#### Grant McLean v. American Mutual Fire Insurance Company of Des Moines, Iowa, Appellants.

Insurance: reduction op risk. An insurance company cannot 1 reduce the amount of a policy without the assent of the assured.

Settlement of Loss. Where the assured, pending a dispute as to 2 the amount of the policy in force at the time of the loss, executes proof of loss in which a stated sum is claimed with the agreement to accept the same and discharge the insurer from further liability, which sum is paid and retained by the assured for more than a mouthy he is bound by the settlement, in the absence of fraud.

Waiver. An agreement between the insurer and assured before ad-3 justment that an investigation of the loss should be made but that the same should not operate as a waiver of the rights of either party, did not affect the validity of the settlement subsequently made.

*Appeal from Dallas District Court.*— Hón. A. W. Wilkinson, Judge.

Saturday, January 23, 1904.

On tbe 23d day of August, 1899, tbe defendant issued plaintiff’s policy, covering bis stock, of goods against fire and tornado during tbe four years following. Mucb of tbe stock was destroyed by fire July 4, 1901. Due notice was given, and on tbe 12tb day of tbe same month tbe adjusters of this and four other companies met tbe plaintiff at Dallas Center. As tbe policies covered specified property in different buildings, and as plaintiff’s books contained no data as to location of tbe property destroyed, some difficulty was experienced in determining tbe extent of tbe loss for which each of tbe companies was liable. After mucb inquiry and computation, an agreement was reached by which plaintiff was to be paid fifty per cent, of tbe face of tbe policies. This appeared to *356be $11,050, but the defendant claimed to bave canceled $750 of tbe $1,250 indemnity stipulated in its policy by a letter written to plaintiff tbe day before tbe fire. Tbe evidence tended to show that plaintiff objected to this claim, and insisted that be bad never received such a letter. Nevertheless, be accepted payment from tbe other companies, and signed and swore to proof of loss to defendant, stating tbe amount of policy in force to be $500, and that “the amount claimed of tbe American Mutual Fire Ins. Co. is $250, which tbe assured agrees to accept, and, when paid, said company shall be forever discharged from all liability of whatsoever nature for and on account of said loss.” Tbe company immediately sent a draft for this amount to defendant,, which be returned October 17, 1901. In this suit recovery is demanded for tbe entire amount of tbe indemnity stipulated in tbe policy. Tbe verdict was for fifty per cent, of the face of tbe policy, with interest added, and from judgment thereon defendant *appeals.'*

Reversed.

*Thos. A. Cheshire*for appellant.

*White & Clarice*for appellee.

Ladd, J.

No doubt tbe company could bave canceled its entire policy by returning tbe proper proportion of tbe premium received. But neither tbe policy nor tbe la.w author-1. reduction of risk. ized it to reduce the amount of the policy with-011t asgenf 0f fhe assured. Tbe mere writing of tbe letter saying, “We are then obliged to reduce our line upon your risk from $1,250 to $500.” and inclosing a slip to this effect, with tbe request that it be attached to the policy, did not effect tbe object sought, unless after its receipt something was done or omitted by tbe insured indicating acquiescence therein. There is nothing in the record to contradict bis testimony that be never received tbe letter. Indeed, there is no competent evidence that it was ever mailed.

*357It is manifest, then, that the contention of defendant, when the alleged settlement of plaintiff’s loss of his stock of goods with the adjusters at Dallas Center was arranged, 2. settlement of loss. fhat $^50 of its policy had been canceled, was without merit. But the claim may have been made in good faith, and there is no averment in the pleadings that it was not. After much discussion and computation, the adjusters agreed to settle the loss by the payment of fifty per centum of the face amount of the policy in force. This was accepted as to all the companies, with the possible exception of defendant. In the course of the discussion plaintiff was informed for the first time of the alleged reduction of its policy, and objected on the ground that he had not received notice; but in the same evening he made out the proofs of loss, wherein he asserted that “the amount claimed * * * is $250, which the assured hereby agrees to accept, and, when paid, said company shall be forever discharged from-all liability of whatsoever nature or kind for and on account of said loss.” A draft for the amount was promptly sent, which he returned after having retained it more than a month.

While the plaintiff insists that he was dissatisfied, and so declared to the company’s representatives, he nowhere denies entering into such an agreement. He was asked: “Now, you may state to the jury why it was that you signed and verified that agreement if you did not intend to abide by the settlement,” and answered :■ “Why, I wanted to get what I could, and commence action for the balance; that is the size of it. Q. You say you wanted to get what you could, and commence action for the balance ? A. Yes; I thought I was imposed on. I didn’t think they ever gave me any notice of cancellation. Q. Did you make any objection to signing that agreement ? A. I signed it for the amount of two hundred and fifty dollars. Q. Did you say to Mr. Seager that you would not stand by that ? A. I would stand by that as far as the two hundred and fifty dollars is concerned; I didn’t make a settlement in full. Q. You didn’t? Now, *358at the time you signed that agreement, you supposed that was right, didn’t you? A. That was all right. Q. So you signed it, and concluded that you would get what you could and sue for the balance ? A. Yes, sir. Q. Did you tell Mr. Seager you would do that ? A. I don’t think I told him' I would sue. I told him I was not satisfied. I told him that a couple of times. Q. Didn’t you tell Mr. Seager you were satisfied the adjustment was the best you could do there at that time ? A. I thought it was at that time. Q. That you were satisfied with it ? A. No; I never told him I was satisfied with it.”

What he intended to do in the way of bringing suit subsequently is not material. A party cannot save himself from the binding 'effect of a compromise by an undisclosed mental reservation that he will get all he can, and sue for the balance. If not satisfied with the amount obtained, he was in the situation of many creditors who compromise their claims. He agreed upon a settlement, the terms of which were embodied in the proof of loss, and the defendant fully complied therewith in its prompt remittance of the amount he agreed to accept. This was the construction given to the evidence by the district court, for the jury was advised in the ninth paragraph of the charge that the paper nominated proof of loss ‘is *prima facie*evidence that plaintiff settled with defendant, and agreed to accept from it the sum of $250 in full settlement of all his claim for loss against the defendant under the policy in suit.” That this appeared in proof of loss renders it none the less binding. It may be that the insured is not always bound by the statement therein of the amount claimed, as where there has been a mistake, as in *Crittenden v. Ins. Co.,*85 Iowa, 653, or where the company has refused to pay, as in *Corkery v. Ins. Co.,*99 Iowa, 382. But in the absence of deceit and fraud, when a distinct proposition has been incorporated in the proofs, and accepted and acted upon by the company, further controversy is foreclosed.

But the court seemed to have been of the opinion that this was obviated in some way by the so-called “nonwaiver” *359agreement entered into preliminary to tbe investigation. It 3. Waiver. was signed by plaintiff and all tbe adjusters, and reads: “It is hereby mutually understood and agreed by and between Grant McLean of tbe first part and tbe Fidelity Insurance Co., of Des Moines, Iowa; Anchor Insurance Co.; State Insurance Co.; American Insurance Co.; Capital Insurance Co., and other companies signing this agreement, parties of the second part, that any action taken by said parties of the second part investigating the cause of fire or investigating and ascertaining the amount of loss and damage to the property of the party of the first part caused by fire alleged to have occurred on July 4th, 1901, shall not waive or invalidate any of the conditions of the policy of the parties of the second part held by the parties of the first part and shall not waive or invalidate any rights whatever of either of the parties to this agreement. The intent of this agreement is to preserve the rights of all parties hereto and provide for an investigation of the fire and the determination of the amount of loss or damage in order that the party of the first part may not be delayed unnecessarily in his business and in order that the amount of his claim may be ascertained and determined without regard to the liability of the parties of the second part.” Its entire purpose was to enable the parties thereto to investigate the cause of the fire and extent of the damages to the property insured without affecting their rights or liabilities under the several policies. It does not undertake to limit the binding force of any contracts they may enter into. Its sole reference is to facts which might be the basis of an adjustment, but does not purport to obviate the effect of any adjustment, compromise, or settlement the parties in .their discretion may see fit to make. The record conclusively establishes an agreement to settle which was complied with, and, unless procured by deceit^ it must stand. — Rbvebsed.