Diehl v. the Adams County Mutual Insurance

The opinion of tbe court was delivered, July 2d 1868, by Thompson, C. J. 1. Tbe answer of the defendant to the first assignment of error in this case is very complete, viz: that its act of incorporation, by adopting tbe 8th section of tbe Act incorporating the Bradford County Insurance Company, Pampb. L. 1838, p. 365, rendered its members competent witnesses for tbe company, when not individually interested. Tbe objection that tbe witnesses were managers did not alter tbe case. They are managers because members, and it is only as members in this case, that they could be supposed to have any interest. No conduct of theirs as managers' is involved in any issue in tbe case. By tbe act of incorporation they were clearly witnesses, therefore, in a case of this kind. Had there been any question of negligence, or recklessness on part of tbe managers involved, tbe objection might have been effectual — but that was not tbe case. Tbe result under tbe pleadings could only affect tbe company. 2. The second assignment was equally well answered. Tbe plaintiff below became a member of the company by tbe act of being insured in it. It was a mutual insurance company. Tbe books were, therefore, in law, as much bis as they were the books and minutes of tbe other members constituting the company: 3 S. & B. 29; 4 Barr 185; 1 P. F. Smith 402. This error is not. sustained. 3. Tbe third assignment of error is to the rejection of an offer-to prove that tbe tannery, the, principal subject of insurance, consisting of several buildings, bad been leased before tbe erection and application of steam to its operations, and that tbe furnace and boilers to propel the engine were erected on a public alley, and were so constructed and situated, as not to increase tbe risk to the insured premises, and that tbe erection was in no wise the-cause of tbe fire, but that it originated in, and was communicated from property not covered by tbe policy. The court admitted that portion of tbe offer to show that tbe location of tbe furnace, boilers, and engine, were on tbe alley, but rejected tbe balance, deeming it inadmissible under tbe pleadings. That the erection was by a tenant was no excuse if it was violative of any covenants in tbe policy. Tbe possession was that of tbe insured, if it was by bis tenant. The lessor, tbe plaintiff in this case, continued to be tbe insured party, and tbe covenants which be entered into in becoming insured remained, whether be occupied personally or by tenant. We need not spend time on this. The defendant went to trial on a single plea, which averred that in violation of the terms and conditions of tbe policy, the [450] plaintiff had erected and set up a steam-engine to he used, and used the same in operating his tannery, up to the date of the injury to the establishment by fire, and by this means changed the property into a class of risks not covered by the policy. The replication of the plaintiff, was a simple traverse of the fact averred. The rule that the allegata and probata must agree, contains the principle which justified the rejection of the proposed testimony. It did not in any manner sustain the plaintiff’s allegation, that no such erection had been made as averred in the plea. The plaintiff contends that it was evidence to show that the erection did not increase the risk, and therefore ought not to avoid the policy. The answer to this is, that the contract of insurance accepted by the plaintiff, stands upon the condition that if the insured premises “ shall be so altered, or be appropriated, applied or used, to or for the purpose of carrying on, or exercising therein, any trade, business or vocation, which, according to the by-laws and conditions, class or hazard, or rates hereunto annexed, would increase the hazard, unless it be by consent, and agreement in writing, endorsed upon the policy,” the policy shall cease and be void. In the by-laws we find a list of rates of insurance for the classes therein enumerated, and in it are “ Tanneries without steam, 8 per cent.” Tanneries with steam are not in the list. “ The above rates,” say the by-laws, “ are for insurance of the ■safest kind.” And “ such classes as are not named may be insured at such rates as the board of managers or executive committee may determine.” The safest risks are the classes named and declared in the policy as enumerated. Other risks may be insured by the special action of the managers or executive committee, at such rates as they may determine upon. That is the meaning of these clauses undoubtedly. The plaintiff’s tannery and other property, are insured according to the class and rates set down in the by-laws, and the policy was, by express stipulation, “made and accepted subject to, and in reference to the terms, by-laws and conditions therein contained •and thereunto annexed.” The application of steam to the tannery changed and put the property out of the class and rates enumerated, and in which it was insured. Steam-tanneries are not on the list, while tanneries without steam are. The list was a mode of fixing what should be regarded-as an increase of hazard. It is declared, if the property insured should be so changed or used as, according to the by-laws and conditions, class or hazard, of rates “hereunto annexed,” the hazard would be increased and unless by consent, the policy should be avoided. On the face of the policy and by-laws made a part of it, a steam-tannery was not insured and not insurable at the rates mentioned. The offer, [451] therefore, to prove as proposed, was an offer to ignore what the parties had agreed upon as the test of increased hazard, and was properly rejected. There are cases in which such offers have been made and the testimony admitted, but I find none in which the conditions and by-laws in regard to the risks are the same as here. The cases of Perry County Ins. Co. v. Stewart, 7 Harris 45, and The Mutual Protection Co. v. Schell, 5 Casey 31, cited, are not. The controversies in these cases arose on a clause similar to the 17th section of the by-laws of this company, which provides that where any alteration or change of occupants shall be made to any building, if the risk is not increased, the secretary shall enter on the policy “ altered, but not endangered,” and give the insured a certificate thereof. Under such a clause, it is not difficult to conceive of the possibility of such evidence being proper, and the cases show that it has been received. In such case the parties not having agreed upon what shall be a test of increased risk, that fact may therefore become a matter of opinion and testimony; but in the case in hand they have, namely, that any change or use of property which puts it out of the enumerated classes and rates, is to be regarded as conclusive of increased hazard. This offer presented the single question of the right to make the proposed proof, without reference to any supposed waiver of conditions, as insisted on in another point in the case. We think, for these reasons, the offer was properly rejected. 4. This offer, the rejection of which constitutes the 4th exception and the 4th assignment of error, was an effort to bring the plaintiff’s case within the 17th section of the company’s by-laws. There were two difficulties in the way of the admission of this testimony. The first was that the defendant’s plea put in issue alone, an unauthorized alteration of the insured premises. This was denied modo et formá by a general traverse. Under this issue the testimony was manifestly inapplicable. Had a license to alter been replied, it would have admitted evidence of a license assuredly, but whether the testimony offered would have been competent, is a matter of great doubt. Neither the plaintiff nor defendant had done what the by-laws required them to do in case of an alteration. The former had made no application to the secretary or managers to examine the premises, and certify his opinion whether the hazard was thereby increased or not. Nor did the latter without, or in the absence of such application, make any examination or give any such certificate. We see no error in refusing the offer. The testimony proved nothing like official action; in fact it proved a refusal to act at the time, not recurred to at any after time. 5. The 5th assignment of error, is to the rejection of the offer to prove the directions of the company, in November 1864, to the treasurer to make an assessment on all the premium notes of the [452] company in force ; that he did so, and included among them the note of the plaintiff, on which there was an assessment of three dollars and ninety cents, which the plaintiff paid as per receipt, and which was retained by the company. The defendant had given in evidence by the minutes of' the board of managers, dated September 12th 1864, the action of the board on the application of the plaintiff for indemnity for the loss which had occurred on the 18th August previously, and their resolution, refusing the claim, with a declaration of a forfeiture of the policy for breach of conditions, and notice of this at the time to the plaintiff. It is very evident, that the action of the treasurer, in including the plaintiff’s note, as subject to assessment, was a mistake on his part. He had no authority to include it, for the directions to assess applied, expressly, only to such notes as were in force, when the order was given. Some days prior to the direction to assess, which was on the 19th September 1864, the note had ceased to be obligatory or liable to any future assessments. The object was to establish a waiver of a breach of conditions. Rut this never occurs unless intended, or where the act relied on ought in equity to estop the party from denying it. The doctrine of waiver seems applicable, properly speaking, only during the currency of the contract. No doubt if the company had called for an assessment on the plaintiff ’& note while the property was being used, after the application of steam, and with a knowledge of such alteration and use, it would have been estopped from setting that up. But that was not the case, as already shown. There must be knowledge to establish a waiver: 5 Denio 154; 235 Conn. Rep. 244; 19 Barb. 440; 38 Id. 402. After a policy is forfeited, I see not how it could be renewed or revivified, except by an express agreement of the insurers. That it can only be done in this mode, seems to be the doctrine of the case of Carroll v. The Charter Oak Insurance Company, 38 Barb. 402. The policy here was forfeited by the action of the board, of which the plaintiff had notice, not only actually, but constructively ; a payment of an assessment, especially on a mutual premium note, after this, can be regarded in no other light, we think, than as voluntary. No resistance was made in this instance, or application to the board on the subject. Without pursuing this line of thought further, however, it might be enough to say, that the issue did not admit of the introduction of the testimony proposed. But there was an offer to amend the replication by replying the waiver specially. In looking at the proposed amendment, it will be noticed that it rests the proposed waiver solely on the act of the treasurer, without involving the assent of the company or alleging it. It is evident if all the facts had been in, evidence, they might have been demurred to. A waiver could not have been inferred from them. An amendment [453] refused which could not aid the party’s case, would hardly he error. But waiving this, we think the court committed no error in refusing it on the ground stated.. It was entirely inconsistent with the replication filed, which made the issue; it would therefore have been double, as held by the learned judge. More than this, it introduced entirely new matter in reply. It was not an amendment of form at all, it seems to me. Nor was it demandable of right under the Act of 1806. One of the first decisions under that act by this court, was Austin v. Ingraham, 4 Yeates 347, in which it was held that the act did not extend further than to an amendment of the declaration or statement, or to the plea or defence. It does not reach to replications, rejoinders, &c. Such amendments, therefore, are as at common law, and to be tested only by the question of the exercise of a legal discretion. We think in no aspect of the question, was there error in the ruling of the learned judge, either in regard to the amendment or the admissibility of the evidence. Judgment affirmed.