Woodbury Savings Bank & Building Ass'n v. Charter Oak Fire & Marine Insurance, 31 Conn. 517

31 Conn. 517 | Conn. | 1863

Dutton, J.

The respondents, issued their policy intending to insure the petitioners on a mortgage interest which they held in the property in question. The agent of the petitioners represented to the local agent of the respondents what their object was, and that the legal title to the property had become so complicated and doubtful that he could not accurately describe it, and requested him to make the necessary examinations and issue such a policy as would insure their interest. This the agent attempted to do, but through mistake and misapprehension as to the proper mode of doing it, he made out the policy in the name of the original mortgagees, without their knowledge or co-operation, payable in case of loss to the petitioners as owners of the mortgage. After the building had been burnt the respondents refused to pay the loss, on the ground that the conditions of the policy as to the description of the title to the property had not been complied with. The petitioners then brought their action at law, which is still pending, on the policy. This court held that on such a policy no action at law would lie in favor of the mortgagees. 29 Conn. R., 374. This petition was then brought, praying for a correction of the mistakes and an injunction against the defendants taking advantage of the failure to comply with the conditions of the policy. The respondents deny that the local agent, in entering a description of the property in the application for the insurance, was their agent.

The principal question is, whether under these circumstances, which as we proceed will be more particularly noticed, the petitioners are entitled to relief. There are other questions involved, which will be considered before we close.

The records of the courts of this state will show that we have maintained the integrity of contracts, and the necessity of a strict compliance with all conditions affecting their validity, although in some instances almost to the denial of justice. Thus in Glendale Woolen Co. v. Protection Ins. Co., 21 Conn., 19, and in Sheldon v. Hartford, Fire Ins. Co., 22 id., 235, this court held that the answer, “ There is a watchman nights,” to the question, “ Is there a watchman in the mill during the night?” implied that there was a watchman in the mill during the whole of each night, and that consequently the absence of the watchman from twelve o’clock Saturday night till twelve o’clock Sunday night was at law an unexplainable breach of the condition and prevented a recovery. It is difficult to reconcile the common mind to the justice of such decisions, and we can hardly satisfy ourselves that the failure to recover was not owing more to the misfortune than to the fault of the plaintiff, and that in all probability the insurance would have been made by the company just as soon and at the same rate if the description had been strictly accurate. But in such cases no doubt public policy requires a strict enforcement of the terms of the contract. So in Bouton v. Am. Mut. Life Ins, Co., 25 Conn., 542, a failure to pay the premium on the day, even with the consent of the local agent, where there was not sufficient proof that such agent was authorized to waive the time of payment, was held to bar a recovery. The case of Treadway v. Hamilton Mutual Ins. Co., 29 Conn., 68, and the former decision in this case, 29 Conn., 374, show the same determination to apply the strict rules of law to policies of insurance, although in the former the grossness of the misdescription and in the latter the manifest inadmissibility of the evidence divest the cases of any claim to sympathy.

The case of Lounsbury v. Protection Ins. Co., 8 Conn., 459, in which the condition specified “ carpenters in their own shops or in buildings erecting or repairing,” as extra-hazardoiis, and as avoiding a policy unless named in it, and in ■which it was held that the condition was not broken by the use of a room in the building for repairing the machinery ; and the case of Billings v. Tolland County Mut. Fire Ins. Co., 20 Conn., 139, in which it was held that the temporary use of a barn for slacking lime and mixing paints, and leaving the materials for a short time in the barn, were not, when in conformity with common usage, a fatal departure from the description — ££ all the above described barns are used for hay, straw, grain unthreshed, stabling and shelter,” may seem to indicate a relaxation of strict rules ; yet they will be found not to have gone further at least in that direction than the cases of Dobson v. Sotheby, 1 Mood. & Mal., 90, and Shaw v. Robberds, 6 Adol. & El., 75.

But the courts of this state have not thought it proper to follow the precedents made by some other courts, of regarding local agents, in rendering aid in the issuing of policies, as the agents of the applicants rather than of the insurance companies. They have rather taken the ground that public policy and the protection of the community require that the contrary rule should be adopted. A modern policy is a very complicated contract. Before executing almost any other instrument of equal perplexity, the parties would deem it necessary to take the advice of able counsel. Frequently questions arise as to the proper construction of the terms used, which divide the opinions of the most learned jurists. Yet the insured are bound at their peril, however ignorant they may be on points of law, to give them their true legal construction. Now we know from common observation that not one in a hundred of those who procure policies give any attention whatever to the finely printed page containing the conditions of a policy. They can not afford to spend the time required to study them over, and they take it for granted that they would not be enlightened if they should. They, rely with full confidence, and whatever may be the law, or whatever stipulations may be inserted in the policy, they.always will rely, on the representa, tions of the agents, and always will regard them as the representatives of the company, and will always consider themselves as safe in doing whatever receives their sanction.

These local agents however are under a strong temptation to use undue influence to increase their business and at the same time to screen as far as.possible their employers from loss. It was well remarked by Ellsworth, J., (25 Conn., 477,) “ There is great danger that injustice will be done to persons obtaining insurance who are inexperienced in the business and place full confidence in the word of an insurance agent, accredited as he is by his public appointment.” This court have therefore in a series of decisions held companies bound by the acts of local agents whenever it could be done consistently with the evidence and rules of law. Thus in Beebe v. Hartford County Mut. Fire Ins. Co., 25 Conn., 51, it was held that an agent whose business it was to receive and forward to the company applications for insurance, is the agent of the company to receive a disclosure of facts, although they instruct him privately to regard himself in so doing as the agent of the applicant. In Bouton v. American Mut. Life Ins. Co., 25 Conn., 542, it was held that a local agent could receive premiums, and could agree to be personally responsible for the premium without actual payment of it, so as to bind the company. In Sheldon v. Connecticut Mut. Life Ins. Co., 25 Conn., 207, it was left to the jury to say, from all the circumstances, whether the agreement of the local agent that the premium might be paid at a subsequent day, contrary to the express condition of the policy, was binding on the company. And in Hough v. City Fire Ins. Co., 29 Conn., 10, evidence was permitted to go to the jury, that the applicant stated to the local agent the exact condition of the property, and that the application was filled out by the agent himself, accompanied with evidence tending to show that the defendants gave their assent to such conduct on the part of the agent.

These were all actions at law. But the case of the Malleable Iron Works v. Phœnix Ins. Co., 25 Conn., 465, which was a petition in chancery, is more directly in point. The business of the agent in that case was to procure applications for insurance and forward them to the company for acceptance. The application was in several particulars made out incorrectly by the direction or direct act of the agent himself. The facts were correctly stated by the applicant to him. The petition prayed for a correction of the mistake as having occurred between the applicant and the company itself. The court held that, in regard to whatever was incident to the business of procuring and forwarding applications, the agent could fairly be considered as representing the company, and granted the relief sought. That case was undoubtedly regarded by the present petitioner as a precedent which he could safely follow.

Let us see then whether Parsons and Brooks ought not, from the facts found by the court below, to be regarded as agents of the company .in making the preliminary contract to insure. First, was Parsons their agent ? He had publicly advertised himself generally as the agent of the company, and this must be presumed to have been with their knowledge. He inserted his name as the agent of the company in every policy which was issued through his office. A corporation must necessarily act by agents. This unexplained would be conclusive proof of a general agency and would authorize him to transact any regular business of the company. There is nothing whatever to restrict his agency, except the fact that it was generally known that he was a local agent, and the general understanding of the limitation of the powers of such an agent. But we know of no such limitation that would prevent a local agent, whose peculiar business it is to receive applications for insurance and generally to issue policies in pursuance of them, from making any agreement relating to this particular business which any agent of the company could do. Any such restriction would be extremely embarrassing and would lead to injustice.

Some part of the arrangement was made with Brooks, but he too was the agent of the respondents, and whatever he did was approvéd of by Parsons. Brooks was employed by Parsons in pursuance of a general custom which prevailed among local agents, and which was known to and approved of by the companies generally and by this company in particular. The respondents had the benefit of his services. A portion of the premium was received by him, and he must therefore be considered as in the employment of the respondents.

The case then is one where there was an agreement on the part of the company to insure the petitioners on their interest as mortgagees in the property in question.

There was a mutual mistake as to the proper mode of filling out the papers on both sides. The application was made out in the wrong name and the policy was made to the wrong person. But there was no fraud or misrepresentation. The papers would have been made out right if they had known how to do it, and it is immaterial whether the mistake was one of fact or of law. Stedwell v. Anderson, 21 Conn., 139.

It is found that the company privately instructed Parsons that he must not insure mortgage interests. This however could not affect the petitioners, who had no knowledge of any such restriction on the powers of the agent. Beebe v. Hartford County Mut. Fire Ins. Co., 25 Conn., 51.

It is claimed that no relief can be granted, because the limitation for the bringing of suits contained in the conditions of the policy expired before this suit was brought. If relief only had been prayed for, we think the objection would have been fatal. The long array of cases cited by the counsel for the respondents is decisive. But the petitioners bring this bill in aid of the suit at law, which was confessedly commenced before the limitation expired and which is still pending. Whatever further is asked for may be regarded as barred without affecting this part of the petition. It would be taking very strong ground indeed to hold that the right of prosecuting a suit in the ordinary way, although the issuing of new process might be necessary, has been relinquished by such a condition.

The object of the condition evidently was in part to prevent delay in the determination of all questions of loss, and in part to enable the company to know in season whether a claim will be prosecuted. The object of the respondents has been answered, and it would be manifestly unjust to allow such an objection to prevail. No cases have been cited which sustain the ground taken by the respondents.

A point was made that Hopkins, a trustee in insolvency, had subsequently to the issuing of this policy procured a policy of insurance on the property in question which was not indorsed on this policy and of which these respondents were not notified. But aside from the fact that that policy was obtained by a stranger without the cooperation or knowledge of the petitioners, and the fact that it was issued by Parsons as agent of another company at the same time that he was agent of the respondents, and viewing this as a policy on the mortgage interest, thére was no subsequent insurance on the same property.

The petitioners are entitled to a decree correcting the mistakes found by the court below, and enjoining the defendants in the suit at law against objecting to the evidence offered by the plaintiffs on any ground which such a correction would remove, and from claiming and introducing evidence to show that the property described in said policy was not the property of the petitioners.

In this opinion the other judges concurred.