Keeler v. Niagara Fire Insurance

By the Court, Paine, J. This was an action on an insurance policy, by which a flouring mill was insured. The plaintiff in error objects among other things, that the complaint was fatally defective in not showing that the owner of the property had sustained any damage. The complaint shows that the mill insured, was damaged by fire to an amount exceeding nine thousand dollars. But the counsel contends that this is not — 536 — equivalent to an allegation that the owner was damaged, and that nothing but damage to the owner can be recovered in this action, and he says “ how inanimate property can sustain damage is not easy of solution.” Whatever merit this criticism might have, if the complaint were to be judged by the strictest rules of metaphysical precision, we are still inclined to think, that “under the code,” the pleading must be held sufficient, Notwithstanding the difficulty in the mind of counsel, the idea prevails quite generally that inanimate property may be damaged. It is very common to hear men speak of damaged wheat, damaged flour, damaged cargoes, &c. If a hurricane occurs they say that houses were damaged; of a freshet, that the crops and bridges were damaged ; if a collision on the railroad or lakes, that the engine or boat was badly damaged, &c. The same language has also inadvertently, nodcubt, crept into this policy. In the ninth condition of insurance there is a provision in regard to cases where “merchandise or other personal property is partially damaged.” So in the tenth, it is provided that in the “ case of any loss or damage to the property insured, it shall be optional with the company to replace the articles lost or damaged,” &c. And the idea is also very common, that in such cases the loss to the owners arises entirely from the fact that their inanimate property is damaged. However inaccurate these notions and forms of expressions may be, yet they^prevail so extensively that we are satisfied that the rules of pleading should be adapted to the common understanding of men, and that where a complaint on a policy avers that the property insured was damaged by fire, we must hold that it sufficiently shows a loss to the owner. The policy was originally issued to Converse & Stevely as partners. It provided that if the property should be “ sold or conveyed without the consent of the company obtained in writing on the policy, it should be void, “ Converse sold his interest to Stevely without such consent. And the question — 537 — was quite fully discussed, whether such a sale by one partner to the other was within the provision. The weight of authority seems to hold that it would be, though there are cases containing intimations to the contrary. And the same reasons which would induce a company to protect itself against a sale to strangers, may exist in a sale from one partner to another. In making contracts of insurance, the company has regard to the habits and character of the other contracting parties. If a firm is composed in part of prudent careful men, a company may be willing to insure the property of the firm, though the others were of an entirely different character. But if, after this was done, those who were prudent and careful, could by selling out to the others, leave the company exposed to the unguarded negligence of the latter, it might suffer the same evil, as from a sale to strangers. "We hold, therefore, that the sale by one partner to the other was within the provision,, and that the company might have avoided the policy on that ground if it had seen fit. But if after such sale, the company knowing the fact, should see fit to waive the forfeiture, and continue the policy in force, it could undoubtedly do so. And if Steveley, after he had purchased the interest of Converse, supposing the policy to be still in force, and desiring to assign it to this plaintiff as security in connection with a mortgage on the property, should apply to the company for its consent, communicating the fact that he had bought out the interest of his partner, and the company should then consent in writing to the assignment, and that the loss, if any, should be payable to the mortgagee, there can be no doubt that this would be a waiver of the forfeiture and continue the policy in force. That the agent of the company did consent to this, was shown on the trial, but the counsel for the company sought to show what were the powers of Lindsay, the local agent at Fox Lake, for the purpose of claiming that he had no authority to consent. But we think he was properly denied the right to do so, for the — 538 — reason that the answer admitted that both he and Whittaker were agents of the company, and that they had given sugh consent. And instead of alleging that the consent was inoperative for the reason that they had no authority to give it, it places the defense entirely upon the ground that neither of them had at the time, any I nowledge of the fact that Steveley had bought the interest of Converse. This clearly implies that neither agent exceeded his authority, and presents the single question whether the necessary information was communicated by Steveley, to make their consent amount to a waiver of the previous forfeiture. This question was fairly left to the jury, under proper instructions, that their consent in the mannei it was given, would continue the policy in force, if those facts had been previously communicated to them. And if Lindsay bad authority to give consent, as the answer clearly implies and as the proof shows he did have at least, though not when first applied to; if Steveley told him all that was necessary, it was immaterial whether he communicated anything to Whitta-ker, the general agent, or not, Lindsay having eventually received the necessary authority to act upon the application, his action upon full knowledge of the facts, amounts to a complete waiver. And this effect would not be defeated, even if it were shown that he did not communicate to the general agent the fact of the sale by Converse to Steveley. The act of such a local agent after his authority was extended, would have full effect according to such extended authority, even though he may not have communicated to his principal everything which the latter might have deemed material in determining the question whether the authority should be extended or not. Parties dealing with him in good faith, and giving him all information they were bound to give, would not be prejudiced by any failure of his, to state everything material, in applying to have his powers enlarged. But even if the waiver depended entirely on the consent given by the general agent, which was given by altering the — 539 — body of the' policy so as to provide that the loss, if any, should be payable to the plaintiff as mortgagee, there is- great reason for holding that the company would still be bound, if the necessary facts were communicated to Lindsay, the local agent, he having undertaken to procure consent from Whittaker. These companies are located generally in other states. They send out their agents to solicit persons to take policies. Persons dealing with them communicate from necessity, almost entirely with these agents.-- And where all material facts are communicated to them, and they undertake the desired action of the company upon these facts, there is much reason for holding the company bound by their knowledge of the facts. There are cases that have gone great lengths in relieving companies from responsibilities for the acts or knowledge of their agents; but we are certainly not inclined to extend such a rule any further than it can be shown to be inflexibly established by authority. Not that these companies, any more than others, are to be held responsible for the acts or mistakes of those who are not their agents; but they should, like everybody else, be held responsible for the acts or knowledge of those who are their agents for all purposes of benefit to themselves, and whose acts are only sought to be repudiated, when some mistake has been committed, through which a loss might happen. If they deal habitually with people throughout the country, through these local agents, every person should be entitled to assume that such agents are authorized to receive communications material to their contracts until notified to the contrary. Hough vs. City Fire Ins. Co., 29 Conn., 10. The objection taken to the preliminary proofs is disposed of by the decision just made. If the company by proper consent had revived the policy after Steveley acquired the entire interest in the policy, the facts that the proofs were made on behalf of him alone, and that they do not show any assignment of interest from Converse to him, constitutes no objection. These facts had been known to the company long before, and it was — 540 — wholly unnecessary to explain them in the preliminary proofs. Nor does the fact that Steveley, after the dissolution executed the assignment in the name of Converse & Steveley, defeat the plaintiff’s right to recover. There does not seem to have been any necessity for an assignment, after the company by consent of all concerned, altered the policy so as to make the loss, if any, payable to the plaintiff as mortgagee. His right then appeared on the face of the instrument. And we can see no reason why he might not maintain the action on such a policy without showing any assignment at all. Grosvenor vs. Atlantic Fire Ins. Co., 5 Duer, 517. It was also claimed that the policy was avoided by false representations made as to the value of the mill at the time it was insured. The judge submitted this question to the jury, telling them that if there was “such misrepresentation of the value of the property insured, as would naturally have influenced the company, and without which they would not have issued the policy, then that ends the case.” This was a proper instruction, and all that the company could ask. But they asked a special instruction to the effect that if the jury should find that the property was not worth ten'thousand dollars info two or three thousand dollars, and that the company would not have issued the policy had they or their agent known that the property fell this much short of the stated value of ten thousand dollars,” their verdict should be for the defendant. This the court declined to charge, and we think properly enough, although the proposition is correct in itself. It was properly refused for the reason that it would have been charging upon matters of fact, to give it. The court having correctly told the jury that any misrepresentation material to the contract, would avoid the policy, rightly left it to them to say what was material. He was not bound to specify what particular difference between the real and represented value would or would not have been material. That was for the jury to — 541 — determine, and it was not a matter of law, about which the court was bound to charge. We have not noticed in order all the points and exceptions of the defendant, but only those which seemed most material. We.have discovered no error for which the judgment should be reversed; it is therefore affirmed, with costs.