Henning v. United States Insurance

Washer, Judge, delivered the opinion of the court. An exceedingly wide range was taken by the counsel in the argument of this case, but upon an examination of the pleadings as embodied in the record, the decision must be confined within much narrower limits. The amended petition on which the case ryas tried alleges that the plaintiffs were partners, and that on the 25th of March, 1864, they made with defendant a contract and agreement by which the defendant agreed that any shipment of cotton made by Butler & Co., of which firm plaintiffs were members, on any steamboat from any point on the Mississippi river- and its tributaries to any point on said river, and consigned to either Butler & Co. or the plaintiffs, might be at the time of shipment entered on the bill of lading as insured by the defendant. The petition then avers that on the 9th day of June, 1864, the cotton on which the loss is claimed Ayas shipped on the steamer Progress, consigned to Butler & Co. at Cairo ; that immediately upon the signing of the bills of lading for the cotton on board the steamer, a memorandum was entered on said bills, AA'hich stated that the same Avas insured in Henning & Woodruff’s open policy of insurance Avith the United States Insurance Company. [431] There is, then, an averment of: loss by fire, one of the perils insured against, an offer to pay the premium, and a demand for the insurance money and a refusal to pay. The answer of the defendant denies that any contract was made as stated in the petition, and substantially negatives every material allegation stated therein. The plaintiffs, to maintain the issue on their side, offered in evidence an open policy issued by the defendant to them in the year 1855, which policy was in many essential particulars different from the contract on which they sought to recover. But, to avoid the variance and bring the contract within the operation of the policy, it was sought to introduce parol proof to show that the -written policy was altered and modified by the consent and agreement of the parties, and that both parties subsequently acted upon the verbal modification. This evidence was all excluded by the court, and the plaintiffs took a nonsuit, and after unsuccessfully seeking to set the same aside, they appealed to this court. There is no doubt in my mind that the intention of the parties, as declared by the words of the instrument, must govern, and subsequent acts and declarations may be looked to in aid of the construction. Parties may by a subsequent parol agreement, upon a sufficient consideration, change or modify the terms of their written contract. This proposition is well supported by authority. (Bunce v. Beck, 43 Mo. 266; Cummings v. Arnold, 3 Metc. 486, where the cases are collated and referred to.) But in the present case the written contract is not declared on, nor is the suit instituted upon it in any modified form. The petition sets forth an absolute, independent agreement disconnected with any other previous transaction, and such being the case, it was not competent for the plaintiffs at the trial to blend the two and graft the verbal on the prior written contract. We therefore see no error in the action of the court in excluding the evidence. The only remaining question, then, to be considered in the case is whether the verbal contract of insurance alleged to have been made in March, 1864, can be held valid. There* is touch disagreement in the books as to the power of corporations [432] to make contracts of insurance by parol. At common law there is nothing absolutely requiring that the contract should be in writing, though a written instrument is undoubtedly usual and customary. In a recent case in this court (Plahto v. Merch. & Manuf. Ins. Co. of St. Louis, 38 Mo. 254) the learned judge who then occupied a seat on this bench said: “It would seem to be a settled principle that a policy of insurance must be in writing,” and to sustain him in this proposition he cites 1 Arn. Ins. 50, note 1; 1 Duer on Ins. 60 ; 1 Phillips on Ins. 8 ; 3 Kent’s Com., 7th ed., 921, note e. And Judge Head, speaking for the court in Ohio, declared that it was the universal commercial usage, confirmed by the general tenor of the authorities, that the contract should be in writing, and that it had been decided that such a thing as a verbal policy of insurance was unknown to the law. (Cockerel v. Cincinnati Ins. Co., 16 Ohio, 148; see also Mound City Ins. Co. v. Curran, 42 Mo. 374.) But the principle in the foregoing cases is, I think, too broadly stated, Corporations, where they are not restrained in any particular manner by their charter, may adopt all reasonable modes in the execution of their business which a natural person may adopt in the exercise of similar powers. The business of insurance is not strictly a corporate franchise; any person may engage in it unless forbidden by law; and where a private person engages in it, his parol contracts will bind him in the same manner as in any other business. The counsel for the appellants have cited a number of cases to show that verbal contracts of insurance are valid and will be upheld. Upon inspection it will be seen that they are adjudications arising at common law, where no particular mode was pointed out in the organic act chartering the company, or that they depend on special circumstances. In the case of Mobile Marine Dock & Mutual Ins. Co. v. McMillan, 31 Ala. 711, it was said that, conceding that many commercial codes expressly require the contract of insurance to be in writing, it was certain that the common law made no such requisition, and it was held that there was no statutory provision in force in Alabama.which required an agreement entered into in [433] that State to insure against loss by fire to be reduced to writing ; therefore, in the absence of any such statutory provision, the question whether such an agreement was valid should be determined by the common law, and that law .did not require itto be in writing. Kennebec Co. v. Augusta Insurance & Banking Co., 6 Gray, 204, was an action against a foreign insurance company, and two questions were raised by the record: first, whether the agents had authority to bind the corporation; second, whether the facts proved made a valid insurance. It was an-open policy of insurance “ on property on board vessel or vessels to,.at and from all ports and places, as per indorsements to be made hereon,” provided that it should-not be binding until countersigned by the agents pf the -company at Boston, and it was so .countersigned. The agents afterward agreed orally with the assured to insure, under this policy, for an additional premium, a.certain number of bales of cotton onshore at New Orleans. The court decided that, in the absence of evidence of any limitation of the. agents’ authority, they were competent to bind the company; and having entered the risk upon the books of the company as taken, it was equivalent to a policy. The Commercial Mutual Marine Ins. Co. v. Union Mutual Ins. Co., 19 How. 318, was a suit in equity to compel the specific performance of a contract to make re-insurance of. a ship. The* application, fo.r reinsurance and the -assent by the officers of the company were.clearly proved,- and - the-.court held that the agreement to issue the policy was binding, and specific .performance was decreed. In The Trustees, etc., v. Brooklyn Fire Ins. Co., 19 N. Y. 305, there was a fire policy issued for one year, and there was a subsequent agreement between the parties that until notice by either party to the-other,:the.policy- should he renewed from year to year. This it was. held was not within .the .statute of -frauds, and might properly be made by parol. In the conclusion to which we haye arrived, it is .not.necessary to impugn .the doctrine .of ,the .above cases in the. least.. Bid the record present-a,case.s.o..as. to. make .them applicable,-we should [434] be strongly inclined to follow them, but we find here nothing but a naked verbal agreement, alleged to have been made in March, 1864, sued upon. This is denied, and there is no proof of it; but were there evidence to sustain it, it could not be upheld. It is the universal and well-recognized rule that a corporate body can act only in the manner prescribed by the act of incorporation which gives it existence. It is the mere creature of law, and derives all its powers from the act of incorporation. In the third section of the act incorporating the defendant we find it declares! that “all the conditions of policies issued by said company shall be printed or written on the face thereof.” Authority is then given to make by-laws, and one of the by-laws requires that the president “ shall sign all policies or other contracts by which the company are bound.” Again, another rule provides that “ every proposal for insurance shall be by written application, signed by the applicant or his agents.” These provisions are satisfactory and conclusive to my mind that there could be no original and binding contract by parol. The result is that the judgment of the Circuit Court, with the concurrence of the other judges, must be affirmed.