Franklin Fire Insurance v. Hamill

Mason, J., delivered the opinion of this court. This case has already been before this court and is reported in 6 Gill, 87. Upon the former appeal it was held that there was but one plea in the case, that of non infregit, and that the evidence offered by the defendants was inadmissible under that plea. The case as now presented shows, that upon the second trial in the court below under a procedendo, the defendants relied upon six additional defences, which, under the agreer ment between the parties, we are to treat as having been regularly pleaded. These defences are: — 1st, enlargement of the time of the performance of the covenant; 2nd, a waiver of performance by the plaintiff, &c.; 3rd, accord and satisfaction; 4th, tender of performance, &c.; 5th, fraud, and 6th, all other defences properly pleadable, &c. The admissibility of the testimony of Smith and Neale, under the above state of pleadings, is the question presented by the present record. The defendants attempted to show by these witnesses, that they had elected under the policy of insurance, to repair the injured property, which consisted of machinery, and that two or three days after the fire they had offered to repair said machinery, but that by the consent and request of the plaintiff said repairs were agreed to be postponed, and the period of thirty days allow'ed by the policy for that purpose, enlarged, — 180 — until the house could- be repaired so as to protect the maehirr®-ry from the weather, and that by virtue- of that understanding the repairs were not made within the thirty days-, but eventually and in- a reasonable- time- the machinery was repaired-,, and placed in as good condition, as it was before the- fire. This testimony is objected to upon two grounds: — 1st. Because the policy required the defendants to pay the damages in money, or to “furnish- the insured with the like quantity of any op ad the said goods, and of the same quality as those so injured by the fire,” and that to offer to repair would be no compliance with the requirements of the covenant; and 2nd. Because the original agreement was under seal, and therefore no- evidence of any subsequent parol agreement would be admissible to vary or modify the covenant. As to the first objection t The extent of the obligation of the insurance company under this policy, was to place the insured in as good a condition as he was before the fire occured. This was to be done-in one of two ways: — first by paying the ’damages sustained in money ; or secondly, by renewing the machinery. It would seem to be a full compliance with the latter branch of this obligation, if the defendants had so far renewed or repaired the old machinery as to have made it as good as it was before the fire. If this had been done within the thirty days provided for in the policy of insurance, the terms of the covenant would have been complied with, and the defendants discharged. Any evidence therefore which would tend to show that this had been done, we think, would clearly have been admissible under the pleadings in the cause. Ellmaker vs. Franklin Ins. Co., 5 Barr. (Penn. Rep.,) 183. 11 Metcalf, 195. Angell on Insurance, sec. 268. Nor do we think the seeond objection urged to the admissibility of this testimony tenable. The defendants did not propose to show by this evidence, as was contended by the plaintiff, that an independent parol agreement had been substituted by the parties in tbe place of the original covenant, and that the latter had thereby been superseded. The evidence objected to tended to show,, in — 181 — our judgment, that after the liability of the defendants had accrued, a valid arrangement was made by the contracting parties, by way of adjustment of the matters in controversy between them, and that the same had been performed by the defendants. If this be true the defendants were discharged, and of course the testimony was admissible. It is not necessary to say whether, technically speaking, a breach of the covenant had actually taken place. It is sufficient that the defendants’ liability to repair, (by their election to repair, instead of paying the damages in money,) had accrued. They were therefore in a condition to tender performance of the terms of the covenant, to offer accord and satisfaction, or to do other acts by way of adjustment, which would operate as a discharge of the covenant. In this condition of their case, any evidence offered by the defendants resting in parol, would be admissible to show the existence of the defences relied upon by them in their pleas. We have examined the numerous authorities cited in argument, and we can find no case based upon well adjudged principles which conflicts with these views. On the contrary, most of the cases support them. In oar judgment they are founded in good sense and sound justice. An opposite doctrine would be fraught with mischief and injustice, and would be promotive of fraud. We can discover no material difference between this case and that of Fleming vs. Gilbert, 3 Johns. Rep., 528. In the latter case the defendant did, within the time limited, tender to perform the stipulations of his covenant or bond, but the plaintiff discharged him from the strict and literal performance of the bond, and entered into another engagement with him respecting the matter. Upon this state of the case, Judge Thompson, who delivered the opinion of the court, announces these principles, which we think apply with equal force to the case we are now considering: “The plaintiff’s conduct can be viewed in no other light than as a waiver of a compliance with the condition of the bond, and I see no infringement of any rule or principle of law in permitting parol evidence of — 182 — such waiver. It is a sound principle, that he who prevents a thing from being done, shall not avail himself of the non-performance he has occasioned.” The case of Delacroix vs. Bulkley, 13 Wend., 71, which is perhaps one of the strongest cases that can be relied upon to support the plaintiff’s view of this case, does not question the soundness of the principles announced in Fleming vs. Gilbert, but, on the contrary, sanctions them in the strongest terms. In this case the proof is, the defendants, under the policy, elected to repair the machinery, as they were at liberty to do, and actually offered so to do, but, at the instance of the plaintiff, the repairs were not made within the time limited by the contract, in order that in the mean time he might be able to rebuild the house in which the machinery stood, and thus protect it from the weather. To allow the plaintiff under such circumstances to insist upon the strict letter of the covenant, would be wholly to repudiate the sound and equitable principles established in Fleming vs. Gilbert. Other cases we think fully sustain the defences relied upon by the defendants in their several pleas. 1 Espinasse, 35. 14 Johns., 330. 2 Wendell, 587. 1 Bailey, 538, (note a.) 1 Roll. Abr., 553, pl. 5. 1 Strange, 535. Doug., 691. 8 Iredell, 179. 10 Iredell, 193. Breese Rep., 132. 22 Eng. Com. L. R., 89. 23 Ibid., 165. Allegre vs. Md. Ins. Co., 6 Har. & Johns., 408. In a very recent English case, Spence vs. Healey, 20 Eng. Law and Eq. Rep., 337, the defendant pleaded to an action of covenant, “that before action and before any breach of the said covenant, he satisfied and discharged the plaintiff’s claim,” &c. Baron Parke, in delivering the opinion of the court upon this plea, said, “the plea is bad. Wherever damages only are sought to be recovered, such a plea affords a good answer to the action; but where the covenant is for the payment of a sum certain, the covenantee has a right to object that the discharge is not by deed.” Baron Martin concurred with Baron Parke, but even as to where the sum is certain, found “it ¡difficult to see the .correctness of the reasons upon which the — 183 — rule is founded.” In this sentiment the judge who delivers this opinion fully concurs. The prominent characteristic which distinguishes this case from the case of Watchman and Bratt, vs. Crook, 5 Gill & Johns., 239, so strongly pressed upon us in argument by the appellee’s counsel, consists in the circumstance, that here'the alleged parol agreement is offered by way of defence to a recovery for a breach of the covenant, while in the former case the parol agreement was deemed inadmissible as evidence for the plaintiff, who was seeking to enforce the covenant. In such a case the plaintiff is held to abide strictly by the form of action which he may have selected. If the doctrines of Watchman vs. Crook, are to control this case, as contended by the appellee- to what result would they lead? The insurance company having made a valid parol agreement relating to the policy of insurance, with which they had complied in good faith, and had thus morally, at least, discharged their obligations to the plaintiff, are not permitted to set up that agreement as a defence to an action on the covenant, but on the contrary, the making, and compliance with that agreement, are to constitute the breach of the original covenant, and furnish the basis for the damages assessed by the jury. But we are told, that under the authority of Watchman and Bratt, vs. Crook, the defendants, while they could* not set up this parol contract against the covenant, would nevertheless have an independent right of action against the' plaintiff for its violation. If this be true, what would be the measure of damages in an action upon this parol agreement? Clearly the appellants would be entitled to recover from the' appellee, what the latter had before recovered from them in this action of covenant. It must be conceded, if Smith’s and Neale’s testimony is to be believed, the appellants were in no' default in this transaction, and therefore unless they recovered in the subsequent suit from the appellee, the same amount which he had previously recovered in this action, injustice would be done to the extent precisely of the difference between the two verdicts. Can any piinciple of law be sound — 184 — or just that would not only sanction, but require such circuity in legal proceedings to attain the ends of justice? The case of Watchman, et. al., vs. Crook, does not sanction such a circuitous proceeding. That case decides, that the plaintiffs having selected to sue in covenant, cannot in that action give in evidence a parol agreement varying or changing its terms. If they desired to abandon the covenant and sue to enforce the parol contract, they ought to have selected the proper form of action for that purpose. But the court have not said in that case that a defendant could not avail himself of such a defence, though it rested in parol in a suit to enforce the covenant. The case of Jewell and others, vs. Schroeppel, 4 Cowen, 564, might be supposed to favor a different doctrine. It appears that the covenant in that case had not been complied with within the time specified, though the work to be done was afterwards, with the knowledge and approbation of the covenantee, prosecuted and completed by the covenantor. -The former brought a suit against the latter on the covenant, for not having completed the work according to the contract, and recovered damages for its breach. Subsequently the covenantor sued in assumpsit for his work, labor, &c., (which is the case reported in 4 Cowen,) and also recovered for the work actually done. The suit on the covenant differs materially from the one now before us. In the first place, it does not appear whether the defendant set up as a defence to the action on the covenant the facts which constituted the grounds of his recovery in his subsequent action of assumpsit; and in the second place, it does not appear in the reported case whether the failure to complete the work within the time prescribed by the covenant resulted from any act of the plaintiff in the first suit. In such a case, if the work was not completed within the period stipulated, though it should be done and accepted afterwards, it would amount to a breach of the covenant, for which damages could be recovered; otherwise, however, if the time of the performance of the covenant had been enlarged, as- in this case, with the approbation or at the instance of the covenantee. — 185 — A defendant should never be prevented from making a just and moral defence to any action instituted against him merely because he might, in the character of plaintiff, enforce that defence in a separate and independent action at law. This principle, however, in actions of covenant must be taken its applicable in general to defences resting upon parol agreements which have arisen subsequent to a breach of the covenant, or after the happening of the event by which the liability of the defendant has become fixed. If then in this case it be ascertained, that at the time the alleged parol agreement was made, a breach of the covenant had taken place, or that the liability under it had accrued and become fixed by the occurrence of the fire and the defendants’ election to repair, then the new parol contract must be taken as a discharge of the defendants’ obligation under the covenant. The argument of the appellee’s counsel upon this point seems to be based upon the assumption, that the breach or liability, and the right to sue, in every instance, were inseperable, and occur at one and the same moment. This is not true, at least in this case. The attaching of the defendants’ liability will be attended with the same legal consequences as if a breach in its technical sense had taken place, though the right to sue had not accrued. When the company elected to repair the machinery their liability commenced, if it did not, in fact, date from the time of the fire. After the defendants elected to repair, their obligation to do so, within the thirty days, became as clearly determined as their obligation to pay the damages in money, after the expiration of the thirty days, would have been; and in either ease it will readily be seen that any adjustment between the parties, by way of enlarging the time of performance, or waiver, or accord and satisfaction, or tender to perform, and the like, must have taken place before the obligation was discharged, or otherwise it would have been of no avail. If, as is contended, the grounds of these defences, to be binding, could only arise after the expiration of the thirty days, stipulated in the contract, and after the right to sue accrued, it is plain that the defendants would be deprived either of the — 186 — alternative l ight to repair or of the equally clear right of tendering to perform, offering accord and satisfaction, accepting an enlargement of the time within which the repairs were to be made, &e. It would seem that accord and satisfaction was something other than strict performance or payment. It is doing that by the covenantor which the covenantee accepts in lieu of a performance of the terms of the covenant. If this be true, at ,what period could the defendants in this action tender accord and satisfaction, and the plaintiff accept the same in reference to the former’s obligation to repair, unless it was done during the interval of the thirty days, allowed for making the repaiis? Before the fire, or proof of damage, there was nothing to accord and satisfy. After the repairs were made, in accordance writh the terms of the covenant, it would then be too late to accord and satisfy, or to make any adjustment, at least, of that branch of the defendants’ liability. We are, for the réasons expressed, of the opinion, that the testimony of the witnesses, Neale and Smith, was admissible under the pleadings in the cause, and that it was error in the court below to reject it. We therefore reverse the judgment and remand the cause. Judgment reversed and procedendo awarded.