Croft v. Hanover Fire Insurance

BraNNON, J udge ; This was a suit in equity in the Circuit Court of Wood county by Walter L. Croft against the Hanover Fire Insurance Company and the Citizens’ Fire Insuance Company for the specific performance of an agreement to issue a policy of insurance upon a dwelling house; which was consumed, by fire. The court decreed that the insurance companies pay the insurance stipulated for, and the companies appeal. No policy was actually issued, but the suit is based on an oral contract to insure and to issue a policy accordingly. As the “Statutes of Frauds and Perjuries,” so called (Code, c. 98) does not apply to insurance, an agreement to insure need not be in writing. Wood, Ins. § 4; May, Ins. § 14; Insurance Co. v. Colt, 20 Wall. 560. I do not think clause 7 of chapter 98 of the Code applies to the case, even if the policy agreed upon was for three years. Kimmons v. Oldham, 27 W. Va. 258. When a contract for insurance has been made, but no policy to evidence it has been issued, the remedy of the insured, after loss, may be by bill in equity, on the principle of specific performance; and the court does not simply decree the specific performance of the agreement by the actual execution of a policy of insurance, and then compel the insured to bring an action on that policy, but, to avoid multiplicity of actions and delay, having the parties before it properly for specific performance, will at once decree the payment of the amount which would be recoverable under the policy if issued, agreeably to that principle of equity practice that as all the necessary parties are before the court for one purpose, it will give full and complete relief, and not send them to another court. Wooddy v. Insurance Co., 31 Gratt. 362; May. Ins. § 565; Wood, Ins. §§ 11, 12; Insurance Co. v. Colt, 20 Wall. 560. Or he may sue at law, by same authorities. But the defendant companies say there was no contract — 513 — to sustain a suit, because the contract was vague, uncertain and incomplete. Herein lies the turning point of the case, xls to proof, there is nothing peculiar in contracts of insurance. As in other cases, the contract must be definite and certain, and the parties must haye agreed upon all essential terms. The contract must be such as to bind both parties— the one to insure, the other to pay the premium. All elements must be agreed upon, and if anything is left open or undetermined, so that the minds of the parties have not met, no contract exists, and there is no liability for a loss; as, where the rate of premium is left undetermined, or the time when the policy shall attach, or the apportionment of the risk has not been agreed upon, or the insured retains control over the premium note or any papers the delivery of which is a condition precedent, or if anything remains to be done by the insured as a condition precedent, as the payment of premium, or if the duration of the risk is not agreed upon, or any condition precedent has not been complied with. The aggregatio mmtvum (union of minds) must be fully established, and nothing must remain to be done but deliver the policy. The details of the contract must be fixed, and, if the agreement or understanding of the parties in reference thereto is not mutual — that is, if one party understands the matter one way, the other another — the minds of the parlies have not met, and there is no contract in law or equity. Of course, the burden of proof to show such a contract as is enforceable is on the plaintiff. Wood, Ins. § 6. The chief point of question in the contract, as it seems to me, is as to the length of time the policy was to run. It has been stated above that this is an essential element in a valid contract. The parties must agree upon a time for the duration of the policy. The plaintiff says that he applied for a policy on his dwelling house for one year, and understood that the agreement with the agents was for one year. One of the agents says he understood it to be three years. The agent says he made no memorandum in writing on this occasion. According to the evidence on both sides, in that interim an agreement was made for the insurance of the dwelling house in such sum as the agents. — 514 — should fix, at a certain rate, and the policy was to be made out and sent by mail to the insured, and be was then to pay the premium, or it was to be charged to his father, who had other insurance with these agents, as the agents preferred. The agents agreed and promised to send the policy, They had policies in blank, signed by the officers, and they had authority to fill out and deliver them without application to the chief officers of the companies. About one month after this, a brother of the plaintiff, by authority of his brother,, met the one of the agents who had negotiated for the policy, and asked the agent for it, and was told that it had nor been made out, as he had not satisfied himself as to the amount for which the policy should be written. The plaintiff’s brother told the agent he wished it fixed up, and the agent himself says that he told the brother that he would fix it then as far as he could, as he was on his way to the train to go on a trip, but would attend to it; and he then wrote in a private memorandum book this memorandum: “W. M. Croft, $600.00 on one-story fr. shingle roof dwell., near Davisville, 1% — 3 yrs. N. Y. Underwriters.” The brother told him to send the policy, and he would send the money to pay the premium, to which the agent assented. The evidence shows the agent agreed to credit; did not demand prepayment. It is not claimed otherwise. About a month after this interview between this agent and the plaintiff’s brother, the house was destroyed by fire, and this brother, the next day, called on the agents, and asked for the policy. The agent said he had written it, but had mislaid it, and searched and could not find it, and said he would look for it, and to call later, and then the brother informed him of the fire. In the afternoon the brother called again for the policy, but the agent had not found it. Later this agent concluded he had never written it up. After this the plaintiff tendered the agent the premium money, but he declined it, saying that he had informed the company of the fire, and the adjuster would soon come, and, “under the circumstances,” he would not take the money. — 515 — We can say from the evidence on both sides that an agreement to insure was made, and nothing remained to be done; but to issue the policy, and that the agent promised to do this. All the elements'were settled, except as to time to be covered by the policy, let us say. The property was named. The plaintiff gave its value. The amount of the indemnity was left by the plaintiff absolutely to the decision of the agent. He would have right to fix that anyhow. It was with him to say just how much he would insure it for. He did fix it, as the memorandum shows. The rate of premium was fixed. The discretion to select the company was left to the agent. The agent, as a witness, says it was only through his neglect or forgetfulness that the policy was not issued. He says the policy should have been issued. But the insured asked and understood that the insurance was to be one year, while the agent understood it to be three years. What effect can this have? The defense would use it to show there was no finished agreement, under that principle of law, stated above, that all elements must be .agreed, and time is an essential element, and that when one party understands an essential element of the contract in one way, and the other in another way, the minds of the parties have not met on that essential element. But what practical harm can this circumstance do to the companies? The fire occurred wit bin one year. The plaintiff says to the companies; “You are liable to me. You agreed to insure me for one year, and the fire occurred within one year.” The companies plead in reply; “We are not liable because we agreed to insure you for three years.” The plea is not good. It confesses the fact of insurance. It does not deny that the fire was in one year, and the fact that the term was three years is not material, the three years covering one year. The rate agreed was the usual one for three years. Croft’s evidence, however, is that the term was one year. It is a case of conflicting evidence as to this. If he is believed their minds met on one year. We should not where two witnesses thus disagree, reverse the decree, there being no other evidence as to that. Itiscontendedforthedefense that no company was named — 516 — as the insuring company at the time the agreement was'' made, and that never until a month later, when in the memorandum above mentioned, the agent wrote the New York Underwriters as the insurers, was there any particular insurer mentioned. Here the evidence of the plaintiff and the agent conflicts, the former saying that the New York Underwriters were named as the insuring parties. The defendant companies did business under that name. Let us say that no insuring party was named at the time of' the agreement. The firm of K. S. Boreman & Son were insurance agents, doing business for the defendant companies,, and also other companies, and both plaintiff and the one-of said firm acting in this matter (to whom I have often referred above and may below, as agent) say that it was left to the agent to assign the risk; that is, give the insurance-to what company they pleased. Croft, having confidence in-the experience of the agents with the various companies,, committed this discretion to them. ° This is often done. It is lawful and binding on the company selected by the agent,, when they have policies signed in bank, to issue to whom they choose. It does not render the agreement incomplete as for want of contracting party. Wood, Ins. § 25, and note; May, Ins. § 59, end. The agents clearly had power to make-a contract binding these companies by name as insurers at the time of the contract. Then, when the party insuring leaves it with the agents to select any of the companies represented by them, why is it not binding? If the party insured does not object, how can the company object? These two companies had an agreement that in all policies taken in the name of the New York Underwriters they should share premiums and liabilities in certain proportion. Until the agent does select the company, there is no contract; but when he does, then there is. Let the date of the memorandum naming the underwriters as the insurers be at the date of the agreement or afterwards, it was before the fire. It became, as to this point, a contract before the loss. The agent wrote to the companies after the fire that he had assigned the risk to them. Sheldon v. Insurance Co., 65 Wis. 436 (27 N. W. Rep. 315) cited, is not in point. An — 517 — •agent agreed to insure in some company represented by liim, but not designated, on certain terms. The defendant ^decided to insure on different terms, but, before acceptance, the company declined to do so. Held, there was no contract. The judge, admitting that when it is left to an agent to select the company, it is binding when he designates the company said it is not a contract until he designates. The memorandum of designation there showed a rejection by the company, and the court held it a departure from the order of the company in designating a less premium than it had proposed to accept. The case of Association v. Boniel, 20 Fla. 815, is not in point. A sub-agent agreed to insure in a company not designated, and there is no showing that he was to select it, and he never did designate one, and he had no authority. There is an indirect allusion in brief of counsel to the nonpayment of the premium, but the point is not distinctly made. It would be untenable. The proof is full that the •agreement was that -when the policy should be sent, Croft would bring or send the money, or it could be charged to his father, and the agents assented. Now, insurance can be sold on credit as well as anything else. The agent can give credit. Eagan v. Insurance Co., 10 W. Va. 583, 588; Wood, Ins. § 28; May, Ins. § 360 D; Insurance Co v. Colt, 20 Wall. 560; Long v. Insurance Co. (Pa. Sup.) 21 Am. St. Rep. 883, note, 20 Atl. 1014. Pre-payment is not necessary to the conclusion of an oral contract. Wood, Ins. §§ 22 A, 43 B. But, in addition, if credit had not been given, there was no obligation to pay until the policy was ready, to be delivered, and the companies were to do that, and did not, though asked to do so. Wood, Ins. §§ 29, 30; May, Ins. §§ 22 A, 43 C. The agent made out the memorandum in the name of W. M. Croft, not in that of plaintiff, Walter L. Croft, by mistake. The plaintiff owned the house and applied for the insurance, and made the agreement. From the fact that his father, W. M. Croft, had insurance from these agents, and the latter thought that the father owned the house, the mistake was made by the agent. The plaintiff says he told him the house was his. No pretense or claim of falsehood — 518 — or concealment is made against the plaintiff. The agent swears that it would have made no difference, as he would have as readily insured in the son’s name. This mistake is mentioned in the brief, but merely mentioned. It can have no effect. Even a policy in a wrong name may be reformed and rectified after loss. This is a suit on an oral, executory agreement, and we are in a court of equity. May, Ins. § 566 A; Thompson v. Insurance Co., 136 U. S. 295 (10 Sup. Ct. 1019); May, Ins. §§ 479, 482. This Court decided in Deitz v. Insurance Co., 33 W. Va. 526 (11 S. E. Rep. 50) that where, by mistake, the agent wrote the name of the husband as the assured instead of the wife, it would not defeat recovery by the true owner. See, also, opinion in Travis v. Insurance Co., 28 W. Va. 583. But this memorandum is uot the contract. There is evidence to sustain the court in holding the agreement was with the plaintiff. The suit is on the oral contract. The memorandum is only important as showing a designation of the insuring companies; it is-not the contract. Plaintiff in person applied for the policy and told the agent the house was his. The agent accepted the risk of the plaintiff in person, and why should we or the agent say the contract was with the father? The agent, as a witness, does not claim he was misled; attributes no-bad faith whatever to the plaintiff. I-Ie inferred, because the plaintiff was a young man of thirty, and the father had a mill property close by, and was a man whose name was-on the insurance book as to other insurance, that the father owned the house. It was merely his inference. The real contract was.in fact and in law with the plaintiff. Prima facie, if the plaintiff did not mislead, it would be his contract. The agent says it was merely his inference. I repeat, the memorandum is not the contract. If it were, the mistake could be corrected. Variance. This' is relied on in a brief of counsel. As regards the matter last spoken of — the name — there can be no variance between allegation and proof. The bill alleges the oral contract as made with the plaintiff, and, as I have shown, the proof is of a contract made with the plaintiff. The memorandum is not the contract sued on; and if it were, — 519 — the bill states the mistake in it, and gives reasons of mistake, -why it, if the gravamen of the suit, should be treated as one made with plaintiff. Either party may have even a written contract specifically enforced with such corrections as parol evidence may show to be necessary to correct a mistake. Creigh v. Boggs, 19 W. Va. 240. Variance as to Date of Contract. There is no variance between bill and proof in this respect. The bill says that “about the middle of July, 1891, the plaintiff applied to the agent for the insurance," etc., “and that at that time, to wit, July, 1891,” a certain agreement was made. The proof shows, I think, that this was on the 11th of August. Is it possible that we must, in a suit of equity, overthrow the decree for this? There is no variance. The substance and real point of the allegation is that a contract of insurance was made. The date is not material. Even if the bill said it was on a fixed day in July, it would not be fatal, the agreement not being a writing. Even in formal law actions, allegations of “time, place, quantity and value, when not descriptive of the identity of the subject of action, will be found immaterial, and need not be proved strictly as alleged. Thus, in trespass, the material fact is the assault, the time and place not being material.” 1 Greenl. Ev. § 61. A distinction exists between allegations of matters of “substance,’- and matters of “essential description.” The former may be substantially proven; the latter must be proven with a degree of strictness extending in some cases even to literal precision. Id. § 56. But here the bill' does not tie itself to a fixed date, but is “about the middle of July.” Vow, if it were a note or instrument described by date, it would then be, in the words of Greenleaf, “matter of essential description,” the earmark of identity, and strict proof would be required, and such cases as Scott v. Baker, 3 W. Va. 285, would apply. This date is not matter of substance, but the substance is the contract and its essential elements. If there were a variance in them, it would be different. Therefore, cases like Railroad Co. v. Skeels, 3 W. Va. 556, and James v. Adams, 8 W. Va. 576, do not apply. Substantial and even-handed justice has been done in the — 520 — case by the decree, and, when that is so, there ought not to be a reversal, though on some point it may be open to question. 4 Minor Inst. 870; Barton Ch. Prac. 1139. The agents agreed with the plaintiff, for a given consideration, to insure a particular house owned by plaintiff, in a sum which ilie agent was to and did fix and for a period of time covering the date of the loss by fire. Nothing remained to be done but issue the policy, which the agent promised to do. These things he himself proved. Both parties understood that the plaintiff- was insured. Every element was final to base that policy on. The agents were authorized to issue it. His own memorandum told him every single element from which to issue it, except the name of the insured; and, had he issued it in the wrong name, the mistake could be corrected, and a suit maintained upon it. The only thing wanting is the policy to perfect the insurance. Whose fault that it was not issued? Where is the plaintiff in fault or default? To decide the case against the plaintiff, his house is lost, without the indemnity he fairly contracted for; to decide against the defendants is only to make them do what they fairly contracted to do. The defense set up at first blush inspires some questions; but, on consideration, it becomes a figment, which withers away. Courts must not let insurance companies evade their policies through mere technicalities. They must be treated fairly, and only held up to their fair engagements. They are very valuable institutions, deserving patronage and encouragement; but when their contracts of indemnity prove worthless, for unsubstantial reasons, to those who are in distress and poverty from the waste of fire, against which their prudence sought to provide, it derogates from the efficacy of the policies and the confidence of the public in fire insurance. For these reasons, we are clearly of opinion to affirm the decree.