Court Opinion

ID: 7340013
Source: CourtListenerOpinion
Date Created: 2022-07-25 23:42:51.012205+00
Date Added: 2024-06-11T16:20:15.279786
License: Public Domain

RUMSEY, J.
(dissenting). This case has been tried four times, and has been to the court of appeals twice. The action was originally brought to recover the sum of $5,000, claimed by the original plaintiff to be the amount of an insurance made by the defendant on his property. The contract was represented by a binding, slip issued on the 1st of January, 1891, in the usual form, for $10,000; but it appeared that on the ' 7th day of January the defendant sent to the plaintiff’s agent a letter stating that the application of the plaintiff for $10,000 of insurance was declined, but that the company would renew for $5,000, if wanted, and saying that the risk would not be held binding by the company for more than $5,000. The theory upon which the action was then brought was that this so-called cancellation of the binding slip reduced the insurance to $5,000, and therefore the plaintiff was entitled to recover for that reduced amount. On the first trial the plaintiff had a verdict, and from the judgment then entered an appeal was taken to the general term. That court determined that the letter of the company dated the 7th of January was not effectual as a cancellation of the binding slip, but only amounted to an offer on the part of the defendant to reduce the insurance to $5,000; that, as a matter of law, the acts of the plaintiff after the receipt of the *656letter operated as a concession on his part that the insurance for the $10,000 mentioned in the binding slip was at an end; and that the letter did not create a new insurance, as its terms had not been accepted. And for these reasons the court held that the complaint should have been dismissed, and ordered a new trial. 72 Hun, 141, 25 N. Y. Supp. 301. The new trial was had, the complaint was dismissed, an appeal from the judgment of dismissal was taken to the general term, where it was affirmed (83 Hun, 612, 31 N. Y. Supp. 1134), and from that judgment an appeal was taken to the court of appeals. That court agreed with the general term that the letter of the defendant was not effectual as a cancellation of the insurance, but was a mere proposition for reducing it. So far the effect of the letter was established by both courts of review; but the court of appeals held that the facts relied upon by the general term as showing that the plaintiff had elected to terminate the insurance under the binding slip did not have that effect, as a matter of law, and therefore concluded that the courts below had erred in dismissing, and in sustaining the dismissal of, the complaint, but that the courts had erred in that matter only. 151 N. Y. 130, 45 N. E. 365. But the court (all the judges concurring in the opinion) took occasion to say that, as the plaintiff had not accepted the offer to reduce the insurance, the original binding slip was in force for the full amount, and, upon the facts made to appear in that case, the plaintiff, had he sought to do so, might have recovered that full amount. When the case went back for a new trial the plaintiff amended his complaint by suing upon the binding slip as a contract of insurance for the full amount of $10,000. The defendant set up in answer to the amended complaint that, by the custom of insurance men in the city of New York, when an application for insurance was made to it the defendant gave a binding slip covering temporarily the risk, pending the consideration of the application; that in accordance with that custom, as was well known to the plaintiff’s brokers, in case the application was declined by the defendant, and notice of the declination given to the brokers, such binding slip immediately then ended and fell; that it was not a contract for a year’s insurance, but the words “insure E. M. Van Tassel $10,000 for twelve months” were simply inserted to inform the defendants of the length of time for which the insurance should run if a standard policy was issued; that the binding slip was issued and accepted by the plaintiff’s brokers under that usage; that the defendant, on the-7th of January, 1891, having considered the application, notified the plaintiff’s brokers, in writing, that such application of the plaintiff for $10,000 of insurance was declined; and that thereupon the contract represented by the binding slip was determined. Upon these pleadings the case came to trial for the third time. The defendant offered to prove the facts set up in its answer as just stated, but the court held that the binding slip was a complete and perfect contract of insurance in itself, that it was not subject to be varied by paroi evidence, and that for that reason the evidence was not competent. The paroi evidence was therefore excluded, and a verdict ordered *657for the plaintiff for the full amount of the binding slip. Upon appeal to this court the judgment was affirmed. 28 App. Div. 163, 51 N. Y. Supp. 79. The case then again went to the court of appeals. It is important here to consider the situation of the record which was presented to that court, and the question which it decided. The question on which the case turned in the court of appeals was whether paroi proof was competent to explain or vary the effect of the binding slip by showing that, instead of being a contract of insurance for 12 months, it was only a temporary arrangement entered into by the parties until the defendant had accepted or declined the application of the plaintiff for insurance. No other question was presented in this court, or in the court of appeals. It is stated in the prevailing opinion in that court that the question was whether the facts set up in the answer above referred to constituted any defense to an action based upon the binding slip. 161 N. Y. 413-419, 55 N. E. 936. The court said that, if those facts constituted a defense, then it was error to refuse to permit the defendant to prove them, and for that error the judgment was reversed. The prevailing opinion was concurred in by four judges. The dissenting opinion was concurred in by three judges of the court. If the two opinions are examined, it becomes apparent that the sole question presented there, and the only question decided, was that stated in the prevailing opinion; and the decision was based upon the reason that the binding slip was not a complete or perfect contract in itself, and could be varied by paroi. Whatever else may have been stated by way of argument, nothing else was decided. The rule laid down in 151 N. Y. and 45 N. E. was not impugned or limited; the court saying that there could be no recovery upon an unaccepted proposition of the company based upon its letter of the 7th of January, but that, if there could be a recovery at all, it must be upon the binder, and not the letter. So it will be seen that the effect of the letter of January 7th was nowhere discussed by this court or by the court of appeals after the decision of that court upon the first appeal, but that what was then determined as to the effect of that instrument still stands as the law of the case.
Upon the trial now under consideration the defendant was permitted to give paroi evidence bearing upon the facts alleged in its answer. It is claimed by the plaintiff that the evidence thus given was not sufficient to establish those facts, but, in the view I take of this case, it is not necessary to consider that claim. It is to be noted that the defendant’s claim stands upon the proposition that the binding slip, although not a contract for a year’s insurance, did operate to insure the plaintiff for $10,000 pending the consideration by the defendant of the plaintiff’s application for insurance for that sum, and was good and binding until that application was declined, or until it should be accepted and a standard policy issued. There is no claim on the part of the defendant that there was any other limitation than that upon the effect of the binding slip. After giving the paroi evidence as to the custom which the defendant claimed was operative to require such a construction as it sought to give *658to the binding slip, the defendant offered in evidence the letter of January 7, 1891, which it claimed was a declination by it of the application for insurance, and which put an end to the binding slip. If that paper was not such a declination, then, whatever may have been the true construction of the binding slip, its force as a contract for $10,000 did not come to an end, because it remained in force until the application had been declined. So it remains to consider whether the paper relied upon by the defendant as a declination of the risk was operative for that purpose. It seems, to have been the opinion of the court of appeals and of the general term of the supreme court that that letter did not operate of itself to put an. end to the binding slip, for the reason that it amounted simply to an offer on the part of the defendant to carry the insurance asked for by Van Tassel to the amount of $5,000, instead of to the amount of $10,000. That is td say, it was simply a counter proposition of the insurance company, in respect of this insurance, to that made by Van Tassel,—that it would insure the property, but not for the-amount for which Van Tassel had applied. "Until that proposition was acted upon by the person to whom it was made, there was no final contract between the parties for the insurance, and the temporary arrangement represented by the binding slip as a contract of insurance continued in force. 'So it was essential for the defendant, in establishing its defense, to show either that it had declined Van Tassel’s application for insurance, or that the new proposition that it had made for the insurance had been accepted by Van Tassel. It seems to us quite clear that the letter of the defendant was not an absolute declination, but a proposition to modify the offers for insurance, and therefore the defendant could only establish its defense by showing that the proposal had been accepted by the brokers for Van Tassel. This evidently was so understood by the defendant, because it not only alleged in its answer, as part of the defense, that the application was terminated and ended by the notice of declination, but that the brokers had accepted and acquiesced in the same; and upon the trial it attempted to prove the acceptance by the brokers of the notice of declination, and the consequent termination of the contract thereby. So, giving to the notice the effect which the court of appeals has already given it, the question which remains in the case is one of fact,—whether or not the brokers of Van Tassel did accept that notice as putting an end to the contract. That question was submitted to the jury by the learned justice at the trial term, and was by them answered in the negative. After that answer had been given, the facts which the defendant might regard as established were that, upon Van Tassel’s application for $10,000 of insurance, it had issued a binding slip, which by the custom of insurance men was to operate as an insurance of the property until the application, pending the consideration of which it had been issued, had been declined; that the defendant had sent to the brokers a paper which was not an absolute declination to insure the plaintiff, and which only operated as such in case it was so received and accepted by the brokers to whom it was sent; that the brokers did not accept it as such a declination, and the defend*659ant was not advised that it was so accepted. The necessary result of these, facts, as it seems to me, was that the binding slip still stood in force for its face value, and that Van Tassel had a right to rely upon it as a policy of insurance for that amount. If that be correct, then it necessarily follows that, upon the facts as they were •established upon the trial, the plaintiff was entitled to recover, and the judgment was right, and should be affirmed.
INGRAHAM, J., concurs.