Case Name: New York Mutual Savings and Loan Association, Appellant, v. Westchester Fire Insurance Company, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-01-26
Citations: 110 A.D. 760
Docket Number: 
Parties: New York Mutual Savings and Loan Association, Appellant, v. Westchester Fire Insurance Company, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 110
Pages: 760–767

Head Matter:
New York Mutual Savings and Loan Association, Appellant, v. Westchester Fire Insurance Company, Respondent.
Second Department,
January 26, 1906.
Fire insurance — policy issued on building known by insurance agent to be unoccupied — agency—insurer estopped by knowledge of agent.
When a fire insurance agent issues a policy of insurance on a building known by him at the time to be unoccupied and likely to remain so for some months, the insurer is liable on" such policy, although it contains a provision that it shall be void if the building “be or become vacant or unoccupied and so remain for ten days,” and the insurance is issued on the building “ while occupied as a dwelling.” Under such circumstances the knowledge of the agent is that of the principal and the latter is estopped.
This is so, even though the insurance agent is also the agent of the owner of the ■ ■. building and leased said building and collected the rents.
Appeal by the plaintiff, the New York Mutual Savings and Loan Association, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Westchester on the 20tli day of June, 1904, upon the report of a referee dismissing the complaint upon the merits."
- George Richards [ Woodson R. Oglesby with him on the brief], for the appellant.
Michael JT. Cardoso, for the respondent.

Opinion:
Hirschberg, P. J.:
This action is brought to recover on a fire insurance policy written by the defendant upon premises belonging to the plaintiff in the village of White Plains, N. Y. The premises in question" were rented by the plaintiff to a tenant and were occupied by the tenant and his family until January 17, 1903. Because of the inability to procure coal at that time owing to the existence of the great coal strike, the tenant then vacated the premises temporarily and resided with his family in the city of New York until the building at White Plains was destroyed by fire. The building referred to remained unoccupied dining all" that time. It was not vacant, the tenant having left his household effects in it. The policy of insurance was issued on February-6, 1903, but the premium was not paid until after the fire, which occurred three weeks later. The policy is in the standard form, and the main defense is that it was void by virtue of the provision that it should be void if the building " be or become vacant or unoccupied and so remain for ten days." Attached to the policy was a special rider, stating in effect that the insurance on the building and additions thereto was " while occupied as a dwelling."
The agent who issued the policy was a general local agent of the defendant to whom policies were furnished, signed by the defendant's officers, which became binding contracts when countersigned by the agent. This agent was also the renting agent of the plaintiff, and had acted as such in the creation of the tenancy referred to. After the fire he charged the premium on the policy to the rents collected, and remitted to the defendant without any knowledge on its part of the mode of collection." He resided near, if not actually adjoining, the insured premises, and was well aware at the timé of . the issuing of the policy that the premises were then unoccupied and were to remain unoccupied for an indefinite period depending upon the continuance of the strike. The evidence is sufficient to justify the ^conclusion that the agent was informed when the tenant and" his family left the building that they would be absent at least until the month of April. The learned referee held that the policy was valid .in its inception, but became void when the period of ten days had elapsed from the time it was issued, but I think that that view is in conflict with the logic of the controlling authorities. The knowledge of the agent in this instance was clearly the knowledge of the defendant, and having elected to issue the policy on an unoccupied hoiise, with knowledge that it was to remain unoccupied for a period greater than ten days, the defendant is estopped from ¿laiming a forfeiture. • . '
' In the case of Vanderhoef v. Agricultural Ins. Co. (46 Hun, 328) the policy of insurance contained a provision that, if the dwelling house should " cease-to be occupied by the owner or occupant in the usual' and ordinary manner in which, dwelling houses are occupied as such this policy shall be void until the written consent of the company at the home office is obtained." The agents of the insurance company knew at the timé the pqlicy was issued that the house was then.practically unoccupied. ' There was a question whether it was so unoccupied at the time of the fire; but it yras held-that even if the house was unoccupied when the fire occurred, yet, as it was in the same condition as to occupancy when the insurance was effected, and that fact was at that time known to the company's agents, their knowledge must be regarded as its knowledge, and that it must be'presumed either that the company by mistake omitted to state in its policy that the house was to be unoccupied or waived the provision as to occupancy and was accordingly, estopped, from setting it up. The court said (p. 333): " It is a general prm-'. ci.ple of the law'of agency that the knowledge of the agent is the knowledge of the principle (sic). Crane & Mosher were the agents of the defendant to make surveys and take applications, for insurance. For those purposes tlieir authority. was unlimited.' The policy recognized their agency not only in the body of it, but by the indorsement upon it of their names as agents. The same rules apply to insurance companies as apply in the case of individuals, and a person who is clothed with power to act for them at all, is treated as clothed with authority to hind them as to all matters within the scope of his real or apparent authority. (Wood on Fire Ins. 624, § 383, and cases cited.) An agent whose business it is to receive and forward to the company applications for insurance, is the agent of the company to receive a disclosure of facts, although the company privately instruct him to regal'd himself in so. doing as the agent of the applicant. (Flanders on Fire Ins. 103.) In Patridge v. The Commercial Fire Insurance Company (17 Hun, 95) it was held that the knowledge of an agent to receive applications was the knowledge of the company and that the company was bound by his knowledge. The case of Broadhead v. Lycoming Insurance Company (14 Hun, 452) ; Chase v. The People's Fire Insurance Company (Id. 456); Van Schoick v. Niagara Fire Insurance Company (68 N. Y. 434) ; Bennett v. North British Insurance, etc., Company (81 id, 273), and many others are to the same effect. (See Bennett v. Agricultural Ins. Co., 106 N. Y. 243.) "
In Woodruff v. Imperial Fire Ins. Co. (83 N. Y. 133) the same principle was enforced. The defendant's agent in that case knew at the time the application for the policy was made that the house on the premises was then unoccupied and vacant. It was held that the condition in the policy requiring notice of a special agreement indorsed on the policy in case the building became vacant and unoccupied was waived.
In Short v. Home Ins. Co. (90 N. Y. 16) the. policy contained a provision that in case the premises " become vacant or unoccupied and so remain with the knowledge of the assured without notice to and consent of the company in writing,'' the policy should be void. The premises were vacant and unoccupied at the time of the insurance and so continued until the building insured was destroyed by fire. It was held that notwithstanding the breach of the condition, if the defendant had'knowledge of the facts at the time of the issuing óf the policy, it .was to be presumed that it by mistake omitted to express the fact in the policy, or that it waived the condition, or at least held itself estopped from setting it tip, as a contrary inference Would impute to it a fraudulent intent to receive pay for- an invalid instrument, and that as the evidence i tended to show that the defendant's agent had such knowledge, and made the insurance without regard to the condition of the premises, a refusal to submit the question to the jury was error.
In Manchester v. Guardian Assurance Co. (151 N. Y. 88) the action was brought to recover the amount alleged to be due on a New York standard fire insurance policy. The defense pleaded was á change of title which by the terms of the policy required the' sanction - of the insurance company- manifested by'an indorsement on the policy. The general agent of the company had agreéd, but failed, to procure 'such indorsement, and it was held that the insured. (his transferee in -this case) cotild Nevertheless recover the amount of the policy as damages for the breach of the agreement, on the doctrine of equitable estoppel, by which the defendant was precluded from-claiming/a forfeiture.
To the'like effect ate Van Schoick v. Niagara Fire Ins. Co. (68 N. Y. 434) and Blass v. Agricultural Ins. Co. (18 App. Div. 481 ; affd., 162 N. Y. 639). In the. case last cited the court Was controlled by the ruling in Manchester v. Guardian Assurance Co. (supra), and said (pp. 486,487) : It is difficult to see any difference in principle between the case cited and the one at bar. In the present cáse the agent had power, by indorsing a. written consent upon the policy, to - insure a dwelling which should be and remain unoccupied for more than ten days. If the agent in the case cited had power by his conduct to estop the defendant without a written consent, the agent in the present case must be deemed to have had power to bind the defendant by a policy on a building which he knew was to be unoccupied beyond the time limited-in the policy, and so estop the defendant from interposing its unoccnpancy as a defense. The case last cited seems to.conflict with Messelback v. Norman (122 N. Y. 578). and O'Brien v. Prescott Ins. Co. (134 id. 28), but it is the latest exnression of the Court of Appeals and must be followed..
"In Bennett v. Agricultural Ins. Co. (106 N. Y. 243, affg. 15 Abb. N. C. 234) the policy provided : ' If the dwelling house or houses hereby insured shall cease to be occupied by the owner or occupant in the usual and ordinary manner in which dwelling houses are occupied as such, or be so unoccupied at the time of effecting insurance, and not so stated in the application, then, and in every such case, or in either of said events, this policy shall be null and void until the written consent of the company at the home office is obtained.'
" The dwelling was unoccupied when the policy was issued; was afterwards occupied for some time, but was unoccupied at the time •of the fire. It was found as a fact that the agent who issued the policy knew that the building was Unoccupied when the policy was issued, though that fact was not stated in the, application, nor was the written consent of the insurer obtained. It was held that the dwelling being unoccupied at the time when the policy was issued, to the knowledge of the defendant's agent, the policy took effect and that it was not invalidated by the fact that it was subsequently occupied for a time - and then vacated, and remained continuously unoccupied for more than six months preceding the fire. This case is an authority for the position that an agent may bind an insurer by issuing a policy upon a building which he knows to be unoccupied, without stating in the application or indorsing on the policy the fact that the building is unoccupied."
The same principle was reiterated in the case of Gray v. Germania Fire Ins. Co. (155 N. Y. 180), where it was held that knowledge on the part of an agent of an insurance company at the time of the delivery of a policy prohibiting other insurance, without an indorsed consent that the insured intended to procure other insurance, does not constitute a waiver of the provision. While the principle was recognized, it obviously had no application to the facts of that case, because of the distinction between the knowledge by an insurer of an existing fact which would render a policy void if continued, and an omission of the insured to give the insurer notice of a subsequent act contemplated at the time of the insurance, but which omission would invalidate the policy by its express terms. As te the principle controlling the present case, the court therein said (p. 184): " It is well settled in this State that where an insurance company issues a policy, with full knowledge of facts which would render it void in its inception if its provisions were insisted upon, it will be presumed that it by mistake omitted to express the fact in the policy, waived the provision or held itself estopped from setting it up, as a contrary inference would impute to it a fraudulent intent to deliver and receive pay for an invalid instrument. (Van Schoick v. Niagara F. Ins. Co., 68 N. Y. 434 ; Whited v. Germania F. Ins. Co., 76 N. Y. 415 ; Richmond v. Niagara F. Ins. Co., 79 N. Y. 230 ; Woodruff v. Imperial F. Ins. Co., 83 N. Y. 133 ; Short v. Home Ins. Co., 90 N. Y. 16 ; Forward v. Continental Ins. Co., 142 N. Y. 382 ; Wood v. American F. Ins. Co., 149 N. Y. 382 ; Robbins v. Springfield F. & M. Ins. Co., 149 N. Y. 477, 484.)"
The samé distinction is to be noted in the case of Herrman v. Adriatic Fire Ins. Co. (85 N. Y. 162), which appears to have influenced the learned referee in the decisión of the case at bar. That case, however, turned chiefly upon the question. whether the property was or was not really occupied at the time of the fire, within the meaning of the provisions of the policy, and it was held .that fortnightly visits of the plaintiff and his wife to the_ dwelling house did not constitute an occupation such as is meant when a dwelling house is spoken of. But in that case the house and outhouses were occupied at the time the insurance was effected; the abandonment which was held to work a forfeiture was a subsequent occurrence, and the extent of the decision is that such subsequent event does not work an estoppel, even where it was known by the insurer at the time the contract was made that such temporary abandonment was contemplated. (See also the case of Cross v. N. F. Ins. Co., 132 N. Y. 133.)
I do not think that the circumstances under-which the agent in this case acquired his knowledge that the_premises were unoccupied is controlling, nor is the fact that he was an agent for both parties. He wrote the insurance- as the agent of the defendant, and if the plaintiff is to be chargeable with his knowledge of the unoccupancy of the premises, the most, that can be said is that both parties knew the fact when the contract was made, and under the authorities . \ . ' cited are to he deemed as having contracted with such knowledge, and, therefore, to be held as intending to create a valid and binding contract notwithstanding the fact of the unoccupancy.
There are other questions presented on this appeal, but the one considered is deemed controlling." Some of .the cases cited are . actions brought to reform policies, and some of -them were brought. to recover on policies other than the standard one: but the underlying principle is the same, and, I tliipk, necessarily leads to the conclusion that the policy in question was issued by the defendant with full knowledge that the premises were unoccupied, and were to remain unoccupied, for a period of more than ten days, and that the defendant accordingly cannot claim a forfeiture of the policy by reason of the breach of the condition.
* The judgment should be reversed.
Jenks, Rich and Miller, JJ., concurred.
Judgment reversed and new trial granted, costs to abide the event.
Bennett v. North British, etc., Ins. Co.— [Rnr.