Court Opinion

ID: 8797874
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:18:24.266293+00
Date Added: 2024-06-11T17:03:44.117967
License: Public Domain

LACOMBE, Circuit Judge
(dissenting). I am unable to concur with the majority of the court. This action is not brought on tire policy of *843insurance Issued on May 10th. Originally the complaint averred that a policy was issued and delivered to the insured on April 28th, and that the property covered thereby was destroyed by fire on April 29th. Upon the filing of answer to this original complaint plaintiff filed an amended complaint, in which he averred that on or about April 28th insured made application to underwriter for insurance, and that on said day the underwriter promised and agreed to insure its property, and that defendant would execute and deliver policy in the usual form; also that on May 10th it did issue the policy. The answer to this amended complaint admitted that a. contract of insurance was entered into on April 28th. It averred that among the terms and conditions were these: (1) Maximum liability not to exceed $15,000. (2) Underwriters liability for loss resulting from any one fire not to .exceed 30 per cent, of such maximum liability. (This was a floater policy, covering lumber in different localities.) (3) That insurance should be subject to 80 per cent, coinsurance clause. The answer further admits the issuance on May 10th of the policy attached to complaint.
It is manifest that the main issue which the parties came into court to try was this: “What contract was entered into on April 28th?” Upon that question proof was introduced, written proof, which stands upon the record wholly uncontradicted. To my mind that proof establishes conclusively what were the terms of the contract. On April 21st the Duluth Company asks for a floater policy on timber products in Minnesota, covering $50,000 at a rate “not to exceed two fifty net.” The next day the insurance company replies by telegram and mail asking that forms be forwarded, stating that it could not advise definitely as to acceptance of the proposition until it had a copy of the form; also that it would require a coinsurance clause equal to 90 per cent, and a limit of loss by any one fire — a plain statement that the whole amount of the floater insurance was not to be absorbed by fire at a single place. By telegram and letter of April 22d and 23d the Duluth Company replied, stating that it was willing to pay gross rate of 3 per cent, premium; also that it would agree to an 80 per cent, clause, instead of the 90 per cent, suggested; also that it would agree to limit loss by any one fire to 30 per cent, of the face of the policy. All these negotiations, of course, included the making of a policy in the standard form, with the usual provisions as to care of property, date of notification, proofs of loss, etc.
Such, then, was the proposition before the insurance company; its terms specifically covering the matter in controversy here, viz., 'the limitation of loss by' a single fire. The total amount asked for was $50,000. This proposition the insurance company accepted, with the single modification of the total amount to $15,000. That this acceptance made a binding contract is conceded. If nd binding contract was made before the fire occurred, plaintiff under the pleadings would have no case at all. Of course, it was in the power of the parties, who had made this binding contract in express terms, subsequently by agreement to modify any one of those terms. But no1 such modification was made, or even attempted to be made, until after the occurrence of the fire while the contract was in force, which crystallized the rights and *844obligations of both parties. The telegram of May 1st, two days after the fire, would no.t change it.
It does not seem to me that the well-settled rule that prior negotiations are merged in a subsequent written contract applies here, where it is asserted and must be shown as a condition of plaintiff’s recovery that there was a complete contract on April 28th, and where the event which the contract provided for occurred the next day. The agent of the insurance company, who had power to make the contract and agree to its terms, had also ppwer to modify or alter those terms at any time before the fire had created mutual rights and obligations; his agency would not, without proof of special authority, give him the power to give up rights of his principal which had become fixed and determined.
Nor do I think that there is any force'in the proposition that the telegram of May 1st sent by the insured and the testimony of its agent as to correcting a mistake in the forms sent changes the situation. To the defendant’s contention that the policy should be made to conform to the agreement, it is objected that this could be done only in a direct proceeding to reform the policy. The same objection may with equal force be urged against an attempt by plaintiff to reform the contract on the ground of mistake.