Case Name: Arba Thayer versus The Middlesex Mutual Fire Insurance Company
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1830-10
Citations: 10 Pick. 326
Docket Number: 
Parties: Arba Thayer versus The Middlesex Mutual Fire Insurance Company.
Judges: 
Reporter: Massachusetts Reports
Volume: 27
Pages: 331–338

Head Matter:
Arba Thayer versus The Middlesex Mutual Fire Insurance Company.
If a corporation, being a party to a suit, refuse to produce their books, upon notice, the adverse party may introduce parol evidence of the choice of the directors of the corporation and of the acts of such directors.
Such notice given to the attorney of record of the corporation, is notice to the corporation.
On the 15th of January an application was made on behalf of the plaintiff, who lived at Hopkinton, to the defendants, an insurance company at Concord, for insurance upon the plaintiff's buildings. The defendants stated the terms upon which they would insure them, and prepared a written application and a premium note, both bearing date of the 16th, to be signed by the plaintiff, and upon their being returned to the defendants by mail, a policy bearing the same date was to be sent to the plaintiff. The plaintiff's agent, who was the postmaster of Hopkinton, presented the written application and the note to the plaintiff on the 28th, and the plaintiff signed them forthwith and left them in the hands of the postmaster, to be forwarded to the defendants. There was a mail every Saturday from Hopkinton to Concord, and these papers were mailed and forwarded on Saturday the 3d of February, but the defendants refused- to give the plaintiff a policy, the buildings having been destroyed by fire on the 31st of January. In an action for the loss, it was held, that no contract of insurance had been completed between the parties, the papers signed by the plaintiff being in the hands of his agent, and therefore revocable, until after the buildings had been destroyed.
This was an action of assumpsit, in which the plaintiff declared that the defendants insured certain buildings of the plaintiff in Hopkinton, for the term of seven years from the 16th of January, 1827, and that on the 31st of the same January the buildings were burnt. The case was tried before Wilde J.
To prove the contract of insurance, the plaintiff called L. Walker, who testified that he was notified by a letter from N. Brooks, the secretary of the defendants, that the directors of the company would meet at Concord on the 15th of January, 1827 ; that the witness attended at the time and place mentioned, and found several gentlemen assembled, whom he supposed to be the directors, three only of whom he knew personally ; that the subject of the claim which the witness had against the company, was discussed by the gentlemen, who concluded to pay him a certain sum, which sum was afterwards paid ; that after the decision on the witness’s claim, A. Harrington, of Hopkinton, (who had deceased before the trial,) presented to the gentlemen a plan of the plaintiff’s buildings, and requested them to make insurance on the buildings for the plaintiff to the amount of $ 2000 ; that some discussion took place among the gentlemen, whether they should make insurance upon any buildings in Hopkinton (as there had been several losses by fire in that town), but that after some discussion they said they would insure the plaintiff’s buildings for a premium of six per cent, upon the sum insured, and they themselves apportioned the sum of $2000 upon the several buildings, according to the estimated value ; that the secretary said to Harrington, “ I will make out an application, and a note for the premium, and date them on the 16th of January, 1827, to be signed by the plaintiff, and when signed you may return them to me by mail or otherwise, and I will return a policy bearing the same date with the note and application ; ” and that an application and a note were then made out and delivered to Harrington, who carried them away.
The defendants objected to the above testimony, and to the reception of any oral evidence to prove the contract.
Before the admission of the above testimony, the defendants’ counsel required proof that the supposed directors vtfere directors, and that they had authority to bind the defendants.
It was then stated by the plaintiff’s counsel and admitted by the defendants’ counsel, that notice had been given to the defendants to produce the books of the company ; and they were called for, but the defendants refused to produce them. The plaintiff then called a witness, who testified that he bad examined the records of the company in the possession of the secretary, and taken the names of the directors chosen for the year 1827, which names the witness gave, being nine in all, among which were the three gentlemen known by Walker, as before mentioned. The witness also said that he examined the records of the directors, and that it appeared that thev were all present on the meeting of the 15th of January, 1827, except one, and that the three named by Walker were among those present.
The plaintiff’s counsel then read the act of incorporation of the defendants, to show the power of the directors.
In the application there were several interrogatories, one of them being, “ What is the estimated value of the buildings ?” Answers in the handwriting of the secretary were annexed to ail of them except this one, on the 15th of January, and to this one no answer was given, when the application was signed and returned to the secretary.
The plaintiff proved by the deposition of A. Harrington’s widow, that the original application and note were presented by Harrington to the plaintiff on the 28th of January, and both were signed by the plaintiff, and left with Harrington, who was the postmaster at Hopkinton, to be sent to the secretary of the defendants by the next mail, which did not go till the next Saturday, the 3d of February, at which time the deponent saw Harrington doing up these papers to be sent by mail. The mail goes but once a week (on Saturday) from Hopkinton to Concord.
No money was sent or paid by the plaintiff at the time of the application for insurance, nor since, nor did it appear that any thing had been said between the parties on that subject.
The jury returned a verdict for the plaintiff, and the defendants moved for a new trial on the ground that the parol evidence was inadmissible, or if not, that it did not prove a valid contract.
Hoar and Keyes, for the defendants,
insisted that parol evidence was not admissible to show the election and proceedings of the directors of the company, but that the same should have been proved by the company’s books ; and on this point they referred to the act of incorporation (St. 1825, c. 141, § 4,) which requires the directors to keep a record of their proceedings. It does not appear that the secretary was not a competent witness, and he ought to have been served with a subpoena duces tecum to produce the books.
Oct. 20th
They likewise contended that the directors could not bind the company in a contract of insurance, except by a policy, to be issued upon the performance of certain conditions precedent on the part of the assured. St. 1825, c. 141, § 2, 5, 10 ; Head v. Providence Ins. Co., 2 Cranch, 127 ; United States Bank v. Dandridge, 12 Wheat. 64 ; Salem Mill Dam Corp. v. Ropes, 6 Pick. 32. And further, that independently of the particular provisions of the act of incorporation, no contract had been made between the parties. M‘Culloch v. Eagle Ins. Co., 1 Pick. 278, [2d ed. 282, notes 1, 2.]
Fletcher and E. Fuller, for the plaintiff,
said the present case was distinguishable from that of M'Culloch v. Eagle Ins. Co., because there the offer of the defendants, was retracted before they had received an answer from the plaintiff. Here there was no dissent on the part of the defendants until after the buildings had been burnt and the plaintiff bad complied with the terms proposed by the defendants. They agreed to take the risk, and to send the plaintiff a policy bearing the same date with the note and the written application, when these two papers should be returned to them executed by the plaintiff. He signed the papers when presented to him by Harrington, on the 28th of January, and sent them to the defendants by the next mail. The contract was to take effect from the 16th of January, and the execution of the papers by the plaintiff and forwarding them to the defendants, completed the contract. Adams v. Lindsell, 1 Barn. & Ald. 681 ; Mactier v. Frith, 6 Wendell, 115 ; Routledge v. Grant, 1 Moore & P 517, and 3 Car. & P. 267; Phillips on Ins. 5.
July 1831.

Opinion:
Shaw C. J.
afterward drew up the opinion of the Court. A preliminary question raised by the defendants in the present sase is entitled to some consideration, which is, whether parol evidence of the choice of directors of the defendant corporation, and of the acts and doings of such directors, after the failure and refusal of the corporation to produce their books upon notice, was rightly admitted. And the Court are clearly of opinion that it was.
The rule, that upon a trial of controverted facts the party having the custody and control of books, documents and papers, shall on notice produce them, and that on refusal to do •so, the adverse party may give evidence of their contents, and that all inferences from such secondary evidence shall be taken most strongly against the party refusing to produce them, is a Highly reasonable and beneficial rule, tending to the discovery of the truth and to the promotion of honesty, frankness and fair dealing, and ought not to be shackled or obstructed by strict constructions or technical niceties.* It is not enough therefore to found an objection, that the party in a particular case, might possibly prove the facts material to his case, in some other mode ; this is the regular and proper mode, and the party has a right to rely on it.
If these views are correct in regard to individuals, a fortiori are they so, in regard to corporations, who are bound to keep records, and whose solemn and formal acts are usually manifested by their records, or by some other writings. It has sometimes been held that a corporation can be bound by its records or corporate seal only, and it is insisted by the defendants in the present case, that they can be bound only by their records or written contracts. This is perhaps pressing the point too far, according to the rules which have been held in this Commonwealth since the great increase of corporations ; but it tends to show that these records are the best evidence. The plaintiff was not bound to call any officer of the corporation to bring in the books ; such officer might be interested ; the secretary and indeed all the directors might have been changed, and yet the artificial body, the corporation, remained the same. The artificial person was in court by its attorney, and through such attorney was bound to take notice of all rules and orders, and to conform to them, like any other litigant party. Notice to the attorney then, bound the principal, and obliged the corporation to produce their books, whoever at the time might be its officers, or in whose custody soever the books might be. On failure to produce them upon this notice, the parol evidence was competent, and properly admitted.
But upon .the other ground, the Court are of opinion, that at the time when the fire took place, there was no complete con tract of insurance between the parties, but only a negotiation, which had not resulted in a contract.
The proceedings at Concord, did not purport to be a contract ; a paper was drawn up purporting to be a proposal to be made by the plaintiff to the company, to be signed by him together with his note, and returned and filed in the office, whereupon a policy was to be made by the secretary and sent to the plaintiff. This took place on the 15th of January, and the policy was to be made out as of the 16th. This would seem to imply that the proposal was to be returned with the note immediately. But in fact, the plaintiff did not sign these papers till the 28th, when they were signed and handed back to Harrington, who was postmaster, to forward to the company at Concord ; the fire took place on the 31st, but the proposal and note were not mailed and forwarded till the 3d of February, four days after the fire.
In the first place, it seems to us quite clear, that the proceedings at Concord did not constitute a contract of insurance, and were not understood so to do. Harrington was authorized to inquire and ascertain the terms upon which the company would insure, but not to make insurance and bind his principal by contract. Until he had stated to bis principal what these terms would be and he had assented to them, he was under no obligation. The same is implied by Harrington's taking home a blank proposal; this the plaintiff was at liberty to sign or not as he pleased. It seems to us clear, therefore, .that no contract of insurance was then made.
But the principal ground relied upon by the plaintiff is, that the proceedings of Brooks and the directors at Concord on the 15th of January, were an offer, and that when assented to by the plaintiff, they constituted a contract.
But we think the facts, as they appear in the judge's report, do not warrant this proposition. If this was to be regarded as an offer, it was to be acceded- to or rejected within a reasonable time, and before any material change of circumstances. As the supposed offer was made on Monday the 15th, and the intimation was that the policy should be made as of Tuesday the 16th, it would seem that an immediate return of the proposal with notice of the plaintiff's acceptance of the defendants' offer was expected. But if notice by mail was contemplated, there was a mail on Saturday the 20th and Saturday the 27th, by neither of which was notice forwarded, nor was it forwarded till the mail of Saturday the 3d of February. Even if no essential change of circumstances had taken place, it would be extremely difficult to hold that the defendants would be bound by simple notice of the assent of the plaintiff to their offer, after such a lapse of time. If however the case rested solely upon the ground that the notice of acceptance of the defendants' offer, on the part of the plaintiff, was not given within a reasonable time, it would deserve further consideration; but we think it does not rest solely or mainly upon that ground.
But we are of opinion, that supposing the proceeding at Concord constituted an offer on the part of the company, which continued binding notwithstanding the delay of the plaintiff in acceding to it, still that it had not been acceded to when the loss happened, and of course that there was no contract of insurance then subsisting between the parties.
If the act of the defendants amounted to an offer, that offer would not be matured into a complete and effectual contract until it was acceded to by the plaintiff, and notice thereof giv en to the defendants, either actual or constructive. The proposal and note were not signed till the 28th, and were then delivered back to Harrington, who was the plaintiff's agent, and who was also postmaster. They remained in his custody, subject to the control of the plaintiff himself, until Saturday the 3d of February, when Harrington enclosed them to Brooks, to be forwarded to Concord. This we think cannot be considered as constructive notice to the defendants, until the papers were enclosed and forwarded, which was after the loss. It may well be conceded, that where notice is to be given by mail, a notice actually put into the mail, especially if forwarded and beyond the control or revocation of the party sending it, may be good notice. But where the party's own agent hap-PeDe<^ t0 be postmaster and the notice and proposal were not enclosed and put into the mail till after a loss, the delivery to such postmaster cannot be deemed notice to the defendants. At the time when the fire happened and the loss occurred, we think the matter rested in proposal only; that there was no complete contract; and therefore that the plaintiff is not entitled to recover.
Upon the question whether the offer of the defendants was substantially complied with, the blank in the proposal, for inserting the value, not being filled up, whether the directors could bind the company, in a contract of insurance, otherwise than by a policy, and several questions upon the delegated and limited powers of the directors, as conferred and qualified by the particular provisions of the act of incorporation, we do not find it necessary to give an opinion ; proceeding upon the ground, that upon general principles, and as between parties having a general power to contract and bound to conform to no particular form of contract, there was no such offer on one side and assent thereto and notice thereof on the other, as by law are required to constitute an agreement or contract, until after such a change of circumstances by the destruction and loss of the subject matter, as must necessarily be considered a revocation of all offers and proposals on the subject.
New trial granted.
See Life & Fire Ins. Co. v. The Mechanic Fire Ins. Co. 7 Wendell, 31, 33, 34; Symington v. M' Lin, 1 Dev. & Batt 291, 298; Cooper v. Gibbons, 3 Campb. 363; Jackson v. M'Vey, 18 Johns. R. 330.
See 1 Metcalf & Perkins's Dig., tit. Corporation, art. VI, and cases cited.
A willingness to enter into the agreement, by the party offering, is presumed to continue for the time limited, and if that time be not fixed by the offer, then until it is expressly revoked, or counteracted by a contrary presumption. Mactier v. Frith, 6 Wendell, 103. But the offer must be accepted within a reasonable time. Peru v Turner, 1 Fairfield, 185. See Chiles v. Nelson, 7 Dana, 281.