Case Name: Matt Anderson vs. Manchester Fire Assurance Co.
Court: Minnesota Supreme Court
Jurisdiction: Minnesota
Decision Date: 1894-11-20
Citations: 59 Minn. 182
Docket Number: No. 8972
Parties: Matt Anderson vs. Manchester Fire Assurance Co.
Judges: 
Reporter: Minnesota Reports
Volume: 59
Pages: 182–195

Head Matter:
Matt Anderson vs. Manchester Fire Assurance Co.
Argued Oct. 11, 1894.
Affirmed Nov. 20, 1894.
No. 8972.
Laws 1889, eh. 217, if constitutional supersedes the rule in Lamberton v. Connecticut Fire Ins. Co., 39 Minn. 129.
Laws 1889, ck. 217, providing for a uniform policy of fire insurance by making tbe use of tbe standard policy compulsory, enables tbe parties to bind themselves by the conditions contained in it, thus changing the rule in Lamberton v. Connecticut Fire Ins. Co., 39 Minn. 129, in respect to the condition considered in that case. Canty, J., dissenting.
On Reargumont.
Laws 1889, eh. 217, held unconstitutional.
Laws 1889, ch. 217, which provided for the preparation by the insurance commissioner, and the adoption, of the “Minnesota standard policy,” is unconstitutional and void, for the reason that it attempted to delegate legislative power to the Insurance Commissioner.
Waiver of condition in a policy by acts in pais.
Where a policy of insurance provided, “This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has, or shall hereafter make or procure, any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy,” held, by delivering the policy knowing the existence of other insurance on the premises, the insurer waived the condition, though no such waiver was indorsed on the policy.
Appeal by defendant, the Manchester Fire Insurance Company from an order of the District Court of St. Louis County, S. H. Moer, J., made March 13, 1894, denying its motion for a new trial after verdict for plaintiff, Matt Anderson, for $800.
On May 9, 1893, defendant issued to the plaintiff its policy of insurance whereby in consideration of $32 it insured him for the term of one year next ensuing against all direct loss or damage by fire to the amount of $800 on his two story frame building situated on lot No. 24 in block No. 18 in the village of Virginia, Minn. The policy was in the form and contained the provisions prescribed by the Insurance Commissioner under Law's 1889, ch. 217. The provisions material to the question involved, are set out in the opinion of the Chief Justice. The building was worth $1,500 and was on June 18, 1893, totally destroyed by fire. When this policy was issued there was other insurance on the building to the amount of $500. This fact was known to defendant’s soliciting agent v'hen he made and delivered the policy to plaintiff, but no consent thereto or notice thereof is written in or upon the policy. Plaintiff was foreign born and cannot read or write English, and can converse in English only imperfectly. He did not know or have notice that the policy contained the provisions set out in the opinion. Notice of the fire was given and proofs of loss were made and served. The defendant refused to pay the insurance and this action was brought to recover the amount. The defendant relied on the condition against other insurance claiming it was not waived by any person having authority to waive it, that Laws 1889, ch. 217, and Ihe action of the Insurance Commissioner in prescribing the form of policy thereunder had superseded Lamberton v. Connecticut Fire Ins. Co., 39 Minn. 129. The trial court held otherwise and adhered to that decision. Defendant excepted. The jury returned a verdict for plaintiff. A motion for a new trial was denied and defendant appeals.
S. T. & Wm. Harrison, for appellant,
cited Quinlan v. Providence W. Ins. Co., 133 N. Y. 356; Moore v. Hanover Fire Ins. Co., 141 N. Y. 219; Wilcox v. Continental Ins. Co., 85 Wis. 193; Bourgeois v. Northioestern Nat. Ins. Co., 86 Wis. 606.
Jno. Jenswold, Jr., for respondent,
cited Kausal v. Minnesota F. M. F. Ins. Co., 31 Minn. 17; Lamberton v. Connecticut Fire Ins. Co., 39 Minn. 129; Brandrup v. St. Paul Fire & M. Ins. Co., 27 Minn. 393; Kister v. Lebanon Mut. Ins. Go., 128 Pa. St. 553; Hoose v. Prescott Ins. Go., 84 Mich. 309; Miller v. Phoenix M. L. Ins. Co,, 107 N. Y. 292.
After the opinions of November 20, 1894, were filed, the plaintiff, Matt Anderson, applied December 4,1894, for permission to reargue the case on the ground suggested in those opinions. Leave was granted and by the courtesy of plaintiff’s counsel permission was given Messrs. Bunn & Hadley to also file a brief for respondent, as they were concerned in several actions pending in the District Court of Ba,msey County which might be controlled by the result (See Laws 1895, ch. 175, § 58.)
S. T. é Wm, Harrison, Kitchel Cohen & Shaw, for appellant.
The question presented on this rehearing is whether Laws 1889, ch. 217, is unconstitutional as an unauthorized delegation of legislative power to the Insurance Commissioner of the state. What the legislature intended to adopt by the act in question was a contract which in its terms and conditions should be the same as the New York standard policy, so far as the same could be made applicable. The Insurance Commissioner was clothed with no discretion except to make in the preparation of the policy such clerical changes as would make the contract a Minnesota contract instead of a New York contract.
Such minor details in the adjustment of the form of the policy were properly submitted to the officer who under the laws of this state had charge and control over the administration of the business of fire insurance here. The New York form contained throughout the words, “Standard Fire Insurance Policy of the State of New York.” The words appeared not only upon the policy itself, but upon each of the riders in the policy. There were other formal matters, such as the size of the sheets on which the policies should be printed, and the mode of designating the riders or schedules, and it may be that in the mind of the legislature there existed some other practical questions which in its judgment could be best settled by the officer in charge of the practical administration of the insurance department.
That legislative power cannot be delegated under our constitution, is elementary law. The difficulty lies in determining what authority or discretion may be lodged in a body other than the legislative without contravening the constitutional principle. The rule of construction has been well expressed in State v. Chicago, M. d St. P. By. Co., 38 Minn. 281, reversed on appeal to the Supreme Court of the United States on other grounds. Chicago, M. d St. P. By. Co. v. Minnesota, 134 U. S. 418.
.The Supreme Court of the United States has gone even further than our own court on this point. Field v. Clark, 143 U. S. 649.
Laws 1872, ch. 1 (1878 G-. S. ch. 34, Title 6,) which is the basis of the present insurance law of Minnesota is in its nature a retaliatory-act. It imposes upon all foreign companies the taxes, fines and other license obligations which are imposed upon insurance companies of- this state doing business in the foreign state. This retaliatory or reciprocal provision of the insurance law has never been discussed in this state in regard to its constitutionality, but in those states where the question has arisen it has been held that this provision does not constitute a surrender by the legislature of its legislative functions to the foreign state. Home Ins. Co. v. Swigert, 104 111. 653; State ex rel. v. Insurance Co., 115 Ind. 257; Phoenix Ins. Co. v. Welch, 29 Kans. 672; People v. Fire Association, 92 N. Y. 311. *
A statute should not be declared unconstitutional unless in the judgment of the court its invalidity is placed beyond a reasonable doubt. Home Ins. Co. v. Swigert, 104 111. 653.
The Pennsylvania case, O'Neil v. American Fire Ins. Co., 166 Pa. St. 72, was decided under a law differing materially from our standard policy ach
The Minnesota standard policy contains not only the waiver clause which was discussed in Lamberton v. Connecticut Fire Ins. Co., 39 Minn. 129, but has, in addition to the language there considered, the following stipulation: “Nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached” to the policy. This additional provision, which is a part of the policy here in suit, constitutes a vital distinction between this case and the Lamberton case.
The distinct purpose of this agreement is to make the contract exclusively a written one, and this purpose is not opposed to public policy.
Jno. -Jenswold, Jr., for respondent,
argued that the legislature could not delegate its power to the Insurance Commissioner, and cited City of Evansville v. State ex rel., 118 Ind. 426; Bradshaw v. Lankford, 73 Md. 428; State ex rel. v. Young, 29 Minn. 474; Commissioners of Hennepin Go. v. Robinson, 16 Minn. 381; In re Wilson, 32 Minn. 145; Dougherty v. Austin, 94 Cal. 601.
Bunn & Hadley, also for respondent.
The question is, whether this policy is an act of the legislature itself or whether it is the act of some other person, under a delegated authority from the Legislature. The act does not fix the terms or conditions of the policy, the use of which it commands. It delegates the power to fix the terms and conditions. The appointee of this power is not named. He is the person who may happen to be. Insurance Commissioner when the time comes to file the form. He is not required to report his work to the Legislature, but simply to file it in his office. It does not become part of the statute in fact, is not recorded in the statute book, nor can a trace of it be found in the records of either branch of the Legislature. The commissioner had until August to prepare his policy over which when filed the Legislature had no control whatever. They did not consider, they had no knowledge of, the form which they required to be used exclusively in the state under heavy penalties.
.The elementary books divide a statute into three parts, the detlaratory, the directory, and the vindicatory. In this statute the Legislature furnished the first and third. It delegated the preparation of the second. It turned the preparation of the policy over to the Commissioner, and gave him four months in which to do his work and file a copy of it in his office. Whoever was interested to know what policy he must use, was required to look in the pigeon holes of the Commissioner’s desk, not in the act of assembly. The people of the state were required to take notice at their peril of whatever law the Commissioner might pass and file in his office. The preparation of the policy was the gist and sole purpose of the act. The enforcement of that policy was the sole object of its penalties. Take away the policy framed by the Commissioner and the act is meaningless, without force or effect. If time is taken to scan the standard policy, it will be found a work of scissors and paste. Culled from here and there, from a hundred various policies; edited and jumbled together so as to be as cut-throat a policy as was ever invented, a mass of various and in many instances inconsistent or incongruous clauses. Provisions are put in which this court had declared void; for example, the very provision on which this case was made to turn. Lamberton v. Connecticut Fire Ins. Co., 39 Minn. 129. It is impossible that a delegation of legislative power to one man can fasten on the people of the State a form of contract, which either is or might be open to such objections. It is not to be supposed that a really mischievous form of policy would pass both houses of the Legislature unchallenged. If this should happen the people would still have the remaining safeguard of a Governor’s veto. But this act steered past both legislative discussion and executive veto. The form of policy was to be fixed without knowledge or thought by the Legislature or Governor of a single one of its many and important provisions, provisions to be enforced by fines and penalties. O’Neil v. American Fire Ins. Co., 166 Pa. St. 72.
But the constitutional question does not arise if the policy be given simply the force and effect of a voluntary contract of the parties. We think that ought to be its construction. It is certain that the Legislature never had an idea that it would have any other force. Reed v. Washington F. é M. Ins. Co., 138 Mass. 572; Quinlan v. Providence W. Ins. Co., 133 N. Y. 356; Steele v. German Ins. Co., 93 Mich. 81; Michigan Shingle Co. v. State Inv. é Ins. Co., 94 ]\?ich. 3S9; Armstrong v. Western Manufacturers’ Mat. Ins. Co., 95 Mich. 137; Bourgeois v. Northwestern Nat. Ins. Co., 86 Wis. 606.
Finally, we do not see how the first opinion in this case can be reconciled with Powers Dry Goods Go. v. Imperial B'ire Ins. Co., 48 Minn. 380. The policies in that case were standard form policies. The point was argued in briefs on both sides whether the policy was to have the effect of a statutory enactment. But the court affirmed the judgment below, which disposed of the case against the companies upon parol waivers and estoppels by acts in pais of insurance adjusters. This was contrary to the letter of the contract, that there could be no waiver but by writing indorsed on the policy.

Opinion:
Gilfillan, C. J.
May 9, 1893, the defendant, by a Minnesota standard policy, insured a building of plaintiff against loss or damage by fire for one year, and June 18th the building was destroyed by fire. At the time of and prior to the issuance of the policy, the plaintiff had other insurance on the building, to the amount of $500.
The policy of defendant (the standard policy) contains this condition: "This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has, or shall hereafter make or procure, other contract of insurance, whether valid or not, on property covered in whole or in part by this policy," — and this further condition: "And no officer, agent, or representative of this company shall have power to waive any provision or condition of this policy except such as, by the terms of this policy, may be the subject of agreement indorsed hereon or added hereto; and, as to such provisions and conditions, no officer, a.gent, or representative shall have such power or be deemed or held to have waived such provision or condition unless such waiver, if any, shall be written upon or attached hereto." There was no indorsement on the policy referring in any way to the other and previous insurance.
The only question in the case is, could an agent of the defendant, notwithstanding the last above quoted condition, waive by parol, and without indorsing on the policy, the condition as to other insurance?
In Lamberton v. Connecticut Fire Ins. Co., 39 Minn. 129, (39 N. W. 76,) the court passed upon a condition similar to the condition last above quoted, and held it to be not an attempt to limit or restrict the power of any particular agent or class of agents, but to disable one of the parties to make, even with the consent of the other, an agreement that would otherwise be valid; and the court said: "A contracting- party cannot so tie his own hands, so restrict his own legal capacity for future action, that he has not the power, even with the assent of the other party, to bind or obligate himself by his further action or agreement contrary to the terms of the written contract." The court decided, in effect, that such a condition was nugatory; that the parties could not bind themselves by any such condition.
The defendant claims that Láws 1889, ch. 217, providing for a uniform policy of fire insurance, to be known as the "Minnesota Standard Policy," changed the rule of law in that particular; and that, by requiring the standard policy to be used, the act not only enables, but enjoins, the parties to bind themselves by the terms, provisions, and conditions contained in it.
No other question on that act is suggested by either party, either as to its validity or construction in any particular, except as above stated; and we ivill pass on nothing but the point thus made as applying to the condition last above quoted.
The standard policy was, under the act, prepared by the Insurance Commissioner, with the assistance of the Attorney General. Its use by insurance companies doing business in this state is made compulsory. The courts must, when called on, interpret it and its various provisions and conditions, and generally by the same rules as though the form of policy were voluntarily adopted by the parties. But in respect to the power of the parties to insert the provisions and conditions that are contained in the standard policy, and the binding effect of them, the act is conclusive; for it would be absurd to say that, while the statute compels the use of a particular condition, the parties cannot or shall not bind themselves by it, but it may be nugatory. By requiring the condition to be inserted, the statute certainly enables the parties to make the condition. It follows that the conditions quoted are valid and binding. In respect to the power of the parties to bind themselves by such conditions, the act changes the rule in the Lamberton Case.
Order reversed.