Fellowes v. Madison Insurance

Spencer, J., delivered the opinion of the court; Nearly all the legal questions arising upon this case have been considered and disposed of by this court on its former hearing, and we shall not, therefore, be compelled to dwell upon them at great length — though it is, perhaps, proper to state, that whereas we were then divided in opinion upon one of the main points, we are now fully agreed upon all the matters to be decided. The first inquiry we make is whether the general verdict, in connection with or apart from the special findings, is against the law and evidence. There are and have been but four points of controversy betwmen the parties: The first relates to the interest of the plaintiffs in the policy, which was denied by the defendant. The jury have — 134 — found that the policy was taken out by Robert, as the agent and for the benefit of the plaintiffs, and was assigned by him to the plaintiffs, with the assent of the defendant. To this finding no objection has been made. The second relates to the payment of the premium, which was denied by defendant to have been made, and who claimed, in consequence thereof, that the policy, agreeably to one of its conditions already quoted, never took effect. On this the jury have found, that the premium was not paid in cash, at the time of issuing the policy, but was charged to Robert, though it has never in fact been paid by him. The language of the condition, it will be observed, is that “ no insurance shall be considered binding until the payment of the premium.” On examining the policy we find, that it contains in express terms an acknowledgment of the payment and receipt of the premium. This acknowledgment (as we held before) “ was made for the purpose of giving effect to the policy from the time of delivery, and must be held conclusive for that purpose.” N. Y. Central Insurance Co. v. National Protection Insurance Co., 20 Barb. 475, and cases cited ; 1 Campb. 532 ; 3 Taunt. 493 ; 1 Sanf. S. C. 58 ; 1 Phil. on Ins. secs. 514-15 ; 2 ibid. 1849-1993-2116 ; 1 Marsh. Ins. 240. The policy having once taken effect, its condition was at an end, and the subsequent non-payment of the premium did uot and could not avoid it, unless provided for by some other condition, of which there was none. The third poinjfc of controversy relates to the time within which the present action was brought. It grows out of the condition of the policy, which declares that “ all claims under it are barred, unless prosecuted within one year from the date of loss.” The facts, as applicable to this branch of the defense, are that the insurance was effected by Robert for the plaintiff’s benefit, and the policy assigned to them with the defendant’s assent, before the loss happened; that within a year after the loss, an action was brought therefor in the name of Robert for the use of the plaintiffs, in the superior court of Cincinnati, which was subsequently re — 135 — moved to the circuit court of the United States for the district of Ohio, where it was prosecuted until the 17th of September, 1853, on which day it was discontinued by the plaintiffs without the consent of' the defendant; and that on the 19th of the same month, the present action was bi’ought, the defendant not consenting to such delay. The present action not having been brought by the plaintiffs within the year prescribed, it is claimed by the defendant that it is absolutely barred by the condition referred to; while on the part of the plaintiffs it is claimed that the condition has been substantially if not literally complied with, and if not, the condition is void as against public policy. Upon a former examination of this point in the case, we declined expressing an opinion upon the validity of this condition. Further investigation has removed all hesitation and doubt, and led us to the conclusion that the provision is both lawful and useful. The idea that such a condition if allowed would virtually oust the courts of their jurisdiction, as urged by Judge McLean in French v. The Lafayette Insurance Co., 5 McLean, 461, is plausible and imposing, and if such were the object of the parties, would perhaps be a conclusive objection against it. But to limit a time within which actions should be brought has always been deemed wise and politic, and accordingly statutes of limitation are of constant occurrence. What shall be regarded as a reasonable time in any particular case, or class of cases, will depend upon circumstances. It should in any event allow sufficient opportunity to a party to investigate his claim, and prepare for the controversy. The urgency of circumstances is, in an individual case, best known to the parties themselves, and they should be allowed to judge accordingly. If it be lawful to require proof of loss to be furnished to the company itself, within sixty days, or any other limited time after the loss occurs, by the condition upon which the liability of the company is to depend, it is equally lawful and proper to require such proof to be furnished in a court of justice, within a reasonable limited time, — 136 — as a condition of its liability. And that such limitations are peculiarly appropriate to actions upon policies of insurance, no one will pretend to deny. It is unnecessary to enlarge upon the subject. That such a limitation is binding, and will be respected in courts of justice, has been decided In several well considered cases, to which we give our hearty approval. Cray v. The Hartford Fire Insurance Co., 1 Blatchf. 280; Williams v. The Vermont Mutual Fire Insurance Co., 20 Verm. 222 ; Wilson v. The Ætna Insurance Co., 1 Williams, 102. But, secondly, has the condition been complied with ? A proper action was brought by the plaintiffs, in the name of Robert, for their use, to recover for this loss, within the time required. It was prosecuted in good faith, until discontinued for the purpose of bringing the present action. Although the nominal plaintiffs in the two actions are different, the persons beneficially interested and prosecuting are the same, and the whole may justly be regarded as the prosecution of the same claim. As said, on a former occasion,' we are all perfectly satisfied, that this provision of the policy Is reasonably complied with, by the bona fide institution of a suit, within the time limited, for the purpose of enforcing the claim; and if the party should afterward discover that he has brought his suit before the wrong forum, as if he had gone into a court of law when he should have gone into equity, or in an improper mode, as if he had brought covenant instead of assumpsit, he may abandon the same, instituting at once a new action, and thereby make a continuous claim in prosecution of his right, without abandoning or forfeiting such right altogether. The language of this condition is that of the defendant; and its terms being restrictive of common right, must be construed strictly, and taken most strongly against the defendant. It does not require that the same prosecution, that is the same action, once begun, shall continue until its completion, and when once determined, whether by non-suit or otherwise, the right shall — 137 — be wholly barred; but that the right itself, or claim shall be prosecuted within the year, and continuously made, whether in the same or a different action, is not material. The prosecution of a claim means nothing more than the following of it up by action; and should be continuously made without serious interruption. This construction answers the terms of the condition ; and it saves to the company all the advantages intended to be secured to it, by the requisition of a prompt suit, on the part of the insured, that is, notice to prepare their defense before the evidence of it may be lost; while at the same time it saves the insured from the casualties which must frequently arise from being compelled to bring a hasty action. The language of this condition differs essentially from that used in the cases just referred to: In Williams v. The Vermont Mutual Fire Insurance Company, 20 Verm. 222, the restriction to sue was embodied in the charter itself. It required the party aggrieved “ to bring bis action against the company, at the next court, to be holden in, and for said county, and not afterward, unless said court shall be holden within sixty days after refusal to allow the loss, if holden within sixty days, then at the next court holden in said county thereafter.” This was held to apply to the action jn which the recovery was sought. So in the other three cases, which are founded upon the same identical form of policy, they turned upon the proper construction of the language used, which provided, not, as here, that the claim “should be barred unless prosecuted within a year,” but that “ no suit, or action of any kind, upon the policies, shall be sustainel in any court of law or chancery, unless said suit or. action shall be commenced within the term of twelve months next after the cause of action shall accrue; and in case any such suit or action shall be commenced after the expiration, etc., the lapse of time shall be taken and deemed conclusive evidence against the validity of the claim, thereby so attempted to be enforced.” In commenting upon this provision, in the case of Wilson v. The Ætna Insurance Company, 1 Wil — 138 — liams, 102, Judge Redfield says: “This stipulation is too explicit to allow of any escape from its import by construction. It is not that an action shall be commenced within twelve months; but that no recovery shall be had, unless such action is commenced within-twelve months after the loss. Such action can only signify the action in which the recovery is sought,” etc. “ And there is no provision for any exception on account of the failure of any such actions; and without such provision in the contract, the court can not import one.” And the judge intimates, that in such a case, even fraud would not be a ground of relief. As the condition, however, in the present case, only requires the claim to be prosecuted within the year, an action fairly brought, with a view to ascertain and enforce the right, answers the terms of the condition; and though discontinued voluntarily, without bad faith, if the claim be promptly prosecuted in another action, it is not barred. .The fourth point of controversy relates to that condition of the policy which declares that “in case of any other insurance upon the property, not notified to said company, and mentioned in or indorsed upon this instrument, then this policy shall be void and of no effect.” The importance of this condition, and the necessity of complying with it on the part of the insured, were considered by this court, at great length, in a former hearing of the case; and the conclusions then arrived at, by a majority of the court, are sanctioned and confirmed by us all, and have been sustained by fresh authority. They were, that in an action on the policy no other evidence than that provided for in the contract itself could be received to show that notice of prior or subsequent insurance had been given; or to prove a waiver of the condition itself, made at the time of delivering the instrument. The cases then cited, as directly in point, were Carpenter v. The Providence Washington Insurance Company, 16 Pet. 510 ; and Barret et al. v. The Union Mutual Fire Insurance Company, 7 Cush. 175 ; and as covering the — 139 — principle involved, Alston v. The Mechanics Mutual Insurance Company, of Troy, 1 Hill, 510 ; Kennedy v. The St. Lawrence County Mutual Insurance Company, 10 Barb. 285 ; Sheldon & Co. v. The Protection Insurance Company, 22 Conn. 235; and The Glendale Manufacturing Company v. The Protection Insurance Company, 21 Conn. 19. Since then has been published the case of The Worcester Bank v. The Hartford Fire Insurance Company, 11 Cush. 265, in which it was held, that where by the terms of the policy, it was required that notice of other insurances should be entered on the books of the company, or on the policy itself, otherwise the policy should become void, and such entry was not in fact made, the plaintiff could not recover, although he had given such notice to the agent of the company, with directions to enter it upon the company’s books, and the agent had promised, but failed to do so. Such being the clear rule at law, equity would not interpose, unless to enforce specifically an agreement on the part of the defendant to cause such notice to be indorsed upon or mentioned in the policy, or on the ground of fraud, accident or mistake. It may be observed that, in the present case, the plaintiffs in their petition aver that, at the time of making application for insurance, they notified the defendant of prior insurances upon the property in the sum of $3,500, “ for the purpose of enabling the defendant to mention said notice in their said policy, or to indorse the same upon it; and the plaintiffs thereupon supposed and believed that the defendant would do so; and defendant thereupon executed and delivered said policy to the plaintiffs, without any.mention therein or upou the same; and the plaintiffs received said, policy, and adjusted the premium, believing it to be in all respects complete and valid.” "What reason the plaintiffs had for such supposition and belief is not set forth — whether because of an actual agreement on the part of defendant, or an agreement implied from the usages of insurers to mention such notice in or upon their policies. The defendant in — 140 — its answer denies that notice of other insurance was given, or was given for tbe purpose claimed by plaintiffs, or that it was the duty of the defendant to mention such notice in or upon the policy. Nor have the jury, in their special finding on the point, unequivocally asserted that there was any such agreement oil tbe part of the defendant, or any usage from which it might be inferred. They have declared (it is true) that in the treaty or agreement between the agents of the parties, it was one of the terms or matters intended to be put in writing, as a part of or as an indorsement on the policy, that there were other insurances upon the property, etc., but it is not found that the defendant agreed or undertook to do it, or that the intention was mutual — that is the intention of both parties. So it is found that “ in making out the policy there was a mistake in not inserting in, or indorsing upon it, the fact of there being other insurances upon the property; and that the policy was accepted under a mistake as to there being no such insertion or indorsement.” But whether such mistake was an omission of duty imposed upon the defendant, and if so, whether by operation of law, of usage, or of contract, is not set forth. Giving this finding a strict construction, it may be questioned whether, if it stood alone, enough appears to warrant a judgment in favor of either party upon it. Giving it however, that construction which would go to sustain the general verdict, and how does the entire verdict comport with the evidence. We premise here that this condition of the policy, so far as it imposes any duty in this regard on either of the parties, imposes it upon the insured, and not upon the underwriters. It is a condition precedent to their right of recovery; and therefore to be performed by them — or at least it becomes their duty to see that it is performed, and if not, to cause it be done. It may possibly admit of some question wliether, if this duty be imposed upon them by the terms of the written contract, it can be cast upon the other party by a concurrent parol agreement,, so as to shield the insured from responsibility for its failure. And it seems to us even more than questionable whether such — 141 — an agreement made with a mere agent of the defendant can. have that effect — whether it is not beyond the scope of his authority, of which the other party has notice from the very terms of the policy itself. Conceding this fully however, it should be made 'out by clear proof that the duty was thus cast upon the company either by express agreement, or by general usage among underwriters. So far as any such usage is concerned, there is not a particle of proof in the case to support it. The matter therefore stands entirely upon agreement between the parties. Nor upon this point is there any proof of an express agreement on the part of defendant, or its agent, to cause a memorandum of this prior insurance to be made upon the policy. The only testimony introduced upon the subject, on the part of the plaintiffs, is that of Robert himself, and of Mr. Hall, the defendant’s agent. Robert says the application was verbal, and only once made; that it was made to Hall just as he (Hall) was going upon change; That he stated to Hall, he was directed to ,insure $7,000 on the building; that he had obtaiued $3,500 in other offices, and wished Hall to take the balance; that he had taken $3,500 with Erost &. Foster (who represented two companies); that Mr. Hall accepted the application, with the distinct understanding that there was other insurance; that witness did not recollect of having insured with defendant before, but had iusured a great deal in other offices. On cross-examination, he states'that Hall was just leaving the office when the application was made; that he directed Mr. Chew to prepare a policy, and then left; does not remember of making a written application, but, on his being shown one says it is drawn up by Hall and’signed by him, in these words and figures: 584 No. 210. $3,500. Insurance in the sum of $3,500 on building commonly known , 3 per cent. as E. Wilson’s pork house. $105.00. To be insured on one year from date. Cincinnati, January 13, 1851. S. Robert. — 142 — Hall testifies that the application was verbal; that Robert said that he wanted $7,000, in all; that he had already obtained $3,500, and he wanted $3,500 mor’e; that is all that took i>lace. He did not remember whether Robert told him where he had made the other insurance, and did not remember whether he had made any agreement as to other insurance; that the policy was filled up by Mr. Chew, his clerk; that there was no fixed practice in the office about the mode of indorsing other insurance; that the policy was made out by Mr. Chew from a memorandum left with him by witness for the purpose; but did not remember any of the directions in the memorandum respecting former insurance. On cross-examiuation, he says the memorandum was as follows: “Mr. Robert wants $3,500 insurance on Wilson’s pork house, and that $3,500 has been insured elsewhere;” that the application of Robert, as above set forth, was in the company’s application book, and was signed by Robert,’but it was not ,handed to Mr.'Chew to make the policy by; nor does witness know when it was made; that it -was the usage of the office to require meution of former insurance in the application itself, and for the applicant to sign it, and that such was the custom in the city generally. This is all the testimony on the part of plaintiffs. Mr. Chew testifies that he has no recollection on the subject; but that the policy was made out from the application; and it in fact so appears from the policy itself. This proof falls very far short of showing an undertaking on the part of the company to cause this prior insurance to be noticed upon the policy, or even of a request from Robert that it might be so noticed. The only fact from which it can be inferred that such was Robert’s purpose, understood by the company’s agent, was the mere statement that prior insui’ance did exist in the sum of $3,500. Now it was manifestly proper and natural that a circumstance which so materially affected the question of risk, as prior insurance, should have been stated by Robert to Hall, for the purpose of enabling Mr. Hall, in the first interview, to determine whether he — 143 — would or would not take the risk; and that when he had expressed his assent, a written application should be made in form, detailing the particulars to be inserted in the policy, agreeably to general usage. He must be presumed to be aware of the custom to make out policies from the application; and if he had intended that mention should be made, upon the policy, of other insurances, he should have stated in his application that there were other insurances, and the particulars thereof, so as to enable the agent properly to mention them on the policy. Not so here. The written application of Robert, from which the policy was made out, contains no statement whatever of prior insurance; and the verbal statement made by him did not contain such particulars as would have enabled the agent to express them on the policy, if he had seen fit, without further inquiry. Should the omission be held fatal in the present case, we hazard nothing in saying that, treating Hall as Robert’s agent, no jury would hold him liable to Robert for neglect of directions. Circumstances have been introduced in defense, going to show still further the alleged equity of the plaintiffs. It appears that Robert, when he received the policy, made no examination to see whether its conditions had been complied with on his part, nor was he prevented from so doing by any act of the defendant. And subsequently, when advised that the policy was imperfect in another particular, and he called upon the agent to have it corrected, he still took no notice of the omission referred to. It may be very questionable, under such circumstances, whether the mistake of Robert, in this case, was not voluntary; and that, if he had not, he ought to have had knowledge that he had not complied with the condition of the policy; and if so, ought not to have the aid of equity to relieve him from his own neglect. At all events, it does not induce a high degree of favor in straining testimony to make out a case which it does not well warrant. "We are not satisfied, then, with this verdict. It is not — 144 — sustained by the evidence, nor consistent with law; and it must be set aside, and a new trial granted. Cause remanded for a new trial.