Sitler v. Spring Garden Mutual Fire Insurance

18 Pa. Super. 139 | Pa. Super. Ct. | 1901

Opinion by

W. D. Porter, J.,

At the time this contract of insurance was effected, there were in existence four judgments against the defendant which were liens upon the property insured. Three of these judgments had been entered and were held by the Spring Garden Loan and Building Association No. 1 and were of the dates and amounts following, viz : March 19, 1895, $500; January 11, 1897, $7Q0 and February 5, 1897, $100. The fourth was held by Henry Kindig and had been entered April 13, 1898, for $2,750. All these judgments continued in force and were liens at the time' the property was destroyed by fire, on July 4, 1900. The policy of insurance was dated and issued July 2,1898, and a copy of the application, as signed by the applicant, was made part thereof and indorsed thereon. The plaintiff stated in this application that the property was not incumbered, and never after-wards'notified the company of the existence of these judgments. The learned judge of the court below held that, under the contract of insurance, the existence of these judgments invalidated the policy, but that the provision of the policy being for the protection of the company they might waive it, and submitted to the jury the question of such waiver. It is conceded by the appellee that, under the terms of the policy, the existence of the liens made the contract void unless the conduct of the defendant company had been such as to estop it from asserting that invalidity. It is therefore unnecessary to enter into any analysis of the provisions of the policy.

It being undisputed that there was a breach of the covenants of the policy, the burden was upon the plaintiff to establish by evidence such facts as would prevent the company from now asserting that breach. The plaintiff attempted to discharge this burden by showing that the company had notice of the existence of the fact against which he had covenanted, and with such knowledge treated the contract as subsisting by making and collecting assessments under it. Had the evidence been sufficient to establish knowledge by the company of the existing conditions and an acquiescence in them the theory of the defense was sound: Niagara Fire Insurance Company v. Miller, 120 Pa. 501; Kister v. Lebanon Mutual Insurance Co., 128 Pa. 558. Had the incumbrance in question been a mortgage and the plaintiff had shown that at the time of the transaction in question and in immediate connection therewith the company had issued a policy upon the interest of the mortgagee, so that the attention of the officers would be directed to the relation of these policies to each other, the company would be held to have notice of the facts: State Insurance Company v. Todd, 83 Pa. 272; "Wilson v. Mutual Fire Insurance Co., 174 Pa. 554. The theory of the defense was correct but the evidence was not sufficient to support it. The testimony presented to the court related entirely to the knowlege of the secretary of the defendant company, derived from outside sources, of the incumbrances in question.

It is sought to impute notice to the company from these facts. George W. Fry, the secretary of the defendant company, was also secretary of the Spring Garden Loan and Building Association No. 1, a distinct and separate corporation. He was called as a witness, by the plaintiff, and testified that as secretary of the Loan and Building Association he knew of the entry by that corporation of the several judgments against Sitler at the time they were respectively entered. He was interrogated, as if under cross-examination, at considerable length as to what his recollection of those judgments had been at the time the policy in question was issued, and the result is fairly summarized in one of his answers. “ Q. Then, Mr. Fry, you mean to say that at the time you knew it, but you can’t say whether or not you thought of it? A. Well, I knew that we had made some loans to Mr. Sitler at different times, but whether or not I thought of it at the time this application came in, that I can’t say.” It must be borne in mind that when the witness says, “We had made some loans,” he referred to the loan association, and not the insurance company. It is not strange that the secretary on receiving this application failed to remember that an independent corporation with which he was connected had claims against the insured, for the last judgment had been entered more than a year prior to that time. Was he to assume that the judgments had not been satisfied and that the applicant was guilty of falsehood ? The witness testified that at the time this policy was issued he had never heard of the judgment for $2,750 held against the defendant by Kindig. This was the sum total of the testimony as to knowledge of the secretary at the time the policy issued. But it is maintained that even if the secretary did not have knowledge, which would visit the company with notice, at the time the policy issued, he did afterwards acquire such knowledge. Fry testifies, that in January, 1900, Sitler applied to the loan association for some money, “I looked him up and saw that lien of $2,700 and some dollars,” the Kindig judgment. He was asked whether at that time he saw a judgment against the insured in favor of the First National Bank, for $4,000, which had been entered after the policy was issued, and which was a lien at the time of the fire, and he replied in effect that if it was entered and he made a correct search, he found it, but he could not remember. In making this search, if he made it, the witness was acting not for the insurance company but for the loan association. In that employment he owed no duty to the defendant company. Can it be said that a secretary of an insurance company who, while engaged in an occupation having no connection with his official duty, such as that of a conveyancer or officer of a title company, discovers a judgment, is bound to take notice of the fact that it has a bearing upon the rights of the insurance company under some one of its thousands of outstanding policies ? The testimony as to the knowledge of Fry derived from sources having no connection with the business of the company was received under exception by the defendant and the admission thereof is now assigned for error.

The secretary of an insurance company is an executive officer, but the power of an officer of a corporation to bind his principal is subject to the limitations which apply to all other agents. The error of the argument in support of plaintiff’s contention consists in treating George W. Fry as the Spring Garden Mutual Fire Insurance Company. A corporation necessarily acts through its officers, but the authority of any officer to represent the company is limited by the powers committed to him. Such officers only bind the corporation when they undertake to represent it and act within the limits of their authority. The authority conferred may be extensive, yet the officer is still an agent. The same person may be an officer of two independent corporations, and his acts while representing one will no more bind the other than the acts of a stranger: Custar v. Titusville Gas & Water Co., 63 Pa. 381; Gass v. Citizens’ Building & Loan Association, 95 Pa. 101; Johnston v. B. & L. Association, 104 Pa. 394; Pennsylvania R. R. Co.’s Appeal, 80 Pa. 265 ; Bard v. Penn Mutual Fire Insurance Co., 153 Pa. 257 ; Hook v. Mutual Insurance Co., 160 Pa. 229; Wilson v. Mutual Fire Insurance Co., 174 Pa. 554. The knowledge of an agent which will affect his principal with constructive notice must be gained by the agent while acting for the principal in the matter to which it relates. Mr. Justice Mitchell who spoke for the court in McSparran v. Southern Mutual Insurance Co., 193 Pa. 184, said: “Notice is knowledge or information legally equivalent to knowledge brought home to the party notified, in immediate connection with the subject to which the notice relates.” More than a year before the date of this policy, in a transaction in which the insurance company had no interest, Fry acquired knowledge that the loan association, of which he was secretary, held judgments against Sitler; the former had then no information that the latter ever intended to apply for this insurance, and when the insurance was applied for there was nothing to suggest the existence of the judgments. A year and a half after the policy was issued Fry, while again acting for the loan association in a transaction in which the defendant company had no interest, may have seen the record of the judgments against Sitler, but there was then nothing to suggest a connection between those judgments and the subject of the insurance in question. It was incumbent on the plaintiff, in order to estop the company from asserting the right of forfeiture, to show that the knowledge of Fry was gained in connection with the exercise of the authority conferred by his principal, the defendant: Bracken v. Miller, 4 W. & S. 102; Lycoming Insurance Company v. Mitchell, 48 Pa. 368; Barbour v. Wiehle, 116 Pa. 308; Langenheim v. Anschutz, 2 Pa. Superior Ct. 285; Wetzel v. Linnard, 15 Pa. Superior Ct. 503. In commenting upon the principle here applied it was said by Mr. Justice Sharswood, in Houseman v. Girard Mutual Building & Loan Association, 81 Pa. 256: “ The true reason of the limitation is a technical one, that it is only during the agency that the agent represents, or stands in the shoes of his principal.” The evidence offered by the plaintiff was incompetent to establish an estoppel. That which was admitted was insufficient to warrant the submission to the jury of the question of notice to the defendant that the property was incumbered: Elliott v. Lycoming County Mutual Ins. Co., 66 Pa. 22; Penna. Mutual Fire Ins. Co. v. Schmidt, 119 Pa. 449. The defendant was entitled to the binding instructions requested in its eighth point and the ninth assignment of error is sustained.

The judgment is reversed.