Texas Banking & Insurance v. Stone

49 Tex. 4 | Tex. | 1878

Moore, Associate Justice.

The first question presented for our consideration iu this case, is whether the policy of insurance upon which this action is brought imports a warranty that the house in which the property insured was stored at the. date of the policy was used and occupied in no other maimer than that stated in the policy. It is not said in the policy that the contract of insurance is made by the insurer upon the condition, or an express warranty of the insured, that the house was used for no other purpose, and occupied in no other manner than stated in the policy. But, unquestionably, this- is not necessary. Bo technical words or form of expression are necessary to constitute a warranty. Words of affirmation, or statements imputing conditions or undertakings on the part of the insured, relating to the risk, or affecting its character and extent, upon which it must be inferred the insurer contracted, will ordinarily be construed and held to be a warranty. (Bliss, sec. 34; Wood v. Hartford Fire Ins. Co., 13 Conn., 533; Sarsfield v. Metropolitan Ins. Co., 61 Barb., 479.) Certainly, the occupancy and use of the house in which the property insured is kept relates in an essential manner to the risk. Obviously, the hazard of the insurer is thereby essentially increased or diminished. And where there were other words in the policy, as there are unquestionably in this policy, to identify the building which contained the property insured, the terms “occupied as a store-house ” have been hold to be not only in themselves fitly chosen to express a fact relating to the risk, but that they could not be regarded as employed for any other purpose, and necessarily implied that the house was not occupied for any other purpose than that thus stated. (Wall v. East River Ins. Co., 3 Sold., 378.) Bor do we think the reference in the succeeding section of the policy to the assured’s application, with declaration that it “ is his warranty and a part hereof,” will rebut the conclusion from the preceding sentence, of a warranty that the building was not otherwise used than as therein stated.

Assuming, then, that there is in the policy a warranty or condition that the house was not used as it in fact was, and this not being a suit to reform the contract, but an action upon the contract as made, the next question is,—Can it be shown by parol evidence, in avoidance of a plea of a breach of the warranty, that the true use of the house was, or should have been, known to the insurer when the policy was issued ? The use of the house, as alleged in the answer of appellant, and in a manner other than warranted by appellee, so as to increase the danger of the loss of the property, is shown in the record beyond all question. It is also, we think, equally clear, if this may be done by parol evidence satisfactorily established, that no false representations, in respect to the use of the building in which the property insured was stored, were made by appellee or his clerk, by whom the policy was procured from the agents of appellant. We think the testimony beyond all doubt warrants the conclusion, if, indeed, it does not conclusively show, that the application for insurance was signed for appellee in blank at the special instance of appellant’s agents, and upon the implied, if not express, understanding and condition that the agents would make a survey or examination of the property, or take other means to satisfy themselves in regard to its situation and condition, and would fill up the application and issue the policy as the existing facts should justify and demand; and if the insurance agents by whom the policy was issued had complied with their undertaking, they would have easily learned the manner in which the building in which the property was stored was in fact used; if, indeed, as seems quite probable, they did not know it when the application was signed. It can hardly be doubted, from the evidence, that the failure to state in the policy the use to which the building in which the property insured was stored, is wholly attributable to the neglect or omission of the agents of appellee, by whom the insurance was effected, to give proper attention to a matter and discharge a duty which they had voluntarily undertaken, and which, it seems, according to the usage when this transaction took place, was ordinarily performed by the insurer. This, too, when these agents must have known that the insured relied upon them to perform their undertaking and properly consummate the contract.

The admissibility and effect to be given to parol evidence of this character, in response to a plea of a breach of warranty in the policy of insurance, involve the correctness of the general principles of law, in regard to contracts of insurance, announced in the charges given the jury in this case by the court, or in those asked by appellant. If, as appellant’s counsel insist, and as seems to be generally held by the earlier cases, proof that the insurer or his agent drew the application, and knew of the existence of the matters of omission to state which constitutes the breach of warranty relied upon to defeat a recovery upon the policy, will not affect the case; and if, whether the omission was by accident or fraudulent design, the insured cannot recover in an action on the policy, unless the condition or warranty as therein stipulated has been performed or kept, the instructions given by the court to the jury are erroneous, and the converse of them, asked by appellant, should have been given. (Wall v. East River Ins. Co., 3 Seld., 370; Mead v. Northwestern Ins. Co., Id., 520; Burritt v. Saratoga Ins. Co., 5 Hill, 188; State Mutual Ins. Co. v. Arthur, 30 Penn., 315 ; Pierce v. Empire Ins. Co., 62 Barb., (N. Y.,) 636; Kennedy v. St. Lawrence Ins. Co., 10 Id., 285.)

But that parol testimony is admissible to show that insurers or their agents are responsible for an omission or improper statement of matters in the application, which are referred to and made a matter of warranty in the policy, when such warranty is relied upon to defeat an action on the policy; and that'it may be shown that the insured is in no way responsible for, or has contributed to the mistake, but has relied upon the insurer or his agents to prepare the application and policy, and did not, in fact, know of the mistake

or omission, bat, on the contrary, the facts as they existed were known, or should have been known, to the insurer or his agents at the time the policy was effected, and thereby the insurer is estopped from setting up such breach of warranty to defeat an action on the policy, is now well settled, and generally, if not universally,' recognized as the sounder doctrine in regard to contracts of this kind. (Rowley v. Empire Ins. Co., 36 N. Y., 550; Plumb v. Cattaraugus Ins. Co., 18 Id., 392; Frost v. Saratoga Ins. Co., 5 Denio, 154; North American Ins. Co. v. Throop, 22 Mich., 158; Franklin v. Atlantic Ins. Co., 42 Mo., 456; Columbia Ins. Co. v. Cooper, 50 Penn., 331; Ins. Co. v. Wilkinson, 13 Wall., 222; Ayres v. Home Ins. Co., 21 Iowa, 185; Coombs v. Hannibal Ins. Co., 43 Mo., 148; People’s Ins. Co. v. Spencer, 53 Penn., 353; Meadowcraft v. Standard Ins. Co., 61 Penn., 91; Beal v. Park Ins. Co., 16 Wis., 241.)

This change in the general current of decisions seems to have been deemed necessary and required by the manner and circumstances now almost universally leading to and attending these contracts. As said by Miller, J., in the case of the Insurance Co. v. Wilkinson, 13 Wall,, 234, “It will not be denied that the application, logically considered, is the work of the assured, and if left to himself or to such assistant as he might select, the person so selected would he his agent, and he alone would be responsible. On the other hand, it is well known (so well that no court could be justified in shutting its eyes to it) that insurance companies organized under the laws of one State, and having in that State their principal business office, send these agents over the land, with directions to solicit and procure applications for policies. * * * They pay these agents large commissions on the premiums thus obtained, and the policies are delivered at their hands to the assured. The agents are stimulated by letters and instructions to activity in procuring contracts, and the party who is in this manner induced to take out a policy rarely sees or knows anything about the company or the officers by whom it is issued, but looks to and relies upon the agent who has persuaded him to effect the insurance as the full and complete representative of the company in all that is said.or done in making the contract, lias he not a right to so regard him ? . It is quite true, that the reports of judicial decisions are filled with efforts of these companies, by their counsel, to establish the doctrine that they can do all this, and yet limit their responsibility for the acts of these agents to the simple receipt of the premium and delivery of the policy; the argument being, that as to all other acts of the agent, he is the agent of the assured. This proposition is not without support in some of the earlier decisions on the subject; and at a time when insurance companies waited for parties to come to them to seek assurance, or to forward applications on their own .motion, the doctrine had a reasonable foundation to rest upon. But to apply such a doctrine, in its full force, to the systeni of selling policies through agents which we have described, would be a snare and a delusion, leading, as it has done in "numerous instances, to- the grossest frauds, of which the insurance corporations receive the benefits, and the parties supposing themselves insured are the victims.”

But while it may be shown by parol evidence that the insurer is estopped from claiming immunity from liability by reason of a breach in the warranty thus improperly or inaccurately incorporated in the policy, yet there must be a proper predicate for this, as well as all other testimony upon which parties rely to support their action or maintain them defense. The evidence is in the nature of a confession and avoidance of the answer of appellant; setting up a breach of warranty. Appellee, however, neither made a replication to the answer, nor, by amendment of his petition, averred the facts upon which he relies in avoidance of the defense set up by appellant. The evidence, if excepted to when offered, should have been excluded; and, though admitted without objection, according to numerous decisions of this court, as it was not warranted by the pleadings, it cannot be looked to as the basis for relief. (Hall v. Jackson, 3 Tex., 305; Cherry v. Newby, 11 Tex., 457; Norvell v. Oury, 13 Tex., 31.) The case, however; was made by the charge of the court to-turn entirely upon it. If we exclude from consideration the testi- • mony in avoidance of the warranty in the policy pleaded by appellant, there is no evidence calling for the charge given by the court. Aside from this evidence, it was clearly irrelevant, and calculated to mislead the jury, and therefore erroneous.

The judgment is reversed and the cause remanded.

Reversed and remanded.