Case Name: George L. Pratt, Appellant, v. The Dwelling House Mutual Fire Insurance Company of Orleans, Niagara and Monroe Counties, N. Y., Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1891-12-01
Citations: 130 N.Y. 206
Docket Number: 
Parties: George L. Pratt, Appellant, v. The Dwelling House Mutual Fire Insurance Company of Orleans, Niagara and Monroe Counties, N. Y., Respondent.
Judges: 
Reporter: New York Reports
Volume: 130
Pages: 206–221

Head Matter:
George L. Pratt, Appellant, v. The Dwelling House Mutual Fire Insurance Company of Orleans, Niagara and Monroe Counties, N. Y., Respondent.
It seems a director of a fire insurance company, or a member of its executive committee has no right to approve of his own application for a policy in such 'company.
An officer of such a company, however, is not debarred from making application for insurance, and if his application is accepted by another officer having authority to accept applications, the company is bound.
The officers of a corporation organized under the act providing “for the formation of county co-operative insurance companies” (Chap. 362, Laws of 1880, amended by chap. 171, Laws of 1881), have the same power to waive defects or ratify invalid policies as officers in a stock insurance company.
iWeans v. Trimountain M. F. Ins. Co. (9 Allen 329); Buffum v. Fayette II. F. Ins. Co. (3 id. 360); Priest v. Citizens’ M. F. Ins. Co. (Id. 602), distinguished.
Where insurance is made upon different kinds of property, each separately valued, the contract is severable, even if but one premium- is paid, and the amount insured is the sum total of the valuations,’
Plaintiff, who was secretary of defendant, a corporation organized under-said act, presented a written application to it, signed by him, for insurance on certain property. The application contained a clause by which the plaintiff agreed to pay a sum specified, and such further sums as he should be required to pay under its rules and by-laws. The application was approved by indorsement thereon, made by an officer of the company authorized to approve applications, and the premium specified was paid by plaintiff. The application was presented to and approved by the executive committee at its next meeting, as prescribed by the by-laws, and it was in various ways recognized by the company. Held, that plaintiff was, by the approval and payment, insured until notice to the contrary was given to him.
By the by-laws of the company its policies were required to be signed by its president, or in his absence by the vice-president, and to be countersigned by the secretary. Plaintiff, pursuant to his application, filled out a blank policy, which had been signed by the vice-president. It contained a clause not permitted by the custom of the company. Held, that conceding the policy to be invalid, it did not affect the validity of the contract made by the application and approval; but that the policy was not rendered invalid by the fact that it was signed by plaintiff as secretary, as that is required both by the statute and defendant’s by-laws; that it was not made void, but simply voidable, at the election of the company, by the fact that its terms had not been previously approved by some officer other than plaintiff; and as the evidence permitted the inference that the company, with full knowledge of the facts, ratified the policy, and no effort was made to avoid it until after the commencement of this action thereon, such efforts were ineffectual and the company was hound.
Pratt v. D. H. M. F. Ins. Co. (53 Hun, 101), reversed.
(Argued October 26, 1891;
decided December 1, 1891.)
Appeal from judgment of the General Term of the Supreme Court in the fifth judicial department, entered upon an'order-made June 22, 1889, which denied a motion for a new trial and directed judgment in favor of defendant upon a verdict directed by the court.
This was an action upon a policy of fire insurance alleged to have been issued by the defendant upon certain real and personal property belonging to the plaintiff. The answer-denied that the defendant issued the policy in question, and alleged that the same was issued by the plaintiff, as secretary of the defendant, to himself, without authority, and that it was, therefore, void. It was further alleged that the real property covered by the policy was subsequently encumbered by a mortgage, given by the plaintiff, in violation of a clause in the contract prohibiting subsequent encumbrances without the consent of the company, and that the policy thereupon became void.
The defendant was organized under chapter 362 of the Laws of 1880, as amended by chapter 171 of the Laws of 1881. The business of the company, as stated in its by-laws, which are annexed to and made a part of every policy, is the “insurance of city and village dwellings and their accompanying outbuildings and their contents; farm houses and their accompanying outbuildings and their contents, and other property not more hazardous, against damage by fire or lightning.”
The powers of the company, as the by-laws further provide, are vested in a board of twelve directors, who elect from their own number a president, vice-president, secretary and treasurer. In addition to the usual duties imposed on such officers, it is the duty of the president, or in his absence the vice-president, to sign all policies, which are to be written and countersigned by the secretary, who keeps the accounts, books and papers of the company, and acts as its general agent during his term of office. These three officers constitute an executive committee, possessing “ all the powers of the board of directors when they are not in session,” and are required to hold stated meetings on the second Saturday of January, April, July and October, to “ examine and approve all applications on which policies have been written during the quarter next preceding, and cancel or modify all policies which they do not approve.” Applications for insurance can be made to any director, but must be approved by one member of the executive committee before a policy can be issued. Any person insured by the company becomes a member thereof, and on sustaining a loss is required to “ notify the secretary without delay and give any information required by the adjusting officers, and submit to examination under oath.” The executive committee is authorized to adjust and settle all losses. “ All applications for insurance, taken by a person duly authorized, take effect at noon of the date of the same, provided that the premium is actually paid. The property shall be held insured until the applicant is notified of its modification or rejection by the secretary.” On the first of each month, agents and directors are required to report “ to the office ” the business done by them during the preceding month, and pay over the amount due to the company, and on the fifteenth of each month the secretary is required to pay over all funds on hand to the treasurer. The premiums charged are expected to pay all ordinary losses and expenses, but in case of an unusual loss, an assessment upon members may be made by the directors, who are to be convened for that purpose. The statute requires the president and secretary to make an annual report, under oath, showing the number of policies issued, the amount and kind of insurance and an itemized account of the moneys received by the company during the year. (Laws of 1881, chap. 171, § 10.) A supervisory committee, elected by the members, is required by the by-laws to examine the books and vouchers “and report tlieir opinion thereon, verify the annual reports of the president and secretary made under the requirement of the statute and certify to the facts in the case as found by them under their hands and report the same to each annual meeting of the members.” A copy of the annual report is mailed to each member of the company. The by-laws also provide that “ applications for insurance and membership ” must be made on “ printed blanks prepared by the executive committee * * "* without ‘ blanketing ’ fa¿ one member more than another.”
Further facts are stated in the opinion.
John J. Ryan for appellant.
As the premium was paid by crediting it to defendant on its books and turning over the proper amount therefor to Mr. Chamberlain, the new secretary, the contract was complete without the policy. (Rhodes v. R. P. Ins. Co., 5 Lans. 71; Whittaker v. F. U. Ins. Co., 29 Barb. 312; Freid v. R. Ins. Co., 50 N. Y. 243-250; Cooper v. P. M. Ins. Co., 7 Nev. 116; Audubon v. E. Ins. Co., 27 N. Y. 216; Perkins v. W. Ins. Co., 4 Cow. 645; Laws of 1880, chap. 362, § 1; Laws of 1881, chap. 171, § 1; Morawetz on Corp. § 310 ; Angelí & Ames on Corp. § 325.) If it be contended that there existed any judicial function in Pratt, as secretary, in writing out policies or applications which had been regularly approved by another member of the executive committee—notwithstanding the by-laws — so as to render him incapable of issuing a legal policy for himself, then the law is that a policy so issued by him is not void, but simply voidable, at the option of the company. (Story on Agency [6th ed.], § 210; Paley on Agency, 33-36; 1 Liverm. on Agency, chap. 8, § 6; 3 Chitty on Cont. 216, 211, chap. 3; Woodhouse v. Meredith, 1 J. & W. 204, 224; Morse v. Royal, 12 Ves. 355; Lowther v. Lowther, 13 id. 95, 103; Saunderson v. Walker, Id. 601; Fowler v. B. S. Bank, 23 Abb. [N. C.] 158; Boerum v. Schenck, 41 N. Y. 182; S. N. Bank v. Burt, 93 id. 233, 246, 241; Roulston v. Roulston, 64 id. 654.) A voidable contract may be acquiesced in and ratified by the principal. (Bishop on Cont. § 846; Story on Agency, §§ 242, 244, 247, 248; Hagedorn v. Oliverson, 2 M. & S. 485; L. R. [9 Q. B.] 577; Webster v. P. Ins. Co., 36 Wis. 67, 71; N. M. L. Ins. Co. v. G. F. Ins. Co., 40 id. 446, 452; Gans v. S. P. F. & Ins. Co., 43 id. 108, 111; Joliffe v. M. M. Ins. Co., 39 id. 111.) If, in any negotiations or transactions with the insured, after knowledge of the forfeiture, it recognizes the continued validity of the policy, or does acts based thereon, or requires the insured by virtue thereof to do some act or incur some trouble or expense, the forfeiture is, as matter of law, waived. (Wood on Ins. 951, 994, § 452; Badger v. G. F. Ins. Co., 49 Wis. 390; Webster v. P. Ins. Co., 36 id. 671; P. F. Ins. Co. v. Kettle, 39 Mich. 51; Viele v. G. Ins. Co., 26 Iowa, 9; Frost v. S. M. Ins. Co., 5 Den. 154; Viall v. G. M. Ins. Co., 19 Barb. 440; Carroll v. C. O. Ins. Co., 10 Abb. Pr. [N. S.] 166; M. M. B. Assn. v. Beck, 77 Ind. 203; May on Ins. § 505; Gans v. S. P. F. & M. Ins. Co., 43 Wis. 108, 111; Joliffe v. M. M. Ins. Co., 39 id. 111; Erdmann v. M. Ins. Co., 44 id. 376; Kabox v. P. M. L. Ins. Co., 21 N. Y. S. R. 203, 208; Roswell v. E. A. Union, 13 Fed. Rep. 840; 23 Abb. [N. C.] 145, 158; 3 Comyn’s Digest, 614; Sanger v. Wood, 3 Johns. Ch. 416, 421; Fowler v. B. S. Bank, 23 Abb. [N. C.] 140; 2 Hormann on Estop. § 1204.) The contract was severable, and in any event plaintiff would be entitled to recover for the personal property. (Merrill v. A. Ins. Co., 73 N. Y. 452; Schuster v. D. C. Ins. Co., 102 id. 260; Smith v. H. Ins. Co., 14 N. Y. S. R. 106-109.) All of Pratt’s acts were ratified and all irregularities were waived, and having once thus elected, the company became irrevocably bound.. (2 Hermann on Estop. § 1204; Ames v. N. Y. U. Ins. Co., 14 N. Y. 253; Liddle v. M. F. Ins. Co., 29 id. 184; Frost v. Ins. Co., 5 Den. 154; Bothen v. Ins. Co., 35 N. Y. 131; Hotchkiss v. G. Ins. Co., 5 Clun, 90; Benninghoff v. Ins. Co., 93 N. Y. 495; Viall v. Ins. Co., 19 Barb. 446; Goit v. Ins. Co., 25 id. 189.)
8. F. Filkvns for respondent.
The application was preliminary, when the policy was issued it then became the contract, and the application then ceased to have vitality; and the policy having been issued without knowledge of the company and without participation by any of its officers, it was an insurance by Pratt, the agent, upon his own property, without any authority whatever, and so voidable by the defendant, (Wood on Ins. § 102; U. Ins. Co. v. T. Ins. Co., 17 Barb. 132; Marie v. Garrison, 13 Abb. [N. C.] 210; Voltz v. Blackman, 64 N. Y. 440; A. R. Co. v. Blaikie, 1 McQ. 461.) Ho act of the defendant rendered the application or policy unavoidable by it. There is no waiver or estoppel in this case. (Krugh v. L. Ins. Co., 77 Penn. St. 15; Wood on Ins. §§ 102, 308, 542; 10 Metc. 216; 9 Allen, 329, 331; 3 id. 602; Id. 360; 14 Gray, 204; 11 Cush. 265; Pitny v. G. F. Ins. Co., 65 N. Y. 6-21; May on Ins. §§ 146, 147, 148; 8 Gray, 28; 12 Cush. 469; 51 Penn. St. 402; 18 Ia. 319; Id. 425; 30 id. 133; 7 Cranch. 396; 58 Md. 463; 45 N. H. 292; 49 Md. 307; 112 Mass. 150; 45 N. J. 177.) The mortgage put upon the real estate without consent of the defendant in writing, was a clear violation of section 4, article 5 of by-laws; and rendered the policy void, so far as the real estate was concerned. (Bailey v. H. F. Ins. Co., 80 N. Y. 21; Green v. H. F. Ins. Co., 82 id. 517; Colt v. P. F. Ins. Co., 54 id. 595; McNierney v. A. Ins. Co., 48 Hun, 239.) There was nothing required of the plaintiff by the defendant concerning its investigation of the origin of the fire, or the amount of property destroyed; which was an acknowledgment of the validity of the policy or waiver of any forfeiture. (Titus v. G. F. Ins. Co., 81 N. Y. 410; Lake v. A. Bank, 3 Abb. Ct. App. Dec. 10.) All the facts which the evidence tends to prove bearing upon the question we must deem assumed by the judge with the plaintiff’s consent. (Price v. Keyes, 1 Hun, 177; M. N. Bank v. Sirret, 97 N. Y. 320.) The doctrine of estoppel cannot apply to force a ratification. (Baker v. U. M. L. Ins. Co., 43 N. Y. 283; Robey v. A. C. Ins. Co., 120 id. 510.) But if this policy had once been valid, and if plaintiff had nothing but a forfeiture to overcome — yet there is nothing in this case which proves that the defendant, after knowledge of the forfeiture, had chosen to recog nize the continued validity of the policy. (1 Wood on Ins. 204, § 102; Robertson v. M. L. Ins. Co., 88 N. Y. 541, 545; Weed v. I. & L. F. Ins. Co., 116 id. 118; Munson v. S. G. & C. R. R. Co., 103 id. 73, 74, 75; M. E. W. Co. v. M. R. W. Co., 14 Abb. [N. C.] 255.)

Opinion:
Vann, J.
Upon the trial of this action there was a sharp conflict of testimony, but at the close of all the evidence, the court granted a nonsuit on motion of the defendant and the plaintiff excepted. As was said by the court in Clemence v. City of Auburn (66 N. Y. 334, 338), " the plaintiff did not assent to any proposition of fact assumed either by the counsel for the defendant or the court, and is not concluded by omitting to request that the whole case or any particular question should have been submitted to the jury. If in any view of the evidence a verdict might have been rendered for the plaintiff, or if there were questions of fact which might have been determined for the plaintiff, and which, if determined in his favor, would have entitled him to recover, the case should not have been taken from the jury." (Sheridan v. Brooklyn City, etc., R. R. Co., 36 N. Y. 39; Colt v. Sixth Ave. R. R. Co., 49 id. 671; Train v. Holland Purchase Ins. Co., 62 id. 598.)
For the purpose of this review, therefore, all questions involving the credibility of witnesses must be resolved in favor of the plaintiff and such facts deemed established as upon any reasonable view of the evidence, the jury could have found in his interest.
The facts, as the jury might have found them had the case been submitted to them for decision, are as follows: On Saturday, July 11, 1885, the plaintiff, who had been the secretary of the defendant ever since its organization, filled out a blank application for insurance upon his own property, intending to present it to the executive committee, which was required by the by-laws of the company to meet in quarterly session on that day. The application was for insurance to the amount of $500 on a wine house and cellar belonging to the plaintiff, and $1,500 on his personal property kept stored therein, and was in the usual form, except that the custom of the company did not permit personal property to he described by a blanket clause. The application was signed by the plaintiff, who by the last clause thereof, agreed to pay to the defendant the sum of $11 and bound himself to pay it such further sums as should be necessary to meet all legitimate losses and expenses, according to its rules and by-laws. The executive committee, which was at this time composed of Edward E. Russell, George Brown and the plaintiff, by virtue of the offices then held by them, respectively, of president, vice-president and secretary, held no meeting that day, as no one attended, except the plaintiff. Within a day or two the. plaintiff met Mr. Brown, and handing him the application, told him that he wished to apply for insurance on his wine house. Mr. Brown took the application in his hands, opened it, looked it through as if reading it and then indorsed his approval thereon as a member of the executive committee, by writing his name in the proper blank space, as the plaintiff had done before him. The plaintiff then went to the office of the company, filled out a policy to himself, according to the application, and signed it as secretary, Mr. Brown having already signed it with others, in blank, as vice-president. At the same time the policy was entered on the " policy register " by Mr. Pratt, as follows, the heads of the columns and the entries beneath being given as if continuous : " Humber of policy, 747; name of insured, George L. Pratt; post-office, Ridgeway, Orleans county; date, July 11, 1885; term, three years ; amount insured, third class, $2,000; amount of premium, $10; total amount insured, $2,000; total amount of premium, $10." He also charged himself on the ledger with the amount of the premium, $10, and credited himself with $1 as the commission on the same to which he was entitled according to the by-laws. He filed the application with the papers of the company, took the policy home and put it with. ins other policies, one at least of which was issued by the defendant, but under what circumstances, or by whom signed, did not appear. The first policy ever issued by the defendant was to the plaintiff on this same wine house and cellar. It was based on an application approved by the plaintiff, Mr. Brown and one Downey, who was president at the time, was written and countersigned by the plaintiff, as secretary, and continued in force for three years, and until it expired by limitation. The next quarterly meeting of the executive committee, after the application in question had been made, was held October 10, 1885, and all of the members were present. According to the testimony of the plaintiff eleven applications, including his own, were presented to and approved by the committee at that meeting, and were so recorded on the minutes of its proceedings, as kept by him. Some of the applications were approved by the indorsement of names thereon, but none in the bundle containing the plaintiff's were so indorsed. Mr. Russell, the president, when requested by the plaintiff to look over those applications, said: " If they have two names on, I wont bother with them. I want to make this next train." The application in question was not otherwise shown to Mr. Russell at that time and he did not examine it, or any other in the package containing it. The applications were always thus presented to the committee " in bulk." In December, 1885, the plaintiff mortgaged the premises insured to one Salisbury and, as secretary of defendant, indorsed its consent thereto, both upon the policy and the application. The premium accompanying the application was paid over, with other moneys, to the treasurer of the company and still constitutes a part of its assets. It does not appear that an annual report was made at the close of the year 1885, except as it may be presumed that the statute was obeyed, nor whether this policy and premium were included in the statement of the affairs of the company as required by law. (L. 1881, ch. 171, p. 217, § 14.) On January 19, 1886, one Chamberlain was elected secretary in the place of the plaintiff, who thereupon delivered all the books and papers oh the company, including the application in question, to that officer. In December of the same year the plaintiff called on Mr. Chamberlain to renew a policy on liis dwelling-house then about to expire, and asked him to produce said application on the wine-house and another on his tenant-house, stating that the policies were with Hr. Salisbury and he wished to see when they expired. The application was thereupon produced by the secretary, having thereon in plain sight the consent to the mortgage and the approval of Brown and Pratt only. The annual report for the year 1886, sworn to by the president and secretary, stated that one hundred and ninety-four policies were then in force, one of them being the policy in suit, and that the amount of the outstanding risks was $235,521, which included the risk in question of $2,000. The report also stated the cash on hand, including in the aggregate, but not specifically naming, the premium paid by the plaintiff. The supervisory committee, appointed to examine the books, verify the annual report and certify the facts as found by them, reported that after making a full examination of the boobs and comparing them with the financial report of the president and secretary, they found that the figures agreed.
On Tuesday, August 2,1881, more than two years after the date of the policy and eighteen months after the plaintiff had ceased to be secretary, the wine-house, cellar and contents were destroyed by a fire, wlfieh occurred at midday. The value of the property burned largely exceeded the amount of insurance thereon. That same afternoon the plaintiff asked Hr. Chamberlain, who was still secretary, to let him see the application, stating that his policy was with Hr. Salisbury and he did not remember the amount of his insurance. Hr. Chamberlain handed him the application and, after it had been examined, took it back. The next day formal notice of the loss was given to the secretary, and two days later the executive committee met the plaintiff, when the president, Hr. Downey, asked him if he had brought his policy. He answered that he had not, as it was in the control of Hr. Salisbury as collateral security to a mortgage. The application was produced and the blanket clause criticised. On being asked if he had made out a list of his loss, plaintiff answered no, and later in the day the president furnished him with blank, proofs of loss and requested Mm to fill them up that evening, which he did, and delivered them to 'the secretary the next day. The same day the committee called on him at Ms house and asked to see his books, and when they were produced, he was informed that they wanted to know what his sales were for the past year, and he said that he would figure it up and let them know. Soon after he took his journal to the committee, gave them the amount of his sales for 1884,1885 and 1886, and on being told that they wanted to go further back, he went for another journal, but could not find it. He was asked if he could not get at it in some other way, and thereupon spent about an hour in picking the accounts out of Ms ledger, and as he read them off the secretary took down the amounts. He was told to continue the work with the secretary the next day, which he did for half an hour, when, having found the missing journal, he furnished the rest of the information in five or ten minutes. Soon after he filed with the secretary an additional proof of loss. Each proof of loss comprised many items and both together fill over seven printed pages of the case. During these repeated interviews with the adjusting committee, Mr. Brown, the vice-president, and the director who approved the application, was present, and the committee with full knowledge of all the facts, did not elect to avoid the policy, but in all that they said and did, prior to the commencement of the action, treated it as a subsisting contract, valid in origin and valid at the time of the fire. Ho offer was ever made to return the premium, although there is no provision for its forfeiture to the company in case the risk never attached or the policy became void.
The main question presented for decision is, assuming that these facts were established, could the jury have found, under proper instructions from the trial court, that there was a valid contract between the parties. The plaintiff could not insure himself in the name of the defendant, and if the supposed contract rested on his action alone, there would be no room for serious controversy. (Neuendorff v. World Mut. Life Ins. Co., 69 N. Y. 389.) But the acts of others, who represented tlxe defendant only, intervened, and it is claimed that through their action the company waived its right to avoid the policy and ratified it as a good and binding contract. While the plaintiff had a right to fill out his own application, he had no right to approve it, either as a director or as a member of the executive committee, because it is the policy of the law to prevent an agent, entrusted by his principal with the discharge of duties involving the exercise of judgment and discretion, from making a contract, in which he has a personal interest, that may conflict with the interest that he is bound to protect as the agent of another. (N. Y. Central Ins. Co. v. National Protection Ins. Co., 14 N. Y. 85; Voltz v. Blackmar, 64 id. 440; 1 May on Ins. [3d ed.] § 125.) Mr. Brown, however, was under no such disability, but as a director he was empowered to receive, and as a member of the executive committee to approve, the application. His approval and the payment of the premium bound the risk, and, by virtue of the by-laws, the plaintiff Avas thereby insured until notice to him of the contrary, which was never given. The learned trial judge was inclined to this YieA\r, but he held that Avhen the policy was issued, the application had fulfilled its office, and that the insurance from that time depended on the policy and not on the application. But if the policy was void, or if voidable and it was avoided by the company, how could it affect the valid application, which was not. dependent upon it ? A voidable act, when lawfully declared void, is the same as if it had been void db initia. Can an act, void in inception or by due declaration, have any legal force ? Can a valid contract be merged into a void contract ? Can that which does not exist, and is the same as if it never had existed, destroy that which does exist ? Moreover, the statute under which the defendant was incorporated, provides that all policies shall be signed by the president and secretary; that the president and secretary shall be directors; that the directors shall be members, and that every person, in order to become a member, must sign an application for insurance. Does not the statute, therefore, contemplate that the secretary shall sign his OAvn policy? How otherwise can. its commands be obeyed, for the secretary is required to sign all policies, and he is also required to take out insurance ? But the signing by the secretary would be merely clerical, if the terms of the contract had been previously assented to by other officers of the company, and we refer to the statute simply to show that the policy was not void because signed by the secretary. We think, however, that it was voidable at the election of the company, because its terms had not been previously approved by some officer who represented the company only. Such was the position taken by the defendant when moving for a nonsuit. Therefore, when the executive committee met on October 10, 1885, a valid application, effective as an insurance contract, had been made and a voidable policy issued thereon. The defendant, through Mr. Brown, knew of the former, but is not shown to have known of the latter, except inferentially. If the plaintiff is to he behaved, the application was then approved by the executive committee.and the temporary insurance thereby rendered permanent. (Fried v. Royal Ins. Co., 50 N. Y. 243; Audubon v. Excelsior Ins. Co., 27 id. 216.)
After the new secretary came in and the application, together with the books containing entries relating to the policy and the premium thereon, were turned over to him, the company had the means of knowing that a policy had been issued. His attention was called directly to the subject some months later when the plaintiff asked him for this application and he produced it. The premium paid by the plaintiff passed through the usual channel into the defendant's treasury, where it still remains. At the close of the year 1886, the officers, of whom plaintiff was not then one, included the policy and its amount in their annual report, not by specific mention, but necessarily counting it to make out the number and amount reported. The supervisory committee, after making a full examination of the books, certified that the report was correct. The books, with their " perfect record of all the transactions of the company," were required by law to be " kept open for the inspection of every member," every day except Sundays and legal holidays. (L. 1880, ch. 362, p. 541, § 5.)
A year and a half after the plaintiff went out of office, the fire occurred, and the executive committee, after receiving specific notice that a policy had been issued, and that it was in the hands of the mortgagee, met as an adjusting committee. With the open application in their hands, and without a word to indicate that they elected to avoid the policy, they met the plaintiff, asked him to fill out the blank proofs of loss which they gave him, called for his books, required him to furnish information, which they knew involved trouble and loss of time to obtain, and not until the action was commenced, so far as appears, was any step taken to avoid the policy. We think that the evidence permitted the inference that the company, with knowledge of the facts, ratified the policy, and that the-effort to avoid it, after suit begun thereon, was wholly ineffectual. (Titus v. Glens Falls Ins. Co., 81 N. Y. 410 ; Roby v. American, Central Ins. Co., 120 id. 510; Hyatt v. Clark, 118 id. 563.)
A question as to the power of defendant's officers to waive or ratify is raised by the defendant, and we are asked to decide-it. The argument is made that there is a distinction between stock and mutual companies, because the insured has no voice in the former while he is a part of the insurer in the latter; that each officer is his agent to a limited extent, and cannot waive the (Obligations of one member to the other, as he is their agent also. The act under Avhich the defendant is organized provides that every person insured shall sign an application for insurance and thereby become a member; that the members-shall choose directors, who are to elect the officers, and that the business and corporate powers of the company shall be transacted and exercised by the board of - directors, subject to the by-laws; that by-laws may be adopted by the directors,, and may provide for an executive committee for such purposes as may be necessary; that the directors may issue policies insuring against damages by fire or lightning. (L. 1880, ch. 362, and L. 1881, ch. 171.) Thus it appears that the defendant is a corporation, engaged in the business of fire insurance. Its members have no direct power in the management of its affairs. Their power is confined to the election of directors, to whom the business and corporate powers of the company are exclusively confided hy law. The relation of a member to the corporation is somewhat analogous to that of a stockholder in a stock company. We see no reason for holding, and we have been referred to no case in this state which holds, that the officers of such a corporation have less power to waive defects or ratify invalid policies than corresponding officers in stock insurance companies.
We have been referred to certain cases in Massachusetts, holding that where the members of a mutual insurance company by formal vote prescribed the form in which their policies should be made, and had thus deliberately determined the liability which they were willing to assume, the officers of the company could not waive such stipulations of the policies and by-laws as constituted the substance and essence of the contract, although they could waive service of proofs of loss and the like. (Evans v. Trimountain Mut. Fire Ins. Co., 9 Allen, 329; Buffum v. Fayette Mut. Fire Ins. Co., 3 id. 360; Priest v. Citizens' Mut. Fire Ins. Co., Id. 602.)
These cases are not analogous, because the statute under which the defendant exists confers no power upon its members to make by-laws, determine the form of the contract, or-do anything except elect directors, who constitute the governing body and wield all the power that the corporation possesses. We think that defendant's officers had the same power with reference to the subjects of waiver and ratification that is possessed by the officers of stock companies. (2 Herman on Estoppel, § 1204 and cases cited.)
The position of the defendant that the policy of the plaintiff, even if once valid, became void on account of the mortgage to Salisbury, requires little attention, because the nonsuit was not moved for on that ground.
If the existence of the mortgage had been made a basis of the motion, non constat, further proof would have been given upon the subject of consent, and any difficulty in that regard thus avoided. (Isham v. Davidson, 52 N. Y. 237; Adams v. Greenwich Ins. Co., 70 id. 166.) Moreover, the condition in regard to encumbrances affected nothing except the real estate, which was but part of the subject of insurance, and a breach thereof did not affect the remainder of the contract, as it related only to the personal property which was not mortgaged.
Whatever the rule may be elsewhere, it is settled in this state that where insurance is made on different kinds of property, each separately valued, the contract is severable, even if but one premium is paid and the amount insured is the sum total of the valuations. (Merrill v. Agricultural Ins. Co., 73 N. Y. 452; Schuster v. Dutchess Co. Ins. Co., 102 id. 260; Smith v. Home Ins. Co., 14 N. Y. St. Rep. 106; Woodward v. Republic Fire Ins. Co., 32 Hun, 365.)
The claim of the defendant that the plaintiff procured the approval of Mr. Brown and of the executive committee by concealment and fraud, involves a question of fact. We think that the motion to nonsuit should have been denied and the case submitted to the jury, and the judgment should, therefore, be reversed and a new trial granted, with costs to abide event.
All concur.
Judgment reversed.