Kelly v. Troy Fire Insurance

— 261 — By the Gourt, Whitow, C. J. The errors assigned in this case, are : “ 1st, The court erred in admitting the resolutions of the board of directors of said insurance company to be used in evidence without laying a foundation whereby they assessed the premium notes of said company. 2nd, The court erred in charging the jury in this cause, that the plaintiff had made out a prima facie case. 3d, The court erred in charging the jury in this cause, that there must be moral guilt to avoid a con. tract. 4th, The court erred in charging the jury in this cause, that before they could find for the defendant they must find that the agent (of) or the company had a guilty knowledge that said representation was false. 5th, The court erred in refusing the instiuctions asked for by defendant’s counsel. 6th, There is error in this, that by the record in said cause the judgment aforesaid appears to be in favor of the Troy Fire Insurance Company; where' as it should have been in favor of said Kelly & Co.’i The reasons relied upon by the plaintiff in error to show that the court below erred in admitting in evidence the resolutions of the board of directors, are, that by the charter and by-laws of the company; the company had two departments, which were to be managed and kept entirely distinct from each, other neither being liable for the losses and expenses of the-other, and that, as the premium note which was read in evidence was given in the “merchant’s department,” it was erroneous to permit the plaintiff to-show that an assessment had been made upon the262 prp.mii) m note to pay the debts of the company, without showing that losses had occurred in the “ merchant’s department ” of the company, and that consequently there were debts which the makers of the premium notes given in that department, were obliged to pay. It is further insisted by the plaintiff in error, that even if proof had been adduced to show such loss, and the consequent existence of a debt in that department of the company, still the evidence in question did not tend to show an assessment upon the premium note, to pay the debts of the “ merchant’s department,” but of the company generally, and that this evidence could not in any event be admissible because the note in suit could not be assessed to pay any debt except in the particular department in which it was given. We think the evidence was rightly admitted. The company, although it had two departments, was but one body. It had but one will, and could not act except in its corporate name. The act of ordering the assessment must therefore be done by the company. It is equally clear that the debts which accrued from losses in either of the departments were the debts of the company, and that an assessment to pay such losses would be an assessment to pay the debts of the company. The company could not apply the proceeds of an assessment upon the premium notes in one department, to pay losses which had occurred in the other, but it could lawfully order an assessment upon the premium notes to pay its debts, taking care to apply the proceeds of the assessments according to its charter and by-laws. Nor do we think it essential that a loss by fire — 263 — should have happened before an assessment upon the premium notes could lawfully be made. No company could transact business successfully, if after a loss had happened, provision must be made by an assessment upon premium notes to pay it. So much delay would unavoidably arise in paying; losses that the company would be unable to fulfil its con. tracts. The principal argument relied upon by the counsel for the plaintiff in error, to show that a loss by fire must have happened before an assessment could be made upon the premium notes, is founded upon the 21st section of the charter of the company, which is in these words: “Any member of this company, may at any time withdraw and receive the piemium note? by paying his share for losses while the policy was in force; the policy to be surrendered with endorsed directions, to cancel.” It is said that if assessments are made upon the premium notes before losses have occurred, the persons who have given the notes cannot withdraw upon paying up their share for losses, because their money will be taken from them to pay the assessments, where no loss has happened. We do not see as the section of the charter of the company above recited creates any difficulty. If, by a fair construction of it, those who have given premium notes are entitled to leave the company at any time upon paying only their share of the losses which have happened while they were insured, they would, of course, be entitled to receive back whatever they' have paid above their just proportion. We do not think the court committed any error in charging the jury that the plaintiff hadiS made out — 264 — &pwna facie case. The making of the note being admitted, and there being no question made in regard to the assessment, (except as to its admissi-bilityin evidence) on the demand, the court committed no error in charging the jury in the manner stated in the second assignment of errors. The third error assigned is, that the court erred in charging the jury that there must be moral guilt to avoid a contract. This assignment of error has reference to the charge of the court, in regard to the alleged fraudulent representations of the agent of the company [Finch] in regard to the condition and resources of the company, and which the defendant contended avoided the contract. The whole charge of the court upon that subject, as stated in the bill of exceptions, is as follows : “ That the question of fraud was a question of fact for the jury under the instructions of the court as to the law as to what constitued fraud, which will avoid a contract. That if the jury were satisfied from the evidence that Finch was the agent of the plaintiff, and that he made any representations which were false in fact, in any matter relating to the substance of the contract, and which were known to be false by the officers of the company who authorized Finch to make them, the defence of fraud would be made out, although Finch, the agent, was innocent. But if the agent, Finch, made representations which the company did not authorize him to make, and which he believed to be true, even if false in fact, and the plaintiff had a knowledge at the time that they were false, the de-fence is not made out. That to constitute fraud to avoid a contract, there must be more than mistake— — 265 — there must be unfairness or deception somewhere— that it must be inconsistent with honesty in all the parties.” We see nothing in this charge of the court which, when fairly considered, is liable to objection. The fact of an agent having innocently made a misrepresentation of facts while effecting a contract for his principal, will not amount to fraud on the part of the latter, if the principal, though aware of the real state of facts, was not cognizant of the misrepresentation being made, nor directed the agent to make it. The errors assigned in the 4th assignment have been already considered, and it is not necessary further to notice them. The iifth assignment of errors is that the court erred in refusing the instructions asked for by the defendant’s counsel. The instructions asked for were as follows: “That if they [the jury] believed from the evidence that the said Joseph R. Finch was the agent of the company to receive applications for insurance, and that said agent was furnished with forms of premium notes, surveys and applications, that such an agency would necessarily authorize him to inform applicants, as such agent, how much and what kind of capital the company were in possession of, and that any representation that he might make as to the capital of said company, at the time:of receiving said applications, would bind the company.” The judge refused to charge the jury as requested, and the defendant excepted. We do not see any error in this refusal of the judge. Entrusting an agent with the blank forms for application for insurance, and also with forms of premium notes, and giving him power to receive applications for insurance, would not of necessity give — 266 — bim power to bind the company to the extent con-for. The judge, we think, took a correct view of the question. He left it to the jury to decide as a quesq0]1 0f fact to be determined from all the evidence, whether the matter in question fell'within the scope of the agent’s authority.. The defendant further requested the court to instruct the jury “ that if they believed from the evidence, that said agent as such agent, to induce said defendant to sign said premium notes and insure n said Troy Fire Insurance Company, represented and told the defendant that said company had a cash capital of forty thousand dollars, or any other sum in cash, and that on account of having said capital the defendant would not be assessed until said capital was used up in paying losses, and the jury find that the company had no such capital, they must find for the defendant. The judge refused so to instruct the jury, but told them “..that before they could find for the defendant upon the state of facts last above mentioned, they must further find that the agent or the company had a guilty knowledge that said representations were false at the time they were made.” We see no errrof in this instruction, or in the refusal to instruct, of which the defendant can complain. In the instruction which was given, it seems to be implied that the agent (Finch) had authority to bind the company, and that the company would be bound if he made the representations with a knowledge that they were false. We have already expressed the opinion that unless the jury were satisfied from the testimony that the act of the agent in question, was within the scope of the agent’s authority, the company could not be affected by it. — 267 — The defendant further requested the judge to instruct the jury “ that if they believed from the evidence, that the said agent, as such, represented to the defendant, that said company liad a capital of one hundred thousand dollars in premium notes, to induce said defendant to sign said premium notes, in consequence, when assessments were made for losses, the assessments would be light, and the jury further find that said representations were false, then they must find for the defendant. The judge refused to give this instruction, but told the jury that they must further find that the agent or the company knew that the representations were false, or they could not on this account find for the defendant. It is manifest that the same observations apply to this, as’ to the preceding instructions, and we therefore leave it without further remark. ■ The defendant further requested the judge to charge the jury, “that if they believed from the evidence, that the agent of the company was furnished with approved blanks of premium notes and applica, tions and surveys, and the by-laws of the company required applicants to insert the fact of being insured in another company in the written application, and that it was usual for the agents of the company to fill np blank applications, and that the defendant requested the agent to insert an insurance in the Jackson Mutual Company, and that said agent promised to insert said insurance in the Jackson Mutual Company in said defendant’s application, and that said agent failed to do so, they must find for the defendant.” This instruction the judge refused to give, but instructed the jury that the testimony which had been introduced tending to show that the agent had — 268 — Prornised to insert the fact in the application of the defendant, that he was insured in the Jackson Mutual Company, and had failed to do so, had been ruled out, and was not before the jury then. The reasons given by the judge why he ruled out the testimony were, 1st, that the counsel for defendant in stating his defence in his opening to the jury, stated that the action was defended on the ground of fraud, and did not propose to show any want of consideration for the notes, and that he must be confined to the de-fence stated in his opening, and could not be allowed to, change his ground, and 2d, that the evidence if given, would not avoid the policy, so as to allow the defendant to avail himself of that defence. That the application was filled up by Finch — he was the agent in respect to that matter either of the plaintiff or the defendant. If of plaintiffs, they are bound by his acts, and the policy was good, and the notes were given for a good consideration. If he was the agent of the defendant, his acts will bind him, and he cannot set up a defence to the notes founded upon his own wrong. The evidence was therefore whplly immaterial, and was ruled out by the court and was not be" fore the jury. We are not prepared to say that according to the practice of the courts in this State, the counsel who tries the case is confined in the evidence which he introduces, to the statement which he makes at the opening of his case. But we are satisfied that the exclusion of the evidence worked no wrong to the defendant, for the reason stated by the judge. We think it clear that if Finch acted in drawing the application as the agent of the company, and neglected to incorporate into it — 269 — a fact which was essential to the validity of the policy, when he had promised the defendant that he would do so, the company would he estopped to set up the omission, for the purpose of defeating an action brought on the policy ; and if he did not act in that matter as the agent of the company, the evidence could not avail the defendant. Upon the whole, we see no error, and must affirm the judgment.