them proportionate amount thereof. Leiter v. Beecher, 2 App. Div. 577.
William O. Beecher and Arthur White were undoubtedly attorneys in fact at the time of the organization of the association, but Mr. Beecher testifies that they became such for the purpose merely of organizing, and when the organization was complete they appointed Beecher & Co. (a firm composed of H. B. Beecher and V. R. Schenck) assistant attorneys; and this firm of Beecher & Co. issued the policy in suit, August 23, 1894, signing it, not as assistants, but as “ attorneys for the underwriters.” William C. Beecher and Arthur White never issued any policies, and the practical details of the business were conducted by Beecher & Co,, who in fact managed everything concerning it.
It appears that about January 24, 1895, Beecher & Co., having by the consent of the underwriters obtained the right to use the name Metropolitan Lloyds, transferred such right to Edwards &
However objectionable the method of changing control and the right to use the business name Metropolitan Lloyds may-have been, the'underwriters, who authorized and permitted the consummation of the scheme, cannot now complain as ■ against a .policyholder of the natural results that followed,* for the consequences should have been foreseen by them and they' probably were. The question whether the state could complain is not before us.
It was further shown that there were twelve or more changes in the membership of the Metropolitan Lloyds, so that those not in the secret could not become informed thereof. It has not been claimed that this change of personnel dissolved the association, or that each change gave rise to a new organization, for the Metropolitan Lloyds .went on as before, with the old business name at its old offices or meeting place; so that so far at least as the public is concerned, it survived the different changes. Strange complications might follow the withdrawal, of members and the substitution of new ones, if those liable as underwriters were not after their retirement bound by the action of the management.
The facts established were sufficient to warrant' the trial court in holding, as it did, that William C. Beecher and Arthur White were not the attorneys in fact of the Metropolitan Lloyds at the .time of the fire, and that the proofs of loss were properly served at the offices of the association on Edwards & Cta., who were openly allowed to hold themselves out as legally representing it as the authorized attorneys in fact and managers of the underwriters, and that such service operated as a valid service on the association within the purposes and requirements of the policy. Walker v. Beecher, 15 Misc. Rep. 149. Indeed, the policy spe
It will not do for the underwriters to allege as against the plaintiffs, innocent third parties, irregularity in the- appointment of Edwards & Co. The rule applicable is thus stated by Morawetz in section 637 of his work on Corporations: “If a person is held out" as the agent of a corporation, by superior agents, who might have properly appointed him, a party dealing with such agent in good faith is entitled to assume that a regular appointment was made; and the corporation will be liable in such case, although the agent was not appointed in the manner prescribed by the company’s charter. Thus, ‘ if a person acts notoriously as cashier of a bank, and is recognized by the directors, or by the corporation, as an existing officer, a regular appointment will be presumed; and his acts as cashier will bind the corporation, although no written proof is or can be adduced of his appointment/ The same doctrine was expressed in an English case, as follows-: ‘ The company is bound by what takes, place in the usual course of business with a third person, where that third person deals bona fide with persons who may be termed de facto directors, and who might, so far as he could tell, have been directors de jure/ After a corporation has invested an agent with apparent authority to represent it, persons dealing with such agent may rely upon this apparent authority until they have received notice, in some way, that the authority has expired, or has been revoked.”
The trial court was also right in deciding that William C. -Beecher and Arthur White were not necessary parties as attorneys in fact, and that the action, as brought, was maintainable.
The underwriters adopted the style “ at Metropolitan Lloyds,” that their venture might be distinguished from other Lloyds concerns. See Crawford v. Collins, 45 Barb. 269; Wright v. Hooker, 10 N. Y. 51; Meriden Nat. Bk. v. Gallaudet, 120 id. 298. The association located offices at which its business was to be carried on and its meetings held, and to which its customers were invited to call in case of loss or other business; and if what occurred thereat with the attorneys in fact and managers does not bind the underwriters, simply because of a devolution of interest and representation, we have reached a stage of Lloyds insurance fully as dangerous to the public as any that has become known.
Upon well-séttled principles, direct proof of agency may 'be dispensed with by estoppel. The inquiry always is whether the party against whom an estoppel is alleged, has by his actions or his words influenced the conduct of others, so that a wrong would be done to those influenced, if a party should be permitted to show a state of facts inconsistent With his actions and words. Carpenter v. Stilwell, 11 N. Y. at p. 73. “ If a person maintains silence, when in conscience he ought to speak, equity will- debar’ him from speaking, when coúscience requires him to be silent.” Hall v. Fisher, 9 Barb. 17; 6 Wait’s Act & Def. 705. Or, as the axiom is sometimes expressed,- “ He who holds his peace when he ought to have spoken, shall not be heard now that he should be silent.” 8 Wait’s Act. & Def. 524.
A party to- a contract containing a provision that it shall not be altered or modified except by a written agreement signed by both parties, may by Ms conduct estop himself from enforcing that provision against a party who has acted on such conduct. Dunn v. Steubing, 120 N. Y. 232; Bishop v. Agr. Ins. Co., 130 id. 488, 496; Stout v. Jones, 9 N. Y. St. Repr. 570; Porter, v. Swan, 44 id. 375.
If the original underwriters did not intend to deceive and mislead the public, such was the effect of their acts (Adams v. Brown,
The rule is applicable to the law of agency “ that where one of two innocent persons must suffer by the misconduct of a third person, that party' shall suffer, who, by his act and conduct, has enabled such third person, by giving him credit, to practice a fraud or imposition on the'other party.” Story on Agency, § 56. Thus in Dreher v. Connolly, 30 N. Y. St. Repr. 674, it appeared that plaintiff’s assignor sold and delivered merchandise for the use of a saloon formerly conducted by defendants, but in fact at that time occupied by one McGonigle, and that defendants’ firm name was continued upon the premises "without any indication of change of ownership; and it was held that plaintiff’s assignor was justified in assuming that defendants continued to be owners, and that defendants by so permitting the use of their firm name were estopped from denying that the sale was to them and on their credit. So, if an insurance company holds out to persons insured, an officer or agent to represent it in respect to losses, and to speak for it at its office in negotiations for the settlement and appraisement of losses, it cannot afterwards question his power to bind the company. Solomon v. Met. Ins. Co., 42 N. Y. Supr. Ct. 22; Van Allen v. Farmers’ Joint-Stock Ins. Co., 10 Hun, 397; aff’d, 72 N. Y. 604. As to innocent third persons, the agent’s authority is determined by the nature of the business intrusted to him and the situation in which he is placed. If he is-put in possession of an office, he is enabled to do whatever business his principal has-represented will be done there. 4 Wait’s Act. & Def. 28.
Hpon equitable principles, therefore, the notice of loss to and service of the .preliminary proofs on Edwards & Co. were properly given and made, and satisfy all the requirements of the policy.
The contract is one liberrimae fidei, demanding from the insured a disclosure of all material facts affecting the' risk, and in -case of loss, a corresponding obligation respecting payment ought to be imposed upon the insurer that the rights of each contracting party may to this extent at least be reciprocal.
In the primitive days of insurance when the underwriters met at Lloyd’s" coffee house on Lombard street, London, and passed around
These associations of underwriters of common-law- origin be-; ' came popular in London, and were so favored in this state that those which on October 1, 1892, were lawfully engaged in the business of insurance were granted certain privileges and exempted from supervision by the insurance department, and not required to report- thereto, “ notwithstanding' any change made therein by death, retirement or withdrawal of any such underwriters, or by the admission of others to said association.” Laws 1892, chap. 690, page 1958; Laws 1894, chap. 684. The privileges conferred upon such Lloyds companies -and not before specially referred to^ are described as consisting “ of an exemption from the conditions and prohibitions prescribed and provided by section 54 of said chapter 690, Laws of 1892, whereby they may transact the business of fire insurance and issue policies in the state of Hew York without being possessed, of the capital required of a fire insurance corporation doing business in this state and' invested in the same manner, and without a certificate to the effect that they have complied with all the provisions which a fire insurance corporation doing business in this state is required to observe, and that the business of insurance specified therein may be'safély intrusted to them.” See complaint drawn by Attorney-General in The People of the State of New York v. Edward V. Loew et al., N. Y. Supreme Court, First Department, May 6, 1896. Associations possessing such exemptions and privileges should in. other respects be held to the same liability "that insurance corporations are to the persons with whom they hold contractual relations.
These associations are anomalous institutions — not corporations or joint-stock companies, though in some respects resembling both, but a combination ■ of individuals-acting concretely as insurers. The members are not partners, for they do not bind themselves jointly, but severally in a specified amount until the sum insured. for is made up. In England, where these institutions originated, they have been alternately called clubs, societies, associations, and individual underwriters. There the contract has been held legal where the members bound themselves severally for specified amounts, but void as contrary to the insurance laws of that country when the underwriters undertook a joint liability oh joint capital. Lee v. Smith, 7 T. R. 338; Strong v. Harvey, 3 Bing. 304; 11 Moore, 72; Harrison v. Millar, 2 Esp. 513; 7 T. R. 340, note; Bromley v. Williams, 32 Beav. 177; 32 L. J. Ch. 176.
While the extent of the liability of each underwriter is specifically limited to his individual share of the loss, the rules of law applicable to insurers generally must in other respects determine when a liability under the policy arises, and to this end the principles of estoppel, adopted from motives of public policy, apply when necessary to prevent fraud and injustice.-
In concluding, it is proper to call attention to the rule that in determining the liability of the defendant, he is entitled to the benefits of the contract fairly construed, and can stand upon all of its stipulations. But when the liability has become fixed by the capital fact' of a loss, within the. range of the responsibility assumed in the contract, courts are reluctant to deprive the insured of the benefit of that liability by any narrow or technical construction of the conditions and stipulations which prescribe
The exceptions are without merit, and the judgment rendered • accords with every notion of substantial justice, finds support in legal principles, and must be affirmed, with costs.
Daly, P. J., and Bischoff, J., concur.
Judgment affirmed, with costs.