Source: https://supreme.justia.com/cases/federal/us/183/308/
Timestamp: 2019-04-21 11:02:31+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 183 › Northern Assur. Co. v. Grand View Building Assn.
Overinsurance by concurrent policies on the same property tends to cause carelessness and fraud, and a clause in a policy rendering it void in case other insurance had been or should be made upon the property and not consented to by the insurer is customary and reasonable.
In this case, such a provision was expressly and in unambiguous terms contained in the policy sued on, and it was shown in the proofs of loss furnished by the insured, and it was found by the jury, that there was a policy in another company outstanding when the one sued upon in this case was issued, and hence the question in this case is reduced to one of waiver.
It is a fundamental rule in courts both of law and equity that parol contemporaneous evidence is inadmissible to contradict or vary the terms of a valid written instrument unless in cases where the contracts are vitiated by fraud or mutual mistake.
Where a policy provides that notice shall be given of any prior or subsequent insurance, otherwise the policy to be void, such a provision is reasonable, and constitutes a condition, the breach of which will avoid the policy.
Where the policy provides that notice of prior or subsequent insurance must be given by endorsement upon the policy or by other writing, such provision is reasonable, and one competent for the parties to agree upon, and constitutes a condition the breach of which will avoid the policy.
Contracts in writing, if in unambiguous terms, must be permitted to speak for themselves, and cannot, by the courts at the instance of one of the parties, be altered or contradicted by parol evidence unless in case of fraud or mutual mistake of facts, and this principle is applicable to cases of insurance contracts.
Provisions contained in fire insurance policies that such a policy shall be void and of no effect if other insurance is placed on the property in other companies without the knowledge and consent of the insuring company are usual and reasonable.
It is reasonable and competent for the parties to agree that such knowledge and consent shall be manifested in writing, either by endorsement upon the policy or by other writing.
authority to alter or contradict the express terms of the policies as executed and delivered.
Where fire insurance policies contain provisions whereby agents may, by writing endorsed upon the policy or by writing attached thereto, express the company's assent to other insurance, such limited grant of authority is the measure of the agent's power.
Where such limitation is expressed in the policy, the assured is presumed to be aware of such limitation.
Insurance companies may waive forfeiture caused by nonobservance of such conditions.
Where waiver is relied upon, the plaintiff must show that the company, with knowledge of the facts that occasioned the forfeiture, dispensed with the observance of the condition.
Where the waiver relied on is the act of an 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, ratified the action of the agent.
In September, 1898, the Grand View Building Association, a corporation organized under the laws of Nebraska, in the District Court of Lancaster County of that state, brought an action against the Northern Assurance Company of London, incorporated under the laws of the Kingdom of Great Britain and Ireland, seeking to recover the sum of $2,500 as due under the terms of a policy of insurance that had been issued by the assurance company to the plaintiff company on December 31, 1896, on certain property situated in said Lancaster County, and which, on June 1, 1898, had been destroyed by fire.
Thereupon the defendant company filed in the said county court a petition and bond, in due form, and prayed for an order removing the cause to the Circuit Court of the United States for the District of Nebraska, and on September 29, 1898, the county court approved the bond and entered an order granting the prayer of the petition for removal.
Court of Appeals for the Eighth Circuit, and that court, on March 26, 1900, affirmed the judgment of the circuit court. 101 F. 77. Thereafter, on petition of the defendant company, a writ of certiorari was allowed, in response to which the record and proceedings in the cause were brought to this Court.
In order that the questions discussed in this case and the grounds of our judgment therein may sufficiently appear, it seems proper to set out with substantial fullness the pleadings of the parties and the special verdict of the jury.
risk and issued said policy, and accepted and received said premium as such agent in behalf of defendant with knowledge beforehand of said concurrent insurance, and with the intent knowingly to waive the condition of said policy that 'it shall be void if the insured now has or shall hereafter make or procure any other contract of insurance' on the property covered thereby. And by the aforesaid several acts and by procuring, receiving, accepting, and retaining of said insurance premium with knowledge of said subsisting concurrent insurance, the defendant has waived the said condition, and is estopped to claim benefit thereof, and is bound by its said policy notwithstanding said condition; that plaintiff had no insurance on said property except as before stated."
"on the 26th day of July, 1898, the plaintiff demanded of defendant the payment of said insurance, and defendant, disregarding its undertaking in that behalf, denies liability on the sole ground that said policy has been void from the date of its issue by reason of the said provision in regard to other insurance, the same provision which as aforesaid it had waived at the time of issuing its said policy."
"Further answering, this defendant alleges that the policy of insurance which it issued to the plaintiff on December 31, 1896, contained the following provision:"
" This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy."
above quoted, contains the following stipulation and condition:"
"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 herein or added thereto, 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 be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached."
"The defendant says that, notwithstanding the stipulations, provisions, and agreements above set forth and without the consent of the defendant endorsed upon said policy in writing, and without the knowledge of the defendant, the plaintiff obtained a policy of insurance, upon the property covered by the policy issued by this defendant, in the sum of $1,500 in the Firemen's Fund Insurance Company."
"Defendant says that the property upon which it issued its policy in the sum of $2,500 was represented by the plaintiff to the defendant to be of the value of $3,500. The defendant alleges that, by reason of the additional insurance upon said property, not consented to in writing endorsed upon the policy of defendant and not in fact known to the defendant, the policy written by the defendant upon the plaintiff's property was at the date of the fire which damaged or destroyed the plaintiff's property wholly void, and was and has been void from the date of such additional assurance. Defendant further says that, on the 5th day of August, 1898, the defendant tendered to the plaintiff in current fund the sum of $33.75, the amount of the premium paid by the plaintiff upon the policy in question, and now brings into court and tenders to the plaintiff the said sum of $33.75, with interest at the rate of seven percent from December 31, 1896."
"The policy referred to in said answer of $1,500 in the Firemen's Fund Insurance Company was, on the contrary, subsisting at and prior to the issuance by defendant to the plaintiff of the policy sued on herein, and was in fact issued December 12, 1895, for the term of three years, and the existence of such policy was personally well known to A.D. Borgeit, defendant's recording agent, who wrote said policy, and accepted said risk, and who then had full charge of defendant's agency at Lincoln, Nebraska, with authority to accept fire insurance risks for and on defendant's behalf, to countersign and issue its policies of insurance, and to collect and receive the premiums therefor. And at and prior to his acceptance of said risk and insurance of the policy sued on, the plaintiff's president, H. J. Walsh, reported orally to said A.D. Borgelt the fact of such subsisting insurance of $1,500, and said Borgelt, as such agent, with full knowledge of said fact, accepted the risk and wrote, executed, and delivered said policy to defendant, with the intent on the part of both plaintiff and defendant that the same should be concurrent with the said subsisting insurance and not avoided or affected thereby, and with purpose and intent of defendant knowingly to waive and forego all benefit of the provisions of said policy set forth in defendant's answer, and in faith thereof and with the sole purpose to procure such insurance to be concurrent with the subsisting insurance, and not otherwise, the plaintiff paid, and the defendant procured and received, the premium therefor. By all the aforesaid several acts, the defendant has waived all benefit of the particular conditions of its policy prohibiting concurrent insurance, prior and subsequent, except by endorsement on the policy, and the defendant is estopped and concluded thereby from claiming any benefit or advantage by reason of said conditions of the policy."
"To Grand View Building Association, H. J. Walsh, President, Lincoln, Nebraska."
"Dear Sirs: We have your favor of the 26th ult., enclosing to us what purports to be proof of loss, making claim under our policy No. 310,024, of Lincoln, Nebraska, agency, and issued to you for $2,500 on household furniture, etc., while contained in the three-story brick and stone building on lot F in Grand View Residence Park Addition, on account of a fire which occurred on the 1st day of June, 1898, and beg to say in reply that your sworn statement therein advises us that you had other insurance on this same property to the amount of $1,500. This additional insurance held by you was without the knowledge or consent of this company, and was not permitted by agreement as provided for in lines Nos. 11, 12, and 13 of the printed conditions of our policy, to which we beg to refer you. We therefore regret to have to advise you, and do hereby say to you, that the Northern Assurance Company specifically and absolutely denies any and all liability under said policy No. 310,024 held by you, holding that said policy has been void from the date of its issuance by reason of the said provision in regard to other insurance above referred to."
"Our agents at Lincoln have been instructed to return to you the full premium paid them by you, namely, $33.75 at once."
now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy."
"This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements, and 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 hereto, 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 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 attached."
The defendant, to maintain the issues on its part, called as a witness A.D. Borgelt, who testified that he was a member of the firm of Borgelt & Beasley, insurance agents at Lincoln, Nebraska, which firm wrote the policy in the Northern Assurance Company on the Grand View Building Association; that, at the time he wrote the policy, he had no notice or knowledge that there was other insurance upon the property covered by the policy in suit, and the first time be knew of any other insurance was after the fire; that, while Walsh might have mentioned that there was an existing policy, he, the witness, had no recollection of having known anything about the other insurance until after the fire. He further testified that, on August 4, 1898, the premium paid for the policy in suit was tendered to the plaintiff company, which declined to take it. The defendant thereupon moved the court to instruct the jury to return a verdict for the defendant, which motion was overruled, and defendant excepted.
1898; that the plaintiff, on or about July 26, 1898, furnished the defendant with proofs of the loss of said property by fire; that the policy contained the provision hereinbefore mentioned, providing that the policy should be void if the insured had or should thereafter make or procure any other contract of insurance on the property covered by the policy in suit, and that the policy was made subject to such condition, and that no officer, agent, or other representative of the company should have power to waive any provision or condition of the policy except such as by the terms of the policy had been endorsed thereon or added thereto, and that no officer, agent, or representative of the company should have power or be deemed or held to have waived such provision or condition unless such waiver was written upon or attached to the policy, and that no privilege or provision affecting the insurance under the policy should exist or be claimed by the insured, unless so written or attached; that there was at the time of the issuance of the policy in suit other insurance upon the insured property in the sum of $1,500, in the Firemen's Fund Insurance Company; that Borgelt was recording agent of the Northern Assurance Company at Lincoln, Nebraska, with authority from the defendant company to countersign and issue its policies and accept fire insurance risks in its behalf and to collect and receive premiums therefor, and that he had issued the policy sued on as such agent; that Borgelt knew, when the policy in the defendant company was issued and delivered to the plaintiff company, that there was then $1,500 subsisting insurance in the Firemen's Fund Insurance Company upon the insured property, issued prior to the date of the policy of the defendant company, and that such knowledge was communicated to said Borgelt by and on behalf of the assured; that the actual cash value of the property covered by the policy in suit and destroyed by fire June 1, 1898, was $4,140; that no consent to concurrent insurance of $1,500 was endorsed on the policy in suit, and that, on August 4, 1898, the amount of the premium paid for the policy was tendered to and refused by the plaintiff.
of the jury, and on January 14, 1899, the motion of the defendant was overruled, and exception was taken by the defendant, and the motion of the plaintiff was sustained, and judgment was entered in favor of the plaintiff and exception was taken by the defendant. A writ of error was prayed for by the defendant and allowed, and the cause was taken to the United States Circuit Court of Appeals for the Eighth Circuit, where the judgment of the circuit court was affirmed, and the cause was then brought to this Court by a writ of certiorari.
Overinsurance by concurrent policies on the same property tends to cause carelessness and fraud, and hence a clause in the policies rendering them void in case other insurance had been or should be made upon the property and not consented to in writing by the company is customary and reasonable.
In the present case, such a provision was expressly and in unambiguous terms contained in the policy sued on, and it was shown in the proofs of loss furnished by the insured, and it was found by the jury, that there was a policy in another company outstanding when the present one was issued.
It also was made to appear that no consent to such other insurance was ever endorsed on the policy or added thereto.
permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached."
Before proceeding to a direct consideration of the question before us, it may be well to inquire into the principles established by the authorities as applicable to such cases.
"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 engagement, it is conclusively presumed that the 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 the parties, or of conversation 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."
"It is likewise a general and most inflexible rule that wherever written instruments are appointed either by the requirement of law or by the compact of the parties to be the repositories and memorials of truth, any other evidence is excluded from being used either as a substitute for such instruments or to contradict or alter them. This is a matter both of principle and policy -- of principle because such instruments are in their nature and origin entitled to a much higher degree of credit than parol evidence; of policy because it would be attended with great mischief if those instruments upon which men's rights depended were liable to be impeached by loose collateral evidence."
This rule has always been followed and applied by the English courts in the case of policies of insurance in writing.
"evidence could not be admitted without abandoning, in the case of policies, the rule of evidence which prevails in all other cases, and that it would be of the worst effect if a broker could be permitted to alter a policy by parol accounts of what passed when it was effected."
In Robertson v. French, 4 East 130, it was held, per Lord Ellenborough, in a suit on a marine policy of insurance, that a parol agreement that the risk should begin at a place different from that inserted in the policy cannot be received in evidence.
These cases are cited as establishing the rule in cases of insurance in Marshall on Marine Insurance 278, and in Arnould on Insurance, vol. 1, p. 277.
"the contract between the parties is the policy which is in writing, and cannot be varied by parol. No defense therefore which turns on showing that the contract was different from that contained in the policy can be admitted, and this is the effect of any defense turning on the mere fact of misrepresentation without fraud."
So where, in assumpsit for use and occupation, upon a written memorandum of lease at a certain rent, parol evidence was offered by the plaintiff of an agreement at the same time to pay a further sum, being the ground rent of the premises, to the ground landlord, it was rejected. Preston v. Merceau, 2 W.Bl. 1249.
And where, in a written contract of sale of a ship, the ship was particularly described, it were held that parol evidence of a further descriptive representation, made prior to the time of sale, was not admissible to charge the vendor without proof of actual fraud, all previous conversations being merged in the written contract. Pickering v. Dowson, 4 Taunt. 779. See also Powell v. Edmunds, 12 East 6; Smith v. Jeffryes, 15 M. & W. 561; Gale v. Lewis, 9 Q.B. 730; Acey v. Fernie, 7 M. & W. 151.
assurance, . . . notice thereof must also be given in writing at once, and such subsequent assurance endorsed on the policy granted by this company, or otherwise acknowledged in writing, in default whereof such policy shall thenceforth cease and be of no effect."
The insured effected subsequent insurance and verbally notified the agent, but there was no endorsement made on the policy, nor any acknowledgment in writing by the company. A loss having occurred, the damage was adjusted by the inspector of the company, and neither he nor the agent made any objection to the loss on the ground of noncompliance with the above condition. In a suit to recover the amount of the policy, the company pleaded breach of the condition, in reply to which the plaintiff set up a waiver of the condition and contended that, by the act of the agent and inspector, the company was estopped from setting it up. It was held by the Supreme Court of Canada that, the insured not having complied with the condition, the policy ceased and became of no effect on the subsequent insurance being effected, and that neither the agent nor the inspector had power to waive a compliance with its terms.
insurance, and were therefore estopped from setting up a condition vitiating the policy for want of a written notice. But the Court of Appeals held otherwise, and determined that, in such a case, notice to the agent was not notice to the company, and that the agent neither had authority to waive the condition nor could by his conduct estop his principals, the first insurers. As regards any direct action of the appellants [insurance company] through their immediate agents, the directors or principal officers of the company conducting its affairs at the head office, there is no pretense for saying that there is in the present case the slightest evidence of conduct upon which either a defense of waiver of the condition, or by way of estoppel against insisting upon it, can be based, and this for the very plain reason that these directors and officers never had the fact of a subsequent assurance brought to their knowledge, and without proof of such knowledge, neither waiver nor estoppel can be made out. . . . The condition in the policy is one which must be complied with or waived. The company, by signing a condition of that kind, reserves to itself the right to withdraw the policy in case of further insurance. That question is one which cannot be decided by a mere local agent. He may receive the notice for transmission, but he cannot act on it; it must be brought to the notice of some person authorized by the company to continue the insurance after notice has been given them. It has been decided in a number of cases in England that a local agent has not such authority, and a mere notice to him, even in a case where he is acting for another company taking the further risk, has been held to be no notice to the company."
company unless it is affirmatively shown that such knowledge was communicated to the company.
In Worcester Bank v. Hartford Fire Insurance Company, 11 Cush. 265, which was a case of additional insurance, and where one Smith testified that he was agent for the defendant company to issue policies, and was in the habit of receiving notices of additional insurance, which he endorsed on the policies, it was held by the Supreme Judicial Court of Massachusetts that as it is provided in the policy on which this action is brought that, if the assured or his assigns shall thereafter make any other insurance on the same property, and shall not with all reasonable diligence give notice thereof to this company, and have same endorsed on this instrument or otherwise acknowledged by them in writing, this policy shall cease and be of no further effect, and as, after the making of this policy, the assured obtained other insurance on the same property, but did not have the same endorsed on the policy or otherwise acknowledged by the defendants in writing, the policy was void, notwithstanding there was parol evidence tending to show that notice had been given to Smith, the company's agent.
this particular policy and render the contract valid notwithstanding by its express terms, as well as by the clause in the bylaws, it would be otherwise void. But the difficulty in maintaining the plaintiff's position on this part of the case is not only that it attempts to substitute for the written agreement of the parties a verbal contract, but that there is an entire absence of any authority on the part of the president to make such waiver or give such verbal assent. He was an agent, with powers strictly limited and defined, and could not act so as to bind the defendants beyond the scope of his authority. Story, Agency, secs. 127, 133; Salem Bank v. Gloucester Bank, 17 Mass. 29. By article 15 of the bylaws, his power to assent to subsequent insurance was expressly confined to giving such assent in writing. In order to guard against the danger of overinsurance, the corporation might well require that any assent on their part to further insurance on property insured by them should be given by the deliberate and well considered act of their president in writing, and not be left to the vagueness and uncertainty of parol proof. The whole extent and limit of the president's authority in this respect were set forth in the bylaws attached to the policy in the present case, and, as the evidence shows, were fully known to the assured. . . . If the argument of the plaintiff should be carried out to its legitimate result, it would give to the president the right in any case to suspend or change the bylaws by his verbal act and at his pleasure. This he clearly had no power to do. We are therefore of opinion that the finding of the jury does not render the policy valid, but that it was annulled by the subsequent insurance obtained by the assured without the written assent of the president."
in the manner prescribed by the policy, wherein the agent is expressly prohibited from waiving or modifying the written contract.
The same view of the law prevails in Connecticut. In Sheldon v. Hartford Fire Insurance Company, 22 Conn. 235, it was held that where the policy and survey constituted a contract between the parties, and there was no imperfection or ambiguity in the contract, evidence of parol representations made to the agent prior to the issuing of the policy could not be received to explain or qualify the contract. See also Glendale Mfg. Co. v. Protection Ins. Co., 21 Conn.19, 37; Hough v. City Fire Ins. Co., 29 Conn. 10.
"The next point is whether the parol proof be admissible to explain the contract, and, if it be, what is the effect, in the present case, of such proof."
"I know no rule better established than that parol evidence shall not be admitted to disannul or substantially vary or extend a written agreement. The admission of such testimony would be mischievous and inconvenient. Parol evidence is to be received in the case of an ambiguitas latens to ascertain the identity of a person or thing, but before the parol evidence is to be received in such case, the latent ambiguity must be made out and shown to the court. In the present instance, there is no ambiguity. The language of the contract throughout is consistent and explicit. This general rule of law has been particularly and emphatically applied to policies. (Skinn. 54.) And except in the special instance of explanations resulting from the usage of trade, they have never been allowed to be contradicted by parol agreements."
"have nevertheless ever been deemed instruments of a solemn nature and subject to most of the rules of evidence which govern in the case of specialties. The policy itself is considered to be the contract between the parties, and whatever proposals are made or conversations had between the parties prior to the subscription, they are to be considered as waived if not inserted in the policy or contained in a memorandum annexed to it."
"A long line of authorities has settled the law to be that, when it is expressly provided that the premium on a life insurance policy shall be paid on or before a certain day, and in default thereof the policy shall be void, that the nonpayment of the premium upon the day named works a forfeiture. . . . The claim that such provision in a paid-up policy is unconscionable and oppressive, and presents a case in which a court of equity should relieve from the forfeiture incurred by omission to make prompt payment of premiums, is not a new one. It has frequently been presented to the courts, and has recently received very full consideration in this Court in Attorney General v. North America Life Insurance Co., 82 N.Y. 172, and in People v. Knickerbocker Life Ins. Co., 103 N.Y. 480, 485. It was decided in those cases that provisions in paid-up policies issued in lieu of other policies on which notes had been given for premiums that they should be void in case the interest on such notes was not paid is not unconscionable, oppressive, or usurious. In the first case cited, Judge Earl said:"
"There are doubtless some decided cases which hold that such forfeiture should not be enforced, but I think the better rule is to uphold and enforce such contracts when free from fraud or mistake, just as the parties have made them."
"And in Douglas v. Knickerbocker L. Ins. Co., 83 N.Y. 492, it was said:"
and then enforce them as made unless, on the ground of fraud, accident, or mistake, ignorance, impossibility, or necessity, relief can be granted against them. . . ."
"It would be impossible to sustain the claim that the statements and representations contained in the pamphlet issued by the company were to be regarded as affecting or modifying the strict terms of the policy without disregarding the established rule of law that a written contract merges all prior and contemporaneous negotiations in reference to the same subject, and that the whole engagement of the parties and the extent and manner of their undertaking is embraced in the writing. This rule is the same in equity as at common law, and although a written agreement may be set aside or reformed, fraud or mistake must be shown to entitle a party to such relief. And it is never competent in an action upon a written contract to show that it was executed on the faith of a preceding parol stipulation not embraced in it."
"The stipulation with respect to further insurance is one of the conditions upon which, by the agreement of the parties, the liability of the defendant depended in case of a loss during the term of the insurance. The parties have also agreed upon the mode in which the condition could be complied with or waived -- namely, by writing endorsed upon the policy in the form of a consent to the other insurance. The agent had power to give this consent only in the manner prescribed by the contract. But there is not in the case any proof, even of verbal consent by the agent that the plaintiff might procure further and additional insurance. . . . The effect of such stipulations in a contract of insurance, as well as the manner in which they may be modified or waived by agents of the company, have been so thoroughly discussed and so clearly pointed out that a reference to some of the more recent cases on the subject is all that is needful here. Allen v. German American Ins. Co., 123 N.Y. 6; Quinlan v. Providence W. Ins. Co., 133 N.Y. 356; Messelback v. Norman, 122 N.Y. 583; Walsh v. Hartford Ins. Co., 73 N.Y. 5."
N.Y. 63, and Owens v. Holland Ins. Co., which are irreconcilable.
The fallacy of this view is disclosed in the phrases we have italicized. It was thereby assumed that the agent had full knowledge of all the facts, that such knowledge must be deemed to have been disclosed by the agent to his principal, and, that consequently it would operate as a fraud upon the assured to plead a breach of the conditions. This mode of reasoning overlooks both the general principle that a written contract cannot be varied or defeated by parol evidence and the express provision that no waiver shall be made by the agent except in writing endorsed on the policy. As we shall hereafter show when we come to consider the meaning and legal purport of the contract in suit, such express provision was intended to protect both parties from the dangers involved in disregarding the rule of evidence. The mischief is the same whether the condition turned upon facts existing at and before the time when the contract was made or upon facts subsequently taking place.
and that such evidence will not be received to raise an estoppel in pais which shall conclude the insurer from setting up the defense that the policy was forfeited by a breach of the conditions of insurance.
"The leading case in New York is Jennings v. Chenango Insurance Company, 2 Denio 75. This case held, in accordance with a series of cases, beginning with Vandervoort v. Smith, 2 Cal. 155, that parol evidence that the insured truly informed the agent of the insurer, who prepared the application, as to the situation of the premises was not competent to vary a warranty on that subject or save the insured from the consequences of a breach of the contract of insurance. This case was recognized as good law by the courts of that state until the decision of Plumb v. Cattaraugus Insurance Company, 18 N.Y. 392, where such evidence was held by a divided court to be admissible not to change the contract, but to produce the same result under the guise of an equitable estoppel. Plumb v. Cattaraugus Insurance Company was followed in Rowley v. Empire Insurance Company, 36 N.Y. 550. It was justly criticized and condemned as founded on erroneous views by the Chief Justice in Dewees v. Manhattan Insurance Company, as reported in 6 Vroom 336, and with Rowley v. Empire Insurance Company, has been greatly shaken by subsequent decisions in the same court, if it was not practically overruled by Rohrbach v. Germania Insurance Company, 62 N.Y. 47, 63. In Maher v. Hibernia Insurance Company, 67 N.Y. 283, reformation of the contract of insurance seems to have been regarded as the appropriate method of relief under such circumstances."
the departure from the law as held in Jennings v. Chenango County Ins. Co. are cited by Judge Folger in Van Schoick v. Niagara Fire Ins. Co., 68 N.Y. 438. Some of the conditions of the policy may be controlled by evidence of the knowledge of the parties at the time the insurance was effected, and others not; but no rule or principle has been promulgated for ascertaining, in advance of the litigation, what stipulations in the contract belong to the one class or the other -- a condition of the law sure to result from the effort to deal with contracts of this kind in disregard of established rules of law and acknowledged legal principles. . . ."
"It is manifest that the theory that such parol evidence, though it may not be competent to change the written contract, may be received for the purpose of raising an estoppel in pais, is a mere evasion of the rule excluding parol testimony when offered to alter a written contract. A party suing on a contract in an action at law must be conclusively presumed to be aware of what the contract contains, and the legal effect of his agreement is that its terms shall be complied with. Extrinsic evidence of the kind under consideration must entirely fail in its object unless its purpose be to show that the contract expressed in the written policy was not in reality the contract as made. A defendant cannot be estopped from making the defense that the contract sued on is not his contract, or that his adversary has himself violated it in those particulars which are made conditions to his rights under it, on the ground of negotiations and transactions occurring at the time the contract was entered into, unless the plaintiff is permitted to show from such sources that the contract, as put in writing, does not truly express the intention of the parties. The difficulty lies at the very threshold. An estoppel cannot arise except upon proof of a contract different from that contained in the written policy, and an inflexible rule of evidence forbids the introduction of such proof by parol testimony when offered to vary or affect the terms of the written instrument. . . ."
control the written contract will be found on examination to be, to a large extent, those in which the proof has been received with a view to the reformation of the policy in equity, or to meet the defense that the contract was induced by false and fraudulent representations not embodied in the contract, or are the decisions of courts in which the legal and equitable jurisdictions are so blended that the functions of a court of equity have been transferred to the jury box. . . . The powers of agents of every kind of principals to act for and bind their principals are determined by the unvarying rule of ascertaining what authority is delegated to them. How the contract was effected, whether directly with the insurer or by the intervention of agents, is of no consequence. The question of the admissibility of the testimony does not relate to the method by which the contract was made. It concerns the rule of evidence by which the contract, however made, shall be interpreted."
the contract as the parties have made it. The legal rule that, in courts of law, the written contract shall be regarded as the sole repository of the intentions of the parties, and that its terms cannot be changed by parol testimony, is of the utmost importance in the trial of jury cases, and can never be departed from without the risk of disastrous consequences to the rights of parties."
"The contract between these litigants, on the point which I shall discuss, is clear and unambiguous. The defendants agreed to insure a building occupied as a country store, and the stock of goods, consisting of the usual variety of a country store. This, by the plain meaning of the terms employed, is a warranty on the part of the insured that the building was used at the date of the agreement for the purpose specified. It was a representation, on the face of the policy, touching the premises in question, and which affected the risk, and such a representation, according to all the authorities, amounts to a warranty. . . . The cases are numerous and decisive upon the subject -- so much so that it does not appear to me to be necessary to refer to them in detail, as, in my opinion, the character of a representation of this kind is apparent upon its face. It can be intended for no other purpose than to characterize the use of the building at the date of the insurance, for unless this be done, there can be no restriction on the use of the property by the insured during the running of the risk. Unless this description has the force thus attributed to it, the premises could have been used for any of the most hazardous purposes. A building described in a policy as a 'dwelling house' could, except for the rule above stated, be converted into a mill or a factory. I think it is incontestably clear that the description of the use of the premises in this case was meant to define the character of the risk to be assumed by the defendants."
violated in a fatal particular by the assured. By the express terms of one of the stipulations of the insurance, it is declared that, if the premises should be used"
"for the purpose of carrying on therein any trade or vocation, or for storing or keeping therein any articles, goods, or merchandise denominated hazardous, or extrahazardous, or specially hazardous, in the second class of the classes of hazards annexed to this policy, etc., from thenceforth, so long as the same shall be so used, etc., the policy shall be of no force or effect."
"Among the extrahazardous risks, that of keeping a 'private stable' is enumerated, and it was shown on the trial, and was not denied, that, at the date of the policy and at the time of the fire, a part of the building insured was applied by the plaintiff to this use."
"It cannot be denied, then, that, if we take into view these conditions of the case alone, the plaintiff's action must fall to the ground. He did an act which, by force of his written agreement, had the effect to suspend, temporarily, his insurance. As this fact, having this destructive effect, could not be disputed, it became necessary, in order to save the plaintiff's action, to avoid the effect of the written contract, and this burden was assumed on the argument by the counsel of the plaintiff. The position taken with this view was that the policy was obtained for the plaintiff by the agent of the defendants, and that he knew that the building in question was in part used as a stable."
"The plaintiff's claim appears to be a meritorious one, and on this account, and in the hope that there might be found some legal ground on which to support this action, the case was allowed by me at the circuit to go to the jury, and the questions of law were reserved for this Court. But the consideration which I have since given the matters involved has excluded the faintest idea that upon legal principles this suit can be successfully carried through. In my opinion, that end can be attained only by the sacrifice of legal rules which are settled and are of the greatest importance. Let us look at the proposition to which we are asked to give our assent."
"The contract of these parties, as it has been committed to writing, is that if the plaintiff shall keep a stable on the premises insured, for the time being, the policy shall be vacated.
But, it is said, the agent of the defendants who procured this contract was aware that the real contract designed to be made was that the plaintiff might apply the premises to this use. This knowledge of the agent of the defendants, and which it is conceded will bind the defendants, is to have the effect to vary the obligations of the written contract. Upon what principle is this to be done? There is no pretense of any fraud in the procurement of this policy. The only ground that can be taken is that the agent, knowing that the premises were to be in part used as a stable, should have so described the use in the policy. The assumption is, and must be, that the warranty in its present form was a mistake in the agent. But a mistake cannot be corrected, in conformity with our judicial system, in a court of law. No one can doubt that, in a proper case of this kind, an equitable remedy exists. 'There cannot at the present day,' says Mr. Justice Story,"
"be any serious doubt that a court of equity has authority to reform a contract where there has been an omission of a material stipulation by mistake, and a policy of insurance is just as much within the reach of the principle as any other written contract. Andrews v. Essex Fire & Marine Ins. Co., 3 Mason 10."
in the present transaction is important only as showing what the tacit understanding of the contracting parties was. Suppose, instead of proof of such tacit understanding, the plaintiff had offered to make a stronger case by showing that the agent expressly agreed that the building might be used not only as a country store, as the policy stated, but also as a stable, and that the restraining stipulation did not apply to the extent expressed. Can anyone doubt that, according to the practice and decisions in this state, such proof should have been rejected? A rule of law admitting such evidence would be a repeal of the principle, giving a controlling efficacy to written agreements. The memory and understanding of those present at the formation of the contract would be quite as potent as the written instrument."
"I have not found that it is anywhere supposed that this general rule which illegalizes parol evidence under the conditions in question has been relaxed with respect to contracts for insurance. Decisions of the utmost authority, both in England and in this country, propound this doctrine as applicable to policies in the clearest terms."
palpable alteration of the agreement of the parties. The mistake of the court appears to have been in regarding simply the legal effect of the facts which were proved by parol. Receiving that testimony into the case, a clear estoppel was made out, but the error consisted in the circumstance that such oral evidence was, on rules well settled, inadmissible. The question presented was purely one as to a rule of evidence, but it was treated as a problem relating to the application of general legal principles to an admitted state of facts. The case was not decided by a unanimous court, three judges dissented, and, in my judgment, that dissent was based on satisfactory grounds. . . . The facts now before us do not present the elements of an estoppel. Such a defense rests on a misconception as to a state of facts, induced by the party against whom it is set up. The person who seeks to take advantage of it must have been misled by the words or conduct of another. Now in the present case, the agent did not make any statement, nor did he do anything which led the plaintiff to alter his condition. The most that can be laid to his charge is that, from carelessness, he omitted properly to describe the use of the premises insured. But this was not a misstatement of a fact on which the plaintiff acted, because the plaintiff was aware of the circumstance that the building was put to another use. The alleged error in the description is plain on the face of the policy, and the law incontestably charges the parties with knowledge of the meaning and legal effect of his own written contract. . . . To found an estoppel on the ignorance of the plaintiff of the plainly expressed meaning of his own contract would be absurd."
In Pennsylvania, it has always been held that courts of law will not permit the terms of written contracts to be varied or altered by parol evidence of what took place at or before the time the contracts were made, and that policies of insurance are within the protection of the rule.
and informed the plaintiff that in that respect the description was immaterial. Smith v. Cash Mut. Ins. Co., 24 Pa. 320; Columbia Ins. Co. v. Cooper, 50 Pa. 331.
"provide that notice of additional insurance, or of any change in existing insurance, shall be given to the company by the insured in writing, and shall be acknowledged in writing by the secretary, and no other notice shall be binding or have any force against the company. In absence of evidence of waiver of the notice required in this stipulation, we do not think the jury would be justified in inferring that the knowledge of the agent will bind the principal of notice of subsequent insurance or surrender of previous insurance. The parties agreed that written notice should be given, and in like manner acknowledged by the secretary; mere knowledge of an agent is not the equivalent of that."
That the law enunciated in these and numerous other cases in Pennsylvania was not overturned by the case of Kalmutz v. Northern Mutual Ins. Co., 186 Pa. 571, as claimed in the brief of defendant in error, will appear on examining the facts of that case and the reasoning of the court.
"The policy in suit contains this provision as to other insurance:"
"Policies of all other insurance upon property herein described -- whether made prior or subsequent to the date hereof -- must be endorsed on this policy, otherwise the insurance shall be void."
the effect of the condition above quoted, the plaintiff undertook to prove that the defendant company, by its own acts, had waived the condition, and was thereby estopped from setting it up as a bar to his recovery. As is usual in such cases, there was more or less conflicting testimony as to what passed between the plaintiff and the defendant's agent at the inception of the contract. In the court below, as well as here, it was forcibly contended on plaintiff's behalf that the testimony referred to was sufficient to warrant the jury in finding such facts as legally constitute an estoppel; but, inasmuch as the record discloses other undisputed evidence which necessarily leads to the same conclusion, it is unnecessary to consider in detail the conflicting testimony that was submitted to the jury on that question. The policy in suit was issued in April, 1894, and the last assessment thereon was made in October following. Defendant company's secretary testified that he had notice of the additional insurance on the first Wednesday of November, 1894. Notwithstanding that notice to the company, the policy was neither recalled nor cancelled, the premiums or assessments collected were not returned, nor was any effort made to return the premium note given by plaintiff, binding him to pay the premiums at such times and in such manner as the company's directors might by law require. These facts were admitted, and if, as the authorities appear to hold, they operated as an estoppel, it will be unnecessary to consume time in the consideration of other questions sought to be raised by several of the specifications of error."
above quoted as a bar to plaintiff's claim and in instructing the jury accordingly."
As, therefore, there was no limitation put in the policy upon the powers of the company's secretary, and as the company, after having received notice of the existence of other insurance, declined to avail itself of the right to rescind the contract, but, on the contrary, elected to enforce payments under the terms of the policy as a subsisting contract, and these facts having been made to appear by undisputed evidence, the court would seem to have been justified in applying the doctrine of estoppel.
It must be conceded that it is shown in the able brief of the defendant in error that, in several of the states, the courts appear to have departed from well settled doctrines in respect both to the incompetency of parol evidence to alter written contracts and to the binding effect of stipulations in policies restricting the authority of the company's agents. The nature of the reasoning on which such courts have proceeded will receive our consideration when we come to discuss the particular terms of the contract before us.
Leaving, then, the state courts, let us inquire what is the voice of the federal authorities.
We do not consider it necessary or profitable to examine in detail the decisions of the circuit courts or of the circuit courts of appeals. It is sufficient for our present purpose to say that the Circuit Court of Appeals for the Seventh Circuit has held consistently to the doctrines on this subject laid down by the English and American courts generally, United Firemen's Ins. Co. v. Thomas,, 82 F. 406, and that the Court of Appeals for the Eighth Circuit in the present case has by a majority of its members adopted and applied the view that a written contract may, in an action at law, be changed by parol evidence, and that such clauses as restrict the power of agents of insurance companies to contract otherwise than by some writing should be given effect, if at all, as they respect such modifications of a policy as are made or attempted to be made after it has been delivered and taken effect as a valid instrument, and should not be considered as having relation to acts done by the company or its agents at the inception of the contract. 101 F. 77.
In such divergence of decisions, we have deemed it proper to have the present case brought before us by a writ of certiorari.
As to the fundamental rule that written contracts cannot be modified or changed by parol evidence unless in cases where the contracts are vitiated by fraud or mutual mistake, we deem it sufficient to say that it has been treated by this Court as invariable and salutary. The rule itself and the reasons on which it is based are adequately stated in the citations already given from the standard works of Starkie and Greenleaf.
Policies of fire insurance in writing have always been held by this Court to be within the protection of this rule.
The first case to be examined is Carpenter v. Providence Washington Ins. Co., 16 Pet. 495. The importance of this case is great, because, if the conclusion there reached was sound when expressed, and if it has not been overruled by our subsequent decisions, it is decisive of the case before us.
"This is a writ of error to the circuit court for the District of Rhode Island. The original action was brought by Carpenter, the plaintiff in error, against the Providence Washington Insurance Company, the defendants in error, upon a policy of insurance under written by the insurance company of $15,000 'on the Glenco Cotton Factory, in the State of New York,' owned by Carpenter, against loss or damage by fire. The policy was dated on the 27th of September, 1838, and was to endure for one year. Among other clauses in the policy are the following:"
shall cease and be of no further effect. And in case of any other insurance upon the property hereby insured, whether prior or subsequent to the date of this policy, the insured shall not in case of loss or damage be entitled to demand or recover on this policy any greater portion of the loss or damage sustained than the amount hereby insured shall bear to the whole amount insured on the said property. . . ."
"Annexed to the policy are the proposals and conditions on which the policy is asserted to be made, and among them is the following:"
"Notice of all previous insurances upon property insured by this company shall be given to them, and endorsed on the policy, or otherwise acknowledged by the company in writing at or before the time of their making insurance thereon, otherwise the policy made by this company shall be of no effect."
"The declaration averred that, during the continuance of the policy he, Carpenter, was the owner of the property by the policy insured, and was interested in said property to the whole amount so insured by the company, and that, on the 9th of April, 1839, the factory was totally destroyed by fire, of which the company had due notice and proof. The cause came on for trial upon the general issue, and a verdict was found for the defendants. The plaintiff took a bill of exceptions to certain instructions refused, and other instructions given by the court in certain matters of law arising out of the facts in proof at the trial, and judgment having been given upon the verdict for the defendants, the present writ of error has been brought to ascertain the validity of these exceptions. . . ."
their policy of the previous 27th of September, 1838, is, according to the stipulations therein contained, utterly void."
"It seems to have been admitted, although not directly proved, that a suit was brought upon the policy of the 14th of December, 1837 at the American Insurance office, after the loss, by Carpenter as trustee of or for the benefit of Reed, for the amount of the six thousand dollars insured thereby, and that, at the November term, 1839, of the circuit court, the company set up as a defense that there was a material misrepresentation of the cost and value of the property in the factory insured made to them at the time of the original insurance, and it being intimated by the court that if such was the fact, it would avoid the policy, the plaintiff acquiesced in that decision, and discontinued or withdrew the action before verdict."
"The instructions prayed and refused, and also the instructions actually given by the court, are fully set forth in the record. It does not seem important to the opinion which we are to pronounce to recite them at large, in totidem verbis, since the points on which they turn admit of a simple and exact exposition."
"The second instruction asked proceeds upon the ground that, although the policy of the American Insurance Company of the 6th of December, 1836, was good upon its face, yet if in point of fact it was procured by a material misrepresentation by the owners of the cost and value of the premises insured, it was to be deemed utterly null and void, and therefore, as a null and void policy, notice thereof need not have been given to the Washington Insurance Company at the time of underwriting the policy declared on."
Insurance Company, and if it was not, the policy declared on was void. We are of opinion that the instruction, as asked, was properly refused, and that given was correct."
"Indeed we are not prepared to say that the court might not have gone farther, and have held that a policy -- existing and in the hands of the insured and not utterly void upon its very face, without any reference whatever to any extrinsic facts -- should have been notified to the underwriters, even although by proofs afforded by such extrinsic facts it might be held in its very origin and concoction a nullity."
"And this leads us to say a few words upon the nature and importance and sound policy of the clauses in fire policies, respecting notice of prior and subsequent policies. They are designed to enable the underwriters, who are almost necessarily ignorant of many facts which might materially affect their rights and interests, to judge whether they ought to insure at all, or for what premium, and to ascertain whether there still remains any such substantial interest of the insured in the premises insured as will guarantee on his part vigilance, care, and strenuous exertions to preserve the property. To quote the language of this Court in the passage already cited, the underwriters do not rely so much upon the principles as upon the interest of the assured. Besides, in these policies there is an express provision that in cases of any prior or subsequent insurances, the underwriters are to be liable only for a ratable proportion of the loss or damage as the amount insured by them bears to the whole amount insured thereon. So that it constitutes a very important ingredient in ascertaining the amount which they are liable to contribute towards any loss, and whether there be any other insurance or not upon the property, is a fact perfectly known to the insured, and not easily or ordinarily within the means of knowledge of the underwriters."
present state of our country for the protection of the vast interest embarked in manufactures and on consignments of goods in warehouses. If these clauses are to be construed with a close and scrutinizing jealousy, when they may be complied with in all cases by ordinary good faith and ordinary diligence on the part of the insured, the effect will be to discourage the establishment of fire insurance companies or to restrict their operations to cases where the parties and the premises are within the personal observation and knowledge of the underwriters. Such a course would necessarily have a tendency to enhance premiums and to make it difficult to obtain insurance where the parties live or the property is situate at a distance from the place where the insurance is sought. But be these considerations as they may, we see no reason why, as these clauses are a known part of the stipulations of the policy, they ought not to receive a fair and reasonable interpretation according to their terms and obvious import. The insured has no right to complain, for he assents to comply with all the stipulations on his side in order to entitle himself to the benefit of the contract, which, upon reason or principle, he has no right to ask the court to dispense with the performance of his own part of the agreement, and yet to bind the other party to obligations, which, but for those stipulations, would not have been entered into."
"We are, then, of opinion that there is no error in the second instruction. On the contrary, there is strong ground to contend that the stipulations in the policy as to notice of any prior and subsequent policies were designed to apply to all cases of policies then existing in point of fact, without any inquiry into their original validity and effect or whether they might be void or voidable."
comply with the requirements of the policy declared on, but that it was necessary, in case of any such prior policy, that the same should not only be notified to the company, but should be mentioned in or endorsed upon the policy; otherwise the insurance was to be void and of no effect."
"We think this instruction was perfectly correct. It merely expresses the very language and sense of the stipulation of the policy, and it can never be properly said that the stipulation in the policy is complied with when there has been no such mention or endorsement as it positively requires and without which it declares the policy shall henceforth be void and of no effect."
Two propositions, then, are clearly established by this decision: (1) that where a policy provides that notice shall be given of any prior or subsequent insurance, otherwise the policy to be void, such a provision is reasonable and constitutes a condition the breach of which will avoid the policy; (2) that, where the policy provides that notice of prior or subsequent insurance must be given by endorsement upon the policy or by other writing, such provision is reasonable and one competent for the parties to agree upon, and constitutes a condition the breach of which will avoid the policy.
We are next to inquire whether this decision has been overruled, or whether it remains as an authoritative declaration of the law.
Shortly after the case was decided at law, it appears that an effort was made by said Carpenter to invoke the aid of a court of equity to enable him to avoid the effect of his own disregard of the conditions contained in the policy. Carpenter v. Providence-Washington Insurance Company, 4 How. 185.
This Court held, affirming the Circuit Court of the United States for the District of Rhode Island, sitting in equity, that under the facts disclosed by the pleadings and evidence, the complainant was not entitled to equitable relief.
repeated notice to him, in writing and print in the policy itself as well as other ways, that they would not take any risks on property where it was insured beyond a certain ratio of its full value unless the circumstances were made known to them, and the additional policy recognized in writing so as to avoid any mistake, or accident, or want of deliberate attention to the subject. If the plaintiff, after all this, omitted to comply with so substantial a provision in the contract itself, as we are bound to believe on the evidence now offered, we see no way, equitably or legally, to prevent the consequences from falling on himself, rather than others, being the result either of his own neglect or that of some of the agents he employed. An adherence to such important rule is peculiarly necessary for the protection of absent stockholders, often interested extensively in insurance companies, and so far from its being unconscientious to enforce them, when their existence is well known and when the risk has been increased without conforming to them, it is the only and just safeguard of all concerned in such institutions."
Carpenter v. Providence Insurance Co., 16 Pet. 495, has been frequently referred to as an authority in subsequent cases on points collateral to the one we are now considering. Taylor v. Benham, 5 How. 260; Russell v. Southard, 12 How. 145; Oates v. National Bank, 100 U. S. 246; Burgess v. Seligman, 107 U. S. 34.
"the parties may by their contract make material a fact that would otherwise be immaterial, or make immaterial a fact that would otherwise be material. Whether there is other insurance on the same subject, and whether such insurance has been applied for and refused, are material facts, at least when statements regarding them are required by the insurers as part of the basis of the contract."
modified or overruled by this Court, but the cases relied on by that court are wholly decisions of several state courts and of some of the circuit courts. Nor is it claimed by the learned counsel for the defendant in error that the Carpenter case has been formally overruled or modified by this Court. He, however, does cite three decisions of this Court which, as he views them, should be regarded as abandoning the doctrines of that case, viz., 80 U. S. v. Wilkinson, 13 Wall. 232; Eames v. Home Insurance Co., 94 U. S. 621, and Insurance Co. v. Norton, 96 U. S. 234.
the policy sued on, but an extrinsic fact or statement contained in the application. The defense made upon that statement was in legal effect a denial of the execution of the statement -- a defense that can always be sustained by parol evidence.
However this may have been, we are unwilling to have the case regarded as one overthrowing a general rule of evidence. Some of the remarks contained in the opinion might seem to bear that interpretation, but not necessarily so.
"Undoubtedly a valid verbal contract for insurance may be made, and when it is relied on, and is unembarrassed by any written contract for the same insurance, it can be proved and become the foundation of a recovery as in all other cases where contracts may be made either by parol or in writing."
"But it is also true that, when there is a written contract of insurance, it must have the same effect as the adopted mode of expressing what the contract is, that it has in other classes of contract, and must have the same effect in excluding parol testimony in its application to it that other written instruments have."
"Counsel for the defendants in error here relies on two propositions -- namely, that the policy, though executed January 5th, is really but the expression of a verbal contract, made the 31st day of December previous, and that the loss of the vessel between those two dates does not invalidate the contract, though known to the insured and kept secret from the insurers; and secondly that they can abandon the written contract altogether and recover on the parol contract."
came to make this instrument, they were entitled to the information which the plaintiffs had of the loss of the vessel. If then they had made the policy, it would have bound them, and no question could have been raised of the validity of the instrument or of fraud practiced by the insured. On the other hand, if they had refused to make a policy, no injury would have been done to the plaintiffs, and they would then have stood on their parol contract, if they had one, and did not need a policy procured by fraudulent concealment of a material fact at the time it was executed and the premium paid."
"To permit the plaintiffs, therefore, to prove by parol that the contract of insurance was actually made before the loss occurred, though executed and delivered and paid for afterward, is to contradict and vary the terms of the policy in a matter material to the contract, which we understand to be opposed to the rule on that subject in the law of Louisiana as well as at the common law."
"We think it equally clear that the terms of the contract having been reduced to writing, signed by one party and accepted by the other at the time the premium of insurance was paid, neither party can abandon that instrument as of no value in ascertaining what the contract was and resort to the verbal negotiations which were preliminary to its execution for that purpose. The doctrine is too well settled that all previous negotiations and verbal statements are merged and excluded when the parties assent to a written instrument as expressing the agreement."
complainant, and in several letters which had passed between the local agent and the general agent of the company and between the complainant and the local agent. The report of the case states that there was an agreement as to certain facts by the attorneys in the cause, but what those facts were does not distinctly appear in the report. However, all that can be claimed for the case is that this Court considered, from the agreement as to facts between the attorneys and from the application and the several letters between the agents and the complainant, that a case was made out justifying a court of equity to decree that complainant was entitled to a policy of insurance to be issued for the amount and at the premium shown by the proofs. What was the scope of the authority of the agents who prepared the application and conducted the correspondence does not appear, but the Court seems to have assumed that it sufficiently appeared that the agents had authority to act as they did. It is not perceived that this case has any valid application to the case now before us beyond apparently holding, with Insurance Co. v. Wilkinson, in 13 Wall., that it may be shown by parol that a statement which purports to have been made by an applicant for insurance was not in point of fact his statement, but was really that of the agent.
"The written agreement of the parties, as embodied in the policy and the endorsement thereon as well as in the notes and the receipt given therefor, was undoubtedly to the express purport that a failure to pay the notes at maturity would incur a forfeiture of the policy. It also contained an express declaration that the agents of the company were not authorized to make, alter, or abrogate contracts or waive forfeiture. And these terms, had the company so chosen, it could have insisted on. But a party always has the option to waive a condition or stipulation made in his own favor. The company was not bound to insist upon a forfeiture, though incurred, but might waive it. . . . That it [the company] did authorize its agents to take notes, instead of money for premiums, is perfectly evident from its constant practice of receiving such notes when taken by them. That it authorized them to grant indulgence on these notes, if the evidence is to be believed, is also apparent from like practice. It acquiesced in and ratified their acts in this behalf."
its agent, done after a policy had expired, by which new life was given to a dead contract."
Whatever may be thought of these divergent views, it is clear that the facts of that case are widely different from those here under consideration where there is no evidence whatever of a waiver by the company, or of authority to the agent, express or implied, from a course of practice by the company. Here the company "has chosen," in the language of Mr. Justice Bradley, "to insist upon the terms of the written contract."
"By the residence of the insured within the prohibited district of country during the period designated in the policy without the previous consent of the company, and the failure of the assured to pay the annual premium when it became due, the policy, by its express terms, was forfeited, and the company released from liability, unless the forfeiture was waived by the action of the company, or of its agents authorized to represent it in that respect."
"The waiver of the forfeiture for the nonpayment of the premium due on the 1st of November, 1872, is alleged on the ground that the premium was subsequently paid to an agent of the company, he delivering its receipt for the same, signed by its secretary and countersigned by the manager and cashier of the local office, the plaintiff contending that the company, by its previous general course of dealing with its agents and its practice with respect to the policy in suit, had authorized the premiums to be paid and the agent to receive the same after they became due, and thus had waived any right to a strict compliance with the terms of the policy as to the payment of premiums."
previous residence of the insured within the prohibited district. . . ."
"The conditions mentioned in the policy could, of course, be waived by the company either before or after they were broken; they were inserted for its benefit, and it depended upon its pleasure whether they should be enforced. The difficulty in this case, and in nearly all cases where a waiver is alleged in the absence of written proof of the fact, arises from a consideration of the effect to be given to the acts of agents of the company in their dealings with the assured. Of course such agents, if they bind the company, must have authority to waive a compliance with the conditions upon the breach of which the forfeiture is claimed, or to waive the forfeiture when incurred, or their acts waiving such compliance or forfeiture must be subsequently approved by the company. The law of agency is the same whether it be applied to the act of an agent undertaking to continue a policy of insurance or to any other act for which his principal is sought to be held responsible. . . ."
"The company, notwithstanding the provision in the policy that its agents were not authorized to waive the forfeitures, sent to them renewal receipts signed by its secretary, to be used when countersigned by its local manager and cashier, leaving their use subject entirely to the judgment of the local agent. The propriety of their use, in the absence of any fraud in the matter, could not afterwards be questioned by the company. . . . So far, then, as the waiver of the forfeiture incurred for nonpayment of the premiums is concerned, it is clear that the company, by its course of dealing, had, notwithstanding the provision of the policy, left the matter to be determined by its local agent, to whom the renewal receipts were entrusted."
made known to the company from the date of the payment, and the retention of the money constituted a waiver of the forfeiture, but no information of a forfeiture on any other ground was imparted by the date of such payment. The agent receiving the premium in the case at bar testified that he knew nothing of the residence of the insured within the prohibited district during the excepted period, and the evidence in conflict with his testimony was slight. He knew that the insured had a place of business there, and that he was permitted to make occasional visits there within that period, and to reside there at other times. Everything produced as evidence of knowledge of residence within the prescribed district is consistent with these occasional visits and residence at other times than during the excepted period."
its liability, and if subsequently the premiums are received by the company without objection, any forfeiture incurred will be presumed to be waived. But here there was no ground for any inference of this kind from the subsequent action or silence of the company. There was no evidence of a disregard of the condition as to the residence of the insured in any previous year, and consequently there could be no inference of a waiver of its breach from a subsequent retention of the premium paid. This is a case where immediate enforcement of the forfeiture incurred was directed when information was received that the condition of the policy in that respect had been broken."
"Not only should the company have been informed of the forfeiture before it could be held by its action to have waived it, but it should also have been informed of the condition of the health of the insured at the time the premium was tendered, upon the payment of which the waiver is claimed. The doctrine of waiver, as asserted against insurance companies to avoid the strict enforcement of conditions contained in their policies, is only another name for the doctrine of estoppel. It can only be invoked when the conduct of the companies has been such as to induce action in reliance upon it, and where it would operate as a fraud upon the assured if they were afterwards allowed to disavow their conduct and enforce the conditions. To a just application of this doctrine, it is essential that the company sought to be estopped from denying the waiver claimed should be apprised of all the facts -- of those which create the forfeiture and of those which will necessarily influence its judgment in consenting to waive it. The holder of the policy cannot be permitted to conceal from the company an important fact, like that of the insured being in extremis, and then to claim a waiver of the forfeiture created by the act which brought the insured to that condition. To permit such concealment and yet to give to the action of the company the same effect as though no concealment were made would tend to sanction a fraud on the part of the policyholder, instead of protecting him against the commission of one by the company."
"A person applied in St. Louis to an agent of a New York insurance company for insurance on his life. The agent, under general instructions, questioned him on subjects material to the risk. He made answers which, if correctly written down and transmitted to the company, would have probably caused it to decline the risk. The agent, without the knowledge of the applicant, wrote down false answers, concealing the truth, which were signed by the applicant without reading, and by the agent transmitted to the company, and the company thereupon assumed the risk. It was conditioned in the policy that the answers were part of it, and that no statement to the agent not thus transmitted should be binding on his principal, and a copy of the answers, with these conditions conspicuously printed upon it, accompanied the policy. Held, that the policy was void."
course, not necessary to argue that the agent had no authority from the company to falsify the answers, or that the assured could acquire no right by virtue of his falsified answers. Both he and the company were deceived by the fraudulent conduct of the agent. The assured was placed in the position of making false representations in order to secure a valuable contract which, upon a truthful report of his condition, could not have been obtained. By them the company was imposed upon, and induced to enter into the contract. In such a case, assuming that both parties acted in good faith, justice would require that the contract be cancelled and the premiums returned. As the present action is not for such cancellation, the only recovery which the plaintiff could properly have upon the facts he asserts, taken in connection with the limitation upon the powers of the agent, is for the amount of the premiums paid, and to that only would he be entitled by virtue of the statute of Missouri."
verbal statements or by those of its agents unless the same were reduced to writing and forwarded with his application to the home office. The company, like any other principal, could limit the authority of its agents and thus bind all parties dealing with them with knowledge of the limitation. It must be presumed that he read the application and was cognizant of the limitations therein expressed."
the assured was required to make and sign, and which, as we have stated, he must be presumed to have read. He is therefore bound by its statements."
What, then, are the principles sustained by the authorities, and applicable to the case in hand?
They may be briefly stated thus: that contracts in writing, if in unambiguous terms, must be permitted to speak for themselves, and cannot, by the courts at the instance of one of the parties, be altered or contradicted by parol evidence unless in case of fraud or mutual mistake of facts; that this principle is applicable to cases of insurance contracts as fully as to contracts on other subjects; that provisions contained in fire insurance policies that such a policy shall be void and of no effect if other insurance is placed on the property in other companies without the knowledge and consent of the company are usual and reasonable; that it is reasonable and competent for the parties to agree that such knowledge and consent shall be manifested in writing, either by endorsement upon the policy or by other writing; that it is competent and reasonable for insurance companies to make it matter of condition in their policies that their agents shall not be deemed to have authority to alter or contradict the express terms of the policies as executed and delivered; that, where fire insurance policies contain provisions whereby agents may, by writing endorsed upon the policy or by writing attached thereto, express the company's assent to other insurance, such limited grant of authority is the measure of the agent's power in the matter, and where such limitation is expressed in the policy, executed and accepted, the insured is presumed as matter of law to be aware of such limitation; that insurance companies may waive forfeiture caused by nonobservance of such conditions; that where 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 where 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 make the waiver or that the company subsequently, with knowledge of the facts, ratified the action of the agent.
"this entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure, any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy,"
"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 the policy may be the subject of agreement endorsed hereon or added hereto, and as to such provisions or conditions, no officer, agent, or representative shall have power or be deemed or held to have waived such provisions or conditions, unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached."
Such being the contract, and the property insured having been destroyed by fire on June 1, 1898, and the insurance company having denied liability because informed that other insurance was held by the insured on the same property without the knowledge or consent of the company, this action was brought.
other words, the contention is that an agent with no authority to dispense with or alter the conditions of the policy could confer such power upon himself by disregarding the limitations expressed in the contract, those limitations being according to all the authorities presumably known to be insured. It was not shown that the company, when it received the premium, knew of the outstanding insurance, nor that, when made aware of such insurance, it elected to ratify the act of its agent in accepting the premium. On the contrary, all the record discloses is that the jury found that the agent knew, when the policy in the defendant company was issued and delivered to the plaintiff, that there was then subsisting fire insurance to the amount of $1,500 in another fire insurance company, and that such knowledge had been communicated to the agent by or on behalf of the assured. There is no finding that the agent communicated to the company or to its general agent at Chicago, at the time he accounted for the premium, the fact that there was existing insurance on the property and that he had undertaken to waive the applicable condition. Indeed, it appears from the letter of defendant's manager at Chicago, to whom the proofs of loss had been sent, which letter was put in evidence by the plaintiff and is set forth in the bill of exceptions, that the additional insurance held by the plaintiff was without the knowledge or consent of the company, and it further appears, and was found by the jury, that immediately on the company's being informed of the fact, the amount of the premium was tendered by the agents of the company to the insured. So that there is not the slightest ground for claiming that the insurance company, with knowledge of the facts, either accepted or retained the premium. The plaintiff's case, at its best, is based on the alleged fact that the agent had been informed at the time he delivered the policy and received the premium that there was other insurance. The only way to avoid the defense and escape from the operation of the condition is to hold that it is not competent for fire insurance companies to protect themselves by conditions of the kind contained in this policy. So to hold would, as we have seen, entirely subvert well settled principles declared in the leading English and American cases, and particularly in those of this Court.
This case is an illustration of the confusion and uncertainty which would be occasioned by permitting the introduction of parol evidence to modify written contracts and by approving the conduct of agents and persons applying for insurance in disregarding the express limitations put upon the agents by the principal to be affected.
It should not escape observation that preserving written contracts from change or alteration by verbal testimony of what took place prior to and at the time the parties put their agreements into that form is for the benefit of both parties. In the present case, if the witnesses on whom the plaintiff relied to prove notice to the agent had died, or had forgotten the circumstances, he would thus, if he had depended to prove his contract by evidence extrinsic to the written instrument, have found himself unable to do so. So, on the other side, if the agent had died, or his memory had failed, the defendant company might have been at the mercy of unscrupulous and interested witnesses. It is not an answer to say that such difficulties attend other transactions and negotiations, for it is the knowledge of the inconveniences that attend oral evidence that has led to the custom of putting important agreements in writing and to the legal doctrine that protects them when so expressed, and when no fraud or mutual mistake exists, from being changed or modified by the testimony of witnesses as to conversations and negotiations that may never have taken place or the real nature and meaning of which may have faded from recollection.
by that fact that, in latter times and in most, if not all, of the states, statutory changes have opened the courts to the testimony of the very parties who have signed the written instrument in controversy.
The judgment of the circuit court of appeals is reversed. The judgment of the Circuit Court is likewise reversed, and the cause remitted to that court with directions to proceed in conformity with this opinion.
THE CHIEF JUSTICE, MR. JUSTICE HARLAN and MR. JUSTICE PECKHAM dissent.

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