Court Opinion

ID: 8740769
Source: CourtListenerOpinion
Date Created: 2022-11-26 10:47:37.134452+00
Date Added: 2024-06-11T17:00:23.621422
License: Public Domain

SANBOBN, Circuit Judge
(dissenting). The question which this case presents has long been the subject of conflicting decisions. In Carpenter v. Insurance Co., 16 Pet. 495, 496, 511, 10 L.' Ed. 496, 510, the policy contained this stipulation: “And provided, further, that in case the insured shall have already any other insurance on the property hereby insured, not notified to this corporation, and mentioned in or indorsed upon the policy, then this insurance shall be void and of no effect.” There was other insurance upon the property at the time this policy was issued. Mr. Justice Story expressed the unanimous opinion of the supreme court upon the question in controversy in this case in these words:
“The third instruction prayed the court to instruct the jury that if the Washington Insurance Company had notice, in fact, of the existence of the policy in the American office, that ‘was, in law, a compliance with the terms of the policy.’ The court refused to give the instruction as prayed; but instructed the jury that at law. whatever might be the case in equity, mere parol notice of such insurance was not,’ of itself, sufficient to comply with the requirements of the policy declared on, but that it was necessary, in case of any such prior policy, that the same should not only be notified to the company, but should be mentioned in or indorsed upon the policy; otherwise, the insurance was to" be void and of no effect. We think this instruction was perfectly correct. It merely expresses the very language and sense of the stipulation of the policy, and it can never be properly said that the stipulation in the policy is complied with, when there has been no such mention or indorsement as it positively requires, and without which it declares the policy shall henceforth be void and of no effect.”
This decision was rendered in 1842, has never been overruled, and in 1897 the circuit court of appeals for the Seventh circuit reached the same conclusion. Union Nat. Bank of Oshkosh v. German Ins. Co., 34 U. S. App. 397, 402, 18 C. C. A. 203, 206, 71 Fed. 473, 476; Insurance Co. v. Thomas, 53 U. S. App. 517, 521, 27 C. C. A. 42, 44, 82 Fed. 406, 408.
A careful reading of the cases upon both sides of the question has forced my mind to the conclusion that the supreme court and the circuit court of appeals for the Seventh circuit are right, and for the following reasons:
1. If the solicitor of this company had had unlimited power to act for it, had known of the prior insurance, and had made a parol agreement or representation before or at the time of the delivery of the policy that the policy should be valid without the indorsement of the- permission to carry the prior insurance, that agreement or representation would have been futile, and the written stipulation that *83the policy was void without the indorsement would have prevailed over the parol contract, under the familiar rule that all prior and contemporaneous oral negotiations are merged in the written agreement. Since the decision in Insurance Co. v. Norwood, to which the writer has never assented, this court has frequently held that no representation, promise, or agreement made, or opinion expressed, in the previous parol negotiations as to the terms or legal effect of the resulting written agreement, can be permitted to prevail over the plain provisions and just interpretation of the written contract. Insurance Co. v. Henderson, 32 U. S. App. 536, 540, 543, 547, 16 C. C. A. 390, 391, 393, 395, 69 Fed. 762, 764, 766; Insurance Co. v. McMaster, 57 U. S. App. 638, 648-652, 30 C. C. A. 532, 538-540, 87 Fed. 63, 69-72; Insurance Co. v. Mowry, 96 U. S. 544, 547, 24 L. Ed. 674; Assurance Co. v. Norwood, 57 Kan. 610, 611, 613, 47 Pac. 529, 530, 532; Association v. Kryder, 5 Ind. App. 430, 435, 31 N. E. 851; Union Nat. Bank of Oshkosh v. German Ins. Co., 34 U. S. App. 397, 18 C. C. A. 203, 71 Fed. 473; Casualty Co. v. Teter, 136 Ind. 672, 673, 676, 679, 36 N. E. 283; Burt v. Bowles, 69 Ind. 1; Clodfelter v. Hulett, 72 Ind. 137; Hudson Canal Co. v. Pennsylvania Canal Co., 8 Wall. 276, 290, 19 L. Ed. 349; Insurance Co. v. Lyman, 15 Wall. 664, 21 L. Ed. 216; Pearson v. Carson, 69 Mo. 550; Insurance Co. v. Neiberger, 74 Mo. 167; Lewis v. Insurance Co., 39 Conn. 100. As a prior or contemporaneous' oral agreement that the policy should be valid without the indorsement of the prior insurance could not avoid the written stipulation that it should be void, much less would the mere knowledge of both parties that the prior insurance existed without any agreement concerning it have that effect.
Moreover, this stipulation of the policy is a wise and salutary one, and it ought to be enforced. Its phrpose is to prevent fraud and perjury by reducing to writing the entire agreement of the parties relative to the amount of indemnity upon the property insured, and, if enforced, it admirably accomplishes that object. A refusal to enforce it or any evasion of it throws wide the door to fraud and perjury, and practically deprives the insurance companies of their right to contract for a limitation of the amount of insurance on the property; for, if that limitation may be avoided by testimony that some agent knew of the existence of other insurance which was not indorsed, the temptation to find such testimony will often be great, and there is no way in which the companies can protect themselves against its discovery. “A company which has seen fit to prescribe that the terms and conditions of its policy shall only be waived by its written or printed assent has prescribed only a reasonable rule to guaid against the uncertainties of oral evidence, and by this the insured has assented to be bound.” Kyte v. Assurance Co., 144 Mass. 43, 46, 10 N. E. 518; Hale v. Insurance Co., 6 Gray, 169; Worcester Bank v. Hartford Fire Ins. Co., 11 Cush. 265.
2. The solicitor of the insurance company had no authority by oral agreement, by knowledge, by waiver, by estoppel, or in any other way, to make a valid contract of insurance here, without the indorsement upon the policy of the permission to carry the prior insurance; and the insured knew that he had no such authority when it took *84its policy. -It is an established principle of the law of agency that a principal may limit the powers of his agent, and that all parties who deal with the agent with knowledge of the limitation are bound by it. The insurance company had the right, under this rule, to limit the power of its solicitor to consent to other insurance to a written consent indorsed on the policy, and it had the right to limit his power to deliver valid policies to those upon which all other existing insurance-was indorsed in writing. The company made these limitations- upon the powers of this solicitor by the express terms of its policy, and the insured, by accepting the policy, was not only char'ged with knowledge of the existence of . these limitations, but it expressly agreed to their terms and their effect. It was beyond the power of the solicitor to deliver any valid policy upon which the concurrent insurance was not indorsed, and the insured knew it, and ■agreed that any policy he should so deliver should be void when it received it. This policy was oí that character, and was consequently void. “When a policy permits an agent to exercise a specified authority, but prescribes that the company shall not be bound unless the execution of the power shall be evidenced by a written indorsement on the policy, the condition is of the .essence of the authority, and the consent or act of the agent not so indorsed is void.” Quinlan v. Insurance Co., 133 N. Y. 356, 364, 31 N. E. 33; Walsh v. Insurance Co., 73 N. Y. 5, 10; Marvin v. Insurance Co., 85 N. Y. 278, 283; Moore v. Insurance Co., 141 N. Y. 219, 224, 36 N. E. 191; Kyte v. Assurance Co., 144 Mass. 43, 46, 10 N. E. 518; Ruthven v. Insurance Co. (Iowa) 60 N. W. 663, 666; Insurance Co. v. Gibbons, 43 Kan. 15, 22 Pac. 1010; Cleaver v. Insurance Co. (Mich.) 39 N. W. 571; Weidert v. Insurance Co. (Or.) 24 Pac. 242; Smith v. Insurance Co. (Vt.) 15 Atl. 353, 1 L. R. A. 216; Hankins v. Insurance Co. (Wis.) 35 N. W. 34; Gould v. Insurance Co. (Mich.) 51 N. W. 455; Clevenger v. Insurance Co. (Dak.) 3 N. W. 313; Enos v. Insurance Co. (Cal.) 8 Pac. 379; Gladding v. Association, 66 Cal. 6, 4 Pac. 764; Insurance Co. v. Mize (Tex. Civ. App.) 34 S. W. 670. “When the policy of insurance, as in this case, contains an express limitation upon the power of the agent, such agent has no legal right to contract as agent of the company with the insured, so as to change the conditions of the policy, or to dispense with the performance of any essential requisite contained therein either by parol or writing, and the holder of the policy is estopped, by accepting the policy, from setting up or relying upon powers of the agent in opposition to limitations and restrictions in the policy.” Cleaver v. Insurance Co., 65 Mich. 527, 32 N. W. 660, 663.
3. No fraud was perpetrated on the insured in this case, for there could have been no fraud without deceit, and the insured was not deceived. It knew that there was other insurance upon the property, and it knew that the solicitor of the company had no power to deliver a valid policy unless the concurrent insurance was indorsed upon it, and it agreed with the company that any policy which this solicitor should deliver should be void if- the concurrent insurance was not indorsed. The insured was therefore neither deceived nor defrauded. It is the insurance company that was deceived, and the *85insurance company that is defrauded, if it is compelled to pay this indemnity. Its agent, acting without authority, and the insured, who knew he had no authority, make a void contract, and agree that it shall be void, and then by the plea of a waiver that was never intended, and an estoppel that did not exist, seek to charge the company with the penalty of their conspiracy or carelessness.
There seems to me to be no ground for a waiver by, or an estoppel of, the insurance company in this case, for several reasons: (1) Because the company expressly limited the power of its solicitor to make waivers or work estoppels of the character here invoked to those made in writing by indorsement upon the policy, and it brought notice of this limitation home to the insured by an express stipulation in the policy, which the insured accepted. (2) Because an indispensable element of an estoppel is some act, statement, or representation which tends to deceive the insured, and thereby induces it to adopt a course of action or a state of inaction that it would not otherwise have taken, and this case contains no such element. The insured knew that there was other insurance. It knew that it was not indorsed upon the policy. It knew that the solicitor had no pow-
er to deliver a valid policy without such an indorsement, and it knew that it agreed that, without this indorsement, its policy should be void; for all these things were written in the contract, and the insured was charged with knowledge of its contents. (3) Because there can be no waiver without an intent to waive, and no intent to waive can be deduced or inferred from the mere fact of knowledge, in the face of an express written stipulation to the contrary, made and delivered at the time. (4) Because no estoppel or waiver based on acts or knowledge prior to, or contemporaneous with, the making of an express written agreement on the subject, can prevail over the express terms of that contract, which as conclusively merges and supersedes all prior and contemporaneous negotiations and understandings by estoppel and by waiver as by words. Insurance Co. v. Mowry, 96 U. S. 547, 548, 24 L. Ed. 674; Insurance Co. v. Thomas, 27 C. C. A. 42, 82 Fed. 409. In my opinion, the judgment below should be reversed, and judgment should he entered for the insurance company.