Black v. Atlantic Home Insurance

HOKE, J., dissenting arguendo; CLARK, C. J., concurring in the dissenting opinion. Defendant insurance company, through its agents at Asheville, N.C. on 29 December, 1905, issued to plaintiff its policy of insurance against loss or damage by fire, to the amount of $1,900, on certain property, fully described therein. The policy was of the standard form set out in full in Revisal of 1905, secs. 4759, 4760, and contained the following provisions: "This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered, in whole or in part, by this policy." The policy contains this further clause: "This policy is made and accepted upon the foregoing stipulations and conditions, together with such other provisions, agreements or conditions as may be endorsed hereon or added hereto, and noofficer, agent or other representative of this company shall have power towaive any provision or condition of this policy except such as by the termsof this policy may be the subject of agreement endorsed hereon or addedhereto; and as to such provisions and conditions no officer, agent or representative shall *Page 128 have such power or be deemed or held to have waived such provisions or conditions, unless such waiver, if any, shall be written upon or attached,hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured, unless so written or attached." All of which is contained in the "standard policy" (171) prescribed in the statute. On 4 January, 1906, another policy was issued by the German Fire Insurance Company on said property for $500. On 9 January, 1906, the property covered by the policies was destroyed by fire. It was conceded that no consent by defendant was endorsed on the policy of 29 December, 1905, to the issuance of the policy of 4 January, 1906. The property, as found by the jury, was worth $3,274. The following among other issues, was submitted to the jury: "Was there a waiver by the defendant of the condition in the policy as to the additional insurance issued by the German Insurance Company?" Plaintiff introduced parol evidence for the purpose of showing a waiver by defendant of the condition in regard to the additional insurance. His Honor, upon the conclusion of the evidence, charged the jury that there was no evidence that the defendant waived the provision in the policy in regard to taking out additional insurance in the German Insurance Company, and instructed them to answer the issue "No." Plaintiff excepted. Judgement was rendered for defendant, and plaintiff duly excepted and appealed. after stating the facts: The principal question presented is whether parol evidence is admissible to show a waiver of the condition avoiding the policy by reason of taking the additional insurance 4 January, 1906. The condition expressed in the policy that other insurance taken upon the property without the assent of the insurer would render the policy void, is valid and, unless waived, will be enforced.Sugg v. Ins. Co., 98 N.C. 143. The language of the contract is explicit and incapable of misunderstanding, leaving no room for construction. Assuming, for the purpose of the argument, that the agent who issued the policy comes within the definition of a (172) general agent, with power to bind the company in respect to the policy issued by him, as held in Grubbs v. Ins. Co., 108 N.C. 472, the plaintiff is confronted with the express provision in the face of the policy, the form of which is prescribed by the statute, that no officer, agent or representative of the company shall have power to waive any provision or condition except such as by the terms of the agreement *Page 129 is "endorsed hereon or added hereto," and as to these no officer, agent, etc., shall have such power or be deemed or held to have waived such condition unless the waiver, if any, shall be "written upon orattached hereto," nor shall any privilege or permission exist or be claimed by the insured unless so written or attached. There can be no controversy regarding the meaning of these words. They are inserted in the policy, not by the company or by the plaintiff, but by the statute. To fail to give them force afd effect is to nullify the statute. They are not intended to restrict the powers, express or implied, of general or local agents, but to prescribe an invariable rule of evidence by which their conduct must be proven to bind the company. Prior to the enactment of the statute much controversy arose as to the reasonableness of conditions or provisions inserted in policies. In many cases, by reason of the obscure language, manner and place of insertion and unfairness to the insured, the courts held them unreasonable and invalid. The conduct and language of agents, together with the extent of their power, rendered the rights and duties of the company and the insured uncertain and insecure. The courts, for the prevention of fraud and injustice, construed such provisions most strongly against the insurer, and, to prevent forfeitures, were industrious to find waivers in the conduct and language of agents. This is apparent from the decided cases in our own and the reports of other courts. To avoid these controversies, frequently resulting in long and, to the insured, ruinous litigation, the Legislatures of this and other states enacted the "standard policy" and forbade the use of any other. The Legislature of this State in 1899 enacted a statute codifying (173) the insurance law and adopting the "standard policy," prescribing the size of type in which it shall be printed, etc. For issuing any other form of policy the company and its agents are made indictable. Sections 4762-4833, Revisal. The courts of other states in which this form of policy is prescribed have uniformly held that its terms and provisions are binding upon the company and the insured. The question presented upon this appeal was decided in Quinlan v. Ins. Co.,133 N. Y., 356, Andrews, J., saying: "No principle is better settled in the law, nor is there any founded on more obvious justice, than that if a person dealing with an agent knows that he is acting under a prescribed and limited authority and his act is outside of and transcends the authority conferred, the principal is not bound, and it is immaterial whether the agent is a general or special one, because a principal may limit the authority of one as well as the other." Referring to the facts in that case, he says: "The limitations upon the authority of K. were written on the face of the policy," copying the language found in the "standard policy." Again he says: "When a policy permits an agent *Page 130 to exercise a specified authority, but prescribes that the company shall not be bound unless the execution of the power shall be evidenced by a written endorsement on the policy, the condition is of the essence of the authority, and the consent or act of the agent not so endorsed is void." This is a manifestly correct statement of the law. The learned justice proceeds to point out the evils which the enactment of the standard policy was intended to avoid, saying: "The act providing for a uniform policy, known as the `standard policy,' and which makes its use compulsory upon insurance companies, marks a most important and useful advance in legislation relating to contracts of insurance." Moore v. Ins. Co., 141 N.Y. 219. In Bourgeois v. Ins. Co., 86 Wis. 606, (174) Winslow, J., referring to the enactment requiring the use of the standard policy, says: "The act is broad and sweeping in its terms and scope. It brings order out of chaos. Prior to its passage there were as many contracts as there were companies. The variations and differences between the conditions of the policies issued by the various insurance companies were almost infinite in number; new clauses and conditions were being constantly inserted, generally ingeniously worded and obscurely inserted. To meet this condition the act under consideration was passed. That it is a long step in the right direction cannot be doubted. . . . The condition here broken was one of the conditions of the standard policy. It is claimed that it was waived not in printing or writing, but by mere word of mouth. Can this be successfully maintained? If so, then this part of the law is at once emasculated." In Parker v. Ins. Co., 162 Mass. 479, discussing an alleged waiver of a condition in a standard policy adopted by the General Assembly, it is said: "There is nothing to show that the agents had any authority to vary the standard form; but if they had it would seem probable that they could only do so by inserting provisions or attaching slips in the manner prescribed by the statute." In Anderson v. Ins.Co., 28 L.R.A. (Minn.), 609, while the case was disposed of upon other grounds, the Chief Justice states clearly the principle which should govern the courts in dealing with the statutory standard policy: "But in respect to the power of the parties to insert the provisions and conditions that are contained in the standard policy, and the binding effect of them, the act is conclusive, for it would be absurd to say that, while the same statute compels the use of a particular condition, the parties cannot or shall not bind themselves by it, but it may be nugatory." "The conditions of the standard policy cannot be waived, except as provided therein and written or printed on the face of the policy." 13 Am. and Eng. Enc., 223, citing a large number of cases. The decisions (175) appear to be uniform upon the point. In Assurance Co. v. Building Association, 183 U.S. 308, an exhaustive description, with *Page 131 a review of the authorities, is made by Mr. Justice Shiras. If the enforcement of this provision works injustice, the Legislature may change the law. As it is written, it is our province to enforce it. We have avoided any discussion of the extent and character of the authority of the agents of defendant, or what conduct will or will not operate as a waiver. We confine our decision to the language of the statutory policy, holding with his Honor, that there was a breach of the condition in regard to subsequent insurance, and that the waiver can be shown only in the manner contracted between the parties as prescribed by the statute. The Legislature has, as a matter of public policy, restricted the freedom of contract and compelled the parties to contract in the exact language prescribed. While a contract of insurance may be made in parol, the statute will enter into and prescribe its forms — that is, the parol contract will be construed to be for a standard policy. If listening to the suggestion of "hard cases," said to be the "quicksands of the law," we nullify the statute, we not only make a new and different contract for the parties, but make the law of none effect. The notice that the plaintiff intended to get other insurance in the future is not notice of existing insurance at the time the policy issued. The distinction is marked and radical. We do not think that it can be said that the agent of the company was acting as the agent of the plaintiff. This would make confusion worse confounded. Upon a careful review of the entire record we find no error. The judgement must be Affirmed.