Palatine Ins. v. Ewing

SEVERENS, District Judge, having stated the case as above, delivered the opinion of the court. The only controversy between the parties raised upon the trial in the circuit court related to the sufficiency of the consent of the insurance company to the additional insurance procured by the trustees on the 23d day of November, 1895, — the day before the fire. And the only question which Ave are required to determine is whether the court committed any error in its rulings upon that subject for which the judgment ought to be reversed. The trial judge was of the opinion that upon the proper construction of the policy and the clauses contained in the rider attached thereto such consent was not made out, and in consequence of that ruling the parties went into further evidence upon the question whether there had been a custom in the course of the defendant’s business at Pulaski, known to the defendant, and relied upon by the insured, whereby the attaching of the so-called “three-fourths value clause” to the policy ivas treated as signifying, without more, the consent of the company to additional insurance to the limit therein prescribed. Upon mature consideration we are of the opinion that the plaintiff’s contention in the circuit court in respect to the construction of the policy and the attached clause was right, and that they did import a present consent, at the time when the policy was issued, to additional insurance not in excess of three-fourths of the value of the insured property, which limit it is not claimed was transcended. It is not necessary to hold that the consent intended by the clause in the policy proper was a permission to be thereafter given. It might be a consent given contemporaneously with the issuance of the policy itself. Indeed, it is not unusual in such instruments to employ language which, although it might upon one, and perhaps the more common, interpretation in ordinary use, have reference to the future, yet, upon comparison with other provisions therein, indicates that reference was had in the general form to the final insertion in the instrument of special provisions which might or might not be required to express the contract in the particular case. An instance of the flexibility of language in such instruments is found in the very case Ave have under consideration. The policy declares that it shall be void “if the insured now has” other insurance. But the insured did, in fact, haA-e other insurance, and this fact Aras known to the insurer. The “three-fourths clause” was added, and it is not doubted, we suppose, that, although literally its language points to prospective insurance, the words “total insurance permitted” refer to and include the insurance already existing at the date of the policy. That this would be the effect of such a stipulation in such circumstances was held in Kimball v. Insurance Co., 8 Cray, 33, a,nd Blake v. Insurance Co., 12 Gray, 265. The only “permission” of such previous insurance is that found in the attached “three-fourths clause,” and it is by that clause that the limitation is imposed upon the amount of prior insurance which would be permitted. The prior insurance was parcel of [114] that amount, but the language of .the permission makes no distinction between that already obtained and that contemplated as additional thereto. It is not reasonable to suppose that the parties anticipated any further agreement upon that subject. It is to be further noticed that the clause in the policy requires the consent to be by an agreement “indorsed hereon or added thereto.” The “three-fourths clause” responds to this by characterizing itself as “attached to and forming part of policy No. 444,557 of the Palatine Insurance Company.” This interpretation is the same as that which the agent of the company who issued this policy testified he had acted upon in transacting the business of the company at that place. He was supplied by it with blank policies and these clauses to be used as occasion should require, and when other insurance was intended to be permitted he used the “three-fourths clause,” which covered the whole subject, once for all. But, if this conclusion were not so clear as it seems to us to be, and were only a permissible one, there are several established rules of construction applicable to the subject which concur in inducing the same result. One of those rules is that forfeitures are not favored in law, and the courts will seek to find, if fairly possible, such a construction of the contracts of parties as will relieve them from the inequitable consequences arising therefrom. New York Indians v. U. S., 170 U. S. 1, 25, 18 Sup. Ct. 531; Tiffany v. Bank, 18 Wall. 409; Cotten v. Casualty Co., 41 Fed. 506; Jackson v. Same, 21 C. C. A. 394, 75 Fed. 359; May, Ins. (2d Ed.) §§ 170, 376. Another rule which is especially, but not solely, applicable to insurance contracts is that, when the meaning of the instrument, taken as a whole, is doubtful, its several provisions should be construed favorably to the party to whom the undertaking is made, and most strongly against the party in whose interest the provisions are introduced. Insurance Co. v. Wright, 1 Wall. 456, 468; National Bank v. Insurance Co., 95 U. S. 673, 678; Moulor v. Insurance Co., 111 U. S. 335, 4 Sup. Ct. 466; Insurance Co. v. McConkey, 127 U. S. 661, 666, 8 Sup. Ct. 1360; Thompson v. Insurance Co., 136 U. S. 287, 10 Sup. Ct. 1019,— are some of the many cases in which this rule is stated and applied. Still another rule is that, where a special provision is added to the formal contract, the special provision will be taken to dominate the formal part upon the principle that it more surely expresses the final purpose of the parties. It rests upon the same presumption which is applied in giving preference to the written language inserted in an instrument containing formal printed language relating to the same subject, for the reason that the former indicates that the attention of the parties was more particularly called to the written parts. May, Ins, (2d Ed.) § 177; Wood, Ins. (1st Ed.) § 62. As this determination is decisive of the main question before us, the exceptions taken to the rulings -of the court in respect to the admission of evidence to prove a practice or usage in the conduct of insurance business at Pulaski are immaterial, and the correctness of the rulings upon that subject need not be considered. If there was error in that regard, it was not prejudicial. The judgment will be affirmed, with costs.