Woodbury Savings Bank & Building Ass'n v. Charter Oak Fire & Marine Insurance

Sanford, J. In this case the plaintiffs claim to recover upon the policy of insurance recited in their declaration. The instrument is in the usual form. It is on its face a written contract between the defendants and “ Smith, Beecher & Beers, of Naugatuck, Connecticut,” in which the defendants acknowledge the receipt of the stipulated premium from the “ assured hereinafter named,” and by which the defendants insure the said Smith, Beecher & Beers, against loss or damage by fire, to the amount of $3,000, on their two and a half story frame building, &c., situated in said Naugatuck. The plaintiffs held a mortgage on the property described in the policy, and upon the trial they sought to show that the contract of insurance was in fact made with them, instead of Smith, Beecher & Beers, and that they alone, as original promisees, were entitled to all the benefits of the insurance. For that purpose they introduced parol evidence of a cotemporaneous oral agreement between them and the defendants, by which the defendants undertook to insure the plaintiffs’ mortgage interest in the name of Smith, Beecher & Beers, for the sole benefit of the plaintiffs, and to insure the plaintiffs as Smith, Beecher — 379 — & Beers, on the plaintiffs’ interest only, “ and in the form of the policy set forth in the declaration.” At the same time the plaintiffs disclaimed any intention by such evidence to vary, explain, or alter the written instrument, and claimed only “ to show that the parties agreed, for the purposes of said contract of insurance, to insure the property of the plaintiffs in the name of Smith, Beecher & Beers.” That is to say, the plaintiffs, while recognizing the rule of law that parol cotemporaneous evidence is inadmissible to contradict or vary the terms of a valid written instrument, undertook, by the proof of a cotemporaneous oral agreement, not indeed to substitute other words or stipulations for those contained in the writing, but only to give to those words and stipulations a signification and effect, entirely different from and inconsistent with, their ordinary, natural and legal import. There is no rule more firmly imbedded among the elementary principles of our jurisprudence, than the one already alluded to, but more fully expressed by Mr. Starkie, in his Treatise on the Law of Evidence, vol. 3, p. 1002, that “ where the terms of an agreement are reduced to writing, the document itself, being constituted by the parties as the true and proper expositor of their admissions and intentions, is the only instrument of evidence which the law will recognize, so long as it exists, for the purposes of evidence.” It is equally well settled also that the terms of every written instrument are to be understood in their plain, ordinary and popular sense, and that where the language of an instrument has a settled legal construction, parol evidence is not admissible to contradict that construction. 1 Greenl. Ev., §§ 277, 278. In view of these elementary principles we think the admission of the parol evidence can not be vindicated. The policy is the foundation of the plaintiffs’ claim. By that, and by that alone, the defendants assumed their obligations. They say, “ By this policy of insurance the Charter Oak Eire and Marine Insurance Company do insure,” &c. It is expressed in plain, unambiguous language, and no doubt or difference of opinion has beep expressed, or can be entertained, in regard to — 380 — the meaning or effect of any of its provisions. It contains no stipulation with, or promise, to the plaintiffs, or any one in their behalf. Their name is indeed mentioned in the instrument, not however as a party to the contract, but only as an appointee of Smith, Beecher & Beers, to receive the money which might become due to them from the insurers on the policy. So that the only inquiry in this part of the case is, whether a plain, explicit and complete written contract with Smith, Beecher & Beers, to insure them against loss by the destruction of their property, can be turned into a contract with the Woodbury Savings Bank and Building Association, to insure their mortgage interest in said property, not by the substitution of the oral for the written stipulations in the policy, but by proof of a cotemporaneous oral agreement between the parties, that, for the purposes of that transaction, Smith, Beecher & Beers should be understood to mean the Woodbury Savings Bank and Building Association — that the insurance of Smith, Beecher & Beers against loss or damage by fire on their two and a half story frame building, &c., should be understood to mean the insurance of the 'Woodbury Savings Bank and Building Association, against loss, &c., on their interest in said building as mortgagees thereof — that the express promise of the defendants to make good unto the said Smith, Beecher & Beers, their executors, Ac., all such loss or damage not exceeding the sum insured, as should happen by fire to the said building, &c., should be understood to mean, a direct promise to make good unto the Woodbury Savings Bank and Building Association, all such loss or damage as should happen to their mortgage interest in said building, &c., by the burning thereof — and that the proviso in the policy, that said loss or damage should be estimated according to the true and actual value of said property at the time the same should happen, should be taken to mean, that said loss or damage should be estimated according to the true value of the plaintiffs’ interest, &c. In short, is it allowable to prove an oral agreement between the parties, that the language and stipulations of a cotemporaneous written contract shall, for the purposes of that transaction, have any other than their natural, ordinary — 381 — and legal signification ? "We think it is not. Two contracts, the one in writing and the other in parol, made between the same parties, at the same time, in regard to the same subject matter, and for the same purposes, but variant in their respective stipulations, can not stand and be enforced together in the same suit in a court of law. In such a case the law wisely determines to rely upon the written instrument alone, as the true and only safe expositor of the intention and final understanding and agreement of the contracting parties. The plaintiffs’ disclaimer could not render the evidence admissible, because the oral contract which they proposed to prove, was when made intended to operate directly upon the written instrument, varying and controlling its effect, and in no other way could operate at all. If a written contract be made for the conveyance of black-acre, may it be proved by parol that white-acre instead of black-acre was the property really bargained for and intended to be conveyed, and that the parties made a cotemporaneous oral agreement that, for the purposes of that transaction, black-acre should be understood to mean white-acre ? And would the party’s disclaimer of an intention to affect the written instrument render such evidence admissible ? In that case as in this, the purpose of the party would not be to substitute the words or terms of the oral agreement in the place of those employed in the written contract, but only to make black in that contract signify white, and nothing else. In the case of Barnett v. Union Mutual Fire Ins. Co., 7 Cush., 175, the by-laws of the,company provided that the insurance should be void unless all prior insurances were mentioned in the policy, and, it appearing on the trial that a prior insurance not mentioned in the policy in fact existed, the plaintiffs offered parol evidence that the fact was made known to the defendants before the issuing of the policy, that both parties expected that such prior insurance would be continued, and that the defendants made out the policy, and delivered it to the assured, who supposed that it was made according to the intention and expectation of the parties, and did not know that the prior insurance was not mentioned in — 382 — the policy until after the loss occurred. Fletcher, J., said: “ In all cases where a sensible construction can be put upon the policy without the aid of parol evidence, the effect of such evidence is materially to vary the legal construction of thecontract of the parties. The true meaning of the rule excluding parol evidence is, that such evidence shall never be used to show that the intention of the parties was directly opposite to what their language expresses, or substantially different from any meaning that the words they have used upon any construction will admit or convey. A. court,of law must act on the agreement as it is.” In the case of Grant v. Naylor, 4 Cranch, 224, Grant addressed a letter of credit to John and Joseph Naylor & Co., in which he says: — £ £ I will guarantee their ” (Hacket & Grant’s) ££ engagements, should you think it necessary for any transaction they may have with your house.” The letter was designed for John and Jeremiah Naylor, was delivered to them, and upon the faith of it they sold goods to Hacket & Grant on credit. Hacket & Grant failed, and John and Jeremiah Naylor brought their action on the guaranty in the letter against Grant, and offered parol evidence to prove that the letter was intended for, and was an assumpsit to them. The court held the evidence inadmissible, and Marshall, C. J., said: “ In such a case the letter itself is not a written contract between Grant, the writer, and John and Jeremiah Naylor, the persons to whom it was delivered. To admit parol evidence to make it such a contract, is going farther than courts have ever gone, where the writing is itself the contract, and not evidence of a contract, and where no pre-existing obligation bound the party to enter into it.” So we say in this case, the policy of insurance is not a contract between the insurance company and the Woodbury Savings Bank & Building Association, and parol evidence is not admissible in a court of'law to make it one. The case of Peck v. New London Mutual Ins. Co., 22 Conn., 575, was cited as an authority for the admission of this evidence. In that case the plaintiffs procured a joint insurance on a bark-mill owned by one of them, and personal property — 383 — in the. mill owned by the other, in severalty, as if they were the joint owners of all the property, and in the declaration they alleged that they were the owners of the property insured; which allegation the court held equivalent to an averment of joint ownership. Upon the trial the plaintiffs offered parol evidence that the facts in relation to their title were fully stated by the assured to the defendants’ agent, who thereupon proposed a joint insurance, and filled up the policy accordingly; the plaintiffs accepting it in that form, and paying therefor the stipulated premium. And this- court held the evidence admissible, in proof of the allegation of joint ownership, as it tended to prove an agreement between the plaintiffs to unite their several interests, and treat the whole, for the purposes of that insurance, as their joint property ; and admissible also to estop the defendants from setting up the objection that the plaintiffs were not joint owners. It was the case of an agreement between the respective owners of the property, for the purposes of that insurance, to unite in the payment of the premium, and participate in the benefits of the security; an entirely fair and valid contract as between themselves, and binding too upon the defendants, because made at their suggestion and with their assent and approbation. The oral contract stood well with the written one, and in no way affected the construction or operation of the policy, or the interests of the defendants. Some other questions were made by the counsel, but we prefer to waive the consideration of them for the present, and advise the superior court to grant a new trial for the reasons already stated. In this opinion the other judges concurred. New trial advised.