Court Opinion

ID: 5186354
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:49:00.198704+00
Date Added: 2024-06-11T08:26:44.886082
License: Public Domain

Spring, J. (dissenting):
The original policy was issued April 4, 1894. It described five buildings which were covered by it, each in the sum of $2,000. The *292policy restricted occupancy to dwellings only, permitted alterations and repairs, and the completion of the buildings; as they were, unfinished at the time of the issuance of the policy, and then contained this clause: “It is understood that entire division walls extend to roofs "between each of the above-described buildings.”
This was a material provision and was untrue in fact for a - hallway- led across the entire rear portion of the building and open . courts were left into which windows opened from each adjacent apartment..
In May, 1895, at the instance of the plaintiffs, the authorized agents of the defendant made and executed a Written modification of this'policy which was attached to it. This was designed as a substitute for the original policy. The statement preceding the description of the property is as follows: “New York, May 15, 1895: On and after this date this policy to cover as below and not as heretofore.” '
■ The modified statement contained - not only ¡a complete descrip- . fion of the property covered by the policy, but the provision as to manner-and-use and occujDancy is included.in it. It included specifically foundations, elevators, platforms, permanent fixtures for" heating and lighting, most of which would.come within the compass of the policy without specific mention'. ' Permission to make alterations, and repairs was given in the original policy and in the amended one ás well, only in the latter It was provided that such repairs .could be made “ without notice,”-which in -effect made no change as notice was not prescribed in the original policy. In the amended policy, a general occupancy was permitted although-the building was designed and used for an apartment house, only. -.The modification "in precise term's -included all personal property contained in the building, but the -original policy, aside from a very elaborate enumeration of personal effects, included also “ the cafe and the furnished apartments all contained in the above-described buildings,” so that in. this respect the modification only altered the verbiage, but it -applied to the same property as the original policy. The clause pertaining to the completion of the building was eliminated as it was then finished. The ■ provision as to division walls was omitted: ' "
One or two things are apparent in this modification: (1) The agents, Whipple & Co., must have possessed- information as to *293the condition of the buildings when they prepared and gave life to this modified policy. They knew the building was completed. Otherwise they would not have stricken out that clause permitting its completion. They knew the elevators were in. operation and the heating and lighting fixtures in use or there would have- been no definite inclusion of them. And they must have known the-' walls were not entire to'the roof or they would not have eradicated of their own motion that significant and important provision in the original policy. (2) It is equally obvious that the modification was designed as a substitute for the original policy except as to those printed portions engrafted in the policies of this Lloyds company.
The provision relating to division walls in the original policy is in the paragraph restricting occupancy to dwelling only, allowing, alterations and repairs, and authorizing the completion of the building. This entire paragraph was rewritten and substantially changed. The attention of the underwriters was, therefore, called to this paragraph carefully, and it is not to be presumed they inadvertently omitted this important statement as to division walls. Its omission is significant and indicates an intent, on their part to relieve the insured from a representation confessedly untrue and which if retained destroyed the validity of the policy.
The familiar doctrine is urged that a waiver of forfeiture will not be inferred, but must be established by preponderating evidence. In this case the' modification was the product of the agents of the defendant. They prepared it and its composition shows that their attention must have been specifically directed to the representation. pertaining to division walls.
Either these agents purposely omitted the clause to deceive the. insured and pass upon them an invalid policy or else the omission' was designed to waive the representation. They possessed as much knowledge of this clause as of any. other in the policy which they left out or altered. The modification consequently is either valid as an entirety or else of no force whatever.
It accordingly seems clear that Whipple & Co. knew the representation that entire division walls extended to the roof was a misstatement, and with that knowledge consented to eliminate it from the modification.
The best evidence of their intention is found in the act itself of *294so vital import to these plaintiffs. This intention need not .be expressed in words. As was said in Kiernan v. Dutchess Co. Mutual Ins. Co. (150 N. Y. 194): “ There may be a waiver by express agreement or through estoppel, but neither is required to effect that result, as words or acts from which an intention to waive may reasonably be inferred are sufficient at least when acted upon,”
It is a principle well settled in the construction of policies of insurance that if the policy is forfeited or rendered invalid the recognition of it as a binding instrument, after knowledge of its nullity, precludes the insurance company from asserting the forfeiture: The act of recognition 'is deemed to be a waiver and a new agreement is unnecessary to support it. (Titus v. Glens Falls Ins. Co., 811 N. Y. 410; Walker et al. v. The Phoenix Ins. Co., 156 id. 628.)
If at the time of the issuance of the policy the authorized agents of the defendant knew, that the buildings, were not separated by continuous division walls, and understood how they were constructed, the defendant could not assert the misstatement as a defense. (McNally et al. v. P. Ins. Co., 137 N. Y. 389, 396.)
If later on he learns of the misstatement and consents to its erasure, he is precisely in the same situation. A waiver after forfeiture is certainly of no greater importance, and requires no greater circumstances to establish it than a consent to strike out a provision in a policy which, at the election of the insurer, may ripen into a forfeiture. In the latter case the insured keeps alive a policy which he might terminate on the assumption that his property is indemnified against loss. In the former case the loss has occurred and he is at the mercy of the insurer, and yet courts in seeking to preserve the insurance for the man who has paid for it are alert to give effect to any -conduct on the part of the insurer which, fairly considered, indicates a purpose to waive a defense otherwise valid:
Whipple & Co. were not bound to accede to the request of the plaintiff to modify the policy. They could have declined to change the agreement of their principal. Had -they taken that position the plaintiffs would have known that the warranty in their policy would be asserted as a defense. They would have understood they were carrying $20,000 of insurance which was no indemnity to them whatever. They could have procured the cancellation of the policy *295and obtained another. They would be entitled in this event to the repayment of the unearned premium. But the agents of the defendant did'not take that position. They prepared and signed a modification satisfactory to the insured, and the vitiating provision was stricken out. They stated to the plaintiffs, in effect, that they waived their right to assail the policy by reason of this misstatement. This conduct of these agents gave life to the policy. The defendant is in the same position as if he had signed and delivered to the plaintiffs an instrument reciting that he would not avail himself of this defense. The plaintiffs received the paper, acted upon it, and let the policy continue undisturbed. The original policy containing this untruthful material statement as to the existence of the division walls was an invalid, unenforcible instrument. The parties consented to expunge the condition which made it invalid. They agreed that it should be made a vital, enforcible contract. The insured forebore terminating the policy and taking out another. That constituted a sufficient consideration for the new agreement. But it is not necessary to show a new consideration to give force to the changed instrument, for the parties to it made the altered instrument. It was the act of the defendant. If a policy contain the statement, inadvertently made, that the property is unincumbered, and, in fact, it is subject to a mortgage lien, and the insured, upon ascertaining that fact, so informs the insurer, and another policy is issued, omitting the untruthful statement, the insurer ought not to evade payment when a loss occurs, because, forsooth, the second policy is unsupported by any new consideration.
The assent to the alteration of any instrument, however vital, precludes either party from impugning the legality of the altered instrument. (Camden Bank v. Hall, 14 N. J. L. 583; Collins v. Collins, 51 Miss. 311, 321; Hill v. Barnes, 11 N. H. 395.)
The judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.
Judgment affirmed, with costs.