Court Opinion

ID: 8740768
Source: CourtListenerOpinion
Date Created: 2022-11-26 10:47:37.13236+00
Date Added: 2024-06-11T17:00:23.619167
License: Public Domain

THAYER, Circuit Judge.
The general question which arises in this case is whether an insurance company should be permitted to take advantage of a condition contained in one of its policies to avoid the payment of a loss that has been sustained thereunder, when it appears that the fact rendering the policy void, by the terms of the condition which is pleaded as a defense, was an existent fact, known to the insurer at the time it issued its policy and accepted the premium, which for that reason rendered the policy void, if at all, from the moment it was delivered. The question arises in this way: The Northern Assurance Company of London, England, the plaintiff in error, insured certain household and kitchen furniture belonging to-the Grand View Building Association, the defendant in error, that was situated in a certain building in the city of Lincoln, Neb. The policy which it issued contained the following provisions:
“This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has, or shall hereafter make or procure, any other contract of insurance, whether valid or not, on property covered, in whole or in part, by this policy. This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto; and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy, except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto, and as to such provisions and conditions no officer, agent, or representative shall have such power, or be deemed or held to have waived such provisions or conditions, unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured, unless so written or a1> taqhed.” .
At the time the policy in suit was executed the insured property was covered to the amount of $1,500 by a policy issued by the Firemen's Fund Insurance Company. A jury found that an agent of the plaintiff in. error by the name of A. D. Borgelt, who- had authority to make contracts of insurance in its behalf, and to countersign and issue its policies and collect premiums thereon, and who solicited the policy in suit, had knowledge of the existence of the policy issued by the Firemen's. Fund Insurance Company at the time he issued the policy in suit, but no indorsement appears to have been made upon the policy in suit relative to the existence of the prior policy. A fire having occurred by which the insured property was totally destroyed, and an action having been brought against the plaintiff in error, which- was the defendant below, to recover the amount of the loss, it pleaded the aforesaid provisions of its policy, and the existence of the prior insurance as a defense to the action. The verdict below was special, and on the state of facts heretofore recited, which were either found by the jury or disclosed by the record, the trial' court rendered a .judgment against the insurer, which it seeks to reverse.
The general question stated at the outset of this opinion has been *79answered in the negative in many well-considered decisions. It was so answered by this court in Insurance Co. v. Norwood, 32 U. S. App. 490, 16 C. C. A. 136, 69 Fed. 71, and the same conclusion has been reached in other circuits. Thus, in the case of Insurance Co. v. Fischer, 34 C. C. A. 503, 92 Fed. 500 (decided by the circuit court of ajjpeals of the Sixth circuit), it was said to be “well settled in the law of fire insurance that the insurer is estopped to plead as a defense the breach of conditions against other insurance or incumbrances, without the consent of the company in writing on the face of the policy, if it appears that when the agent of the company, with authority to deliver or withhold policies, delivered the policy in question he then knew of the existence of the other insurance or the incum-i branee.” The same doctrine was enforced by the circuit court of appeals for the Ninth circuit in the case of McElroy v. Assurance Co., 36 C. C. A. 615, 94 Fed. 990, wherein it appeared that an agent of an insurance company had issued a policy with knowledge of an existing incumbrance on the insured property, and had failed to indorse the fact on the policy, although it contained a provision, in substance, that it should be void if there was a mortgage on the property, unless the consent of the insurer thereto was shown by a written indorsement on its policy. It was also held by the circuit court of appeals for the Fourth circuit in the case of Glover v. Insurance Co., 30 C. C. A. 95, 85 Fed. 125, that the fact that the insured property was erroneously described as a “dwelling house” when it should have been described as a “Keeley Institute,” which would have rendered it a more hazardous risk, would not avail the insurer as a defense to its policy when a loss had occurred, it appearing that the agent of the insurance company had knowledge of the misdescription when he solicited the risk and issued the policy. And in Putnam v. Insurance Co. (C. C.) 4 Fed. 753, Judge Blatehford held, after a careful review of the authorities, that an insurance company could not take advantage of a provision in its policy rendering it void if there was other concurrent insurance not indorsed thereon, when it was proven that its soliciting agent had knowledge of existing insurance on the insured property to the amount of $6,000' at the time he issued its policy, and only indorsed thereon permission to carry other concurrent insurance to the amount of $3,000.
The point now under consideration has been adjudicated so frequently that it is doubtless unnecessary to do more than refer to the cases already mentioned and the authorities therein cited. We will call attention, however, to the fact that the doctrine as heretofore stated has the approval of the supreme court of the state of Nebraska, from which state this case comes, and is also stated and re-enforced by numerous citations by the leading text Writers on the law of insurance. Insurance Co. v. Hammang, 44 Neb. 566, 62 N. W. 883; Joyce, Ins. § 515; Ostr. Ins. § 243; May, Ins. (2d Ed.) § 497. The doctrine in question rests upon the ground that facts made known to the agent of an insurance company, who is empowered by it to solicit insurance, countersign and issue policies, and collect premiums, is the knowledge of his principal, and that a fraud would be perpetrated if an insurance company, through the medium of its agents, was al*80lowed to deliver one of its policies, and accept the premium thereon, with knowledge of facts which under its provisions rendered it void ab initio. To prevent the perpetration of such frauds, the courts have very generally held the insurer estopped from taking advantage of a condition or conditions found in one of its issued policies which, in the light of known facts, rendered the same void from the time of its delivery, or they have indulged in the charitable presumption that the insurer intended to waive the benefit of such a provision, or that, through accident or mistake, it failed to modify the condition before the delivery of its policy, as it intended to do, so as to render it valid.
It is contended, however, in behalf of the insurer, that, by virtue of the conditions of its policy above quoted, the rule of law heretofore stated is inapplicable to the case in hand. It is said, in substance, that no provision of its policy, as printed and delivered to the insured, can be denied its legitimate force and effect, except by virtue of a written indorsement on the policy; that the insurance company has effectually deprived itself of the power to waive any of the conditions of its policy except by a written indorsement thereon; and that it has succeeded in framing a contract which is wholly exempt from the equitable doctrine of estoppel and waiver. This court decided, however, in Insurance Co. v. Norwood, 32 U. S. App. 490, 499, 16 C. C. A. 140, 69 Fed. 71, 75, that “parties to contracts cannot disable themselves from making a contract allowed by law in any mode in which the law allows contracts to be made,” and that “a written contract may be changed by parol, and a parol one changed by a writing, despite any provision in the' contract to the contrary”; and the law to that effect is, as we think, well established by the authorities there cited, as well as by other authorities that are referred to in Farnum v. Insurance Co., 83 Cal. 246, 261, 23 Pac. 869. It has also been held that such clauses as those that are relied upon by the insurer to deprive, itself of the power to contract otherwise than by some writing should be given effect, if at all, as they respect such modifications of a policy as are made, or attempted to be made, after it has been delivered and taken effect as a valid instrument, and that they should not be considered as having relation to acts done by the company or its agents at the inception of the contract which are' sufficient, notwithstanding provisions that it may contain, to render it valid through the operation of the doctrine of estoppel or waiver. Walsh v. Insurance Co., 73 N. Y. 5, 11; Woodruff v. Insurance Co., 83 N. Y. 134, 141; Insurance Co. v. Robison, 19 U. S. App. 266, 274, 7 C. C. A. 444, 58 Fed. 723, 728, 22 L. R. A. 325. men an insurance company delivers a policy and accepts the premium thereon, it is presumed that its intention is to malee a contract which, in the light of all facts then known to'it, will afford indemnity, and it is beyond its power, by any provision that may be found in its policy, to overcome the force of that presumption, or to avoid the effect of acts or declarations which from an equitable standpoint are sufficient to raise an estoppel in pais. Thus, in the case of Wood v. Insurance Co., 149 N. Y. 382, 44 N. E. 80, it appeared that an agent of the insurance company issued a policy with knowledge of a fact which under its terms rendered it void ab initio; but notwithstanding the fact *81that the policy in suit was a standard policy, which contained conditions similar to those that are invoked in the case at bar, it was held that the condition under which the forfeiture was asserted must be regarded as having been waived, as otherwise tbe insurer would be put in the attitude of accepting a premium for a policy which was known at the time to he of no force and effect. The court said, in substance, that it had long been setiled that general agents of an insurance company may waive stipulations and provisions contained in a policy with respect to the conditions upon which it shall haye inception and go into operation as a contract, by delivering it with knowledge of all the facts and receiving the premium. A similar ruling was made in Robbins v. Insurance Co., 149 N. Y. 477, 44 N. E. 159, where a policy was issued by the agent of an insurance company with knowledge of the existence of an incumbrance on the insured property, which fact was not indorsed in writing on the policy, as it should have been, by the. terms thereof, to render it operative. The policy in that case contained a provision to the effect that no officer, agent, or other representative of the company should have power to waive any condition or provision thereof, except such as might by the terms of the policy be indorsed thereon or added thereto, and that no such officer or agent should be deemed to have waived any provision of the policy unless the waiver was written thereon. Nevertheless, it was ruled that the insurance company had either waived the condition rendering the policy void, or was estopped by the conduct of its agent from pleading the condition and the existence of the incumbrance as a defense. And in the case of Farnum v. Insurance Co., 83 Cal. 246, 259, 23 Pac. 869, it was also held, in substance, that an insurance company was estopped from denying that one of its policies had taken effect, when it appeared that it had been delivered by one of its agents, who had power to deliver policies, and who had extended credit for the premium by an oral agreement, although the policy contained a provision that the company should not he liable thereon until the premium was paid, and a further provision that no thing less than a specific agreement indorsed on the policy should operate as a waiver of any of its provisions.
We are of opinion, therefore, that the delivery by the agent of the insurance company of the policy in suit, with knowledge at the time of the existence of the prior insurance, estops the insurer from pleading the prior insurance as a defense. Its agent by whom the delivery of the policy was made had power to deliver it and collect the premium, and to receive notice of anV existing insurance. In doing these acts he was for the time being the company, and no obligation rested on the insured to insist that the existence of the outstanding insurance should be indorsed on the policy in suit if the insurer, with knowledge of its existence, did not elect, to do so, hut delivered the contract without such indorsement. He had the right to assume, because of the delivery of the policy uuder the circumstances aforesaid, that the insurer had determined to accept the risk, notwithstanding the other insurance.
The point seems to he made in the brief that the plaintiff below, in its petition and reply, pleaded a waiver, and that the judgment *82below cannot .be supported, because it is founded on estoppel. With reference to this suggestion, it is only necessary to say that the plaintiff! pleaded the facts and circumstances under which the policy was issued, and the knowledge possessed by the insurer at the time, substantially as hereinbefore set forth, and, in view thereof, alleged that the defendant company had not only waived the provision of its policy on which it relied as a defense, but was also estopped from asserting it. We perceive no error in this method of pleading, nor was any exception taken thereto in the trial court. Judgment below is accordingly affirmed.