Summary
In Dayton Ins. Co. v. Kelly, 24 Ohio St. 346, the written application for insurance was filled up by the company's agent and contained among other interrogatories, the following: "What amount is now insured on the property?
Summary of this case from Mutual Fire Insurance v. GoldsteinOpinion
DECEMBER 1, 1873.
ERROR to the Court of Common Pleas. Reserved in the District Court of Preble county.
The original action was brought by the defendant in error against the plaintiff in error.
In the court below the defendant demurred to the petition on the ground that it did not state sufficient facts, which demurrer was overruled.
The cause was afterward tried to a jury, and resulted in a verdict for the plaintiff.
A motion was made by defendant for judgment in its favor, notwithstanding the verdict, which motion was overruled.
A motion was also made by defendant for a new trial, which was also overruled. Judgment was afterward rendered on the verdict in favor of plaintiff.
These several rulings and judgments are alleged to have been erroneous.
1. Where the defect in a petition to which a demurrer has been overruled consists in the omission to aver the performance of a condition precedent in the contract sued on, and it appears from the subsequent pleadings and record, that the defendant was not prejudiced thereby, the judgment will not be reversed.
2. Where the legal effect of the allegations in an answer is a mere denial of the averments in the petition, such allegations can not be regarded as new matter which will be taken as true unless controverted by reply.
3. A judgment will not be disturbed for an omission of the court to order an amendment of the petition so as to make its allegations conform to the facts proved or admitted, where the variance between the allegations in the petition and the proof is not material.
4. Where the delivery of a void policy of insurance is the sole consideration for the release of a debt or liability, the release may be avoided without returning or offering to return the policy to the debtor.
5. Where the charter confers upon an insurance company power "generally to do and perform all things relative to the object of the association," and provides in a subsequent section that "all policies or contracts of insurance" shall be subscribed by the president or some other officer designated by the board of directors for that purpose, the latter provision does not disable the company from binding itself by contracts for policies and immediate insurance executed in other modes and by other agents, but merely prescribes the manner in which the final contract or policy shall be executed.
6. Where an agent of an insurance company, intrusted with certificates for intermediary insurance duly signed by the secretary of the company, with authority to deliver the same to applicants, erases therefrom a material stipulation, and afterward delivers the same to an applicant for insurance, who has no knowledge of the circumstances of the erasure or the want of authority on part of the agent to make it, the company will be bound by the certificate to the same extent as if the erasure had been authorized.
7. Where a contract for present insurance and for a policy on same risk is made subject to the conditions contained in the printed policy of the insurer, a condition in the printed policy that all additional insurance, whether prior or subsequent, shall be mentioned in or indorsed on the policy, does not require that either prior or subsequent insurance should be mentioned in or indorsed on the contract.
8. A condition in a contract for insurance requiring notice of prior insurance is waived by accepting the risk on an application wherein the question concerning prior insurance is not answered.
9. Where notice of additional insurance is required to be given to the insurer, it may, before the receipt of the policy, be given to the agent of the insurer who effected the insurance and with whom the policy is intrusted for delivery to the assured in fulfillment of the contract; and the indorsement of such additional insurance upon the policy by such agent must be regarded as the act of the principal, thereby assenting to the additional insurance.
10. Where the agent of an insurance company effects a contract for intermediary insurance and for a policy, and delivers a certificate of the contract to the applicant under an agreement to give time for the payment of the premium, and the principal charges the agent with the amount of the premium, which is settled and paid after the loss, a condition that "no insurance, original or continued, shall be considered as binding until the actual payment of the premium" contained in the printed policies of the company, according to the terms of which the insurance was effected, must be deemed to have been waived, although the agent had no express authority to give time for the payment.
I. The petition does not state facts sufficient to constitute a cause of action. It sets out an agreement "for insuring according to the tenor and conditions of their printed policies," etc., but there is no recital of said conditions.
The contract sued on, and set out, refers to another contract which is not set out, but which contains terms and conditions, which form part of the contract sued on. And it is utterly impossible to ascertain what would be the proper construction, or legal effect of the contract, without also stating the tenor and conditions of their printed policies.
The contract set out in the petition recognizes that it is only a temporary insurance, until a regular policy is issued from the office of the company, and that it will become void, if the risk is not accepted.
The petition is silent as to whether the risk was accepted or not, and whether a regular policy was ever issued. This being a condition upon the face of the contract, and upon which its very life depends, there should be an averment that the risk was accepted, or at least that it was not rejected, and that the company had not issued a regular policy.
There is no averment, even in the most general terms, that Kelly "performed all the conditions on his part," or that he did anything, except to make the application for insurance.
II. The court erred in overruling the motion of defendant to have judgment rendered in its favor, upon the statements in the pleadings, notwithstanding the verdict against the defendant. The code expressly authorizes such motion. 2 S. C. 1054, sec. 384.
The second defense distinctly alleges that the issuing of the receipt by the secretary, and the alteration thereof by Gunckel, was without authority. The reply does not deny either of the allegations of this defense.
The reply to the third defense concedes: That Kelly gave Gunckel discretion as to what company to apply to, limited only to the companies he was agent for, and for that purpose he, before making an actual request for insurance, signed an application for insurance, not dated, or directed to any company, and delivered it to Gunckel. That Gunckel delivered to plaintiff the policies in the German, Cooper, and Central Companies, and that he surrendered the receipt. This was after the fire.
It claims that the three policies were void, because the Dayton Insurance Company failed to notify the companies of other insurance. That he gave up the receipt, induced by defendant's acts to believe that the three policies were binding.
It is manifest from these facts:
That Gunckel was Kelly's agent in this matter, when the blank application was given him by Kelly, and he was instructed to exercise his discretion as to the company. That Kelly commenced his action upon an instrument which he had long before surrendered. The arrangement by which the three policies were exchanged for the receipt, it is not claimed was rescinded. Kelly still holds the three policies. The excuse for bringing suit on the receipt, instead of on the three policies, is not valid. The excuse is, that the three policies are void, because the Dayton Insurance Company did not give the German, Cooper, and Central Companies notice of Kelly's prior insurance.
It was not the duty of the Dayton Insurance Company to give such notice.
In the action between Kelly and the Dayton Insurance Company, the validity of these policies can not be tried. Fire Ins. Dig. 416, sec. 90; David v. Hartford Ins. Co., Supreme Court of Iowa, 1862; 51 Penn. St. 402; 16 Peters, 400 (cond.); 20 Barb. 635.
No fraud is alleged, and there is no offer to rescind. It follows that Kelly is the owner of the three policies, and not the owner of the receipt.
The fourth defense is, that it is one of the conditions of the company's printed policies, that if there is prior insurance on the property, "not notified to this company, and mentioned in or indorsed upon this policy," the policy shall cease and be of no effect.
That Kelly had other prior insurance at the date of the application, and at the issuance and delivery of the receipt, which was not notified to the company, not mentioned. in his application, nor indorsed, nor requested to be indorsed, on any policy to be issued, nor on any receipt.
The reply admits there was other prior insurance at date of the application, but says that plaintiff notified Gunekel, the agent of the defendant, of the existence of such other insurance.
The fact is conceded, that the prior insurance was not mentioned in, or indorsed on the application, or on the receipt, nor requested to be so indorsed.
Mere notice to Gunckel is not enough. The contract requires that it shall be mentioned in or indorsed upon the policy, or the contract shall be void.
This is the unbroken current of authority in relation to prior insurance: Harris v. Ohio Ins. Co., 5 Ohio, 467; Carpenter v. Providence Ins. Co., 16 Peters (cond.), 400; 19 Ohio, 149.
A verbal waiver of this condition is void. Contract of insurance must be in writing. 12 Cush. 469; 36 Barb. 372; 16 Ohio, 148; 1 Phil. Ins. 483-4.
Mere knowledge of other insurance is of no avail, if not indorsed. Forbes v. Aganan Mutual Insurance Co., 9 Cush. 470.
The reason of the rule is stated with clearness and force in Hale v. Mechanics' Ins. Co., 6 Gray, 169; Couch v. City Ins. Co., (Sup. Ct. of Conn., 1871); Angel Fire Ins. 235, sec. 174; 4 Howard, U. S. 185.
The sixth defense and the reply thereto is in reference to subsequent insurance, and raises the same question as the fourth defense.
The seventh defense recites: That its only power to make contracts of insurance is contained in the 9th section of its charter, which provides that all contracts of insurance "shall be subscribed by its president, or such other officer as may be designated for that purpose by the board of directors, and attested by the secretary, and being so subscribed and attested, shall be obligatory upon the company."
That the board never authorized any one but the president to subscribe such contract, and no one else had such authority. The secretary had authority only to attest, when subscribed by the president.
No reply was filed to this answer, and it stands undefended. Angel Ames on Cor. 268, sec. 277; Couch and Wife v. The City Fire Ins. Co., Ins. Law Journal, Oct., 1871; Heart v. Providence Ins. Co., 2 Cranch, 127; 1 Phil. Ins. 9; 16 Ohio, 164; 19 Ohio, 149; Angel Fire Ins. 503, sec. 457; 6 Duer, 13.
III. The Court of Common Pleas erred in overruling defendant's motion for a new trial.
IV. The Court of Common Pleas erred in permitting to be read to the jury the copy of a receipt, different from the one actually delivered by Gunckel to Kelly, being the one without the erasure. This was a material and fatal variance. The petition was not amended so as to let in the altered receipt. It is true the plaintiff, in his reply, admits the erasure and consequent variance, but the plaintiff's case must be made in his petition, not in his reply. Durbin v. Fisk, 16 Ohio Stat. 533.
V. The court erred in charging the jury, that under the first and seventh defense, if Young, as secretary, signed the contract, and if C. F. Gunckel was the agent of the company, the contract would be binding, though not signed by the president.
This charge assumed, in direct opposition to the 9th section of the charter, that the secretary had power to bind the company, by a contract of insurance, and that, too, without proof that he had been clothed with such power by the charter-by-law resolution of the board, acquiesence, or in any other way.
The presumption of law is that the secretary has no such power. The party alleging such authority must prove it. 2 Phil. Ins. 524, sec. 1872.
VI. The court erred in its charge in effect, that if Gunckel was the company's agent, and made the alteration in the contract or receipt, without Kelly's knowledge, and before delivery, then the company would be liable upon what remained of the contract.
Any agent, the court say in substance, may so act and bind the company. This doctrine is unsupported by any authority. If he could erase a material part of the contract, he might thereby change its entire character.
VII. The court erred in charging that the company could authorize an agent to sign contracts, instead of the president, and that is, if Hecker's letter was written with the company's knowledge, or acquiescence, it was binding, and Gunckel was the agent for that purpose.
But Gunckel was not agent to alter the blank contracts of insurance signed and sent to him.
There was not a word of proof tending to show that the company knew of, or acquiesced in, the writing of Hecker's letter.
VIII. The fifth charge throws upon the Dayton Insurance Company the duty of notifying the German, Cooper and Central of other insurance, taken by Kelly, without the qualification which should have been given, that Gunckel, or the Dayton Insurance Company, had notice of such prior insurance. This was error. The fact of prior insurance was within Kelly's knowledge. It was his duty to give the notice.
IX. The sixth charge, in substance, states, that as to a contract of insurance, dated December 5, notice of prior insurance (taken on the 27th of November), is sufficient, if given on the 13th of December, and before loss by fire; also, that notice "of all the insurance" on the 13th of December, is sufficient as to insurance not issued till the 14th of December.
This charge puts at defiance the written agreement of the parties, which requires that prior insurance shall be notified to the company, and mentioned in or indorsed upon, the policy.
The words in the printed policy requiring the notice of insurance to be given "before any loss by fire occurs," refer exclusively to subsequent insurance. The judge, in his. charge, makes the words apply also to prior insurance. This is a manifest error.
X. The tenth charge is, in substance, that if Gunckel was agent of the company, to receive and forward applications for insurance, receive premiums and issue certificates of insurance, then notice to him of prior and subsequent insurance would satisfy the requirements of the contract (in reference to the terms contained in defendant's policies) before the issuing of the regular policy.
This charge is based on the idea that neither prior or subsequent insurance was required to be indorsed. No distinction is made between notice of prior and subsequent insurance, nor as to the time when the notice was given.
Will it be claimed that notice of prior insurance given after the insurance contract was made would avail ?
Admitting that Gunckel was agent, for the purpose stated in the charge, it does not follow that he was a general agent of the company, so as to bind the company by notice to him of subsequent insurance.
He exhausted his power, and performed his whole duty, when he delivered the policy; after that, notice of insurance could only be given to the company.
Matthews, Ramsey Matthews, for defendant in error:
I. The demurrer to the plaintiff was rightly overruled.
It was not necessary that the petition should set out specifically what the tenor and conditions of the printed policies are. The whole of the contract is set out. It states that it is "binding on the Dayton Insurance Company, of Dayton, Ohio, until a regular policy shall be issued from the office of said company, or should the risk not be accepted, and the above sum of money refunded to the applicant, then this receipt is void," etc.
The petition does not, in terms, allege which, if either, of these alternatives happened; but it does state that said agreement remained in full force until the 7th day of January, 1868, when the loss occurred. If it remained in force, at that time, then the necessary implication is, that nothing had previously occurred to defeat its operation.
It also alleges that the insured property was destroyed by fire, "whereby there became due, and payable to the plaintiff from the defendant, the sum of five thousand dollars." This was sufficient, especially after answer and after verdict. The code requires that pleadings should be liberally construed. Erwin v. Shaffer, 9 Ohio St. 43; Bethel v. Woodworth et al., 11 Ohio St. 393.
II. The second defense consisted, substantially, in allegations of a want of authority in the officers and agents of the company signing and issuing the contract sued upon, to bind the company thereby.
Though the reply does not deny this, what is more to the purpose, the petition does.
The original reply denied all the allegations of the third defense.
The amendment to the reply states that the new policies were delivered after the loss; that they were void by reason of the failure of the defendant, who undertook to procure them, to notify the companies who issued them of the existence of prior and subsequent insurance on the property, and that the plaintiff accepted the said policies and surrendered the original contract under the belief that the substituted policies were valid, which belief was induced by the acts of the defendant in procuring and delivering them.
It is urged that the defendant could be in no default in not giving notice of prior and subsequent insurance, because it owed no duty to the plaintiff. This is a mistake. It undertook to procure valid insurance. Its duty then grew out of its undertaking. The consideration was the release of its own liability. Upon the facts, as they might be shown, under these pleadings, the defendant procured the surrender of the original agreement, on which its liability had become fixed, without any consideration. It is certainly not entitled to judgment on that showing.
As to the question, whether the invalidity of the substituted insurance, as between the plaintiff and defendant can VOL. XXIV — 23 be shown, the authorities cited by counsel for plaintiff in error show an entirely different principle than that claimed by them. But whether so or not, the rule has no application here. The obligation assumed by the defendant was to procure valid insurance. It is certainly competent to show, in an action between these parties, in which the question is, whether that obligation has been performed or broken, that the defendant has violated it, because the policies of insurance procured by him are not valid.
Whether notice of prior insurance to the defendant's agent is notice to the defendant, and whether that notice, without indorsement on the instrument, avails, see May on Insurance, sec. 370, p. 449, and cases there cited.
In regard to the seventh defense, we claim:
1. That the answer merely amounts to a denial of the allegation in the petition, that the company issued the contract sued on. It consequently made an issue of fact, without further pleading, and its allegations of fact, inconsistent with those contained in the petition — such as that the company had authorized no one but the president to sign contracts on its behalf — need no further denial. That allegation can not, therefore, be taken to be true, until proved.
2. That the section of the charter quoted does not sustain the construction sought to be imposed on it. It is merely directory. It does not, either in express terms, or by any fair inference, forbid or prohibit `the execution of contracts of insurance, in any other mode, or declare such to be void. May on Insurance, sec. 15, and cases cited, and sec. 23 and note.
III. The motion for a new trial was properly overruled.
It can not be denied that the secretary was authorized to appoint agents, and confer upon them their authority.
The company held Gunckel out to the world clothed with the apparent authority to bind it, by the delivery of such contracts; and that, too, with an erasure of part, such as was made in this instance. The plaintiff was justified in believing he was authorized to do so, for he had no means of knowing but that the paper was in the precise form in which it was when issued by the secretary. The appearance of authority extended as well to the document erased as to the document entire.
That Gunckel acted as agent for the defendant in the transactions, out of which this controversy arose, admits of no serious question.
It is insisted that there was a variance between the pleading and the proof, in that the copy of the contract stated in the petition, and read to the jury, was the entire printed paper without the erasure.
But the variance, supposing that technically it could only have been avoided by an amendment to the petition, instead of by way of reply, is nevertheless not essential, nor was the defendant prejudiced thereby.
The first four charges of the court relate to the authority of Gunckel to bind the defendant, as its agent, by the delivery of the compact sued upon, and may be considered together. That there was no error in these charges, we refer the court to May on Insurance, sec. 14, p. 14; Bulkeley v. The Derby Fishing Co., 2 Conn. 254; Fuller v. Boston Mut. Fire Ins. Co., 4 Met. 206; Prince of Wales Life and Ed. Ass. Co. v. Harding, 1 E. B. E. 183; Trustees of First Baptist Church v. Brooklyn Fire Ins. Co., 19 N. Y. 309; Sanborn v. Fireman's Ins. Co., 16 Gray, 448; Am. Mut. Ins. Co. v. Union Mut. Ins. Co., 19 How. (U. S.) 318; Union Mut. Ins. Co. v. Wilkinson, 13 Wall. 222.
The fifth and ninth charges need no comment. The sixth and seventh are necessarily connected. They relate to the defenses based on the alleged want of notice of prior and subsequent insurance, and want of indorsement thereof on the policy or contract sued on. The written application for the insurance now sued upon, was filled up by Gunckel, and contained, among other interrogatories, the following interrogatory: "Insurance. — What amount is now insured on the property ? In what offices (state particularly), and on whose account?" To this the applicant made no answer.
This application was made out by Gunckel as agent of the company, and not as the agent for the plaintiff. Union Mut. Ins. Co. v. Wilkinson, 13 Wall. 222.
The plaintiff in error, having accepted the application with the interrogatory above quoted unanswered, thereby waived notice of prior insurance altogether, and was not afterward entitled to require it. Lorillard Fire Ins. Co. v. McCulloch, 21 Ohio St. 176.
An office which issues a subsequent policy will be presumed to have notice of the prior one. Barnes v. Union Ins. Co., 45 N. H. 21; Horwitz v. Equitable Ins. Co., 40 Mo. 557.
And where both policies are negotiated through the same person, who is agent for both companies, his knowledge is the knowledge of the company. Van Bories v. United Life, etc., Ins. Co., 8 Bush (Ky.) 133.
McILVAINE, J. 1. Did the Court of Common Pleas err in overruling the demurrer to the petition ?
The petition counted upon a written contract, of which the following is a copy:
"This is to certify, that the Dayton Insurance Company, of Dayton, Ohio, have received from Joseph L. Kelly, by their agent, Charles F. Gunckle, the sum of sixty dollars, for insuring according to the tenor and conditions of their printed policies, issued from their office, in Dayton, Ohio, from this date, 12 o'clock at noon, until March 5, 1868, at 12 o'clock at noon, $5,000 in the following property: Hogs and products of hogs, contained in his frame pork and slaughter-house, situate in Campelltown, Preble county, Ohio.
"This receipt and agreement is binding on the Dayton Insurance Company, of Dayton, Ohio, until a regular policy shall be issued from the office of said company; or should the risk not be accepted, and the above sum of money refunded to the applicant, then this receipt is void, and of no effect.
"Signed by the secretary of the company.
"J. R. YOUNG, Secretary.
"This is of no effect until countersigned by the agent, Charles F. Gunckel. Dated at Middletown, Ohio, this 5th day of December, 1867.
[Signed,] "CHARLES F. GUNCKEL, Agent."
The objections urged against the petition are, that it did not set out the conditions contained in the "printed policies;" that it did not state whether or not the risk was accepted, or whether a regular policy had been issued, and that it contained no averment of the performance of conditions on the part of the plaintiff below.
If it were necessary to determine whether the facts stated in the petition are sufficient to constitute a cause of action, we would probably resolve the question in the negative. Section 138 of the code, however, provides that the "court, in every stage of the action, must disregard any error or defect which does not affect the substantial rights of the adverse party: and no judgment shall be reversed or affected by reason of such error or defect." Now, we are all agreed that the defects in the petition, whatever they be, were supplied by averments in the answer and reply: so that, upon the whole record, we find that the defects in the petition did not affect any substantial right of the defendant below. Thus, if the plaintiff should have averred in the petition that a regular policy had not been issued, etc., the want of such averment was supplied by an allegation to that effect in the answer, which was not denied in the reply. And again: if the petition was defective in not averring the performance of conditions precedent, the defect was cured by the averment in the answer, that such conditions (naming them) had not been performed by the plaintiff, followed by averments in the reply, that they had been performed, or that the performance had been waived by the defendant. 8 Ohio St. 293.
II. The overruling of defendant's motion for judgment in its favor on the pleadings, notwithstanding the verdict is assigned for error.
Several objections are made under this assignment, which will be disposed of hereafter, when we come to consider the alleged errors in the charge of the court, as given to the jury. In addition to what has already been said, it will suffice, in this connection, to add that the averments in the answer to the effect that the secretary of the defendant and its soliciting agent, Gunckel, had no authority from the company to make the contract sued upon, must be regarded as a denial of the averment in the petition, that "the company agreed to make said insurance." Where the only legal effect of matter stated in an answer is a denial of facts stated in the petition, no reply is necessary. Such an answer does not contain "allegations of new matter constituting a defense," which must be taken as true unless denied.
III. The refusal of the court to set aside the verdict and grant a new trial is also assigned for error. Under this assignment three general propositions are discussed. 1. That the verdict was not sustained by sufficient evidence; 2. That incompetent evidence was admitted; 3. That the court erred in its charge to the jury.
1. The following state of facts can fairly and reasonably be deduced from the testimony, all of which is set out in the record:
J. R. Young, the secretary of the defendant below (an incorporated insurance company), was authorized by the company to negotiate contracts for insurance, to sign and issue certificates like the one sued upon, to appoint agents to solicit risks, and to receive applications for policies, and to authorize such agents to deliver to applicants for policies the above-named certificates, and to collect premiums for insurance. Charles F. Gunckel was appointed such agent by the secretary, and was supplied with certificates duly signed by the secretary, with authority to countersign, fill blanks, and to deliver the same to applicants upon the receipt of premiums.
Gunckel was also agent for several other insurance companies, among which were the Ætna, the Home of New York, and the Hamilton.
About the 30th of November, 1867, Gunckel, being such agent, solicited a risk from the plaintiff, and agreed with him to postpone the payment of the premium for ninety days from the date of insurance; and at the same time prepared an application for a policy, which contained the usual interrogations, respecting the proposed risk. The ninth interrogatory was as follows: "Insurance — what amount is now insured on the property ? In what offices (state particularly), and on whose account?" To this interrogatory there was no answer given. The fact was, however, that the plaintiff had previously obtained a policy from the Enterprise Insurance Company, for $2,000, on the same property. This application was signed by the plaintiff, and delivered to Gunckel with the understanding, that upon call by the plaintiff for insurance, Gunckel should address and forward the application to such company as be might select. On the 5th of December following, the plaintiff, by letter to Gunckel, requested insurance to the amount of $5,000. Same day, upon receipt of plaintiff's letter, Gunckel remitted to plaintiff, a certificate signed by Secretary Young, a copy of which is set out in the petition, having first, however, erased the words," or should the risk not be accepted, and the above sum of money refunded to applicant, then this receipt is void, and of no effect;" and at same time, forwarded the plaintiff's application to the home office of the defendant, with information that a certificate for insurance had been issued to the plaintiff. The erasure by Gunckel was without authority from defendant. The plaintiff, however, received the certificate in good faith, and without any knowledge of the circumstances of the erasure.
Upon the receipt of the plaintiff's application at the home office of the defendant, the officers in charge procured from the German Insurance Company a policy in favor of the plaintiff for $2,000, from the Cooper Insurance Company a like policy for $2,000, and from the Central Company one for $1,000; and forwarded the same to Gunckel to be delivered to the plaintiff in lieu of their own policy for $5,000. Each of these policies contained a condition, that "if the assured shall have or shall hereafter make any other insurance on the property hereby insured without the consent of this company written hereon," then this policy shall be void. At the time the German, Cooper and Central Companies delivered the policies to the defendant, they respectively charged the defendant with the amount of the premium thereon, and the defendant charged Gunckel with the amount of premium on the plaintiff's risk.
The printed policies of the defendant, referred to in the instrument upon which the suit was brought, contained the following conditions:
"Provided, further, that in case the assured shall have already any other insurance against loss by fire, on the property hereby insured, not notified to this company, and mentioned in or indorsed upon this policy, or if the said assured, or his assigns, shall hereafter effect any insurance on the same property, and shall not, with all reasonable diligence, and before any loss by fire occurs, give notice thereof to this company, and have same indorsed on this policy, or otherwise acknowledged by them in writing, this policy shall cease and be of no effect."
And also a further condition, that "no insurance shall be considered as binding until the actual payment of the premium."
On the 13th of same month, the plaintiff made application, by letter, to Gunckel, for further insurance, on the same description of property, to the amount of $10,000; and at same time informed him that he (plaintiff) had obtained other insurance on same property, from the agency of Landis Son, to the amount of $13,000, including $7,000 applied for on that day. The amount of insurance thus notified to Gunckel included also the policy for $2,000, from the Enterprise Company, which had been obtained before the execution of the instrument sued on. On the next day, December 14th, Gunckel indorsed on the policies, then in his hands, from the German, Cooper, and Central Companies, the amount of insurance in other companies, which was thus notified to him.
Neither the German, the Cooper, nor the Central Company assented to or was notified of any insurance on the property affected by plaintiff after the date of their respective policies.
On the 18th day of same month, the property insured was destroyed by fire; and on the next day, Gunckel, having full knowledge of the loss, delivered the German, Cooper, and Central policies to the plaintiff, who, in consideration thereof, and in the belief that they were valid and binding policies upon the companies by whom they had been issued, surrendered the instrument sued on to Gunckel to be cancelled, and at the same time executed to Gunckel his note for the amount of the insurance premium as per agreement. This note was afterward paid, and the payment accounted for by Gunckel. The loss was notified to the companies interested, including the German, Cooper, and Central, and proof thereof duly made. The German, Cooper, and Central companies repudiated the plaintiff's claim on the ground that their policies were avoided by reason of subsequent insurance, without notice to them, and without their consent. Proof of loss was afterward, and about three months after the fire, made as against the defendant.
If our view of the law governing this case (as herein-after stated) be correct, the foregoing statement of facts is sufficient to sustain the verdict.
2d. Did the court err in admitting incompetent testimony? The testimony objected to was a copy of the instrument set out in the petition. Neither the instrument, as set out in the petition, nor the copy offered in evidence, manifested the erasure, which, according to the averments of the answer and the admissions in the reply, had been made by Gunckel before it was delivered to the plaintiff. The objection, as we understand it, is, that the paper offered in evidence, though a copy of the instrument, as set out in the petition, did not support the plaintiff's case, as it was finally made by the pleadings.
We do not perceive how the defendant was prejudiced by the supposed variance. The instrument, as it existed before the alteration by Gunckel, was shown and admitted to be as set out in the petition; nor was there any controversy as to its altered condition at the time of delivery. Hence, no proof in relation to its condition or terms, either before or after alteration, was necessary; nor could the introduction of a copy of the paper, as it was before or as it was after the alteration, prejudice the defendant. The court might have ordered the petition to be amended so as to state the contract as it was not only proved, but admitted to be, yet the failure to do so was not error for which the judgment should be disturbed.
It is also claimed that the court erred in permitting the plaintiff to prove that the policies issued by the German, Cooper, and Central Companies, were void by reason of subsequent insurance without their assent. The defendant had set up as matter of defense, that the plaintiff had released and surrendered the obligation sued on. The reply, in substance, was, that the supposed release was made solely in consideration of these policies; that the policies, at the time they were delivered to him, were in fact worthless and void, and therefore there was no consideration for the supposed release.
The ground of objection, as stated, is, that these policies were valid on their face, and there being no allegation of fraud, and no offer to return the policies to the defendant, the plaintiff, as against the defendant in this action, should not have been permitted to show them to be worthless. We think otherwise. At the time the plaintiff surrendered the certificate, the liability of the defendant thereon had become fixed. The loss by fire had occurred, and unless the surrender and release were supported by a valuable consideration, the plaintiff ought not to have been bound thereby. The underwriters themselves had avoided their policies by insisting upon the condition as to notice, and assent to subsequent insurance. It was not necessary that the plaintiff should have returned or offered to return the policies. If they were in fact and in law worthless and void, as against the underwriters, the defendant sustained no injury by reason of the plaintiff's failure to return them.
Another question made in the case may as well be considered in this connection. The German, Cooper, and Central Companies avoided their policies for want of notice of and assent to subsequent insurance. Whose duty was it to give them notice and obtain their consent? The plaintiff, at that time, had no contract relation with these companies, nor had he any knowledge that these policies had been issued. He was content with the defendant's contract for insurance. When he desired additional insurance, he notified the defendant's agent, in whose possession these policies were. The agent consented to the insurance by indorsing it on the policies. But this did not answer the condition. The agent, we think, under the
circumstances, was authorized to act for his principal, the defendant, but could not bind the underwriters. If the defendant still desired to substitute these policies for its own undertaking, it was its duty to obtain from the German, Cooper, and Central Companies their assent to the proposed additional insurance.
IV. Did the court err in its instructions to the jury ? 1. The court instructed the jury, among other things, as follows:
"In regard to the issues made by the first and seventh defenses, if it was proved that the contract upon which suit was brought was signed by J. R. Young, as secretary of the defendant, and if Charles F. Gunckel was agent of the defendant, the contract would have the effect of binding the company, though not signed by the president of the company."
The defenses referred to were based on the provisions of defendant's charter, the ninth section of which provides as follows (49 Ohio L. 191): "That all policies or contracts of insurance, that may be made or entered into by said company, may be made either under or without the seal thereof, and shall be subscribed by the president, or by such other officer as may be designated for that purpose by the board of directors, and attested by the secretary; and being so subscribed and attested, shall be obligatory upon said company according to the tenor, intent, and meaning of this act, and of such policies or contracts."
This charge assumed, as was averred in the answer and not denied in the reply, that the contract sued on was not subscribed by the president, and that the secretary had not been designated by the board of directors as an officer for the purpose of subscribing "policies or contracts of insurance," as required by the ninth section.
It must be admitted that the charter gave to the company all the powers that it possessed. It undoubtedly gave the power to make contracts of insurance, and the ninth section prescribed a form for the preservation of the evidence of its contracts, which is made obligatory on the company. If this form constitutes the only mode by which the company can obligate itself, of course any other mode would no more create a binding contract of insurance than if the corporation had never existed.
The question therefore arises, is the form thus prescribed the only one in which the defendant can enter into a binding contract of insurance? It will be observed that the ninth section does not, in totidem verbis, confer upon the company the power to make contracts of insurance. If there were no express grant of such power to be found elsewhere in the charter, I admit that it would be implied from the provisions of this section; and in that case, the form therein prescribed would be exclusive. But if the grant of power to contract be found elsewhere in the charter, then our inquiry will be confined to the question, whether the form prescribed in the ninth section was intended as a limitation upon the power to contract, or merely as prescribing the manner of executing its policies. Insurance against fire was the sole object and purpose for which the defendant was incorporated. And the first section of its charter declares that it shall be capable "generally to do and perform all things relative to the object of the association." This grant is certainly broad enough to confer the power to make contracts relative to insurance — power to negotiate and agree upon all the terms and conditions of the risk. Indeed, the very terms of the ninth section seem to imply that negotiations have ended in a complete contract before the execution of the formal instrument is required. Having found in the first section of the charter a grant of power to contract for insurance, we do not feel authorized to so construe the ninth section as to render null and of no effect all contracts made within the scope of the power there conferred, unless and until the president or other designated officer has subscribed the "policy or contract of insurance." On the other hand, we feel justified in holding that the terms, "policies or contracts of insurance," as here used, were intended to embrace the final instruments — such as are technically called policies of insurance, and do not include intermediary contracts of insurance, or contracts for policies.
2. The court further charged:
"That, if the jury find that Gunckel was the agent of the defendant and that he made the alteration in the receipt or contract before it was delivered to Kelly, and that he did not do so by Kelly's procurement or assent or knowledge, then the alteration does not affect the liability of the defendant, but would be liable upon what remained of the contract."
We find no error in this instruction. The testimony shows that the secretary of the company was authorized to negotiate contracts for insurance, and also to appoint agents to solicit applications, etc. It also shows that the secretary had supplied Gunckel, as agent of the company, with these receipts or certificates, duly signed by himself, with authority to deliver them to applicants. We think the company, therefore, and not the applicant, should bear the consequences of Gunckel's erasure, although he was acting in violation of his duty to the company in making it.
The company held Gunckel out to the world clothed. with the apparent authority to bind it, by the delivery of such contracts; and that, too, with an erasure of part, such as was made in this instance. The plaintiff was justified in believing he was authorized to do so, for he had no means of knowing but that the paper was in the precise form in which it was when issued by the secretary. The appearance of authority extended as well to the document erased as to the document entire.
3. The court instructed the jury in relation to the condition in the contract concerning other insurance as follows:
"That, even if the jury should find that Kelly did not notify Gunckel of the insurance in the Enterprise Company of November 27th, 1867, on or before the 5th day of December, A. D., 1867, yet if he wrote to Gunckel on the 13th December, informing him of all the insurance, and Gunckel was the agent of the defendant, that such notice, if received before the loss, would be a good compliance upon the part of Kelly, with his obligation to give notice to the company of all other insurance, and that it would be sufficient as to the Enterprise insurance, and sufficient as to the $7,000 applied for on that day to Landis Son, although such $7,000 was not issued until the 14th of December.
"That it was not necessary that any indorsement of either prior or subsequent insurance should be made upon the contract sued upon or recited in the same."
If, under the contract, the plaintiff was required to give notice of prior insurance, we doubt whether this instruction, in so far as it relates to that subject, could be sustained. The contract was for insurance according to the "tenor and conditions of the printed policies" of the defendant. The conditions, in relation to other insurance contained in the printed policy, were as follows:
"Provided, further, that in case the assured shall have already any other insurance against loss by fire, on the property hereby insured, not notified to this company, and mentioned in or indorsed upon this policy, or if the said assured, or his assigns, shall hereafter effect any insurance on the same property, and shall not, with all reasonable diligence, and before any loss by fire occurs, give notice thereof to this company, and have same indorsed on this policy, or otherwise acknowledged by them in writing, this policy shall cease and be of no effect."
A fair and reasonable construction of this contract would require notice of prior insurance to be given at the time of making application for insurance. The object of notice is to enable the insurer to act prudently and intelligently in relation to the risk; yet, notwithstanding the reference to the condition in the printed policy, it was competent for the defendant to waive the condition, and we think it was waived, in so far as it related to the notice of prior insurance. The risk was taken upon an application which formed part of the contract. The interrogatory in the application for insurance in relation to prior insurance, was not answered. The acceptance of the risk upon such an application is a waiver of any notice which a truthful answer to the interrogatory would have disclosed. 21 Ohio St. 176; 6 Gray, 85.
As to notice of subsequent insurance, the charge of the court was right. Notice to Gunckel was notice to the defendant. We are not prepared to say that the notice to Gunckel would have been sufficient, if he had been the agent of the defendant merely for the purpose of soliciting applications and collecting premiums. Confessedly his authority in relation to this risk was much more extensive. He was, in fact, intrusted with the German, Cooper, and Central policies, for the purpose of delivering them, in lieu of the defendant's own policy, and lifting the instrument sued on. Had he been intrusted with a policy of the defendant, for delivery, in performance of the contract, there can be no doubt that notice to him and indorsement by him of subsequent insurance thereon would have bound the company. He, in fact, indorsed the subsequent insurance upon the policies in his possession, and, in our opinion, he thereby assented, as the agent of defendant, to all the sub-sequent insurance of which he had notice.
We also think the court below was right in charging the jury "that it was not necessary that any indorsement of either prior or subsequent insurance should be made upon the contract sued upon, or recited in the same." The parties contemplated and contracted for a "regular policy," but the instrument sued on is not such policy. We understand, as did the court below, that the meaning of the parties was, that prior, as well as subsequent insurance, should be mentioned in or indorsed upon the regular policy, when or after it should be issued. Such recitals or indorsements would be a full compliance with the contract in this respect. No such policy having been issued, there was no failure to comply with this condition. The court also instructed the jury:
"That, if the company charged the amount of the premium to Gunckel, and Gunckel received the note of Kelly for the same, which was subsequently paid, that was a good and sufficient compliance with the contract upon Kelly's part, and the contract is binding, although said note was not given until after the fire."
The facts assumed in this charge, in connection with the fact admitted in the defendant's answer, viz., that Gunckel was the agent of the company, "to solicit applications and to collect premiums, when insurance was affected," amount to a waiver of the condition in their "printed policies;"" that no insurance, whether original or continued, shall be considered as binding until the actual payment of the premium." It is very doubtful whether such condition, in the policy contracted for, attaches to a contract for intermediary insurance (10 Bosw. 83); but whether it does or not, the charging of the premium to such agent, and the agent's agreement to give time for its payment, and the subsequent payment to the company constitute a waiver of pre-payment. Judgment affirmed.
DAY, C. J., WHITE, and REX, J.J., concurring. WELCH, J., not sitting.