Maupin v. Insurance Co.

Brannon, Judge: C. W. Maupin sued the Scottish Union and national Insurance Company in the circuit court of Mason County, and recovered upon the verdict of a jury a judgment for $2,340, from which the company sued out a writ of error from this Court. The defendant filed a plea in abatement of another suit' panding. The trial upon the merits under other pleas was had as if in ignorance of that plea in the case; no trial was had upon it in advance of the main trial, and this is assigned as error. The Code, chapter 125, section 21, gives leave, as a change from common law pleading, to plead in abatement and bar at the same time, but requires that the issue on the plea in abatement be first tried, because that may alone end the case. Though a plea in bar to the merits is, at common — 559 — law, a waiver of a ploa in abatement, it is not under _that statute. But tbe defendant put in that plea. He bad right to insist upon its trial or waive it. He ought to have brought it to trial, and by not doing so, and going to trial on the merit pleas, it waived the plea in abatement. 1 Cyc. 136) 1 Ency. Pl. & Prac. 33. The policy contained what is called the “Iron Safe Clause” reading: “It is expressly stipulated, that the assured shall, before this policy shall take effect (provided no inventory has been taken within six months,) make an inventory of the stock to be covered hereby, and shall keep books of account correctly detailing purchases and sales of said stock, from and after date of said inventory, both for cash and credit; and shall keep said inventory and books securely locked in an iron safe, or away from the building containing property hereby insured, during the hours that such store is closed for business. Failure to observe these conditions shall work an absolute forfeiture of all claims under this policy. This policy is void if there are any Terra Cotta flues in the building. Agents of this company have no authority to waive these conditions.” The following is also in the policy: “This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements or conditions as may be endorsed hereon or added hereto, and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement endorsed hereon or added liereto> and as to such provisions and conditions no officer, agent or representative shall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall bo written upon or attached hereto;, nor shall any privilege or permission affecting the insurer under this policy exist or be claimed by the insurer unless so written or attached.” The defendant filed pleas averring that Maupin did not comply with the demands of the “Iron Safe Clause,” as he failed to malee an inventory, or keep the books of purchases and sales as required by it, and did not keep the books in an iron safe, or away from the building containing the stock — 560 — of goods insured, when closed for business, and that they were consumed by its destruction by fire, and not in a safe, and were not open to the examination of the company after the fire. The plaintiff filed replications to said pleas stating that the company had waived compliance with said clause; and under these replications gave oral evidence to the effect that a local agent prepared and mailed the policy to him; that upon its receipt he went to the local agent of the company and told him that he would not have the policy with that clause in it, that he could not live up to it, and that he had no safe in his store, and that he kept only a book of debit and credit with customers, and that he did not keep books showing purchases made by him of goods, and detailed lists of cash and credit sales,; and that then this agent told him that he could invoice once a year, and that it would be “all right”- — in short, as claimed, dispensed with compliance with that clause, and that with this understanding he, Maupin, accepted the policy. To this evidence of waiver the defendant objected. It is not necessary to use much space to show that such a clause is valid and binding. It provides for the business record of the doings in the store in regular course -of business as means by which the company can examine the extent of the loss and its 1 Lability, the best, generally the sole means of its ascertainment, and it provides for the security of these documents by moans of an iron safe, or being away from the store building when closed for business. The covenants contained in the clause are promissory warranties in the law of insurance. Warranties are of two kinds, affirmative and promissory. Affirmative consist of representation in the policy of facts; promissory are those that require that something shall be, or shall not be, done after the policy takes -effect. If the affirmative warranty is false, it avoids the contract; and if a promissory warranty is not complied with, it avoids the policy. 15 Am. & Eng. Ency. L. (2 ed) 919, 920; May on Ins. section 157. The particular clause in question is a promissory warranty. Scottish Union v. Stubbs, 98 Ga. 754, (20 S. E. 180); Goldman v. North British, 48 La. Ann. 223. The decisive question is whether the oral waiver of the agent dispensed with the clause. Here is a written contract free from ambiguity requiring no evidence to impart its mean — 561 — ing. It says that certain, things shall be done. Oral evidence is used to make another contract; to prove that the things which it says shall and must be done were not in the policy as it was in fact to be done — a flat contradiction.. Evidence of the conversation, the interlocution, at the time of the contract to contradict what the writing stipulates as to the escence of the contract; to make it say the opposite of what it does say. This Court condemned that doctrine in Crislip v. Cain, 19 W. Va. 438 and Knowlton v. Campbell, 48 Id. 294. Where is safety to be found, if the written testimony of the solemn actions of men can thus be annulled? Unstable, frail memory, wilful purjury, will thus dominate. “When parties have deliberately put'their engagements into writing, in such terms as import a legal obligation, without any uncertainty as to the object or extent of such engagements, it is conclusively presumed that tire whole engagement of the parties, and the extent and manner of their undertaking, was reduced to writing; and all oral testimony of a previous colloquium, between them, or of conversations or declarations at the time when it was completed, or afterwards, as it would tend in many instances to substitute a new and different contract for the one which was really agreed upon, to the prejudice, possibly, of one of the parties, is rejected.” 1 Grenl. section 275. “It is a fundamental rule in both courts of law and equity, that parol contemporaneous evidence is inadmissible to contradict or vary the terms of a valid instrument, unless in cases where the contracts are vitiated by fraud or mutual mistake.” Northern Insurance Co. v. Grand View, etc., 183 U. S. 308. That case applies this rule to insurance policies just the same as to other written instruments. So does Insurance Company v. Board, 49 W. Va. 360. The evidence admitted in this case was inadmissible. I place the reversal of the judgment in this case on two grounds, the first, that oral evidence to change, to deny the letter of tho contract, is incompetent to do so. The second objection to the action of the circuit court is, that this oral evidence to prove a waiver of the clause of the policy in question was not admissible, because the agent had no power to make such a waiver. The very words of the clause say that non-compliance with it “shall work an absolute forfeiture of all claims under this policy. * * * Agents of — 562 — this company have no authority to waive these conditions.” In another clause, if it allowed such waiver, but does not, the waiver must he in writing on the policy. Upon this subject of the power of the agents to waive conditions imposing on the party insured duties proper to the protection of the insuring company, there is a world of decisions, and they are a wilderness of conflicting cases, and to attempt anything like a review of them in detail would be only to grope and wander in that wilderness, and in the end lead to bewilderment. Still, for every day use it is highly important that there should be fixed, settled principle in this material matter, a principle giving some light and guidance. The Supreme Court of the United States, seeing the confusion and variance of decision touching the subject, in 1902, considered, that subject in an elaborate discussion, reviewing the most apt, pertinent and forcible authorities in England and Canada, those of the great commercial states of the Uuion, and of the Supreme Court of the United States, with the evident purpose to bring order out of chaos and set some reliable line. I am disposed to yield to that court upon this subject controling persuasive authority. True, its judges are only men, subject to error of judgment, as are we; but it is the highest court in the land, and in the maze of decisions from so> many states, it is better to be in accord with it upon certain subjects, such as commercial law, negotiable paper, fellow servancy, fire and life insurance. These subjects are common to all the states, and there should fe uniformity of decision, as far as is possible, to avoid disharmony and uncertainty as to the law. This cannot he done by following state decisions. As to local state law, as to title to land, state constitutions and statutes, purely state law, these remarks do not apply. The case referred to is Northern Assurance Company v. Grand View Building Association, 183 U. S. 308. It says that it is competent and reasonable for insurance companies to make it matter of condition in their policies that their agents shall not he deemed to have authority to alter or contradict the express terms of the policies as executed and delivered,” “Where waiver relied on is the act of the agent, it must be shown either that the agent had express authority from the company to make the waiver, or that the company, subsequently, with knowledge of the facts, — 563 — ratified the action of the agent.” In the present case not only was no authority shown in the agent to annul conditions absolutely necessary for the protection of the company, but the policy, in two clauses, in plain words denied such authority and told Maupin that the agent had no such authority, and he read this warning, as he himself says. And if the agent had power to dispense with the condition in question, Maupin did not take the precaution to have the agent endorse on the policy, or give in writing, a waiver of .the requirement, and the agent squarety denies such waiver, and it is supported by only the evidence of Maupin, a deeply interested witness; whereas the agent seems disinterested, as he had tendered his resignation before this policy was signed. Maupin must have known of this, as he paid the premium to the new agent; but did not mention this condition to him. Whilst we sympathize with Maupin in his loss, we must say that it is imputable to his own rashness in an important matter, and we cannot overturn sound law to relieve him. Recurring to the decission of the Supreme Court we find the Court saying: “Coming to the decisions of our state courts, we find that, while there is some contrariety of decisions, the decided weight of authority is to the effect that a. policy of insurance in writing cannot be changed or altered by parrol evidence of what was said prior to^ or at the time insurance was effected; that a condition contained in the policy cannot be waived, by an agent, unless he has express authority to do so; and then only in the mode prescribed in the policy.” As this ci aimed waiver occurred when Maupin, after reading the condition, brought it to the agent to express his das-satis faction and the waiver was then made before acceptance of the policy, it occurred to me that this waiver might be deemed as part of the contract, made at the time of issue, and would be different from the waiver after issue of the policy, and that at its issue the agent knew that Maupin had no safe, and did not design to have, and knew of his mode of keeping-books. But here we meet the doctrine that to qualify the policy we must make it say what it does not, or worse, to put it correctly, make it say just the reverse of what it does say, by oral evidence, 'and thus do away with the writing; and, second, we do this by allowing an agent to exercise a powejf — 564 — denied him by the contract. It was an invariable rule of the company to put the “Iron Safe Clause” in policies for stores, and the agent was bound to do it, and it is found in this policy. Maupin so accepted it. In the case cited the policy provided that it should be “void, unless otherwise provided by agreement endorsed hereon, or added hereto, if the insured now has or shall hereafter make any other contract of insurance.” The agent knew there was then another policy on the property. The court held the fact unavailing to' affect the policy. The agent had no power to waive by oral agreement, if he had not at the time known of the existing policy or consent after-wards to the taking afterwards of another policy, and how could his mere knowledge of an existing one work that result? To say that when an agent is forbidden power to dispense with specific provisions as to security of books, material to be preserved as evidence of the amount of loss, he can yet by mere knowledge that the insured party had no safe, and does not design to have, and knows of the manner of keeping books, dispense with such requirement, denies the letter of agreement, defeats the usage and intent of the insuring party, and malíes for it a contract which it never made or knew of. It can say: “We made no such policy. It fails of effect as no- policy, but you are to blame. We told you, and you knew that our agent had no such power. Tou rested upon it, but did so at your own risk.” Suppose we say that Rayburn was a general agent. I do not think he could waive, because forbidden on the face of the policy, “and it has been held that a general agent may not by his acts and representations at the time of effecting the contract of insurance waive conditions in the policy relating to future action.” “By a number of authorities it has been held that a soliciting agent may not, at or before issuance of the policy, waive conditions in the policy relating to future acts or defaults, on the ground that all'verbal arrangements at that time are merged in the written agreement.” 16 Am. & Eng. Ency. L. 943-4. The case of Germania Ins. Co. v. Bromwell, 63 Ark. 43, is exactly in point to this case. It holds: “A provision in an insurance policy requiring the assured to keep a set of books, showing the changes taking place from time to time in the stock of goods in an iron safe or other secure place is reasonable and valid.zz — 565 — A provision in a policy of insurance requiring that assured shall keep a set of books cannot be contradicted by parol evidence, that, before the policy was issued, the company’s agent told the assured that it was unnecessary to keep such books. A stipulation in a policy that the assured shall keep a set of books is not waived by a statement to the insured by the agent before the policy was issued that it is unnecessary to keep such books.” Such a safe clause was held valid, and “knowledge on the part of the company’s soliciting agent at the time the policy is issued that the insured does not intend to comply with the condition requiring him to keep a set of books, and to take and preserve an inventory, to be produced in case of loss, does not estop the company from setting up the insured’s non-compliance with it as a defense.” Summers v. Mutual Fire Ins. Co., 85 N. W. 763; Fire Asso. v. Masterson, 61 S. W. 962. Do our cases conflict with this holding? In Wolpert v. Franklin Ins. Co., 42 W. Va. 647, there would seem to be doctrine contrary at first view. The syllabus is broad in holding general power, in general language, in an agent to waive forfeitures and conditions. That was a case relating to his power to consent to other insurance. It did not involve the “Iron Safe Clause”; nor did the policy prohibit the agent from dispensing with the conditions. This is vital. The case is not authority for the plaintiff. In Cole v. Jefferson Ins. Co., 41 W. Va. 261, we find a very broad proposition that “a general agent may waive forfeiture and conditions notwithstanding a provision that no agent has such power”; yet in the opinion it is said “no limitation on his powers unknown to strangers, will bind them.” In this cause Maupin knew the agent had no power to waive. Ins. Co. v. Wilkinson, 13 Wall. 222, is cited, but there was no limitation on the agent’s power in it. A volume of authority exists to show that where an agent’s power is limited in the policy he cannot go beyond it. The ease does not seem to have been well considered. And reflect, again, that one dealing with an agent must, at his peril, look to his authority. lie cannot do a thing prohibited. But there is another feature of this case deciding it against the plaintiff. Though he did not keep an iron -safe and the store books in it, yet if he had kept such books as the policies — 566 — required, and had removed them from the store room to a safe place, the clause would not debar recovery. But what are tire facts? The fire was at two o’clock at night. The books, all of them, remaining in the store room on a shelf unsecured. Six out of eight destroyed in the fire. Of the two books loft, day books, one containing an inventory admitted to be incomplete; the other articles sold on credit, no cash sales. The six destroyed were of recent business. Such books as they were gone. Some bills of purchase gone. One invoice presented made in April, 1898, the fire 23rd January, 1899. A second invoice made in October and partly entered in one of the day books, and the slips showing the remainder of it burnt. The company’s adjuster came, biit had nothing to go by. How could justice be done under these facts? There is no pretence or claim that tire agent, in his denied conversation with Mau-pin, ever excused him from removing those books to a place of safety from the store at night. He kept them there contrary to the policy and without any leave from any person, and they were consumed. It is not only admitted, but found by the jury in answer to a special question, that Maupin did not comply with said clause of the policy, but was excused therefrom by the agent. How was he excused from taking the books, such as they were, from the store room, if he had no safe? Where was the evidence to prove the waiver of that? He could easily have kept this promise. There was no right or reason for claiming exemption from it. Plain justice required him to comply with it. The court erred in refusing defendant’s instruction 9. “The jury are further instructed that when parties have made a written agreement, the -writing is regarded as the exclusive evidence of the contract, and all oral negotiations and stipulations preceding or accompanying the execution of the written agreement are merged in it, and are not admissible in evidence, and all such oral negotiations and stipulations should not be considered by you to contradict or vary the written policy in this case.” Also instruction 10 should have been given that any waiver of the “Hon Safe Clause” must be endorsed on the policy or attached to it, and that a parol waiver was incompetent. The court should have directed a verdict for the — 567 — defend ant, and should have' set aside the verdict and granted • a new trial. We grant that insurance companies should be, and generally are, held to account where courts can see their way to impose liability with justice to them; but not where they cannot do so with justice owing to the fault, of the other party. These companies are allowed to make their contracts, and insert clauses calculated to protect them from fraud and unjust and destructive liability. They are all important insti tutions to all, and as was said by the Supreme Court way back in Carpenters v. The Providence Co., 16 Peters 495, and repeated in Northern Assurance Co. v. Building Asso., cited, “The public have an interest in maintaining the validity of clauses in a policy of insurance against fire. They have a tendency to keep premiums down to the lawest rates, and to uphold institutions of this sort, so essential to the present state sf the country for the protection of the vast interests embarked, in manufactures and on consignments of goods in warehouses.” They protect our homes and property. We must not bankrupt and blot them out by demolishing fair provisions to protect them against fraud and injustice. Deny this right, and, you deny the right of contract for self-preservation. When the plaintiff concluded his case, the defendant moved the court to exclude the plaintiff's evidence as not sufficient to authorize a verdict for the plaintiff, and to direct the jury to find a verdict for the defendant; but the court refused. The defendant gave no evidence. . What shall this Court do? Shall it simply reverse the judgment, set aside the verdict and direct a new trial? Had the court sustained the motion, we could not reverse, because the evidence being insufficient for recovery by the plaintiff, such action would be warranted by law. Ketterman v. Railroad, 48 W. Va. 606. In that case is discussed the practice, not formerly followed, but now followed general^, of directing a verdict, and the eases there cited hold that when the evidence is so clearly deficient as to give no support to. the verdict for the plaintiff, if rendered, the court should exclude the evidence, and direct a verdict, and it is error to refuse to do1 so. If the court had sustained the motion, the case would have ended in final judgment for defendant, and so it must be our judgment, as we must render — 568 — such judgment as the circuit court ought to have entered. This motion is in no wise different from a demurrer to evidence, and upon that final judgment is always given. The plaintiff so. submitted his case. The adverse party is compelled to join in a demurrer, and when a party moves for a verdict he docs the same as demur. 'When there is a special verdict or finding of facts, final judgment is given on reversal, or a mandate is directed to the lower court to do so. Fort Scott v. Hickman, 112 U. S. 150, 165. When the court tries the case in place of a jury, and the evidence is plainly insufficient to sustain the judgment, the case is reversed and final judgment given for the defendant. State v. Miller, 26 W. Va. 107, 110; State v. Seabright, 15 Id. 590. How when the verdict is general, and there is no motion to exclude, or to direct a verdict, but the appellate court, on reviewing a motion for a new trial overruled, on the ground that the verdict is contrary to-, or without sufficient evidence so finds? During service on the bench of this Court I have seen verdicts set aside for want of evidence in many instances where it vas plain that if the decision of this Court were observed, there would certainly be no verdict for the plaintiff, and it was plain that the case could not be bettered, and the question arose in my mind, why remand for a new trial? The practice has been to remand always under the idea that it was the infallible rule. That is a mistake. In that very late valuable work, Cyclopedia of Law and Procedure, vol. 3, 450, 452, 454, these points are fully discussed. Even in the case of a general verdict, if the appellate court finds no cause of action, it gives final judgment or directs the lower court to do so. And when even the verdict is contrary to evidence, or it is plainly not supported by the evidence, or there is no dispute as to facts, or it is plain that a new trial would serve no useful purpose, there should be final judgment in the interest of an end of litigation. It is in the sound discretion to enter or direct final judgment or award a new trial. An important question, however, may arise in the exercise of this discretion. It is laid down in New York that “extreme caution should be exercised in refusing new trials where judgments are reversed. The discretion should be exercised by appellate courts in that direction only 'in cases where it is entirely plain, either from the plead569 mgs or the very nature of the controversy, that the party against whom the reversal is pronounced cannot prevail in the suit. It is not sufficient, to refuse a new trial, that it is highly improbable that the party upon reversal can succeed upon the new trial. It must appear that he certainly cannot.” New v. Village, 158 N. Y. 41, 43. Does not the last clause quoted go too far? I think the statement of law in 3 Cyc. 454, more sound, and that is, that a new’ trial will be awarded “whenever it appears to be necessary for the purposes of justice;” “whenever it appears that the ends of justice will best be served by such course.” The party has had one jury trial. It is fairly presumable that he presented all the evidence of his ease. He has submitted this case upon the evidence. Is the appellate court to surmise and guess that he can produce more? If he did not produce it, he is guilty of negligence. If he discovered it before judgment, we presume he would have made it the basis of a motion in the lower court for a new trial. If ho discovered it after judgment, and he.is guilty of no negligence, and it is of proper import, it is basis for equity action. Is the appellate court not to presume that he cannot better his case, unless it sees that he can or may? I see no- difference, in this respect, between a ease tried by a court and one tried by a jury. It is in the discretion of the appellate court in either case to grant a new trial, but only when justice appears to demand it. But the matters just mentioned, though relative to the general subject, are not the question before us. That is much plainer against a new trial. We have the case of a motion to direct a verdict improperly overruled. The jury found that Maupin had not complied with the policy, but was excused by the agent, which could not in law be. And no evidence tended to show any excuse for leaving the books in the store to be burnt. Therefore, we reverse the judgment, set aside the verdict, and render judgment for defendant. Note by BRANNON, Judge : “Where, in a policy of insurance, there is an express .stipulation that ‘no agent has power to waive any condition of this policy/ the insured, by acceptance of the policy, is estopped — 570 — from relying upon any agreement made with, an agent having the effect a'f waiving one of the conditions enumerated in the policy.” Thornton v. Travellers Ins. Co., (Ga.) 42 S. E. 287. “If one who is dealing with an agent knows that he is acting under circumscribed and limited authority, and that his act is outside of and transcends the power conferred, the principal is not bound, whether the agent is general or special, because principals may limit the power of one as well as the other. If a policy of insurance declares that m> officer or agent has power to waive any provision or condition embraced in a printed or authorized policy, but may waive certain added conditions, provided such waiver is written on or attached to the policy, an attempted wiaver by an agent of one of the conditions which the policy declares he shall not have power to waive, is inoperative and void.” Quinlan v. Providence Ins. Co., 133 N. Y. 356, 28 Am. St. R. 654, . “Where a policy of insurance itself .contains an express limitation upon the power of the agent, he has no- right to contract, as against the company, with the party to whom the policy has been issued, so as to change its terms, or dispenee with the performance of any part of the consideration, either by parol or in writing, and the insured is estopped by accepting the policy from setting up powers in the agent at the time in opposition to the conditions in the policy.” Wiedert v. State Ins. Co., 19 Oregon 261, 20 Am. St. 809. To the same effect Cleaver v. Ins. Co., (Mich.) 8 Am. St. R. 908; German Ins. Co. v. Heiduk, 30 Neb. 288, 27 Am. St. R. 402. “We must take the contract (policies) as we find them and enforce them as they read,” says the late case Roback v. Ins Co., 62 N. Y. 47, 20 Am. R. 451; 88 Am. St. R. 779. In the face of the right of parties to contract, in the face of a plain denial in that contract of any power in the agent to dispense with a reasonable .provision to protect one of its parties against fraud or uncertain evidence of loss, it is gravely claimed that an agent can dispense with such reasonable provision, though the party knew of such denial of the agent’s power, and the evidence defined by the contract as to amount of loss is dispensed with, and evidence by estimate based on guessing is made the base of recovery. May not an insurance — 571 — company make provisions to protect itself against fraud or un--certain evidence of loss, and to save itself from the fraud, collusive and loose declarations of even its own agents? A court may construe a contract, but can it go straight against its letter, its admitted meaning, and impair it, abrogate it? The Legislature cordel not. A court should not do so, even if there be no constitutional impediment. It ought to think of the prohibition in the Constitution against the Legislature and adjudge by analogy. Indeed, it is not going far to say that such decision violates the 14-th amendment and the state Constitution providing that no person shall be deprived of life, liberty or property without due process of law. Liberty includes right of lawful contract. When the letter pf a contract is admitted by even a court to mean only one thing, and it is not a matter of construction of it, but only whether it shall be enforced, and the court refuses to enforce it, is not the Constitution violated? I do not forget that a decision of a court, though wrong, is “due process of the law”; but should not a court even refuse thus to impair a contract and thus in spirit nullify the Constitution ? Petition Refused.