In Weed v. London L. Fire Ins. Co., 116 N.Y. 106 (22 N.E. 229), the question was whether an adjuster had the power to waive a defense based upon failure of the assured to comply with certain conditions of the policy.Summary of this case from Roemhild v. Home Insurance
Argued June 5, 1889
Decided October 8, 1889
G.B. Wellington for appellant. A.H. Sawyer for respondent.
The defendant by the policy in question undertook to insure "the estate of O. Richards" against loss or damage by fire upon property described as a grist-mill, and fixed and movable machinery, etc.
The referee found as facts that the defendant intended to insure such persons and their interests in said premises as were or might be represented under the name or title aforesaid.
The contract cannot, therefore, be considered as one insuring the interest of the plaintiff as mortgagee. The undertaking to pay the loss to him is collateral to and dependent upon the principle undertaking to insure the estate of Richards; and if the evidence shows a breach of the conditions of the policy by the assured, the plaintiff cannot recover. ( Grosvenor v. Atlantic Ins. Co., 17 N.Y. 391; Bidwell v. Northwestern Ins. Co., 19 id. 179; Perry v. Ins. Co., 61 id. 214.) The referee further found that at the time of the issuing of the policy the interest of the "estate of O. Richards" in the property insured was not the entire, unconditional and sole ownership thereof for the use and benefit of the assured.
One of the conditions of the policy was that it should be void if the interest of the assured in the property was other than the entire, unconditional and sole ownership thereof. And under the finding I have quoted, that Richards' estate was not the entire and unconditional owner at the time the policy was issued, the insurance was void and plaintiff was not entitled to recover, unless the condition quoted was dispensed with or in some way obviated or waived. ( Lasher v. Ins. Co., 86 N.Y. 423.)
The referee found that such condition was waived, first, by the employment in the policy of the indefinite phrase "estate of O. Richards;" second, by negotiation between Rice, the defendant's adjuster, and the plaintiff and assured subsequent to the loss, and after full information about the facts relating to the title to the property. When an agent who effects the insurance has knowledge or is informed by the assured of the true condition of the assured's interest in the property, and with such knowledge accepts the premium and delivers the policy, his acts will be deemed a waiver of such provisions of the policy as would be inconsistent with the real facts of the case. ( Van Schoick v. Niagara Ins. Co., 68 N.Y. 434.)
In the case cited the policy contained a provision that if the building insured was upon leased ground, it must be so represented to the company and expressed in the policy, otherwise the insurance would be void. The building insured was on leased ground and was known so to be to the agent who issued the policy. The court held the condition waived, saying "We cannot suppose that either the plaintiff or defendant would do the utterly absurd thing of making, with deliberation and knowledge, a contract that was void from inception and was in contradiction of the facts and statements of the negotiation."
Insurance policies must, however, like other written contracts, be construed so as to give effect to the intent of the parties as indicated by the language employed. Words and phrases must be taken in their ordinary and popular sense unless it is apparent that they have been used in a different sense, and the knowledge possessed by the parties to the subject-matter of the contract is always a guide to ascertain the meaning of the terms used.
Such a construction should be adopted as will uphold the whole contract and give effect to all its provisions in preference to one that will render some of its provisions nugatory.
We should, therefore, endeavor to give to the phrase "estate of O. Richards" such meaning as will harmonize it with the condition of the policy, if we can do so without doing violence to the words used. It is not necessary to the validity of the policy that the name of the assured should appear in the contract. He may be described in other ways than by name, and if the description is imperfect or ambiguous, extrinsic evidence may be received to ascertain the meaning and the intent of the parties in its use. ( Burrows v. Turner, 24 Wend. 277; Davis v. Boardman, 12 Mass. 80.)
Applying these rules of construction to the evidence in this case, it leaves no reasonable doubt as to the persons intended by the expression "estate of O. Richards." No doubt the phrase might include the administrator; so it might, without doing violence to language, include the trustee under the Sage deed. But the question here is, who did the defendant intend it to designate? It could not have been the trustee, as the agent had no knowledge of the Sage deed. Nor do I think it was intended to include the administrator.
Ketcham, the agent of the company, had known Richards in his lifetime and knew that he had owned the property insured. He knew that he had failed and was dead, but he did not know of the Sage deed or that Richards had parted with his title before his death. No information upon the subject was furnished to him by the applicant for the policy. We must assume that he intended to make a valid contract; and supposing, from his information, that Richards had died owning the property, he must have intended by the use of the word "estate" to describe such person as had, upon Richards, death, succeeded to his title. The administrator would not be included among such persons. The parties were dealing with real estate, with no reference to or knowledge of the Sage deed or the rights that Richards' estate might have thereunder, and upon the assumption that Richards was the owner at his decease. Under these circumstances, the ordinary and accepted meaning of the term used, as applied to such property, would be to designate those succeeding to Richards' title. This meaning, I think, must be regarded as the one intended by the parties. Thus construed, the conditions of the policy were not inconsistent with the description of the assured. Evidence would be necessary, in case of loss, to identify the owner, and the condition would apply if it should be found that such ownership was other than sole, entire and unconditional. This meaning of the phrase gives full effect to the whole policy, and it cannot, therefore, be said to be indefinite in the sense that it could not be made applicable to the condition of the contract. Moreover, it is the common and accepted meaning of the term and is in harmony with the decision of this court in the case of Clinton v. Hope Insurance Company ( 45 N.Y. 454). This condition as to the ownership of the property was precedent to the attaching of the risk; and as Richards' estate had no title it was broken upon the delivery of the policy. Upon this point of the case, therefore, the plaintiff failed to prove a valid contract and was not entitled to recover.
It remains to be seen whether this condition was waived by the acts of the defendant subsequent to the fire. Such a waiver is claimed by the appellant, and was found by the referee, to have grown out of the acts of Rice, the adjuster, in negotiating with the assured in reference to the proofs of loss. The referee found that Rice had "entire and sole charge of the matter of the loss" under employment of the defendant from a day or two after the fire to the commencement of the action; that he was informed of the trust deed to Sage, and knew and understood the facts connected with the title of the insured property; that such information was obtained as to a portion, if not all, the facts in 1881, and that he had obtained a knowledge as to all of said facts right after the fire while in defendant's employ; that, with such knowledge after service of the original proofs of loss, he continued to negotiate with the plaintiff and assured, and induced the belief on their part that if further proofs of loss were made the loss would be adjusted and paid, and that the defendant thus waived, and intended to waive, any defense based upon any alleged failure by the assured to state in the policy the title or interest of the assured.
It is well to bear in mind, in discussing the waiver which the referee found grew out of the facts set forth in the findings I have quoted, that the condition in the policy with reference to the statement therein of the title or interest of the assured was one precedent to the attaching of the risk. It lay at the threshold of the contract, and if not then performed or then obviated there was no enforceable agreement. The delivery of the policy and the breach of the conditions were concurrent acts, and if the assured had not the sole and unconditional ownership of the property at the moment the policy was delivered the condition was broken and the insurance was void. To say, therefore, that the condition was waived after a loss had occurred is to hold substantially that a new contract had been made. Rice was not an officer or general agent of the company. He was a resident of Albany engaged in an independent business as an insurance adjuster, giving his services to any person who wished to employ him.
There is no evidence in the case to show that he had any power whatever, except to ascertain and adjust the loss sustained by the assured, and the plaintiff is chargeable with knowledge of his powers and the extent of his authority. Nor is there any evidence that his knowledge of the Sage deed was communicated to the company, or any of its officers, or that any of the officers or general agent of the company ever recognized the validity of the policy after knowledge of its forfeiture.
It would serve no good purpose to examine, in detail, the numerous authorities cited upon the briefs of counsel upon the question of the waiver of an essential condition of the contract.
Notwithstanding the provisions of the policy that "anything less than a distinct specific agreement, clearly expressed and indorsed on the policy, should not be considered as a waiver of any printed or written condition, or restriction therein," the court recognize and affirm the law as settled in this state, that such condition can be dispensed with by the company or its general agents by oral consent as well as by writing. ( Steen v. Niagara Fire Ins. Co., 89 N.Y. 315; Pechner v. Ins. Co., 65 id. 207.)
But that doctrine does not aid the appellant's case. The most liberal rule that has been established in cases of this character which can be invoked in his favor is that the "agent's power is co-extensive with the business intrusted to his care." ( Ins. Co. v. Wilkinson, 13 Wall. 222; Pechner v. Phoenix Ins. Co., 65 N.Y. 207; Marvin v. Universal Life Ins. Co., 85 id. 283.)
As was said by Judge FINCH, in the last case cited, "the rule could go no further without violating all reason and justice." But, as has been stated, Rice was not a general agent as was the fact in the case cited, but a special agent of limited authority. He had no power to alter the contract between the parties, or to waive any of its essential conditions, or to make any agreement to pay the loss notwithstanding the forfeiture. Nor were any of these things within the apparent scope of his authority. His business was to ascertain the loss and fix and adjust the amount. Beyond that he had no duty to perform and no power to act. No agent of such special limited power has any authority to waive an essential condition of the contract. ( Walsh v. Hartford Ins. Co., 73 N.Y. 5; Marvin v. Universal Ins Co., 85 id. 278.)
We are also of the opinion that, assuming Rice to have been an agent with general powers, the evidence did not justify the finding of the referee that there was a waiver of any defense based upon the failure to state in the policy the title or interest of the assured in the property. To establish a waiver of a forfeiture the proof must show a distinct recognition of the validity of the policy, after a knowledge of the forfeiture, by the person by whom it is claimed the forfeiture was waived. ( Robertson v. Metropolitan Life Ins. Co., 88 N.Y. 541.)
In the case cited it is said: "Ordinarily, a party should not be held to have waived a forfeiture in the absence of facts constituting an estoppel, unless he intended to waive it; nor can he be held to have waived it unless he knew of the facts constituting the forfeiture." This principle is recognized in Titus v. Glens Falls Insurance Company ( 81 N.Y. 419), cited by the appellant.
If the company had known of the fact, that at the time the policy was issued Richards' estate had no legal title to the insured property, and with that knowledge had directed Rice to ascertain and adjust the loss, or required further and additional proofs from the plaintiff, there would have been a recognition of the validity of the contract that would have constituted a waiver. There is no evidence, however, that the company or any of its officers before the commencement of the action ever knew of the fact of the conveyance to Sage. Nor is there any evidence that Rice ever saw the policy or was acquainted with the condition of the contract which was violated by the existence of the Sage deed.
But, assuming that he was bound to know the condition of the contract, he never recognized any liability on the part of the defendant. In his written communication to the plaintiff, and his conversation with his attorney, he stated distinctly that the company would waive none of its defenses under its contract, and he pointed out what the policy required as proofs of the loss and the defects in the papers served upon the company. Particularly he directed attention to the necessity of proof of title in the assured, and asked to see Richards' deed. Nowhere am I able to find in the record that the plaintiff or the assured, or his attorney, ever informed him that Richards' estate did not have the legal title to the property. Reference to that fact, if it was known, was carefully avoided by the assured and by the plaintiff.
These statements on the part of Rice could not have induced the belief that the loss would be paid if further proofs were furnished, unless those proofs supplied the defects and defenses that were pointed out; and it is sufficient to say that proof of title in the assured was never furnished, because the estate had no title.
In all that Rice did he asked for nothing that the company had not a right to demand, and he did nothing that it was not his duty to do; and while it may very well be that, in conducting these negotiations, the company intended to, and did, waive the condition which required the proofs of loss to be served within fourteen days after the fire, it certainly did not waive any of the vital conditions of the contract.
The company cannot be held to have acquiesced in that which they declared to be insufficient, nor could the plaintiff have been misled when he was told he must supply the proof of his compliance with an essential provision of the policy.
We think the order of the General Term was right and should be affirmed and judgment abolute rendered for the defendant on the stipulation, with costs.