Court Opinion

ID: 9643582
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:33:32.684708+00
Date Added: 2024-06-11T18:11:01.676596
License: Public Domain

LINDLEY, District Judge
(dissenting in part).
I regret that I am unable to assent to-the conclusion that the proof established a waiver of the right of forfeiture by the insurer. Waivers are either express, — intentional, — or constructive, — implied. If of the latter class, they are a branch of estoppel. Thus, in Globe Mutual Life Ins. Co. v. Wolff, 95 U.S. 326, at page 333, 24 L.Ed. 387, Mr. Justice Field said: “The doctrine of waiver, as asserted against insurance companies to avoid the strict enforcement of conditions contained in their policies, is only another name for the doctrine of estoppel. It can only be invoked where the conduct of the companies has been such as to induce action in reliance upon it, and where it would operate as-a fraud upon the assured if they were afterwards allowed to disavow their conduct and enforce the conditions.”
The Supreme Court of Illinois has twice said that “The doctrine of waiver, as applied to such a case as this, is that of estoppel in pais. There is no substantial distinction between the two, and the terms are used interchangeably, a waiver being only another name for an estoppel.” Phenix Insurance Company v. Grove, 215 Ill. 299, 74 N.E. 141, 142, 25 L.R.A.,N.S., 1; Dwelling House Ins. Co. v. Dowdall, 159 Ill. 179, 42 N.E. 606. The same court has held that if the act of the insurer has not in any way affected the actions of the insured, that if he has not been led to do or omit to do that which he would otherwise have omitted or done, there is no waiver. Obviously this is because there is no estoppel. Weston v. State Mut. Life Assur. Co., 234 Ill. 492, 84 N.E. 1073. Other insurance cases illustrating the tenet that *689an implied waiver of an insurance policy is essentially a branch of estoppel and that before it is effective, there must be a mis^ leading of the insured with consequent action upon his part in reliance upon that which misled him resulting in disadvantage or injury to him, are Traders’ Mut. Life Ins. Co. v. Johnson, 200 Ill. 359, 65 N.E. 634; Bennett v. Union Central Life Co., 203 Ill. 439, 67 N.E. 971; Lunt v. Ætna Life Ins. Co., 261 Mass. 469, 159 N.E. 461; Morrison v. Royal Ind. Co., 180 App.Div. 709, 167 N.Y.S. 732; Weidert v. State Ins. Co., 19 Or. 261, 24 P. 242, 20 Am. St.Rep. 809.
Furthermore many courts have held that. if the waiver is not in the nature of an estoppel, to be effective, it must be based upon the law of contracts and include consideration. Smith v. Minneapolis Threshing Machine Co., 89 Okl. 156, 214 P. 178; Newman v. Roach, 111 Okl. 269, 239 P. 640, 642; Schwab Safe & Lock Co. v. Snow, 47 Utah 199, 152 P. 171, 176; 67 C.J. 296.
In the present case, at the time of the alleged waiver, the insured was denying and thereafter denied emphatically from the witness stand that he had knowledge of or participated in securing the admittedly perjured testimony. Not until the jury found affirmatively on a special interrogatory to the contrary was this question settled. Not until that time was defendant authoritatively charged with notice of the insured’s breach of contract. When defendant first learned of the perjury, it promptly moved for a mistrial; that being denied, it proceeded to make the best defense possible in the face of circumstances sadly prejudicial, for Roin’s participation in the fraud could act upon the jury’s judgment only unfavorably to his cause. Defendant did not abandon the trial then approaching conclusion; it did not desert the insured, then caught in a precarious dilemma of his own making; rather, it presented full defense, and withdrew only after completing that defense and after the jury had found that the insured had participated in the fraud. This situation, it seems to me, created no implied waiver— no estoppel. Defendant did nothing upon which its insured relied to his injury or disadvantage. On the contrary, it protected him when it was not bound to do so. Had it withdrawn from the trial when the motion for a mistrial was denied, the insured would have been marooned in the uncharted sea of a jury trial and thereby subjected to probable irreparable injury. He was not misled; he was gratuitously defended. There was clearly no intentional waiver, no express waiver, and, in my opinion, the facts are not sufficient to create a waiver implied from the acts of the insurer. As Judge Baker said in American Cereal Co. v. London Guarantee & A. Co., 7 Cir., 211 F. 96, at page 99, “there is no estoppel unless plaintiff has been misled and injured.” And “if defendant’s interposition in the Overhouser case prevented plaintiff from presenting fully its defense, or in any way prejudiced plaintiff in the final results of that case, a different question from the one before us would be presented.”
I am fully conscious of the rule that an insurance contract should be' construed strictly against the company, in view of the fact that the latter drafts it; but it is also true that such a policy is a contract binding each of the parties and that waivers and estoppels relating to the same are governed by the same rules as those abiding in contracts in general. Courts may not make new contracts for parties; their functions consist of enforcing and carrying out those actually made. Imperial Fire Insurance Co. of London v. Coos, 151 U.S. 452, 14 S.Ct. 379, 38 L.Ed. 231.
The insured having been guilty of a breach of his contract and plaintiff having only such rights as the insured, General Cas. & Surety Co. v. Kierstead, 8 Cir., 67 F.2d 523, in the absence of any waiver or estoppel, the suit should have failed. I think the judgment should be reversed.