Opinion ID: 1542045
Heading Depth: 1
Heading Rank: 1

Heading: The Contract Between the Parties.

Text: The plaintiff was represented in all matters concerning the contract in question by her husband and agent, who had acted for her in a similar capacity for many years past and was the only witness appearing in her behalf at the trial. On December 30, 1937, he communicated with the agents of defendant, advising them that plaintiff, a professional dancer, was contemplating a tour of the Southern States of the United States, commencing January 24, 1938, and continuing through March 4, 1938, and that plaintiff desired insurance in the amount of $200 per day against all disability to her professional capacity as a performer during that period. Later, the agent of the defendant telephoned the agent of the plaintiff that such insurance had been arranged and the cover note 3019 (being the written contract relied upon by defendant) was delivered to plaintiff's agent on January 5, 1938. During these telephonic conversations no reference was made to the terms of the insurance, other than the period it was to be effective, the premium the amount of indemnity to be paid, and the nature of the disability (accidental and illness). Cover note 3019 is the written memorandum issued by defendant, covering the accident hazard and cover note 3018, which is of relative unimportance in this proceeding, covered disability arising from illness. The plaintiff suffered an accident on January 9, 1938, falling through a skylight, sustaining injuries, the extent of which is not disclosed. On January 11, 1938, plaintiff's agent paid the premium to defendant for both of said cover notes. Plaintiff contends that there is a variance between the parol arrangements and some of the provisions in the cover notes. Cover note 3019 provided that no benefits were to be paid for the first two days of the disablement. Plaintiff asserts that this was not mentioned in the telephonic conversations. This cover note in Paragraph 7 of the Schedule of Compensation also provided, as follows: 7. Total disablement which either permanently or temporarily, necessarily and continuously disables the Assured and prevents the Assured from fulfilling her engagements as a classical dancer while on tour principally through the Southern States of the United States of America. $200.00 per day so long as the disablement continues, during the period between January 24, 1938, and March 4, 1938, both days inclusive. Plaintiff likewise asserts that this provision was not discussed and that nothing was said about any contracts of employment during that period. The plaintiff had previously, in August, 1935, through her husband as agent, obtained from defendant a written binder of accident insurance, covering a period of 35 days which provided that the defendant would pay the plaintiff $1,500 a week for total disablement which either permanently or temporarily, necessarily and continuously disables the assured and prevents assured from filling the contract with H. H. Handley. This binder provided that no benefits were payable for the first two days of disablement. Again in November, 1935, she obtained a similar written binder of accident insurance from defendant, covering a period of thirteen days, which provided that defendant would pay the plaintiff $1,000 a week for total disablement which either permanently or temporarily, necessarily and continuously, disables the assured and prevents the assured from filling her contract. This binder also contained the two day elimination clause. Again in February, 1936, the plaintiff obtained from defendant a similar written binder which provided that defendant would pay plaintiff $2,500 a day for total disablement which either permanently or temporarily necessarily and continuously disables the Assured and prevents the Assured from filling her contract, on March 1st and March 2nd, 1936   . This binder covered only a two day period and, presumably for this reason, contained no two day elimination clause. Also in 1936, defendant issued to plaintiff a written binder covering illness. No two day elimination clause appeared in this contract, or any other similar contract covering illness. Again in November, 1936, plaintiff obtained from defendant a written binder of accident insurance which provided that defendant would pay plaintiff $1,000 per week for total disablement which either permanently or temporarily necessarily and continuously disables the Assured and prevents the Assured from filling her contract with the Chicago City Opera Company. This binder contained the usual two day elimination clause. There was also issued in November, 1936, a written binder covering illness. Plaintiff declares on the oral contract, and contends that the two day elimination clause and the provision of Paragraph 7 of the Schedule of Compensation should not have been included in the binder or cover note. She asserts that they were wrongfully inserted in the cover note, wrongfully, not because of any agreement to the contrary, but wrongfully because of no mention of same in the preliminary conversations. In the case of Eames v. Home Insurance Company, 94 U.S. 621, 629, 24 L.Ed. 298, the following language is used by the Supreme Court: As to the plea that the contract does not specify what kind of a policy was desired, it does not appear that the complainants had any knowledge or notice that the defendant issued different kinds of policies. As Eames justly said, he supposed (as he had a right to suppose) that they would get the same kind of policy which had been issued on the property before. If no preliminary contract would be valid unless it specified minutely the terms to be contained in the policy to be issued, no such contract could ever be made or would ever be of any use. The very reason for sustaining such contracts is, that the parties may have the benefit of them during that incipient period when the papers are being perfected and transmitted. It is sufficient if one party proposes to be insured, and the other party agrees to insure, and the subject, the period, the amount, and the rate of insurance is ascertained or understood, and the premium paid if demanded. It will be presumed that they contemplate such form of policy, containing such conditions and limitations as are usual in such cases, or have been used before between the parties. This is the sense and reason of the thing   . See also Cottingham v. National Mut. Church Insurance Company, 290 Ill. 26, 124 N.E. 822. These cases were cited and followed in Trichelle v. Sherman & Ellis, Inc., 259 Ill. App. 346. In this case, plaintiff sued on a preliminary binder of fire insurance. The defendant maintained that the preliminary binder was subject to all the terms and conditions of the usual form of policy and that the plaintiff did not comply with certain of those terms and conditions. One condition required the plaintiff to bring suit on the policy within twelve months after the loss. A second condition provided that the policy would be void if the assured had other insurance on the property. A third condition provided that the policy would be void if explosives were kept on the premises. None of these three conditions was mentioned in the preliminary binder. The defendant proved that the present action was instituted more than a year after the loss, that the plaintiff had other insurance on the property, and that explosives were kept on the premises. The jury returned a verdict for the plaintiff and judgment was entered thereon. The Appellate Court reversed the judgment because the trial court erred in not directing a verdict in defendant's favor. We think that the parties, in view of their previous conduct and their previous contracts, covering similar risks, had a right to suppose and did assume that substantially the same kind of a contract would be issued by defendant in pursuance of the order given by the plaintiff on December 30, 1937, as had been previously used for like insurance. It is undisputed that the period of insurance, the premium to be paid, the amount of indemnity and the disability to be insured against were agreed upon in the preliminary conversations, and, this being true, if the defendant, pursuant thereto issued its written cover note, substantially in accordance with previous similar contracts between the parties, neither party can complain. Many provisions were contained in the written cover note not mentioned in the preliminary conversations in addition to the two day elimination clause and the provisions of Paragraph 7. Necessarily this must be so if the law is to give recognition to such preliminary binders. Risks excluded from one type of policy may frequently be covered in a policy of a different type. A personal accident policy does not cover intentional self-injury; an ordinary life insurance contract does not, during the contestable period, cover suicide; an automobile public liability policy does not cover one driving the assured's car without his consent. When the assured orders a policy from his broker, he does not usually discuss these details, but preliminary binders are issued daily upon the mere naked order for an insurance contract. When the contract is issued if it contains the usual conditions, limitations and exclusions that have by practice been generally recognized in similar contracts or that have previously existed in similar contracts between the parties they will be given effect by the courts. If it was reasonably consistent with the practice in similar cases or reasonably consistent with substantially similar insurance contracts between plaintiff and defendant to include in the written cover note the two day elimination clause and the provisions of Paragraph 7 referred to, then the oral conversations preliminary to the issuance of such cover note were merged in the cover note which became the contract of the parties. In Hartford Fire Ins. Co. v. Webster, 69 Ill. 392, the Supreme Court of Illinois said: No principle of law is better settled than that the evidence of a contract can not exist partly in writing and partly in parol. Whatever may have been said in reference to the contract between the parties, at the time of or prior to its execution, after it was reduced to writing parol evidence was inadmissible to enlarge, modify, or contradict its terms as expressed in the written instrument. The parties might, undoubtedly, by a subsequent agreement, modify or enlarge its terms by parol, but that was not the case here. What was relied on as an excuse for not complying with its terms, was said when the contract was being made, and is directly contradictory to it, as evidenced by the policy. See also Hartford Fire Insurance Company v. Wilson, 187 U. S. 467, 23 S.Ct. 189, 47 L.Ed. 261; Harnickell v. New York Life Insurance Company, 111 N.Y. 390, 18 N.E. 632, 2 L.R.A. 150; Union Mut. Life Insurance Co. v. Mowry, 96 U.S. 544, 24 L.Ed. 674; 16 Am. and Eng. Encyclopedia of Law, Second Edition, page 856. The principle that written contracts cannot be varied by parol and that contracts generally cannot be founded partly in parol and partly in writing is fundamental. Winnesheik Insurance Co. v. Holzgrafe, 53 Ill. 516, 5 Am.Rep. 64; Hartford Fire Insurance Co. v. Webster, supra; Rozgis v. Missouri State Life Insurance Company, 271 Ill.App. 155. It is not necessary in a preliminary contract that all the details of the contract finally to be expressed in the written policy should be specified, but in a preliminary contract it will be presumed that the parties contemplated such form of policy, containing such limitations and provisions as are usual in such cases, or as have been used before between such parties. Eames v. Home Insurance Company, supra; Cottingham v. National Mutual Church Insurance Company, supra. We find from the testimony of plaintiff's agent that nothing was said during the conversations concerning the two day elimination period, and nothing was said in regard to whether or not plaintiff had any contracts of employment during the period in question. Plaintiff's agent testifies, I told him (agent for defendant) that I would accept the insurance on the basis that had been covered in our conversations and that was to carry it forward in whatever manner was proper and bill me for it in due course. Defendant's agent testifies that plaintiff ordered insurance of the kind she had previously carried, the plaintiff has not denied this, unless it be by inferences to be drawn from the testimony of her husband. Under such circumstances, we think there was no substantial disagreement between the parties about the preliminary conversations and we conclude that the written cover note, issued in pursuance thereof, being to all effects and purposes substantially similar to previous contracts of insurance between the parties became, when issued, the contract of the parties. The oral discussions became merged in such written contract. It was manifestly impossible that all the details of the insurance contract should be included in the conversations and such written contracts are not to be condemned merely because they contain provisions not mentioned. The District Court in its conclusions of law found that such parol agreements were merged in the written cover notes so far as such cover notes were not actually or materially at variance therewith; but he further concluded that the two day elimination clause was not properly included in the written contract and was not binding upon either party. This conclusion of law we cannot accept on the undisputed facts.