Case Name: The Farmers National Bank v. The Delaware Insurance Company
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1911-03-07
Citations: 83 Ohio St. 309
Docket Number: No. 11772
Parties: The Farmers National Bank v. The Delaware Insurance Company.
Judges: Spear, C. J., Price and Johnson, JJ., concur.
Reporter: Ohio State Reports, New Service
Volume: 83
Pages: 309–339

Head Matter:
The Farmers National Bank v. The Delaware Insurance Company.
Written provisions in contract — Control over printed provisions, when — Power of agent to waive provisions of contract — Authority of agent for insurance company — Verbal waiver will not bind principal, when — Principal bound by ratification, when — Courts construe contracts to give them effect, if possible — Contract of doubtful meaning — Construed in favor of party — Dealing with those who prepared the contract.
1. Where there is a conflict between any of the printed provisions of a contract and those inserted in writing at the time the contract is executed the latter will control.
2. An agent having power to waive in writing certain .printed provisions of a policy of insurance has authority to write into such policy conditions and provisions in conflict with the printed provisions that he has authority to waive, and such written provision will be held to be a waiver in writing of any such printed conditions in direct conflict therewith.
3. Where an insurance company has given authority to its agent to make, execute and deliver a policy of insurance, but has not given authority to such agent to make a later verbal contract waiving any provision of the policy, a verbal contract undertaking to waive any provision of the policy will not bind the company. But the company will be bound if with knowledge of the facts it ratifies such act of the agent; and this may be done by the company by its direct acts which show such ratification or indirectly by conduct.
4. Where an insurance policy stipulates that the violation of certain of its provisions will release the company issuing it from all liability thereon, and the agent issuing the policy is advised of acts of the insured claimed to be in violation of such provisions, and such policy is returned to the agent, and the company is notified by the agent of the act complained of, it is the duty of the company to act within reasonable time and to return either the unearned premium or the policy, and if it fails to instruct its agent within reasonable time with reference thereto and the agent returns the policy to the insured retaining for his principal the unearned premium, the company can not avoid liability for loss thereafter occurring for and on account of the acts in violation of such contract of which it had knowledge before the return, of the policy.
5. The return of such policy by the agent, if it be a contract the agent was then authorized to make, will operate as a new contract between the parties as of the date of its redelivery.
6. In the construction of a contract courts should give effect, if possible, to every provision therein contained, and if one construction of a doubtful condition written in a contract would make that condition meaningless, and it is possible to give it another construction that would give it meaning and purpose, then the latter construction must obtain.
7. Where a person or corporation engaged in a particular line of business with the public, prepares or uses printed forms of contract for the purpose of effecting and carrying on that business, and places in such printed form of contract a printed condition of doubtful meaning susceptible of two or more constructions, that construction will be adopted most favorable to those dealing with the person or corporation that’ prepares or uses the printed form in the conduct of its business.
(No. 11772
Decided March 7, 1911.)
Error to the Circuit Court of Darke county.
On the 29th day of January, 1907, in consideration of the sum of $27.00, paid to it as premium, the Delaware Insurance Company of Philadelphia, Pa., through its agents, Hough & Reigel, of Greenville, Ohio, issued its policy of insurance, by the written terms of which it agreed to insure J. E. Turner for the term of one year from said date, in the sum of $2,000 on a quantity of leaf tobacco stored in a building located on East Fourth Street, Green-ville, Ohio. At the time of the issuing of this policy, Turner Brothers, a partnership composed of J. E. Turner, whose name appears in the policy as the insured, and C. K. Turner, his brother, were the owners of the property insured and the Farmers National Bank of Greenville, Ohio, held warehouse receipts for the tobacco then stored in the warehouse. On the 23d day of February, 1907, Turner Brothers executed and delivered to the Farmers National Bank a note covering their indebtedness then evidenced by warehouse receipts aggregating $4,500, and executed a chattel mortgage to the bank covering the tobacco insured to secure the payment of said note, and on the same day executed a further mortgage on the same property to Mary J. Turner and Alice G. Turner to secure the payment of $4,000. Both mortgages were delivered and filed for record on February 23, 1907, and were both in full force and effect on the 5th day of April, 1907, at which time the property covered by this contract of insurance was destroyed by fire. About the 20th of March, preceding the fire, the agents of the insurance company, Hough & Reigel, learned of the execution and delivery of these two chattel mortgages, and at once notified the bank and J. E. Turner that the terms of the contract .of insurance had been violated in that respect, and the policy had become void. Thereupon J. E. Turner obtained from the Farmers National Bank the policy of insurance herein sued upon and delivered the same to Mr. Hough of the firm of Hough & Reigel, who held the same for about ten or twelve days, and then returned it to the bank. After the loss, upon failure of the insurance company to pay the amount therein named in its policy of insurance, J. E. Turner and C. K. Turner, as partners, under the name and style-of Turner Brothers, brought an action against the Delaware Insurance Company. The Farmers National Bank was made a party defendant to that suit and filed its answer and cross-petition therein.
The plaintiff sought first a reformation of the contract averring that the name of J. E. Turner was written therein by mutual mistake of the parties, and asked that it be reformed so as to make it read Turner Brothers instead of J. E. Turner, and to recover a judgment thereon in the name of Turner Brothers. They also averred that an appraisement had been had of the loss and an award made showing. there was a total loss amounting in the aggregate to over $13,000; that no proof of loss had been furnished because the company had denied all liability. The policy was in the form known as the Standard Policy of New York, and contained all the terms, covenants and conditions of that form of contract, many of which are elaborately set forth in the answer of the defendant, insurance company, which answer contained five separate defenses. The first defense admitted its corporate capacity, the issuing of the policy by Hough & Reigel and denied all the other allegations of the amended petition. Second: It denied there was a mutual mistake of the parties and averred that J. E. Turner’s interest in the property was not truly stated. Third: It averred the giving of a chattel mortgage to the Farmers National Bank and a second chattel mortgage to Mary J. and Alice G. Turner in violation of the terms of the contract. Fourth: It averred failure to furnish proofs within sixty days after the fire. Fifth: It averred a disagreement as to the extent of the loss and damage to said property and failure of the plaintiffs to demand an appraisal as required by the terms of the policy in event of such disagreement.
The plaintiff for a reply to the second defense of the insurance company again pleaded the mutual mistake of the parties, and aver that J. E. Turner’s name was written in said policy instead of Turner Brothers by mutual mistake and inadvertence.
For a reply to the third defense they admit the giving of the mortgages, and say that they were given because the policy of insurance never came into their possession, but was delivered directly to the Farmers National Bank, it being provided in the policy of insurance that loss, if any, should be paid to that bank, and that, therefore, they were in ignorance of this provision against the chattel mortgages, but that after their attention was called to this fact by the agents of the company they surrendered this policy to the agents, advising such agents that they had other opportunities to insure, and asking them to return the unearned premium thereon; but that said agents then and there agreed to submit the question to the company, and later did reissue or redeliver this same policy to the bank and notified plaintiffs of that fact, and advised' the plaintiffs that nothing further was required and that no endorsement thereon was necessary; that the same was in full force and that plaintiffs relied thereon and did not procure other insurance in place of this.
For a reply to the fourth defense, in addition to the averment in their petition that the company within the time limited for furnishing proof of loss had denied all liability, further aver that notice was given promptly to the company; that these plaintiffs had not the possession of the policy, and were, therefore, not familiar with its terms and requirements, but applied to Hough & Reigel, the' general agents of the company, who advised them that nothing further was necessary to be done, upon which statement these plaintiffs relied. And as a further defense thereto, averred that the loss' was a total loss, and the value of the property destroyed was greater than all the insurance thereon.
For reply to the fifth defense, plaintiff avers that there was an appraisement and award as required by the terms of the contract, that such appraisement and award showed a total loss of $13,746.
The Farmers National Bank filed its answer and cross-petition averring the indebtedness of Turner Brothers to it and the arrangement by which it was to furnish money for the purchase of this tobacco and take warehouse receipts therefor; averring the provision in the policy that if loss occurred the amount of this insurance was to be paid to this bank; admitting the execution of the chattel mortgage to cover the total indebtedness contemplated at the time the policy of insurance was taken out and then evidenced by warehouse receipts; averring the mutual mistake in the writing of the policy, asking for reformation and judgment.
The answer of the defendant company to this cross-petition contained practically the same defenses as those contained in the answer to the plaintiff’s petition, and to this answer the Farmers National Bank replied to the second defense denying that it was the intention to issue the policy of insurance to J. E. Turner, but that it was the intention of the parties to issue the same to Turner Brothers.
For a reply to the -third defense it averred the surrender of the policy to Hough & Reigel, and an attempt and intention to procure further insurance in place thereof, but that Hough & Reigel, having communicated with their company, reissued and redelivered to them the same policy advising and assuring them that it was still in force and binding upon the company and their interest in said property would be fully protected thereby, and for a reply to the fourth defense averred that notice was given of the loss; that Hough & Reigel advised them that nothing further was necessary to be done by them to protect their interests thereunder; that Hough & Reigel were the general agents of this defendant company and it relied fully upon the statements made by them in reference thereto, and for a second reply to the fourth defense say that said defendant company had within the sixty days allowed for the furnishing of said proof denied all liability upon said policy, and for reply to the fifth defense avers that an appraisement was had and award made, showing a total loss of all the property insured amounting in the aggregate to $13,746; and as a further reply to each of these defenses the Farmers National Bank averred that the contract of insurance sued upon had a condition therein written in the words following, to-wit:
“If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee or of any person or corporation having an interest in the subject of insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall be written upon, attached, or appended hereto,” and averring that there was neither written upon, attached or appended to said policy of insurance, in any way, any statement, endorsement, provision or condition providing, in any way, that said prior conditions contained in the body of said policy of insurance should be applicable to this defendant.
This case was submitted to the common pleas court, without the intervention of a jury, upon the issues presented by these pleadings, and that court found that there was a mutual mistake of the parties and reformed the contract as prayed for in plaintiffs amended petition, and further found the other issues in favor of plaintiffs and the defendant, the Farmers National Bank, and entered a judgment in favor of the Farmers National Bank against the insurance company for the full amount of the face of the policy, but did not enter any judgment for the plaintiffs for the reason that the contract of insurance provided that the loss should be payable to the bank, and that plaintiffs have no further right except to have the same paid to the bank and credited upon their indebtedness to the bank.
The insurance company prosecuted error in the circuit court and that court reversed the judgment of the common pleas court assigning as reason therefor:—
1. That the common pleas court erred in holding said policy of insurance was not void as to the Turner Brothers because of the execution and delivery of the chattel mortgages.
2. That said common pleas court erred in holding that the provisions contained in the policy of insurance did not apply equally to the defendant, the Farmers National Bank, as 'mortgagee, with the plaintiffs, Turner Brothers. This proceeding in error is now prosecuted in this court by the Farmers National Bank and by Turner Brothers, cross-petitioners in error, to reverse the judgment of the circuit court and affirm -the judgment of the common pleas.
Mr. D. W. Bowman, for plaintiff in error.
Messrs. Robeson & Yount and Mr. D. W. Bowman, for Turner Brothers, defendants in error.
We claim that the giving of the chattel mortgage to Mary J. and Alice G. Turner did not affect the right of the plaintiff in error to whom the loss was payable as such mortgagee to recover on said policy.
We are supported in this claim by a number of well considered cases by courts composed of judges of great renown and famous for their high character, learning and ability. Welch v. Assurance Co., 148 Cal., 223; Senor & Muntz v. Ins. Co., 181 Mo., 104; Insurance Co. v. Savings Assn., 175 Ill., 115; Insurance Co. v. Bank, 47 Neb., 717.
When the loss is made payable to the mortgagee by a policy on mortgaged property which provides that “the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest, as shall be written upon, attached, or appended thereto,” and no such provisions or conditions are written upon, attached, or appended, the insurance will not be invalidated by violation of provisions applicable to the mortgagor. Boyd v. Ins. Co., 25 Wash., 447; East v. Insurance Assn., 76 Miss., 697.
Any other view or rule of construction would entirely eliminate this provision from the policy and render it meaningless and a mere nullity. The policy was written by the insurer, and this mortgage clause was evidently inserted for a purpose. We do not assert that it was intended as a trick to entrap or injure the assured. If so, it would not be enforced. Insurance Co. v. Pottker, 33 Ohio St., 459. The policy being an instrument prepared by the insurer, the language thereof, is “the words of the insurer, not of the insured.” Yeaton v. Fry, 5 Cranch, 341.
Courts will find a waiver of forfeitures upon slight evidence where the equity of the claim is, under the contract, in favor of the assured. Turner v. Fidelity & Casualty Co., 112 Mich., 428.
Being part of a contract of indemnity against loss, this provision should be liberally construed in favor of the object sought to be attained. Trustees v. Deposit Co., 76 Ohio St., 264; Brink v. Ins. Co., 49 Vt., 457.
And any provisions in favor of the insured against stipulations in the policy providing for disabilities and forfeitures, and the object of the contract being to afford indemnity, the language thereof will be construed so as to support, rather than defeat, the indemnity provided for, and strictly against the insurer and liberally in favor of the insured; This is the rule, even though the intent of the company was otherwise. Wallace v. Ins. Co., 41 Fed. Rep., 744.
It is claimed, however, that if it was intended to contract indemnity directly in favor of the mortgagee, the “union mortgage clause” should have been used, and the fact that it was omitted is conclusive that no such effect was intended.
We insist, however, that the attachment of the so-called “union mortgage clause” was wholly unnecessary, as the mortgage provision contained in the policy had the same effect. Christenson v. Ins. Co., 117 Ia., 77.
Turner Bros, had agreed to keep the property insured for the benefit of the plaintiff in error, .The Farmers National Bank, and this was known to the defendant in error, The Delaware Insurance Co. And in order to accomplish the same, and in aid thereof, said policy was issued and delivered directly to the plaintiff in error, and in view of the circumstances, created a contract directly between the insurance company and the bank unaffected by any act of the mortgagors, and as said by Judge Airead in his opinion, “limits, if it does not entirely contradict, the incumbrance clause contained in the policy.”
The policy having been issued and delivered directly to the mortgagee, he is the party insured. Boyd v. Ins. Co., 25 Wash.,447.
We claim that the insurance company having knowledge of the existence of the Turner chattel mortgage, and the policy having been surrendered to it, it was its duty to cancel the policy if it did not wish to carry the risk. But instead thereof, having returned the policy and retained the premium, it in effect reinstated the policy as fully as if a new policy had been issued. Insurance Co. v. Michael, 167 Ind., 659.
But, however this may be, this provision against incumbrance may be waived. Insurance Co. v. Wilson, 70 Ohio St., 354; Insurance Co. v. Hook, 62 Ohio St., 256.
The defendant in error, The Delaware Insurance Co., could not, with knowledge of the mortgage, retain the premium and treat the policy as in force until a loss has occurred, knowing that the assured was relying on its validity, and then insist that the execution of the mortgage is a breach of the conditions of the policy. 16 Am. & Eng. Ency. Law (2 ed.), 938; Insurance Co. v. Eggleston, 96 U. S., 577; Hillis v. Ins. Co., 65 Ia., 459; Titus v. Ins. Co., 81 N. Y., 419; Knoebel v. Ins. Co., 135 Wis., 424; Cannon v. Ins. Co., 53 Wis., 594; Replogle v. Ins. Co., 132 Ind., 366; Prentice v. Ins. Co., 77 N. Y., 483; Armstrong v. Ins. Co., 130 N. Y., 564; Trippe v. P. F. Society, 140 N. Y., 28.
Especially should the insurance company be estopped from insisting upon these provisions of forfeiture contained in the policy where, as in the case at bar, the plaintiff in error and said Turner Bros, were induced to forego procuring other insurance by reason of their reliance upon the promise made to them by Mr. Hough. Manchester v. Assurance Co., 151 N. Y., 92; Insurance Co. v. Hart, 139 Ill., 513; Pechner v. Ins. Co., 65 N. Y., 196; 1 Joyce on Insurance, Sec. 563; 2 May on Insurance, Sec. 370.
These provisions, like that against incumbrances, may be waived as heretofore shown; nor can they be construed as an agreement against the assured pleading the acts and conduct of the insurance company by way of estoppel, for it is not in the power of the insurer to abolish the law of estoppel or waiver by such means. Assurance Co. v. Building Assn., 101 Fed. Rep., 77; Insurance Co. v. Norwood, 69 Fed. Rep., 75; Insurance Co. v. Earle, 33 Mich., 143.
Hough & Reigel, however, were general agents of the insurance company, with all the powers to bind the company incident to this position. Insurance Co. v. Eshelman, 30 Ohio St., 647; Insurance Co. v. McGookey, 33 Ohio St., 555.
It is well settled, that an agent who effects insurance, has policies signed in blank, which provide they shall not be valid until countersigned by him, and who issues and countersigns such policies, is a general agent. Machine Co. v. Ins. Co., 50 Ohio St., 549; Insurance Co. v. Myers, 62 Ohio St., 541; Stacy v. Ins. Society, 1 C. C., N. S., 441; Nickell v. Ins. Co., 144 Mo., 420; Thompson v. Ins. Co., 169 Mo., 24; Snyder v. Ins. Co., 59 N. J. L., 545; 1 Joyce on Insurance, Sec. 583; 2 Biddle on Insurance, Sec. 1136.
It follows that any general agent of the company has authority to waive the conditions of the policy. 19 Cyc., 809; 16 Am. & Eng. Ency. Law (2 ed.), 942; Martin v. Ins. Co., 44 N. J. L., 274; Morrison v. Ins. Co., 69 Tex., 363; Insurance Co. v. Munger, 49 Kans., 178; Insurance Co. v. McLanathan, 11 Kans., 549; Insurance Co. v. McMillen, 24 Ohio St., 82; Insurance Co. v. Jones, 62 Ill., 458; Rathbone v. Ins. Co., 31 Conn., 194; King v. Ins. Co., 72 Ia., 310; Insurance Co. v. Kneidel, 11 C. C., N.S., 194.
Mr. J. W. Mooney and Messrs. Kline, Tolles & Morley, for the insurance company, defendant in error.
It is conceded by the pleadings, and the policy of insurance which was introduced in evidence shows there was no agreement indorsed upon the policy of insurance, or added thereto, consenting to the existence of either of the chattel mortgagees.
Under the foregoing conceded facts the policy upon the execution of the mortgages became absolutely void and no recovery could be had thereunder. Webster v. Ins. Co., 53 Ohio St., 558; Smith v. Ins. Co., 19 Ohio St., 287; Sun Fire Office v. Clark, 53 Ohio St., 415.
The policy, on account of its provisions, became void upon the execution of the two chattel mortgages without a written agreement upon the policy consenting thereto. The plaintiff in error, The Farmers National Bank, as well as the Turners, had full knowledge of these provisions of the policy. If they did not have actual knowledge, by accepting the policy of insurance they are bound by the conditions of the policy and are presumed to know its contents. Insurance Co. v. Myers, 62 Ohio St., 529; Hickey v. Ins. Co., 20 C. C., 385; Assurance Co. v. Building Assn., 183 U. S., 362; McFarland v. Ins. Co., 46 Minn., 515.
In- view of the provisions of the policy, the soliciting agents had no power to bind the company, except by indorsing upon the policy an agreement consenting to the chattel mortgage. The parties had agreed by accepting the policy that all changes in the policy must be in writing, and that the agents should have no power to waive any condition of the policy, except in writing indorsed upon the policy. The Delaware Insurance Co., therefore, was not bound by anything that occurred between its soliciting agents, the plaintiff in error and the Turners, unless it was done in pursuance with the provisions of the policy. Smith v. Ins. Co., 19 Ohio St., 287; Hammel v. Ins. Co., 24 C. C., 101; Billings v. Ins. Co., 24 C. C., 552; Walsh v. Ins. Co., 27 C. C., 313; Mulrooney v. Ins. Co., 157 Fed. Rep., 598; Sullivan v. Ins. Co., 94 Pac. Rep., 676; Bank v. Ins. Co., 11 Cush., 265; Hale v. Ins. Co., 6 Gray, 169; Smith v. Ins. Co., 60 Vt., 682; Wilson v. Ins. Co., 4 R. I., 141; Cleaver v. Ins. Co., 65 Mich., 527, 71 Mich., 414; Baumgartel v. Ins. Co., 136 N. Y., 547; Insurance Co. v. Martin, 40 N. J. L., 568.
There is no place for the doctrine of estoppel in this case. No person can rely upon the acts of the agent when he knows that the acts are in excess of the power of the agent. Clements v. Ins. Co., 153 Fed. Rep., 237.
Hough & Reigel were in no sense general agents, but were soliciting agents with limited power, all of which was known to the bank and to the Turners. The bank and the Turners having accepted the policy without an indorsement thereon consenting to the chattel mortgages, did so with full knowledge that Hough & Reigel had no power to make any statement, promise or verbal agreement without the same were indorsed upon the policy in writing. Insurance Co. v. Schild, 69 Ohio St., 139.
It has been further held by this court that the parties to an insurance contract have the legal right to agree upon such terms as they may see fit, and that the contract will be enforced. Insurance Co. v. Wilson, 70 Ohio St., 354.
The legal effect of the “loss payable” clause has been long established. When endorsed upon a policy, it makes the mortgagee named therein a mere appointee to receive payment in case of loss. Such mortgagee has no contractual relation whatever with the insurance company issuing the policy, and his rights with respect thereto must be worked out solely through the insured, his mortgagor. Such a mortgagee has no better right than the insured, and the insurance company can interpose in bar of his claim any defense it may have against the insured. At the present time this rule is declared in every jurisdiction where the question has been raised. Bates v. Ins. Co., 10 Wall., 33; Smith v. Ins. Co., 120 Mass., 91; Baldwin v. Ins. Co., 60 N. H., 164; Martin v. Ins. Co., 38 N. J. L., 140, 20 Am. Rep., 372; Insurance Co. v. Maackens, 38 N. J. L., 564; Loring v. Ins. Co., 8 Gray, 28; Savings Inst. v. Ins. Co., 119 Mass., 240; Savings Inst. v. Ins. Co., 68 Me., 313, 28 Am. Rep., 56; Bank v. Ins. Co., 125 Mass., 431; Fogg v. Ins. Co., 10 Cush., 337; Ins. Co. v. Hamilton, 82 Md., 88, 51 Am. St., 457; Jaskulski v. Ins. Co., 131 Mich., 603; Armstrong v. Ins. Co., 130 N. Y., 560; Lewis v. Ins. Co., 181 N. Y., 392; Graham v. Ins. Co., 2 Dis., 255; Keith v. Ins. Co., 117 Wis., 531; Ins. Co. v. Greer, 120 Fed. Rep., 916, 61 L. R. A., 137; 2 Cooley on Insurance, 1521; Merwin v. Ins. Co., 7 Hun, 659; Holbrook v. Ins. Co., 117 Cal., 561; Humphry v. Ins. Co., 12 Fed. Cas., 884; Friemansdorf v. Ins. Co., 1 Fed. Rep., 68; Sias v. Ins. Co., 8 Fed. Rep., 187; Christenson v. Ins. Co., 117 Ia., 77; Insurance Co. v. Hulman, 92 Ill., 145; Bergman v. Ins. Co., 12 Ky. L. Rep., 942; Building & Loan Assn. v. Ins. Co., 50 La. An., 1243; Young v. Ins. Co., 14 Gray, 150; Insurance Co. v. Newman, 58 Neb., 504; Antes v. Ins. Co., 61 Neb., 55; Warbasse v. Ins. Co., 42 N. J. L., 203; Lattan v. Ins. Co., 45 N. J. L., 453; Perry v. Ins. Co., 61 N. Y., 214; Grosvenor v. Ins. Co., 17 N. Y., 391; Weed v. Ins. Co., 116 N. Y., 106; Moore v. Ins. Co., 141 N. Y., 219; Rosenstein v. Ins. Co., 79 N. Y. Supp., 736, 79 App. Div., 481, 112 App. Div., 902, 188 N. Y., 639; Lewis v. Assurance Co., 87 N. Y. Supp., 525, 93 App. Div., 157; Little v. Ins. Co., 5 Dec. Re., 285, 38 Ohio St., 110, 4 Am. Law Rec., 228; Boyd v. Ins. Co., 25 Wash., 447, 55 L. R. A., 165; Gillett v. Ins. Co., 73 Wis., 203; 2 Cooley on Insurance, 1523; Kabrich v. Ins. Co., 48 Mo. App., 393; Bidwell v. Ins. Co., 19 N. Y., 179.
Where the policy is issued to owner, with loss, if any, payable to a mortgagee as interest may appear, but without the “mortgage clause” attached, the contract of insurance is with the owner exclusively, the mortgagee being merely an appointee to receive the amount of the owner’s loss; if policy is forfeited as to the owner, the mortgagee can not recover; and the policy can not be revived for benefit of the mortgagee, by attaching' a mortgagee clause, unless there be. a new consideration for it. Cone v. Ins. Co., 60 N. Y., 619; Reynolds v. Ins. Co., 128 Cal., 16; Ins. Co. v. Johnson, 22 Colo., 476; Williamson v. Ins. Co., 86 Wis., 393; Bank v. Ins. Co., 6 Kans. App., 219; Richmond v. Assurance Co., 88 Me., 105.
Because of the settled construction given the “loss payable” clause, about the year 1875, what is now known as the “union mortgage clause” came into use, and received its first construction in the case of Hastings v. Ins. Co., 73 N. Y., 141.
It is universally held that the effect of this clause is to bring the mortgagee into contractual privity with the insurance company, and that, in consequence thereof, the right of the mortgagee can not be defeated by a breach of a condition of the policy by the insured. Under this clause the mortgagee is answerable for his own acts only, not for those of his mortgagor, and this because the insurance company has expressly agreed that such may be the case. This ‘ distinction runs through all the cases, and is sharply drawn in the following: Insurance Co. v. Trust Co., 71 Fed. Rep., 88; Insurance Co. v. Ins. Co., 101 Ind., 392; 2 Cooley on Insurance, 1525; Magoun v. Ins. Co., 86 Minn., 486, 91 Am. St., 370; 1 Cooley on Insurance, 777, 778.
The following cases involve both the “loss payable” clause and the clause contained in the policy, and construe the latter as claimed by the insurance company in the case at bar. Bank v. Ins. Co., 153 Fed. Rep., 440; Savings Society v. Ins. Co., 77 Conn., 676, 68 L. R. A., 924; Insurance Co. v. Wolff, 23 Ind. App., 549, 54 N. E. Rep., 772; Bank v. Ins. Co., 55 W. Va., 261.
The greatness of the innovation of the union mortgage clause in New York is shown by the fact that in the leading case, Hastings v. Ins. Co., 73 N. Y., 141, stating the common law rule of the Grosvenor case, puts the decision upon the express words, “no act of neglect of the mortgagor shall invalidate” the insurance as to the mortgagee. This case is authority for the meaning of those words expressly used, and the state of New York has never since the Grosvenor case (17 N. Y., 391) protected a mortgagee unless those words were used.
The cases holding opposite construction, as already stated, are from the western states, with possibly two southern states. .They may be divided into two classes, those based on Ins. Co. v. Bank, 47 Neb., 717, and those based on the Illinois cases. The first class is based upon the construction of the clause itself, while the second class is based upon a new contract of insurance created by the union of the loss payable with the special clause in the policy. The most of the cases are based on the Nebraska case. The objections to these cases are well stated in Insurance Co. v. Greer, 120 Fed. Rep., 916, and also in Insurance Co. v. Wolff, 54 N. E. Rep., 772. The Nebraska case is also reported in 58 Am. St., 663, with a strong dissenting note thereunder. Senor v. Ins. Co., 181 Mo., 104; Henton v. Ins. Co., 95 N. W. Rep., 670; East v. Ins. Assn., 76 Miss., 697; Welch v. Ins. Co., 148 Cal., 223; Ins. Co. v. Dearborn, etc., Assn., 175 Ill., 115, 51 N. E. Rep., 717; Assurance Co. v. Building Assn., 198 Ill., 474, 64 N. E. Rep., 979; Crawford v. Ins. Co., 100 Ill. App., 455.

Opinion:
Donahue, J.
The record discloses a conflict of evidence upon the issues presented to the trial court for determination. That court found for the plaintiff and for The Farmers National Bank upon all the issues joined by the pleadings. The circuit court did not disturb the judgment of the common pleas court as to its findings on the issues of fact, but reversed for error of that court in its application of the law to the facts found. This judgment of the circuit court, in effect sustaining the finding of the common pleas court upon the evidence, eliminates from our consideration the issues raised by the first, fourth and fifth defenses of the answer of the insurance company. The further effect of these judgments is to sustain the allegations of the reply filed by the plaintiff and defendant bank to the second and third defenses so far as the facts in dispute therein are concerned, leaving for consideration practically the same questions as would have been submitted upon a demurrer to the reply to the second and third defenses. In order to determine the .law applicable to this state of facts it is important to notice the contract sued upon. Attached to and made a part of this policy of insurance is a slip or paster upon which the following is written:
"$2,000.00 On Leaf Tobacco, packed or in process of packing, sorting, storing and resweating; and on cases full or empty, his own or held by him in trust, or on commission, or sold but not removed, or which by the terms of any contract he may agree to keep insured; all while contained in the frame shingle-roof building lot No. 647, East Fourth St., Greenville, Ohio. Loss, if any, payable to the Farmers National Bank as its interest may appear. Loss, if any, payable to the assured, or to order hereon for collateral purposes only.
This provision is as broad and comprehensive as it is possible to write it in the English language. There is no representation or statement here that J. E. Turner is the sole owner of the property insured, nor does the language used require that he should be. It is sufficient if it be held by him in trust or on commission or sold and not removed, or if he have a contract with a third party to keep the property insured. This provision is in direct conflict with the further provisions printed in the body of the policy that "If the interest of the insured in the property be not truly stated herein" or "If the interest of the insured be other than unconditional and sole ownership," or "If any change other than by death of the insured takes place in the interest, title or possession of the subject of insurance," the policy will be void. The first question that arises is as to which of these conflicting covenants shall obtain in the disposition of this case. The right of private contract is a constitutional right that it is the duty of the court to guard zealously. The terms and conditions are written into a contract for the purpose of being observed by the parties thereto. Courts 'must not make contracts for parties, nor exercise a guardianship over contracting parties but when the parties have made a contract containing ambiguous provisions, or conflicting covenants, the court must construe the contract as nearly as may be to effect the purposes of it, and to meet the intentions of the contracting party at the time of the execution of the contract. Usually in contracts written contemporaneously with their execution, the later provisions, if in conflict with former provisions, should obtain. But that is not the correct rule for the interpretation and construction of printed forms of contract prepared or used by one of the contracting parties in his business, leaving blanks therein for inserting other and further provisions to make it applicable to the immediate business that may be the subject of the contract. The true rule in the interpretation of such a contract is that the covenants then written, either in the contract, endorsed thereon, or appended thereto, will control and that any printed portions of a printed form of contract made and prepared for general use in conflict with these provisions written at the time of its execution must fail, and full effect be given to those parts that were written coincident with the execution of the contract.
There is no controversy here made that the agents, Hough & Reigel, had not the authority to make the contract sued upon. It is admitted in the answer of the insurance company that it did execute and deliver this policy of insurance to J. E. Turner. Counsel for the insurance company, however, in their brief, question the authority of these agents, and call our attention particularly to the evidence touching the original power and authority delegated to them by the insurance company. But the authority of an agent is not always measured by the original grant of power, but also by the growth and development of the business relation between principal and agents, and daily acts of the agent in relation to the principal's business, of which the principal had knowledge, and from this record, and from the policy itself, it clearly appears, that these agents had authority to waive any provision or condition of this policy, which by the terms of the policy may be the subject of agreement, the only limitation on their power being that such waiver "shall be written upon or attached to the policy." Having the authority to waive these conditions, provided only that the waiver appear in writing on the policy itself, they would have the power to insert in this policy or attach thereto a condition in conflict with these printed conditions later found in the policy, which written provision would control the construction of the policy itself. In other words, the effect of this written provision in conflict with the provisions that might be waived by .the agent would be in effect a written waiver of these provisions, and, therefore, falls within the direct letter and meaning of the contract itself.
This construction of this contract is practically the end of the case, however, the common pleas court found upon the evidence that there had been a mutual mistake of the parties and reformed the contract. Having so found it was perfectly proper to enter a decree of reformation inserting the name of Turner Brothers as the insured instead of J. E. Turner, and that finding and decree also disposes of the defense interposed by the insurance company touching the violation of the provisions that "If the interest of the insured in the policy be not truly stated herein" and the provision "If the interest of the insured be other than unconditional and sole ownership" the policy should be void. .In view of the construction we have given this contract this decree of reformation was not necessary in order to permit the recovery by J'. E. Turner or by the Farmers National Bank.
This construction of the policy applies with equal force to the provision against the giving of a chattel mortgage, for the greater includes the less. If the insured might make an absolute sale of the property and retain this insurance until the same should be removed from the warehouse then undoubtedly they could make a conditional, sale, for in the former case they would part with all insurable interest in the property and the latter case they would still retain an insurable interest, subject only to the lien of the chattel mortgage. In fact from a careful consideration of this contract, and this portion of it written at the time of its execution, it fully appears that all these provisions printed later in the policy and in conflict therewith and pleaded by the defendant insurance company as a defense to this action were waived in writing by the agent of the company in the policy itself at the time the policy was written, and, therefore, the judgment of the common pleas court was right. This disposes not only of the contentions made as to the ownership of the insured property but also the contention as to the giving of both chattel mortgages. But there is a further reason why the giving of the chattel mortgage to the Farmers National Bank cannot be interposed as a defense herein. As already said, these agents Hough & Reigel, whether they be denominated general agents or not, had full authority to deal with this contract. We think this clearly appears from the evidence in the record, perhaps not from any one part of it, but from the evidence as a whole, and especially the evidence of Mr. Hough on page 135, where he says: "We have authority so to do, to change the conditions of those policies, as I stated awhile ago. It is done every day." When information reached Hough & Reigel of the giving of these chattel mortgages, they notified the bank that the giving of these mortgages was in conflict with the provision of the policy, and thereupon this policy was returned to them. Mr. Sigafoos, cashier of the bank, testifies on page 85 of the record that he said to Mr. Hough: "If they are void we want you to cancel them and we will get other insurance." To the same effect is the testimony of Mr. Turner. Thereupon Mr. Flough said that if other companies could carry this insurance there was no reason why his company could not; that he would hold the policy until he could communicate with them. In this respect we think Hough & Reigel were acting for the company and within the scope of their employment, and the return of these policies to these agents was the return of the policies to the company itself. True, what Mr. Hough said at that time with reference to keeping these policies in force would avail nothing were a waiver of these conditions not already written in the policy at the time of its execution. Mr. Hough at once notified the company of the giving of this chattel mortgage to the bank, but it does not appear that he notified the company as to the giving of the chattel mortgage to the Turner women.
It would also appear that he did not notify the company that the policy had been returned, but that is not important. He had authority to represent the company in accepting the return of the policy, and his failure to notify the company of that fact is in no wise important. His act was the act of the company in so far as the return of this policy was concerned, and the subsequent conduct of the company must be considered in that light. The company then having possession of the policy of insurance, and possession of the unearned premiums were required within a reasonable time to return either the premium or the policy. The company now having actual knowledge of the mortgage given to the bank, and being. charged' with the knowledge that the policy had been returned to the agent, failed to return the unearned premium and neglected to advise its agent within a reasonable time, one way or another, with reference thereto, and thereupon the agent returned the policy to the bank with the verbal assurance that it was all right, in full force and fully protected the bank from loss. This conduct of the company would forever estop it from setting up the defense of the chattel mortgage given to the bank, whether the policy contained a written waiver or not, but as already stated the policy did contain written provisions in conflict with the provisions pleaded by the company in its defense to this action, which written conditions amount to a waiver in writing of these provisions. These agents had the right to make this contract originally. They had a right on the day they returned this policy to the bank to make a new contract of the same tenor and effect. If there were any possibility that this written provision was not originally intended to comprehend and include a waiver as to these chattel mortgages, there could be no reasonable contention that at the time Hough & Reigel redelivered this policy to the bank, but that they were intended to cover and include everything then prominent in the minds of the contracting parties and then a matter of controversy between them. This delivery of this contract at this time and under these circumstances must be held to amount to a new contract between the parties binding from the date of such redelivery, and must have the same construction and effect as if Hough & Reigel, having full knowledge of all questions touching ownership and liens, had then issued on the part of .their principal a new policy of that date containing the same written provisions in conflict with these printed provisions with reference to ownership and-liens.
There is another question presented by this record, the correct 'solution of which is important in the determination of the rights of the parties.
The Farmers National Bank in its reply pleaded the following condition and stipulation in the policy: "If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee or of any person or corporation having an interest in the subject of insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed in such provisions and conditions of insurance relating to such interest as shall be written upon, attached or appended hereto."
And said bank further averred that there was neither written upon, or attached, or appended to such policy of insurance, in any way, any statement, endorsement, provision or condition providing that the prior conditions contained in the body of said policy of insurance should be applicable to the bank. This provision pleaded by the Farmers National Bank is ambiguous and uncertain and subject to more than one construction. It is contended by the insurance company that this means "That such conditions apply to the interest of the mortgagee except as modified or abrogated by a writing placed or appended to the policy." If this contention be the correct one, then this provision in the policy is absolutely useless and unnecessary.
Given such construction, it could have no meaning or application whatever, nor could it modify the remaining covenants of the contract in the slightest degree. Without it, the terms and conditions printed in the body of the policy would apply to the mortgagee "except as they might be modified or abrogated by a writing -placed upon or appended to the policy." If it were left out, the contract would then be construed exactly the same as if it were written therein. The construction contended for by the bank is that the prior conditions named in the policy and applicable to the owner making the contract of insurance shall not be applicable to the mortgagee when the insurance company consents to the mortgage, unless it shall be specifically provided by a writing upon of attached, to or appended to such policy that such prior conditions contained in the body of the policy shall apply to the mortgagee. This construction would give effect to this provision and recognize that it was written into the policy for some purpose and would materially affect the rights of the parties to the contract. The plain rule of construction requires that every provision of a contract shall be given effect if possible. The claim of defendant in error here with reference to the proper construction of this provision simply eliminates it from the contract and makes- it purposeless and unnecessary, while the other construction gives it purpose, place and meaning.
There is another rule of construction equally applicable here and that with equal force determines the proper construction of this provision, and that is that where an individual or corporation is engaged in a particular line of business with the public and prepares or uses printed forms of contract for the purpose of effecting and carrying on that business; that if such individual, corporation or company place in such printed form of contract a printed condition of doubtful meaning and susceptible of two constructions, one favorable to the party preparing or using the printed form of contract, the other construction favorable to the individual dealing' with him, a court coming to construe such contract should construe it most favorably to the one who had nothing to do with the preparation of the printed form of contract and most strongly against that party to the contract who prepared the same-, or used the same in the regular course of his business.
The proper construction of this contract under the rules above stated would entitle the Farmers National Bank to a judgment against the insur- . anee company.
The construction of the contract of insurance and the conclusion reached by this court upon such construction makes it unnecessary for us to- consider at length the claim of the insurance .company that the Farmers National Bank, if entitled to recover at all, could not recover more than a pro rata amount of its total claim against Turner Brothers in proportion of that claim to the entire amount of insurance written upon the property destroyed. The evidence discloses that there was a total loss of over $13,000; that the total insurance amounted in the aggregate to $11,000. The plaintiffs below were entitled to recover the full amount of this insurance, but by the terms of this policy the loss, if any, was to be paid to the Farmers National Bank, so that the.Farmers National Bank was entitled to recover the full face of the policy, and the satisfaction by the insurance company of a judgment in favor of the Farmers National Bank against it for that amount would be a full acquittance as to any claim of the Turner Brothers under this policy of insurance, and they must look to the bank for an accounting, if it should receive from the total insurance in force more than was owring to it by the Turner Brothers.
Judgment'of the circuit court reversed; judgriient of the common pleas affirmed.
Reversed.
Spear, C. J., Price and Johnson, JJ., concur.