Ætna Life Ins. v. Frierson

DURTON, Circuit Judge, after making the foregoing statement of the case, delivered the opinion of the court. For the company it is said: (i) That the consideration upon which the policy issued was the premium paid and “the warranties made in the application.” (2) That the statement in the application that “I have not in contemplation any special journey or hazardous undertaking, except as herein stated,” constituted a warranty, the breach of which was not waived as a consequence of the facts communicated by the assured to either the soliciting agent at Shelbyville or the company’s “manager” at Cincinnati. (3) That the conceded fact that the insured lost his life while upon a “special journey” and “hazardous undertaking,” which he had in contemplation when he made his application, constitutes a breach of the warranty, and defeats the policy. Among the conditions made a part of the policy is this: “No agent has authority to waive any condition of this policy; and no waiver will be recognized unless in writing, signed by either the president, vice president, secretary, or assistant secretary of the company.” It may be conceded that a contract of insurance in writing, if in unambiguous terms, must speak for itself, and cannot be altered or contradicted by parol evidence, in the absence of fraud or mistake. This ancient rule has been lately applied in respect of a fire insurance policy which was held void in consequence of the existence of other insurance at inception of contract, because consent to same was not indorsed thereon, although the fact.of its existence was communicated by the assured to the company’s agent before the policy was delivered. Northern Assur. Co. v. Grand View Bldg. Ass’n, 22 Sup. Ct. 133, 46 L. Ed.-. In that case the policy provided that it should be “void if the assured now has or shall hereafter make or procure any other contract of insurance,” etc., unless otherwise provided by agreement — 61 — '‘indorsed hereon or added hereto.” The policy also provided that no officer or agent of the 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 indorsed hereon or added hereto, and as to such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or remission affecting the insurance under this policy exist or be claimed by the insured unless so written or attachedWe have underscored certain parts of the policy there involved for the purpose of calling attention to the specific character of the agreement sought in that case to be avoided by evidence tending to show knowledge of other existing insurance by the agent who issued the policy. If the defendant in error had rested her case upon an estoppel arising from the mere fact that the soliciting agent who received and forwarded these applications knew the truth as to the purposes of the applicant, the case, in that aspect of it, would, perhaps, be controlled by the case last cited. But we think the facts of the case are such as to distinguish it from Northern Assur. Co. v. Grand View Bldg. Ass’n. The statement relied upon as constituting an untruthful representation of the purposes of the applicant indicates upon its face that it was accompanied by some other statement upon the same subject. It reads thus: “I have not in contemplation any special journey or undertaking, except as herein stated.” To what do the words “as herein stated” refer ? No journey or undertaking was “herein stated” unless the statement which the parties agreed should accompany Frierson’s applications is to be regarded as constituting a part of the application upon which the policy issued. The facts found by the court below were that two applications were made at the same time, one for a six-months policy and the other for an annual policy. The latter was desired only in case the policy would cover a trip such as he expected to make. The soliciting agent agreed to accompany these applications with “a letter fully explaining the facts as to the proposed trip.” This the agent did. Upon this accompanying part of the application the general agent acted. Clearly, this statement accompanying the applications must be regarded, as both parties then intended, as a part of the application itself. The letter and the formal application should be regarded as together constituting one document. Greenl. Ev. § 283; Lee v. Dick, 10 Pet. 482, 493, 9 L. Ed. 503; Bell v. Bruen, 1 How. 169, 183, 11, L. Ed. 89. The question is not, therefore, one of waiver; for, if the letter of the soliciting agent constituted a part of the written application for the policy upon which the policy was issued, there has been no breach of the warranty to be waived, the application truly stating the purpose of the applicant to take the very journey in course of which he met his death. But if we assume that the communication which accompanied the two applications is not to be regarded as a part of the application upon which the policy in suit issued, it is, nevertheless, operative as notice to all of the agents and officers of the company who saw it or learned of it that the applicant did contemplate the journey ana enterprise in course of which he met his death, and that he had not applied for tw'o policies of insurance, but for the annual policy if the company should consent to issue it in view of his purposes, and for — 62 — the shorter one only if it declined the risk of his contemplated journey. If the Cincinnati agent who received this communication and issued the annual policy, with all the light which that document gave him, had been himself the insurer, there could be no possible doubt of his authority to bind himself, and to waive any and every condition of the policy made for his benefit. So, too, it is not to be doubted that an incorporated insurer may waive any condition intended for its protection, even though it has prescribed that such waiver must be in writing; for it may as well waive such a condition as any other. This power of an insurance company to waive any provision or condition solely for its own benefit was affirmed in Insurance Co. v. Wolff, 95 U. S. 326, 24 L. Ed. 387, and Insurance Co. v. Norton, 96 U. S. 234, 24 L. Ed. 689. However much those decisions may be regarded as doubted by Northern Assur. Co. v. Grand View Bldg. Ass’n, the doubt does not extend to the question of the power of an insurance company to waive any provision or condition of the policy intended for its protection. “As to this proposition,” said Justice Shiras, in the case last cited, “there was, and could have been, no disagreement among the judges, but the difference arose over the sufficiency of the evidence to show the waiver.” The question we must, then, meet in this aspect of the case is one of the evidence relied upon to establish that the company issued this policy with knowledge that the statement in the formal application relied upon as a warranty had been inserted by its own agent under an agreement with the applicant that he would forward therewith a full statement as to the journey and enterprise which the applicant had in view. For the purposes of this case we shall assume that the manager at Cincinnati, who received the two applications and the soliciting agent’s accompanying communication, did not and could not waive the condition of the policy in respect to any breach resulting from any misrepresentation in the application. The court found that on October 2, 1897, this managing agent issued the policy now in suit, dating it September 27, 1897. On October 9, 1897, he wrote this Shelbyville agent, to whom the policy had been sent, and by whom it had been delivered to the assured, as follows: “I regret the ordering up of the policy of Robert P. Frierson. We have written him .a policy for $5,000, dated September 29th, for five months. You can advise him that that policy is in full force and effect, and will be mailed you immediately upon receipt or return of the other policy. I tried my best to favor y6u in this matter, and regret my inability to do so.” This act was the act of the company, and the plain inference, in the absence of explanation, is that the company had disapproved the issuance of this policy in view of the knowledge communicated to its home office through the letter of the local agent which had accompanied the application. It is true that at another point in the finding of facts it is stated that this manager had, “about October 13, 1897,” forwarded the application to the home office of defendant company at Hartford, Connecticut. The date; “about October 13th,” is probably a mistake, as every inference is that the home office received the application and accompanying communication prior to the direction to cancel the policy, which undoubtedly emanated from the “home office.” The company could have made plain just when the home office received — 63 — these applications, and just why the cancellation of the policy was directed. Its silence justiñes the presumption that the direction to recall the policy came from the managing officers of the company, and that it was due to an unwillingness to accept the risk incident to the contemplated journey of the assured, and therefore preferred to issue to him the short policy which he had applied for as an alternative. The agent did not communicate with the assured, and withdraw the annual policy, as directed. Upon the contrary he, “in due course of business,” “remitted the full premium for twelve months to the manager at Cincinnati, who received it without objection, and remitted it to the chief officer at Hartford, where it was received and retained.” “No further effort was made to cancel the policy.” The proposal submitted by the assured to accept an annual policy, provided it would cover his contemplated journey, was accepted by the company’s agent, and the act of this agent, when submitted to the company, was ratified by the receipt and retention of the premium with full knowledge of all the facts. In Northern Assur. Co. v. Grand View Bldg. Ass’n, cited above, it is said to be sustained by all the authorities “that, when waiver is relied on, the plaintiff must show that the company, with knowledge of the facts that occasioned the forfeiture, dispensed with the observance of the condition; that, w'hen the waiver relied on is an act of an agent, it must be shown either that the agent had express authority from the company to take the waiver, or that the company subsequently, with knowledge of the facts, ratified the action of the agent.” The receipt and retention of the premium at the home office of the company, after determining to recall the policy because unwilling to take the risk incident to the journey and business contemplated by the assured, was a distinct election to ratify the contract and continue the policy. Insurance Co. v. Norton, 96 U. S. 234, 24 L. Ed. 689; Insurance Co. v. Wolff, 95 U. S. 326, 24 L. Ed. 387; Madden v. Brown, 97 Mass. 148; Kirkpatrick v. Insurance Co., 11 App. Cas. 177; North Berwick Co. v. New England F. & M. Ins. Co., 52 Me. 336; Miner v. Insurance Co., 27 Wis. 693, 9 Am. Rep. 479. In Madden v. Brown, cited above, Judge Gray, speaking for the court, said: “Although an agent of the company had no authority to bind them by receiving payment of a premium note after it was due, the company' might receive such payment at any time. If they received the amount of the note from their agent after it was due, they were bound to inform themselves of the time when it had been paid to him; and by receiving it from him without inquiry they waived the right to insist on the delay in the payment as a ground of forfeiture of the policy.” This waiver, being the act of those officials constituting the “home office,” was the act of the corporation. The fact that the premium was received and retained with knowledge of the facts constitutes in itself a waiver of the right to rely upon the known breach of the condition of the policy. It was likewise a waiver of the stipulation of the policy that “no waiver will be recognized unless in writing, signed by either the president, vice president, secretary, or assistant secretary.” It was just as competent for the company to dispense with the observance of this condition, being one made for its own benefit, as any other. Mutual Reserve Fund Life Ass’n v. Cleveland Woolen Mills, — 64 — 54 U. S. A. 291, 27 C. C. A. 212, 82 Fed. 508; Insurance Co. v. McCrea, 8 Fea, 513, 41 Am. Rep. 647; Pechner v. Insurance Co., 65 N. Y. 195; Insurance Co. v. Earle, 33 Mich. 143; Dilleber v. Insurance Co., 76 N. Y. 567. In Mutual Reserve Fund Rife Ass’n v. Cleveland Woolen Mills, cited above, this court said: “Neither is it competent for the parties to disqualify themselves from ability to agree by parol to any contract which, under the law, need not be in writing; and an agreement in the terms of a policy that no change or alteration thereof shall be valid unless in writing, indorsed thereon, may itself be changed by parol.” In Northern Assur. Co. v. Grand View Building Ass’n, there is nothing in conflict with this. The court there upheld a provision in the policy which required consent to other insurance to be indorsed thereon in writing by the agent issuing the policy. The waiver then relied on was waiver resulting from the mere knowledge of the agent that such other insurance existed at the time he issued the policy. 2. What we have said applies as well to the defense that the assured lost his life through “adventures into wild, uninhabited, or uncivilized regions.” The assured lost his life by a storm while a passenger on board a steam vessel called the Jessie, belonging to the Columbia Navigation Company, while crossing Kuskokwim Bay, a bay on the coast of Alaska, for the purpose of ascending the Kuskokwim river, one of the rivers of Alaska. He, with others, had been carried from Seattle as passengers upon an ocean steamer to a point off Kuskokwim Bay, where they took the Jessie for the purpose of continuing a journey to the gold fields of Alaska. The journey was not completed which the company knew he had in contemplation. It cannot be said that he was, at the time of his death, engaged in adventures in a wild, uncivilized region. He was crossing a well-known arm of the sea, and had not reached the river which it was proposed to ascend. His adventure in a wild and uncivilized region — if that may be regarded as a proper characterization of the mining regions of Alaska — had not begun. 3. The fourth condition of the policy was in these words: “If tbe insured is injured in any occupation or exposure classed by this company bigber than tbe premium paid for this policy covers, tbe sum insured and weekly indemnity shall be only sucb amounts as said premium will purchase at tbe rate fixed for such increased hazard.” The contention is that the insured had changed his occupation from that of a lawyer, as stated in the application, to that of a “prospector miner.” But there are no facts upon which to base this defense. If the assured had lived to begin his work of prospecting for mines, there might be some room for the contention now made. That he intended to engage in “prospect mining” is not enough. To bring this provision of the policy into effect, the company must show that he was actually engaged in an occupation, at the time he sustained his injury, “classed higher than the premium paid for the policy covers.” This the company has not done, for it is clear that he lost his life in a storm while a passenger on a steamer crossing the Kuskokwim Bay for the purpose of going up the Kuskokwim river, and thus into the interior of Alaska. The journey which he contemplated when he applied for insurance, and about which he informed the company through the com — 65 — munication accompanying his application as a part thereof, had not been completed when he met his death. This defense was properly held to be unavailing by the court below. 4. It is next assigned as error that the court allowed a recovery for double the sum named as the principal sum insured. Clause “f” of the policy is in these words: “If such injuries are sustained while riding as a passenger in any passenger conveyance using steam, cable, or electricity as a motive power, the amount to be paid shall be double the sum above specified.” There is no specific finding that the assured was a passenger at the time of his death, but the court adopted as its finding the facts testified to by Richard Chilcott, president of the Columbia Navigation Company. There was no specific finding that the assured was riding as a passenger in a passenger conveyance at the time of his death. The court, however, did find certain facts which tended to show what his relation was to the owner and navigator of the steam vessel upon which he was traveling. These facts have been elsewhere set out in full. Upon this finding of facts the court below held that the assured was a passenger, within the meaning of the double indemnity clause of the policy. While some of the persons .composing the party, of whom Frierson was a member, did constitute the crew employed and paid by the navigation company to navigate the steamer, Frierson was not one so paid. He owed no duty to the navigation company in respect to the navigation of the Jessie. The agreement of the navigation company, so far as it involved the transportation of Frierson from Seattle up the Kuskokwim river, created the relation of carrier and passenger. There were other parts of the contract, by which the Jessie was to be used as a base of supplies up the river, which do not affect the carrier agreement one way or the other. The Jessie at all times continued to be under the control and management of the navigation company. The Frierson party had no exclusive rights, for she was under no charter, and she had on board a passenger who had paid a separate fare, not being a member of the Frierson party, nor within the terms of the contract under which he was being carried. The Jessie was a passenger conveyance, whose motive power was steam. Frierson was not at the time a servant, or in the employment of the owners or navigators of the Jessie. He was riding on the boat under a contract based upon a good consideration, by which the Columbia Navigation Company undertook to carry him up the Kuskokwim river. These facts constitute him a passenger. Wood, Ry. Taw, § 298. The fact that the Jessie was to remain up the river, and be used as a base of supplies for exploring or mining parties, does not affect the carrier agreement which was being executed when the Jessie was wrecked. That for the service in carrying his party up the river and for the subsequent use of the boat as a warehouse or place of shelter the navigation company was to receive a definite share in the results of the expedition 'does not change the carrier relationship which existed while the journey was in progress. There was no partnership or charter relation in the ownership or navigation of the steamer. The counsel for defendant in error has cited and relied upon a class of cases holding that employés of railroad companies, while being carried to and from — 66 — their work, are not passengers, but employés. The eases relied on are cited and approved by this court in Railroad Co. v. Stuber, 48 C. C. A. 149, 108 Fed. 934. They have no possible application to the case at bar, for the reason that the assured was not an eraployé of the navigation company. That the Jessie was not “a public conveyance in the usual lines of travel as a common carrier of passengers” may be true. But, if the insurance company intended to limit the benefits of its contract to passengers who travel “in conveyances operated in the usual lines of travel as common carriers,” it should have so stipulated. This it did not do. The judgment must be affirmed.