Phœnix Ins. v. Spiers

JUDGE HOLT delivered the omkjon of the court. [ The appellant, The Phoenix Insurance Company, of Hartford, Conn., issued to the appellees, Spiers and Thomas, of New Liberty, Ky., a policy of insurance of one thousand two hundred dollars, for six months from February 20, 1888, upon twelve thousand pounds of tobacco. It provided: “If the assured shall have, or shall hereafter make, any other insurance on the property hereby insured, or any part thereof, without the consent of the company written hereon, * *' * this policy shall be void. _ * * * The assured shall forthwith give notice of loss to the company, and as soon after as possible tender a particular account of such loss signed and sworn to by them. * * * The amount of loss or damage to be estimated according to 'the actual cash value of the property at the time of the loss, and to be paid sixty days after due notice and proofs of the same are made by the assured and received at this office in accordance with the terms of .this policy, * * * Until such proof, declarations and certificates are produced, and examinations and appraisals permitted, the loss shall not be payable. * * * * This policy may be canceled at any time by the company on giving written or verbal notice to that effect, and refunding or tendering a ratable proportion of the premium for the unexpired term.” — 288 — Tlie assured added otlier tobacco to the stock; and on' May 4, 1883, the Liverpool, London and Globe Insurance Company issued a policy lor two months for eight hundred dollars upon the entire lot, then amounting to twenty thousand pounds. It ivas destroyed by fire on June 23, 1883, being then worth three thousand dollars, and the total insurance on it being two thousand dollars. The appellant never consented to tlie additional insurance by writing indorsed upon the back of its policy. The appellees now seek to enforce it. But two of the several defenses need be considered. They are, first, that the preliminary proofs were not made; and second, that the policy is not enforceable, because of the additional insurance taken without the written consent of the appellant. « "'Soon after the loss occurred the appellant had it investigated by its adjusting agent, and thereupon notified the appellees, in writing, that it considered the policy void by reason of the taking of the additional insurance without its consent, and distinctly refused to pay upon this ground alone. This was equivalent to the company saying that it would be useless to furnish any preliminary proofs; that no form or degree of them would induce payment, and it would be but an idle ceremony to present them. Such conduct waives the necessity for their production before suit, although required by the policy./The stipulation is in favor of the insurer; and his conduct renders it an idle formality, the observance of which the law will not, therefore, require. (Manhattan Ins. Company v. Stein, &c., 5 Bush, 652; — 289 — Martin v. Ins. Company, 20 Pick., 389; Thwing v. Ins. Company, 111 Mass., 110.) Conditions affecting tke risk itself are more strictly enforced in. favor of the insurer than those relating to tke mode of establishing a loss. In Wood on Fire Insurance, section 496, it is said: “Tke production of proofs of loss, or defects therein, may be waived, and suck waiver may be implied from what is said or done by tke insurer.” Another leading writer upon tkis subject says: “A distinct denial of liability and refusal to pay, on tke ground tkat tkere is no contract, or tkat there is no liability, is a waiver of tke condition requiring proof of tke loss.” (May on Insurance, section 469.) It is insisted, however, tkat tkere was a non-acceptance of tkis waiver; tkat the matter was re-opened at tke instance of tke assured, and tkat tkey, therefore, oould not thereafter sue without first furnishing these proofs. It appears tkat, soon after tke refusal to pay, tke attorneys of tke appellees wrote to tke company, saying tkey believed it had been misled as to tke facts, and requesting an investigation and remittance of tke amount of tke policy. Tke company replied, tkat if it had been misled it would “entertain proofs to that effect.” Evidently the letter of tke attorneys related alone to tke refusal to pay upon tke ground tkat tke policy had been avoided by taking other insurance without the company’s consent. Tke assured were induced by tke insurer to believe tkat it based its refusal to pay upon tkis ground alone, and did not intend to insist — 290 — upon the production of the preliminary proofs; and this refusal, so grounded, it never did withdraw, and is now insisting upon it. One of the special findings of the jury is, that the company refused to pay upon this ground; and we think its conduct lulled the appellees into the belief that the mere preliminary proofs would receive no consideration. It will not, therefore, be heard to now defend because they were not furnished before suit. It - is insisted that the forfeiture provided by the terms of the policy, in case other insurance should be taken without the written consent of the appellant indorsed upon its policy, was waived by it. A brief statement of facts is necessary to a proper understanding of this question. One Curtis was the agent of the company at New Liberty. Sometimes he styled himself its surveyor. Tie took applications for insurance, made the surveys, received the premiums, countersigned and delivered the policies to the insured, but did not issue them. Tie was the sole representative in that locality of the appellee, a corporation located in a distant State. One Vallandigham was loaning money upon tobacco in the vicinity of the appellees, and, therefore, desired its insurance. Tie agreed with Curtis, if he would divide his commissions with him, that he would bring to him the insurance upon all the tobacco in which he might thus become interested. This arrangement was unknown to the company. As between it and Curtis the powers of the latter as its agent appear to have been limited. — 291 — It is not certain whether Yallandigham suggested the insurance of their tobacco to the appellees, or they to him. They doubtless believed he was an agent of the company. He so represented to them, and they obtained both policies of insurance through him; that is, he furnished the information and made the applications for the insurance; received the premiums, and paid the same in one instance to Curtis, and in the other to one Gayle, who was the local agent of the Liverpool, London and Globe company. The policies were delivered by the agents to him; that in the last-named company being still in his possession when the loss occurred. ■ There is evidence tending to show that it was the understanding between Yallandigham and the appellees that the additional insurance was to be taken out upon the eight thousand pounds of tobacco only. The testimony is conflicting as to whether he so applied for it. He signed the names of the appellees to the application for the insurance in the Phcenix company, but in obtaining the additional insurance the agent of the Liverpool, London and Globe company merely obtained from him information as to the property, and no formal application was made out. The policy issued, however, upon the entire twenty thousand pounds; and the appellees, after the loss, proved it as such without qualification, explanation or objection, and obtained the eight hundred dollars insurance. It must, therefore, as to them, be regarded as having been an insurance upon the entire lot of tobacco. Yallandigham certainly was not even purporting to act as agent for the appellant in obtaining the second policy. Nor can he be re — 292 — garded as its agent as to the first one. The arrangement between him and Curtis was not binding upon the company. It had no knowledge of it. Curtis had no express authority from it to appoint another or a sub-agent. An agent ordinarily has no power to do so without the knowledge or consent of his principal; and while an agent of an insurance company, who is authorized to contract for risks, receive premiums and .deliver policies, may confer upon a clerk or a subordinate authority to exercise these powers, as the service is not of such a personal character as to come within the maxim, delegatus non potest delegare, yet in this instance the circumstances show that it was the private arrangement of Curtis and Yallandigham, who was interested in the subject of the insurance; and if it were material to the question at issue, he cannot be regarded as having acted as the agent of the company. It follows that the testimony detailing what was said between him and Spiers and Thomas was incompetent. It has been held in some few cases, as in Hutchinson v. Western Insurance Company, 21 Mo., 97, that where the policy provides for a forfeiture in case of additional insurance without the written consent of the insurer indorsed upon the policy, it can only be waived by a literal compliance with the condition. The decided current of authority, however, is that this waiver may arise from the act or conduct of the insurer; and silence for an unreasonable time upon his part, after notice or knowledge of the breach of the condition, will constitute such conduct. — 293 — If notice be given to the company of the additional insurance or increased risk, and no objection be made within a reasonable time, fairness and good faith should estop it from insisting upon a forfeiture of the policy because its consent was not indorsed upon it according to its literal terms. The assured has a right to infer therefrom that the company will not insist upon it. It has not spoken as to a matter for its benefit when it could and should have done so to prevent another from being misled to his probable injury. If it had done so, he might have protected himself probably by other insurance. Its silence under such circumstances is a consent to the additional insurance. A forfeiture upon this ground is not for fraud. It may cancel the policy jby reason of it, but if it does so, it must refund a proper proportion of the premium. It can not, therefore, remain mute with a knowledge of the existence of a ground of forfeiture, and if there be no loss, retain the entire premium, but if there be one, rely upon the breach of the contract. The term “twi,” as used in the policy, is to be regarded as meaning that the insurer may, at his exclusive option, treat it so, and not that the contract becomes an absolute nullity as to either party. The insurer may, therefore, by his conduct, waive his right of forfeiture and estop himself from insisting upon it. (Baer v. The Phœnix Insurance Company, 4 Bush, 242.) The contract of insurance may be by parol. It is not within the statute of frauds. Such a contract, although in writing, may be changed by parol, even — 294 — though it provide that it shall- only be done by writing, because men can not so tie their wills as not to be able thereafter to do by consent what the law allows. Conditions of forfeiture in a policy of insurance, as, indeed, the entire instrument, are to be construed most strongly against the insurer. The company prepares it, and is familiar with its details and many conditions. Its ambiguities are to be resolved against the insurer; but while all this is justly so, yet undoubtedly a condition of forfeiture like the one in : question should be upheld. Its object is to guard ¡ against over-insurance, and the consequent temptation to fraud and crime. Experience teaches that in such matters the interest of men is more to be relied upon than their morality. Therefore, no prudent company ever insures property to its full value. It will not do to say that the first insurer should not complain of additional insurance, since it aids him in case of loss by way of contribution, because over-insurance not only is likely to lead to fraud and the destruction of property, but 5it takes away the owner’s incentive to care for and j protect it, and, therefore, greatly increases the danger of loss. While, however, these reasons exist for upholding such a condition of forfeiture, yet it may now be regarded as settled law that insurance companies may, by conduct or parol agreement, waive it, and become estopped from enforcing what is but a conventional condition of forfeiture. (Kenton Insurance Company v. Shea, &c., 6 Bush, 174; Von Bories, &c., v. In — 295 — surance Company, 8 Bush, 133; Insurance Company v. McCrea, &c., 8 Lea., 513.) There is evidence in the record tending to show that Curtis had notice of the additional insurance; the special verdict so finds ; and it is claimed that this was notice to the company, and that its silence under these circumstances operated as a waiver of any right of forfeiture. Upon the other hand, it is insisted that notice to him was not notice to it; and that no power of waiver existed in him, because the contract of insurance had been closed ; because his powers were limited, and he then owed no duty to the assured. If the latter knew that his powers were limited, and that he was invested with no power of waiver, or if there was any thing connected with the transaction to put the assured upon inquiry, then any conduct of the agent in excess of his authority would not bind the company. Of course it could limit his power; and if the assured knew it had done so, or as prudent men should have known it, then they dealt with him at their peril in matters in excess of his power. The policy in this case contains no provision as to how or to whom notice of other insurance is to be given. If, however, the agent had apparent authority in the matter ; if, under all the circumstances, he ostensibly had it; if his acts indicated general powers as to the subject of insurance for his company, then, although in fact his authority was limited, yet it should be considered adequate as to third parties, unless those dealing with him had express or inferential notice of the want of power. — 296 — The acts of an agent within his ostensible authority are binding upon his principal. If the latter has authorized the opinion that he has given more extensive authority than he has in fact, he will be estopped to deny it. If he holds him out as his general agent, he will be bound by his acts and conduct, although, as between them, his powers are in fact limited, provided the party dealing with him has no notice of the restriction. Thus, if the agent be intrusted with the general management of a business, he has implied general authority to do all that ordinarily enters into the conduct of that business. (Williams v. Getty, 31 Penn. St., 461.) In the language of the Supreme Court of the United States (Insurance Company v. Wilkinson, 13 Wall, 222): “The powers of the agent are prima facie co-extensive with the business intrusted to his care, and will not be narrowed by limitations not communicated to the person with whom he deals. An insurance company, establishing a local agency, must be held responsible to the parties with whom (they transact business for the acts and declarations of the agent, within the scope of his employment, as if they proceeded from the principal.” The. authority of the agent need not be express it may be implied from circumstances, and may thus exist as to third parties, although in fact forbidden by agreement between the company and its agent. Mr. May says: “The authority of an agent must be determined by the nature of his business, and is prima facie co-extensive with its requirements. It can not be limited by special private instructions, un — 297 — less the insured has notice, or there is something in the nature of the business, or the circumstances of the case, to indicate that the agent is acting under such special instructions.” (May on Insurance, section 126.) The tendency of recent decisions, and we think properly] is to hold the insurer bound by the acts and conduct of the local agent whenever it can be done consistently with the rules of law. The maxim, qui facit per alium facit per se, should apjdy with peculiar force to the acts of an insurance agent. He usually represents a company remotely located. Its patrons in his vicinity naturally-look to him for direction generally as to the insurance obtained through him. He is generally regarded as having full power in reference to it. Being usually the only man upon the ground having any thing to do with it, the persons insured in his company, with few, if any exceptions, would, in the absence of notice that his powers were limited, regard his statement as to any matter relative to such insurance as authoritative, and any notice to him as to it as sufficient. They rarely know any thing of the company or of its officers, who issue the policies, and look to the agent through whom they have obtained the insurance as the complete representative of the company in every thing connected with that insurance. If they did not consider that they were authorized to do so, it would undoubtedly create distrust and cripple the business. As to third parties, the agent should, in the absence of notice to the contrary, be regarded as possessing all the powers his occupation fairly imports to the public. Under this rule, an — 298 — 3 agent who solicits the insurance, takes the appliI cation, receives the premium, and delivers the policy, I may, in our opinion, by his conduct or acts, bind his ' company by way of waiver of a forfeiture on account of additional insurance, in the absence of knowledge upon the part of the assured that his powers in this respect have been restricted. This being so, it follows that the knowledge of the agent under such circumstances is to be imputed to the company. In Wood on Eire Insurance, section 406, it is said: “Tn all cases where notice is required to be given, unless some special officer is named to whom it shall be given, notice to an agent of the company is notice to the company. Thus, when notice of other insurance is required to be given, notice given to the agent is sufficient, and if no special mode in which it shall be given is provided, any notice conveying the requisite informa- ' tion, written or verbal, is sufficient, or if the agent knew of the other insurance when the contract was entered into, it is not only a waiver of notice, but also of a forfeiture on that ground. It is not necessarily essential that the agent should be clothed with au- . thority to issue policies. It is enough'if he is authorized to receive applications, make surveys, deliver policies and receive the premiums therefor, and is in any measure held out by the insurer as having authority to act for it in any or all of these respects.” In the case now under consideration there was a myriad of questions submitted to the jury. It is not surprising, therefore, that some of the findings are — 299 — inconsistent with each other, while others are directly in the teeth of the testimony. For instance, the jury found that the second policy did not cover the property embraced by the first one, and that the appellees, under the second policy, only proved for the loss of eight thousand pounds of tobacco. This finding is directly in the face of all the evidence, both verbal and written. In answer to question number nine of the appellees they say that Spiers and Thomas had no notice, prior to the loss, of any limitation upon the authority of Curtis as agent; and then, in response to the second question submitted by the court, they declare that the appellees knew the] extent of his powers when the application for the I insurance was made, and that both they and the public knew his agency was limited. It is apparent, from what has already been said, that this was a vital point - Iiq the case. It is unnecessary to further review the findings, but sufficient to say that they are too inconsistent and conflicting to support the judgment, and a new trial should have been awarded. We have indicated our view of. the law governing the case at length, not only upon account of its legal importance, but because it must, upon another trial, be submitted to a jury, under proper instructions, for a general verdict, a special one being no longer authorized. Judgment reversed, and cause remanded for a new trial in conformity to this opinion.