American Insurance v. Walston

Mr. Justice Baume delivered the opinion of the court. This was a suit brought by David R. Walston against the American Insurance Company, of Newark, New Jersey, to recover on a policy of insurance issued to him November 9, 1899, for $1,000, on a frame barn, which was destroyed by fire October 6, 1900. There was a verdict and judgment against the insurance company for $050, to reverse which judgment this appeal is taken. The policy of insurance was issued by appellant upon a written application therefor, containing the usual questions as to the value, condition, and title to, the property to be insured, to be answered and signed by the applicant. It is insisted by appellant that the policy issued by it on the application in this case is void because of false statements in the application made by appellee relative to the mortgage encumbrances on the property. The evidence shows that the application is in the handwriting of one Clare, at that time a soliciting agent for appellant; that appellee told him there were two mortgages on the property, one for $800 and one for $300, and that he .expected to pay off the latter in the fall from proceeds of sale of apples; that Clare said that would be all right and he wouldn’t put the $300 mortgage in the application. In taking this application, Clare was the agent of appellant and it is bound by his knowledge. It cannot now be permitted to charge appellee with making a false statement in the application when that statement was known to be false by its agent and was made at his suggestion. On the trial, appellee was permitted to introduce in evidence against the objection of appellant, a copy of the proofs of loss ■ made by him and sent to appellant. Attached to the copy of the proofs of loss was the copy of an affidavit by Milard F. Walston, purporting to fix the value of the barn at §1,000, which paper also went to the jury. The original proofs of loss were in the possession of appellant, and appellee should have notified it to produce them, and on failure to do so, the copy of the proofs would have been competent; but the copy of the ex ¡jarte affidavit attached was incompetent, and in view of the sharp controversy as to the value of the barn, its admission was prejudicial to appellant. Appellee testified as to the contents of a letter written by one Hatfield, an agent of appellant, to appellee’s attorney, suggesting a settlement of appellee’s claim by arbitration. Ho sufficient foundation was laid by appellee to enable him to testify to the contents of the letter, if it was competent, but the letter was an offer of compromise of the claim, after litigation threatened, and was for that reason incompetent. We should not reverse this case, however, because appellee so testified, for the reason that the record fails to show that appellant objected to it at the time. It appears from the evidence that shortly after appellee procured the policy of insurance sued on, he executed a third mortgage on the premises to James P. Walston for §922.03. The policy provided that if, without the consent of the western manager of the company endorsed thereon, the assured should execute any encumbrance by mortgage or otherwise on the premises, the policy should be void. It is conceded that the consent of the manager of the company was not endorsed on the policy, as to this third encumbrance, but it is contended that this provision has been waived by the subsequent acts of the company through its authorized agent or agents with full knowledge of the encumbrance. Appellee testified, that on the day the mortgage was executed he told Clare, the soliciting agent of appellant, of its execution, and that Clare replied, “ That is all right.” The notice to Clare was not notice to the company. Clare was a mere soliciting agent, authorized and acting only to receive applications for insurance and forward same to the company with cash or notes for the premiums, the policies being issued by the secretary of the company and mailed to the insured! Clare’s agency with reference to the transaction ceased when he received and forwarded appellee’s application to appellant, and appellee testified that he so understood it. Milwaukee Ins. Co. v. Schallman, 188 Ill. 213, is not an authority in point. There is evidence tending to show that appellant sent its general adjuster, one Gohrman, to appellee to adjust his loss under the policy; that appellee then informed Gohrman of this third mortgage on the property, and that Gohrman attempted an adjustment of the loss without raising any question as to the forfeiture of the policy, but based his refusal to pay upon the ground that appellee’s claim for loss yras excessive. It is doubtful, under the evidence, whether the conduct of Gohrman in and about an attempted adjustment of the loss, was such as to constitute a waiver by appellant of a forfeiture of the policy. Appellant, without objection by appellee, introduced evidence relative to the third mortgage, and the question of the forfeiture of the policy thereby was treated by both parties as directly at issue during the trial, although not specially pleaded. The appellee is therefore in no position to insist that it was not properly in issue in the case. Appellee’s sixth instruction given to the jury is as follows : <l Even though you may believe, from the evidence, that , encumbrance was placed upon the property, yet, if you further believe, from a preponderance of the evidence, that after such other encumbrance was placed upon the property, and that the defendant knew it, and the defendant company, by its agent, called upon the plaintiff for proofs of loss, and arranged for the same, or received proofs of loss from the plaintiff, or sent an agent to the place of the loss to adjust it, then, in either of these cases, if the preponderance of the evidence shows them, or either of them, the defendant company would be held to have waived the condition in the policy providing that a subsequent mortgage should forfeit the policy, and it would not be permitted to avoid liability on this policy by the fact of such subsequent encumbrance, if the defendant knew it, if the preponderance of the evidence shows any such.” This instruction is involved, misleading and inaccurate. It authorized the jury to find a waiver of the forfeiture provided in the policy, if they found from the evidence that appellant had received proofs of loss from appellee. It must be clear that the mere receipt of . proofs of loss by appellant, independent of any other act by it, and particularly, when, as in this case, the proofs of loss gave no specific information as to the third mortgage on the property, would not amount to a waiver of the forfeiture. While the seventh instruction given on behalf of appellee is somewhat involved, it states with substantial accuracy a correct rule of law and there was no error in giving it. Appellee’s eighth instruction was erroneous in misquoting an alleged statement by'the soliciting agent Clare at the time he procured the application for insurance. Appellant’s first refused instruction should have been given, as it properly told the jury that M. H. Clare was a soliciting agent of appellant only, and had no right as such to waive any of the terms or conditions of the policy, after it was issued. Appellant’s second refused instruction was properly refused, as it told the jury that an agent not authorized to issue policies had no authority to waive a forfeiture. Whether an agent has or has not authority to „ issue policies is not the test as to his authority to waive a forfeiture. For the errors indicated, the judgment will be reversed and the cause remanded. Reversed and remanded.