Court Opinion

ID: 7094187
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:09:08.350178+00
Date Added: 2024-06-11T16:13:11.427105
License: Public Domain

Beck, J.
1. Pleading and practice; confession and avoidance. This cause has been conducted by the respective counsel of the parties with ability, learning and zeal fully commensurate with its importance, The record attests the skill displayed by the counsel at the trial in the District Court. In addition to complete and exhaustive printed arguments submitted in this court in behalf of each party, which exhibit great learning and industry in their preparation, we have had the benefit of a most thorough and profound oral discussion of the questions involved by Mr. Lane, for the defendant, and Mr. Rogers, for the plaintiff. These arguments cannot be too 'highly commended for the evidence they exhibit of patient industry in the collection of authorities and thoughtful consideration of the questions which arise in the case. The industry and ability of *42counsel in the argument have greatly abbreviated our labors in the investigation of these questions, and we enter upon their discussion with a satisfactory feeling of preparation, for which we are free to acknowledge our obligation to the attorneys who have argued the cause.
I. The assignment of errors first presented in argument for our consideration relates to the action of the court in reference to the admission of plaintiff, to the effect, that the terms of the policy had been violated, as averred in the answer of defendant. The defendant in separate motions moved to strike the paper from the files, to strike out the notice, therein contained, that evidence in avoidance of the admitted defenses would be relied on, for judgment upon the pleadings, and finally for permission to open and close the cause upon the trial. These motions were severally overruled.
The answer of defendant admitted the execution of the policy and the loss as alleged in the petition, but set up certain acts of plaintiff in violation of the terms of the policy whereby it became forfeited. Under our system of pleading, no replication' is required to an answer of this character, and the cause is at issue thereon, the law presuming a full denial thereof, and all matter properly in avoidance, as the replication of plaintiff. The answer may be controverted at the trial by evidence in denial of the facts averred or by new matter in ayoidance, as if fully pleaded under the old system. The Revision (§ 2917) provides, that a party may admit in writing any allegation of facts pleaded by his adversary which otherwise would be deemed controverted by mere force of law. This admission, of course, dispenses with proof of all facts thus admitted. But it does not preclude the party making it from proving other independent facts in avoidance of those admitted.
Upon the defendant filing such admission, his answer *43sets up the facts relied upon as matter iu avoidance; but when filed by the plaintiff, the replication being dispensed with, there is no pleading prescribed by the Revision in which such matter may be embodied. TJpon. an admission by the plaintiff, it is evidenly proper that he should in some way advise the court that matter in avoidance of the facts admitted is relied upon to defeat their effect, for, without being so advised, the court, upon the pleadings, would be justified in rendering judgment for defendant. This may be done by a separate paper, by an entry of record, or, as in the case at bar, which seems to be the better practice, by embodying the notice in the admission itself. This practice, we think, is contemplated by section 2917, above cited. If, upon filing an admission, the plaintiff would be precluded from setting up matter in avoidance, it would practically defeat the intention of the section, and render it impossible for such admissions to be .made when facts in avoidance are relied on. But the law expressly provides that the admission may be by the plaintiff as well as the defendant. When made by the plaintiff, it may be without the abandonment of his right to defeat the effect of the facts admitted, by evidence of other independent facts. How can this be done? The obvious solution of the difficulty is a statement or notice of intention to prove matter in avoidance. Such a statement or notice is not expressly provided for by the Revision, but, from the nature of the case, is necessary, and is in harmony with our system of pleading, and, therefore, proper. It matters not whether it be classed as a pleading or not, nor what name be given it, though it may be properly designated an admission and avoidance, in imitation of the name of pleas and replications of like character under the common law pleading.
As no replication to the answer is necessary, the matter of avoidance relied upon need not be specifically set out *44with, oi’ as a part of, the admission. Without the admission, the defendant would not be informed specifically what facts in avoidance of his defense would he given in-evidence. It is certainly imposing no hardship upon him, nor could it be a surprise, for the plaintiff to admit the facts he pleads, without stating the matters in avoidance to be given in evidence. Having been relieved of the necessity of proving his defense, he cannot, on that ground, base a claim to be informed .fully of the evidence relied on by plaintiff.
The terms of the admission and avoidance made it applicable to the term of court at which the case was triéd. Whatever effect the condition limiting the operation of the paper would have had at another term of court, it did not operate to destroy its effect at the trial. It could have been withdrawn only with leave of the court, and was effective for the purposes of an admission until its withdrawal, which would not have been allowed without proper showing. At all events, if the condition is improper as a part of the paper, the limitation thereby attempted could not have been enforced. But the defendant was not prejudiced thereby, and we cannot be expected to adjudicate upon possible errors and prejudice that might have resulted therefrom.
It is urged, that the admission does not go to all the defenses pleaded by the defendant; but this objection, if tenable, was not made in the court below, and cannot be first urged here. All of plaintiff’s motions, directed against the admission and avoidance, as well as his motion for judgment thereon, were properly overruled. ■
2._trial: mative of the issue. The answer of defendant, admitting the loss and setting up matter in avoidance of plaintiff’s right to recover, imposed upon defendant the burden of proof, with the consequent right of opening and closing at the trial.
*45Upon the admission and avoidance- being .filed by plaintiff, the court ruled, that he had the burden of proof, and permitted his attorneys to open and close against the objection of defendant. The ruling of the court upon this question was purely a matter .of practice, which we will not review, unless there is evidence of an abuse of discretion, which in no manner appears. Smith, Twogood & Co. v. Coopers c& Clark, 9 Iowa, 379; Woodward v. Laverty, 14 id. 383. Under the state of the pleadings and admissions, without the introduction of evidence by either party, plaintiff would have failed in the action; the burden of proof was therefore upon him, and he had the right to open and close the trial. Vieths v. Hagge, 8 Iowa, 192.
3. — consolillation of causes. II. The question next presented and discussed in the argument of defendant’s counsel relates to the order of the court consolidating' this with other causes °. . . pending upon the same policy against other defendants, or, more properly, requiring each of those causes to abide the event of this, and providing for the like judgments to be entered therein as in this. Inasmuch as the other causes are not on appeal in this court, and in order to waive any objection that might arise therefrom to the consideration of the question, the parties have stipulated in writing, that the orders made in all the causes may be reviewed in this court upon the record before us. Under this stipulation, the objection made by defendant to the said orders of consolidation, as they are termed in the-assignment of errors and arguments, may be properly considered.
Section 2764 of the Revision provides, that, “ when two or more persons are bound by contract, or by judgment, decree or statute, whether jointly only, or jointly and severally, or severally only, and including the parties to negotiable paper, common orders and checks, and sureties *46on the same or separate instruments, the action thereon may, at the plaintiff’s option, be brought against any or all of them.” Under this section, in my opinion, the defendants in the several actions could have been sued jointly. Though, by the terms of the policy, each company is severally liable thereon, yet the same evidence which would charge liability upon one, would fix it upon 'all the others. We cannot conceive of any state of facts which, under the terms of the policy, would render one, and not all, liable. The several companies united in one agency to do business. Risks were jointly taken, and losses jointly adjusted and paid through this agency. Their manner of business was as though they were one company. The condition of the policy, whereby their liability becomes several, is defeated, so far as it tends to prevent a joint action thereon, by the section of the Revision above cited. The companies defended the suits through the joint agency, and all of them were engaged in the defense of each suit, — each one thus became a party to each suit. 1 Greenl. Ev. § 522-3. A judgment in one suit would be conclusive against all the companies. Lovejoy v. Murry, 3 Wallace, 18. The several suits are upon the same instrument, for the same cause of action, supported and defended by the same evidence, prosecuted by the same party plaintiff, against several parties that could have been joined as defendants, and that are, in fact, parties to each suit in contemplation of law, and each would, therefore, be concluded by a judgment recovered in any one of the actions. Under these circumstances, the order of consolidation was properly made.
The power of the 'court thus to consolidate the several actions, upon motion of plaintiff, is not expressly confered by the Revision. Section 2980 authorizes consolidation on motion of defendant. The same reason and necessity exists for allowing the relief, in a proper case, *47to plaintiff, upon his motion. The power of courts to consolidate actions, has been long exercised in the absence of of any express statutory directions. Clason v. Church, 1 Johns. Cas. 29; Hollingsworth v. Broderick, 31 Eng. Com. Law, 162; Lewis v. Barkes, 93 id. 329.
These cases were upon polices of insurance on vessels or their cargoes, signed by many underwriters in the manner that prevailed in former times, before the business of insurance was done as at present by powerful companies and incorporations. The contracts of the underwriters in these cases, were not unlike the one which is the foundation of the action under consideration. Each underwriter was severally bound, by the policy he subscribed, to pay a stipulated sum in case of loss. In one of the cases eight, in another eighteen, and in the third forty, separate actions were consolidated. The orders, however, were made in each instance upon the motions of defendants. The reasons for consolidation upon motion of plaintiff are equally strong, and warrant the application of the rule, when invoked upon proper showing by 'either party.
The construction above given to section 2764 of the Eevision, whereby an action would be sustained upon ,the policy against all of the underwriters jointly, is not concurred in by my brothers, who unite in holding that such an action could not be maintained. They consider the policy operates precisely as though there were four separate contracts, and that the several underwriters are separately bound thereon, and that it must be considered as the separate contract of each of the obligors, and not as one contract upon which all are severally bound. I am constrained to regard it, as it is in fact, as one contract, upon wdiieh the obligors are severally bound. The fact that each obligor is severally bound to pay a separate sum, to my mind, does not give a character to the instru*48ment, nor remedy tbereon, different from such as would exist -were the obligors severally bound to pay the same sum. The extent or amount of the liability of the obligors upon the instrument, does not, in my opinion, sustain the view that it is, in contemplation of law, four separate instruments. It is in fact one instrument, upon which the obligors are severally liable, and, in my opinion, comes within the purview of the section above referred to. I state these views with diffidence, and would not urge them were they not at the very foundation of my conclusion upon this point.
Mr. Justice Cole concurs in affirming the ruling of the court below requiring the other causes to abide the verdict and judgment rendered in this one, but arrives at that conclusion upon a different course of reasoning. lie thinks, that, under the peculiar facts of the case, the identity of the contract, pleadings, defense, plaintiff, and that, as no cause was shown by the defendants, in answer to the rule, why the order should not have been made, its allowance was a matter within the discretion of the court, and that, as no abuse of that discretion appears from the record, and no prejudice appears to have resulted to the defendants, we should not interfere with the ruling. He is of opinion, however, that such practice should not be encouraged, as it might lead to abuses and work injustice. As no such results appear in this case, he is willing to sustain the order of the District Court.
The Chief Justice and Mr. Justice Wright are able to concur in neither the views of Mr. Justice Cole, nor of those of the writer of this opinion, and unite in holding that the ruling of the District Court upon this point is erroneous. That ruling is, therefore, sustained by reason of a division in opinion of this court upon the question.
*494. Insurance: waiver of conditions: estoppel. *48III. The solution of one question will dispose of many points made by defendant relating to the admission and *49exclusion of evidence, and the giving and refusing of instructions to the jury. The question is this: Can the breach of the conditions of the policy against the increase of the risk, without the written consent of the insurers, whereby the instrument became forfeited, be waived by parol or by the acts of defendant ?
The plaintiff admitted the increase of the risk by the use of a part of the building insured for the manufacture of rustic ydndow shades, but sought to avoid the forfeiture, which otherwise would have resulted, by evidence tending to show the consent of the agent of defendant to such use, his acts and declarations recognizing the contract of insurance, after the increase of the risk, and his admission that the building continued to be covered by the policy. This evidence was given to the jury against the objection of defendant, and the court held, in the instructions to the jury, that such facts, if proved, would operate as a waiver of the forfeiture and entitle plaintiff to recover. The following are among the conditions of the policy:
“If the above mentioned premises shall be used or occupied so as to increase the risk, or become vacant and unoccupied, or the risk be increased by the erection of adjacent buildings, or by any other means whatever, within the control of the assured, without the assent of the companies indorsed hereon; * * * or if the assured shall keep upon the said premises gunpowder or phosphorus, or petroleum, or rock or earth oils, or benzole, benzine or naptha, or any explosive substance, or shall keep or use upon the said premises camphene, spirits, gas or chemical oils, without written permission on this policy, then, and in every such case, this policy shall be void.”
The question above stated is fairly presented by the record, and is of very great importance, not only in its *50relation to this case, but to the business of insurance generally. We have endeavored to give it the careful and patient consideration, aided by the able argument of the counsel for the respective parties, which its importance demands. ‘
"'""The policy which is the foundation of this action, though a unilateral contract in form, contains covenants of the assured as well as of the underwriters, and mutual agreements of the parties. Some of these covenants on the part of the assured, are in the nature of warranties, and conditions precedent; others are in the nature of obligations imposed by the conditions limiting or measuring the liability of the underwriters. The covenants of the insurers are mostly, if not all, dependent upon the obligations or covenants of the insured, expressed or implied in the policy. The policy, though subscribed only by the underwiters, is evidence of the contract entered into by both parties, and binds both. 2 Parsons’ Maritime Law, 27; Parsons’ Mercantile Law, 404. Contracts of this character, binding the obligor upon conditions to be performed by the obligee, but subscribed only by the obligor, are not uncommon. Those for the sale of real estate are often in this form. The language used to express the idea that the obligor is not bound to perform his covenant, until the conditions imposed upon the other party are performed, or, in other words, that the obligor’s covenants are dependent, is usually a recital of the conditions which are to be performed by the obligee, following with the declaration that if they are not performed, the instrument shall become void, or forfeited. The policy under consideration is in this form. It declares, that if the risk is increased by means within the control of the assured, without the assent of the underwiters, it “ shall be void.” By the conditions expressed, the assured is prohibited from increasing the risk, and he obligates himself that it *51shall not be increased in the manner prohibited. This is his undertaking, and, as we have seen, he is bound thereby as though he had subscribed the policy. This is obvious; but a word or two more may express the idea more clearly. The underwriters obligatq-th,emselves to pay a certain sum in case of the loss of the building by fire, with the condition, however, that the risk shall not be increased in the manner prohibited. To this condition the assured assents by the acceptance of the contract, and he thus obligates himself and becomes bound by the policy, that the risk shall not be increased. If he permits it to be increased, his covenants are broken. The condition which he is bound to perform is precedent to the underwriters’ covenant. The underwriters are, therefore, not liable on the policy, which ceases to bind them, and to that extent the policy becomes void.
Unsound conclusions in the argument of defendant’s counsel, result from an improper understanding of the expression “ shall be void,” used in the condition above quoted from the policy. It is insisted, that the instrument, by force of these words, upon the increase of the risk, became absolutely null and void. The phrases and words used to convey the idea are, “ ipso facto void;” “ dead;” “ extinct;” “ defunct;” “ of no effect,” etc., etc.; meaning thereby that the instrument has no force or effect, in the sense of these terms when applied to instruments void in law, as the deeds of parties having no legal capacity to contract, or contracts against public policy, etc. But the term “ void,” as used in the policy, has no such meaning. It simply means that the underwriters, upon the violation of his covenants by the assured, shall cease to be bound by their covenants in the policy; and this is in accordance with the true definition of the word, and its common use in like connections. The policy does not cease to have a legal existence, it is the only compe*52tent evidence of the contract it embodies, and in truth is not void except so far that the underwriters are no longer bound thereby. Neither will they be discharged therefrom unless they plead the fact that the insured failed to perform his covenants contained in the policy. Their silence would waive the default of the opposite party.
The position of defendant’s counsel, which is supported by sevei’al authorities, is to the effect that upon breach a of the conditions of the policy by the assured, which would defeat recovery thereon, it becomes absolutely void — as it were, dead — and that nothing short of a new creation could impart vitality to it. This doctrine is certainly unsound when applied to other contracts; for, on the contrary, after default in the conditions by one party, the other may waive the forfeiture and treat the instrument as of binding force -upon himself. No reasons can be given to except policies of insurance from the operation of this rule. The party in default cannot defeat the contract; the party for whose benefit the conditions are introduced may waive the forfeiture. It follows, therefore, that the instrument is forfeited at the option of the innocent party; and if he waives the forfeiture, the contract stands as if no breach had occurred. In Williams v. Bank of the United States, 2 Peters, 102, the doctrine is announced in these words: “ If a party to a contract, who is entitled to the benefit of a condition, upon the performance of which his responsibility is to arise, dispenses with, or by any act of his own prevents, the performance, the opposite party is excused from proving a strict compliance with the condition.”
We conclude, therefore, that the forfeiture of the policy on account of the breaches of the conditions thereof, could have been waived by the defendant, and if waived, the policy continued of the same binding force which it originally possessed. This view is sustained by the following *53authorities: Keenan v. Mo. State Mut. Ins. Co., 12 Iowa, 126; David v. The Hartford Ins. Co., 13 Iowa, 69; Carpenter v. The Prov. Wash. Ins. Co., 16 Pet. 509; Coursen v. Penn. Ins. Co., 46 Penn. St. 323; Atlantic Ins. Co. v. Goodale, 35 N. H. 328; Frost v. Saratoga Ins. Co., 5 Den. 154; Clark v. Jones, 1 id. 516; Cartwright v. Gardner, 5 Cush. 281; North Berwick Co. v. Ins. Co., 52 Maine, 336; Warner v. Peoria Ins. Co., 14 Wis. 323; Smith v. Gugerty, 4 Barb. S. C. 614; N. E. F. & M. Ins. Co. v. Schettler, 38 Ill. 166; Viall v. Ins. Co., 19 Barb. 440; Ins. Co. v. Stockbower, 26 Penn. St. 199; Buckbee v. Life Ins. Co., 18 Barb. 541; Beal v. Park Ins. Co., 16 Wis. 241; Wing v. Harvey, 27 Eng. Law & Eq. 140; Peoria F. & M. Ins. Co. v. Hall, 12 Mich. 202.
5. — waiver need not be in writing. IV. We are next led to inquire as to the manner of the waiver of the forfeiture, whether it must be in writing or may be by parol, and what acts of the defendant will amount to a waiver.
Parol evidence is not admissible to contradict or alter a written instrument, but this rule does not exclude such evidence when adduced to prove that a written contract is discharged, or that the damages for non-performance were waived, or that performance of a part of the contract was dispensed with. 1 Greenleaf’s Ev. §§ 302-304; 2 Phil. Ev. (Cowen & Hill’s and Edwards’ Notes) 692 and note 505; 2 Starkie’s Ev. 574; Fleming v. Gilbert, 3 Johns. 528; Merrill v. Ithaca & Oswego R. R. Co., 16 Wend. 586.
These exceptions to the rule, or rather the rule admitting parol evidence for these purposes, may not apply to specialties; but a contract of insurance need not be by specialty, or even in writing. It seems to be the better opinion that it may be oral only. Parsons’ Mercantile Law, 403 and notes; 2 Parsons’ Maritime Law, 19 and notes; City of Davenport v. Peoria Ins. Co., 17 Iowa, *54276; Commercial Ins. Co. v. Union Ins. Co., 19 How. 321; Baptist Church v. Brooklyn Ins. Co., 19 N. T. 305. We need not, then, inquire whether a policy executed by an incorporation and attested by its corporate seal is a specialty, for the policy sued on is not sealed by the companies, and is therefore a simple contract and not a specialty. The rule therefore will not, in this suit exclude parol evidence for the purposes above mentioned. The cases which we will hereafter cite, in considering what acts may amount to a waiver of conditions or forfeiture on account, of breaches of conditions, support this doctrine and will illustrate its application.
It is argued that the condition in the policy, to the effect that an increase in the risk avoids the contract on the part of the underwriters, unless consent thereto be had in writing, implies that such consent can be given in no other way. It will be at once remarked, that this restriction is itself a condition, %nd is just as capable of being waived or dispensed with as any other condition of the instrument and in the same way. There is nothing in the terms of this condition prohibiting its waiver. But the conditions of the policy became broken by an increase of the risk, without written consent, and there at once happened a forfeiture whereby defendant was discharged from the contract. Now, as a matter of fact, the waiver was not of the written consent, but of the forfeiture. .
6. -— what will amount to waiver. Y. What will amount to or have the effect of a waiver of a forfeiture of the policy, or a dispensation of the performance of its conditions? The party for whose benefit a condition is introduced in a contract may determine whether it shall or shall not be enforced, and, as we have seen, may waive or dispense with its performance. It seems reasonable that the same character of evidence will establish a waiver or dispensation of conditions, that is sufficient to prove the existence *55of a contract. An express agreement to that effect will of course be sufficient. Circumstances proving that the party treated the contract as subsisting and not forfeited, a course of dealing consistent only with that hypothesis, and acts and declarations whereby the other party was induced to believe that the condition was dispensed with or forfeiture waived, will be sufficient to preclude the setting up of the breaches of the condition as a defense to the contract of the party bound thereby. Thus (the receipt of premium upon a policy after forfeiture is a waiver thereof. North Berwick Go. v. Insurance Go., 52 Maine, 336; New York Insurance Go. v. National Prot. Ins. Go., 20 Barb. 468; Piddle v. Market Fi/t'e Insurance Go., 29 N. Y. 184; Ames v. New York Union Ins. Go., 26 id. 263; Bochen v. Williamsburgh Ins. Go., 35 id. 131; Cfoii v. National Prot. Ins. Go., 25 Barb. 189; Viall v. Genesee Mwt/ual Ins. Go., 19 id. 446; Frost v. Saratoga Mutual Ins. Go., 5 Den. 154; Pycommg Ins Go. v. Stock-bower., 26 Penn. St. 199; Wing v. Harvey, 27 Eng. Law & Eq. 140.
So the taking of an additional risk on the same policy will waive a forfeiture, existing at the time, for breach of condition. Rathborn v. City Ins. Co., 31 Conn. 193.
The knowledge of the officers of an insurance company taking a risk upon the life of a party, that he intended to go south of a certain degree of latitude, is a dispensation of a condition that the insured should not go beyond that latitude. Bevin v. Connecticut Life Ins. Co., 23 Conn. 244.) The renewal of a life policy which had expired by non-payment of premium, in favor of one who at the time was sick, and so known to the officer renewing the policy, is a waiver of conditions against ill health of the assured, which otherwise would have avoided the policy. Buckbee v. United States Ins. & Trust Co., 18 Barb. 541. The following cases which illustrate the *56doctrine under discussion, we have not space to classify or further notice in this connection. Peoria Ins. Co. v. Hall, 12 Mich. 202; Sheldon v. Atlantic Ins. Co., 26 N. Y. 460; Warner v. Peoria Ins. Co., 14 Wis. 318; N. E. F. & M. Ins. Co. v. Schettler, 38 Ill. 166 , Coursen v. Penn. Ins. Co., 46 Penn. St. 323; Ruse v. Mutual Ben. Life Ins Co., 26 Barb. 556.
7._need not be founded on new consideration. It will be observed that the waiver of the condition, or forfeiture, under these authorities, is not required to be supported by a consideration. In the eases where it is held that the payment of premium upon a policy forfeited for breaches of condition, is a waiver of forfeiture, the payment was not made in consideration of the waiver, but for the renewal or continuance of the insurance. The waiver or dispensation is not in the nature of a contract which requires the support of a consideration, but rather of an estoppel, whereby the underwriter is precluded from denying the validity of the contract, on account of acts or admissions either recognizing it as of binding force after the forfeiture, or holding out to the assured that the performance of the condition is dispensed with.
It is not an accurate use of terms to say that the condition of a contract must be supported by a consideration. The contract itself must be, but the condition is a mere incident thereto, and its sufficiency, validity or force is in no way affected or dependent upon the consideration. It is true the condition may influence the parties in fixing the amount of the consideration, but the law will not, in the absence of fraud, inquire into its sufficiency, nor hold a contract invalid because a full or just value has not been received by the obligor. The case of a policy of insurance illustrates the point. The underwriter is bound thereby to pay the assured the amount of any loss by fire which may happen to his property within a certain time. *57The consideration of this contract is the premium received by the underwriter. The assured is bound not to permit the risk to be increased; this obligation is the condition of the policy, and with it we can associate no idea of consideration. It may enter into the contemplation of the underwriter when fixing the value of the risk, which may be worth a greater premium without the condition in the policy, but the adequacy of the consideration, as we have remarked, is not a matter of inquiry, and the consideration itself no element of the condition. We conclude, therefore, that, as the condition is not dependent upon nor supported by the consideration, it may be waived or dispensed with even by an agreement without consideration.
8_power of agent to waive forfeiture. VI. We approach the consideration of the questions involving the power of the agent of the defendant to dispense with the conditions of the policy or to waive the forfeiture resulting from the breach thereof. Defendant’s counsel contend, that, as shown by the policy, the agent possessed no power to assent to an increase of risk except in writing, and that, in order to bind the company by his acts, declarations or agreement, dispensing with the conditions or waiving the forfeiture, his authority so to do must be expressly proved.
There was evidence tending to prove that the agent had full power to effect contracts of insurance, to fix rates of premium, to give consent to the increase of risk and change of occupation of buildings insured, to cancel policies in his discretion, and that in the prosecution of their business it was the custom of agents of insurance companies to exercise supervision over property covered by policies issued at their respective agencies.during the term of insurance.
The instructions to the jury, and the rulings upon objections to evidence, in effect, hold, that the authority of *58the agent to waive forfeitures and dispense with conditions may be sufficiently shown by proof of the possession and exercise of the powers above stated, and that express authority need not be shown in order to bind the defendant thereby. This we conceive to be the law.
By proof of the possession of the powers aforesaid, the authority of the agent is shown to be in fact of the broadest and most plenary character. It is difficult to conceive of an act in the prosecution of the business of insurance, which the officers of the companies can do, that cannot be done by the agent. He is provided with blank policies whereby he is enabled to enter into the contract of insurance. These blank instruments are in no sense contracts until signed by him, for it is expressly provided therein that they “ shall not be valid unless countersigned by the duly authorized agent of said companies at Davenport, Iowa.”
Such is the express provision of the policy upon which this suit is brought, and there is not one word of limitation upon the authority of the agent contained in it. No attempt was made to prove knowledge on the part of the assured of any limitation of the power of the agent, further than by the policy itself, and a general custom or rule of insurance companies and agents that no change can be made by agents in the printed conditions of the policy. The effect of such limitation will be hereafter noticed. The powers of the ageut, then, are those of a general agent, and the companies are bound by his acts which are within the scope of the general authority he possesses, even though he violates limitations upon that authority which are not brought home to the knowledge /of the party with whom he deals. Story on Agency, §§ 126, 134; Keenan v. Mo. State Mut. Ins. Co., 12 Iowa, 131; City of Davenport v. Peoria Ins. Co., 17 id. 276; Warner v. Peoria Ins. Co., 14 Wis. 318, 323; North *59Berwick Co. v. N. E. F. & M. Ins. Co., 52 Maine, 336; Post v. Æna Ins. Co., 43 Barb. 351; Sheldon v. Atlantia Ins. Co., 26 N. Y. 460.
9. — implied and incidental powers. YIL This brings us to inquire what powers may be ■ exercised by the agent within the scope of his general authority. Under this general authority he , . , , , , . />. has power to conduct the business oí insurance of his principals at the city of Davenport. This is the aggregation of all his powers, and. he possesses implied authority to do all things proper and necessary in the prosecution of that business, subject of course to limitations imposed by his principals and known to those with whom he deals. These incidental powers may be numerous, and their enumeration is not necessary. Among others he has the power to assent to the increase of the risk, and to a change of occupancy of property insured, and to cancel policies on account of increase of risks or for any other reason. In the exercise of these powers he is guided by his own discretion, which it is presumed will be exercised for the best interests of his principals. He has, also, all the powers which by the usages of the business are properly and ordinarily exercised by agents engaged therein. Story on Agency, §§ 11, 106.
It appears that insurance agents usually exercise supervision over the property insured by them, and this necessarily results from the character of the business and their authority to cancel policies on account of increase of risk. The agent is charged, by the terms of the policy on which this suit is based, with the power to determine whether the risk is increased. If he so determines, he may cancel the policy and put an end to the contract. This involves the necessity of examination of the condition of the insured property during the life of the policy, and constant watchfulness to protect the interest of the underwriters. If he determines that the risk is increased, such determination *60is final, for it seems the assured has no appeal therefrom and no redress for loss that may be sustained thereby. Such being the great, and in some respects extraordinary, powers of the agent, it follows that he is clothed with the power to dispense with conditions and waive the effects of breaches thereof, in contracts of insurance made by him. These powers are necessary incidents of his general authority, and without their exercise he could not act to its full extent. If he, can determine that the conditions of the contract have been broken, surely he can also determine that they have not been broken. If he can put an end to the contract because of the increase of the risk, and the consequent forfeiture, certainly he can waive that forfeiture. If,-possessing such full authority to make the contract, determine that it is performed, and to put an end to it, he can not dispense with its conditions after it is executed, the rules of law controlling agents generally and all kinds of contracts, must be held not applica“'ble to insurance policies and insurance agents., These companies have no way of dealing with their customers and the public, except through their agents. They are „ incorporations existing under the laws of another State. Practically those powers can only be exercised by agents. They are inherent in the corporations, whose interest as well as fair dealing toward others (as it did in the ease before us), may require their exercise. The agents, therefore, must be held to have full authority to dispense with the conditions of policies, after their execution, and to waive forfeitures for breaches thereof.
As we have already intimated, the law, in its application to other kinds of contracts, and to agents transacting other kinds of business, fully sustains the doctrines we have announced. This may readily be illustrated by facts disclosed by the record. The owner of the property upon which the policy in question was issued was a non*61resident of the State, and the business was transacted for him by an agent, who, it seems, exercised general powers in all matters pertaining to the property. Now, suppose this agent had executed a contract for the rebuilding of the property burned, or his principal had executed it, and it was delivered by the agent, blanks being filled by him under proper authority, with the name of the other contracting party, sums to be paid, etc. This contract contained many conditions, as we may suppose, for the benefit of the property owner, and the agent was authorized to' assent in writing to the dispensation of certain of them, and the power to put an end to the contract in case of the failure of the other party to comply with its conditions. During the progress of the work, questions arose whether certain things done or omitted to be done by the builder, were in violation of the conditions of the contract. The agent, as to whose power not one word of limitation existed in the contract, or was otherwise known to the builder, asserts that the matters in question are not in violation of the contract, and treats it as complied with, or verbally assents to the dispensation of certain conditions. When the building is completed, in accordance with the contract as thus modified, the principal refuses to pay the sum agreed on, because of non-compliance on the part of the builder with the conditions thus waived by the agent. Upon no recognized rules of law could this defense be sustained, and we would have no difficulty in finding ample authorities in support of the doctrine that the waiver of forfeitures by reason of the breaches of the conditions, and the dispensation of the conditions by the agent, were binding on the principal. This supposed case is not distinguishable upon principle from the ease disclosed by the record.
The views above advanced are fully sustained by the more recent decisions of the courts. In the Peoria Fire *62and Marine Ins. Co. v. Hall (12 Mich. 213) the knowledge of the agent when the policy was issued, that gun powder was kept on the premises insured, was held to be a waiver of a condition prohibiting the keeping of it without written permission. In Warner v. The Peoria Fire and Marine Ins. Co. (14 Wis. 319) the policy required notice to be given of additional insurance, and consent thereto indorsed on the policy. The agent indorsed a waiver of this condition as follows: “ Other insurance permitted without notice until required.” The court held this to be a sufficient waiver, and that the agent had. authority to make it. In N. E. Fire and Marine Ins. Co. v. Schettler (38 Ill. 110) the agent, upon the receipt of additional premium, gave permission, indorsed on the policy, for the removal of the building and goods to another lot. In a suit upon the policy, the insurance company claimed, that the agent had no power to consent to the removal of the property. The court held, that the power will be presumed without proof.
The following additional authorities support the doctrine we have- above announced: Sanford v. Handy, 23 Wend. 260; Conover v. Mutual Ins. Co., 1 Comst. 290; Rowley v. Empire Ins. Co., 36 N. Y. 550; Plumb v. Cattaraugus Ins. Co., 18 id. 392; Sheldon v. Atlantic Fire and Mutual Ins. Co., 26 id. 465.
The cases cited in prior pages in support of the positions that there may be a waiver of a breach of the conditions of a policy, and that such waiver may be by parol or presumed from the acts of the parties, sustain the point here made; the waiver in those cases being generally, if not all, made by agents.
It is not to be disguised, that, upon this question, there is very great conflict of authorities, some cases restricting the power of the agents to the most narrow limits of the express terms of their appointments, and circumscribing *63it strictly by tbe restrictions imposed by tbe principals, tbe insurance companies. But the more recent cases support the contrary view, and are in consonance with the doctrines we have attempted to maintain in this opinion.
As an illustration of the progress of the authorities upon this question, it may be mentioned, that Rowley v. The Empire Ins. Co., above cited, which was decided in 1867, overrules five prior cases adjudged in the courts of New York, and is supported by only one older case in the reports of that State, viz., Plumb v. The Cattaraugus Ins. Co., 18 N. Y. 392. These later decisions are in harmony with reason and sound public policy, in view of the manner of conducting the business of insurance through a system of agencies far distant from the place of business of the corporations. While it is true that these companies transact business only through their agents -at distant points, it is also true, that much of their business is acquired through the diligence, skill and capacity of these agents, and that parties effecting insurance rely in a great measure upon the representations made by them as to the rights and obligations of the respective parties to the policies, and are controlled in the care of the insured property by their directions. The acts of these agents, in all matters pertaining to the proper business they are appointed to transact, should bind their principals, unless contrary to restrictions of their powers, brought to the knowledge of those with whom they deal.
It is argued, that, inasmuch as - by the restrictions imposed on the power of the agent by custom, as well as by the rules of the company, he can make no change in the printed conditions of the policy, therefore he had no authority to waive a forfeiture of such terms, or dispense with their performance. Without determining whether this could be done by agreement at the *64time the policy was issued, we are clearly of the opinion, that such restriction of authority in no way affects his power so to do after the policy is issued, in a proper case, and without fraud on his part, or by the assured.
The distinctions between omitting a condition required by the terms of his authority, and by custom, to be introduced into the policy, and the waiver of such condition for a proper cause, after the policy had been executed, are obvious.
It has been held that an agent intrusted with blank policies, to be filled up and countersigned by him, may bind the underwriter by new clauses or conditions inserted by the agent before issuing the policy. 2 Phillips’ Ins. 528, § 1877; Gloucester Manufacturing Co. v. Howard, 5 Gray, 497.
10._waiver arising from failure to cancel. Till. /By the terms of the policy the underwriters reserved the right to cancel it upon the risk being increased, or for any other cause, “ by paying to the assured the unexpired premium pro rata” The point is made by the plaintiff, that if the risk be increased, of which the underwriters have notice, and the right to cancel is not exercised, this amounts to a waiver of the forfeiture incident to a breach of the condition against increase of risk. The decision of this question is not necessary, as the case is determined without it. But, for myself, I am free to admit the force of the position, in view of the peculiar facts of the case, and that I believe it is supported by sound reason. Without discussing the legal principles upon which it is founded, it will readily be seen to be in harmony with our ideas of fair and honest dealing. The agent had full notice of the increase of the risk, obtained upon an examination of the property, made in discharge of his duty, for the express purpose of determining whether there had been such increase. This notice to the agent bound the com*65panies. Keenan v. Missouri State Mutual Ins. Co., 12 Iowa, 131. If the agent determined that the risk was increased, his duty to his principals and good faith toward the assured, and every principle of honesty, required him to cancel the policy and advise the assured of the fact. It was bad faith of the darkest hue for the agent, upon determining that the risk was increased, so to act and speak as to induce the assured to believe that the policy continued to cover the property. The companies thereby retained the money paid as premiums, which they had not earned, and which their contract, required should be repaid to the assured upon canceling the policy, and induced their confiding customer to trust for indemnity, to the extent of many thousand dollars, for loss of his property, upon a contract which they had predetermined was avoided, and upon which, according to their interpretation of the law, he could not recover one cent. Such a course of dealing indicates a reckless and fraudulent spirit of gain, which will hazard the property of others to the value of tens of thousands in order to secure an inconsiderable and paltry sum. On the other hand, if, upon such examination of the property, the agent ^honestly determined that there was not such increase of risk as required the exercise of his power to cancel .in order to protect the interest of his principals, and acted upon that determination, whereby the plaintiff was induced to rely upon the policy as a valid, binding contract, the underwriters ought to be bound by such determination and acts of their agent, and ought not to be permitted to set up, as a breach of the conditions, the very things which the agent decided were not breaches. In such a case, while the agent would be relieved of the charge of dishonesty, it would be successfully sustained against his principals. In whatever light we may view the facts that the increase of the risk was fully known to *66the agent, and no steps were ■ taken to cancel the policy in accordance with its terms, they involve bad faith and deceit, whereby one party in order to realize a small sum puts at hazard great interests of another, a course of dealing repulsive to all right notions of justice, and nowhere practiced among honest men.
11._extent of waiver. IX. It is argued by the defendant’s counsel, that the waiver of the breach of the condition of the policy, on account of the rustic window-shade manufactory, extended only to the acts in violation of the terms of the policy done before such alleged waiver, and that the condition continued to be daily violated by the continuance of the cause of the increase of risk; and that, as it is not pretended that there was any waiver of the breaches resulting therefrom, the policy is thereby avoided. The error of this argument is apparent. The waiver extended to all breaches resulting from the manufacture of rustic window shades in the building insured, and the parties in all their intercourse concerning the increase of the risk, and by their acts touching the same, had reference to the continuation of the manufactory, and of course contemplated the waiver of the breaches resulting therefrom, and the dispensation, of the conditions of the policy prohibiting it.
12. — consent to certain occupancy carries incidents. X. The policy expressly prohibited the keeping of benzine upon the premises insured. There was evidence tending to prove that this fluid was necessary in the preparation of the paints and varnishes x used in the manufacture of rustic window shades, and that, at the time of the fire, it was kept for that purpose upon the premises, in tin cans, in quantities not exceeding two gallons. The evidence also tended to prove that the agent gave permission for keeping benzine for the purposes and in the manner and quantities aforesaid. This permission was given, as it is claimed, at the *67time tlie alleged consent was given to the continuation of the window-shade manufactory. The court instructed the jury, substantially, that a consent to the occupation of the building for the manufactory implied a consent to the use of such articles as were. necessary to be used in the business. This instruction was clearly correct. The consent to the manufacture of the window-shades, implied a consent to the use of benzine if it was necessary or commonly used in making those articles; otherwise a direct permission to-continue the manufactory would be defeated by the prohibition in the policy.
This permission operated to dispense with the prohibition. In Citizens’ Ins. Co. v. McLaughlin, 6 Am. Law Register, N. S. 371, lately decided in the Supreme Court of Pennsylvania, this doctrine is recognized. In that case the policy covered a patent-leather manufactory, and the keeping of benzine upon the premises was prohibited, and confined to a shed detached therefrom. It was a necessary article in the manfacture of patent-leather, and was ordinarily carried in a bucket, containing three or four gallons, into the building insured. The benzine took fire in the bucket and the building was consumed. The court holds that the permission to use the building for a patent-leather manufactory, carried with it the permission to use all articles necessary to the business, and dispensed with the prohibition expressed in the policy. The same rule is announced in the following cases: Harper v. Albany Ins. Co., 17 N. Y. 191; Harper v. N. Y. Ins. Co., 22 id. 441; Pindar v. Kings County Ins. Co., 36 id. 618.
13. — conditions connected with change of occupancy. XI. The evidence tended to prove that the agent of the underwriters, at the time he made an examination of the building, directed a certain iron door to _ be put up, and that either the tenants or the agent of the plaintiff agreed to comply with this requirement. It seems that no time was specified in *68■which it should be done. An order was given for the door, but it was not completed and put up at the time of the fire. Upon this evidence are based the sixth and seventh interrogatories to the jury by the defendant, and the fifth propounded by the court.
The special finding in response to the sixth question of defendant, while it makes the continuance of the insurance conditional upon the door being put in, fixes no time when it was to be done. It simply shows that the agent agreed to carry the risk if an iron- door should be put in. The agreement to put in the door was not a condition precedent to the continuance of the insurance. Of course the plaintiff had a reasonable time in which to comply with his agreement, and the response to the fifth question shows that he had used all reasonable efforts to do so before the fire, and had, therefore, sufficiently complied with his part of the agreement. These findings are consistent with each other, and not inconsistent with the general verdict. Plaintiff’s motion to set aside the finding upon the sixth question of defendant was properly overruled.
In the light of the doctrines above announced, we find no error in the rulings of the court upon the admission of evidence and the submission of questions to the jury for special findings. It is not necessary to state the special questions raised, or evidence admitted or excluded. Neither do we find error in the giving or refusal to give instructions asked by the parties. Those given are in harmony with the principles of this opinion; those refused are not. It would answer no useful purpose to refer to them more fully. The verdict, as well as the special findings, are well supported by the evidence. The motions to set them aside were properly overruled.
Affirmed.
The importance and somewhat leading character of this case, and the interesting nature of the questions discussed, have induced the *69Reporter, believing it would be of use to the profession, and facilitate future investigation, to publish the following valuable note written by John N. Rogers, Esq., for the Western Jurist.
The same considerations have induced the publication of briefs of counsel more than usually full.
Note. — This valuable case contains, it is believed, the most complete and comprehensive view to' be found in the decisions of- the courts of the law of waiver of conditions, or of forfeiture by breach of conditions, in policies of insurance; a subject of great and increasing practical importance, in view of the numerous, complex and frequently far from perspicuous conditions inserted in those instruments, and the frequent instances of failure on the part of the insured to comply strictly with their terms. While there are many- reported cases in which particular acts or conduct by insurers or their agents have been held to amount to, or to be evidence of, such waiver,-in the present case the subject is discussed upon principle, and rules of general application are laid down, as to what is capable of waiver, and how and by whom a waiver may be made, which applied to particular cases, will go far to solve most questions usually arising in respect to waiver, in suits on fire policies.
The foundation principle of the decision may, in a general form, be thus stated: when a written contract between two parties,'imposing obligations to continue through a given period of time,'contains a condition intended for the benefit of one party only,- and providing that on its breach during such period, the written-instrument shall, be void (or words of that import), the le^al effect is, that, on the happening of a breach, the contract, so far as it imposes obligations on the party for whose protection the condition is intended, becomes void only on the election of such party so to treat it. The other party cannot take advantage of his own breach to avoid the contract. It follows, of course, that the forfeiture incurred by the breach may be waived by the party entitled to enforce it; and that such waiver, being simply the exercise of the right to elect ‘whether to terminate or continue the contract will be effected by any act or conduct toward the other party, with knowledge of the breach, recognizing'or treating the contract as still continuing in force. The result is, that the rights -of both parties are the same as though no breach had occurred.. The waiver, not being in itself a new contract, nor a change of the terms of the original contract, but merely the legal consequence-of an election not to avoid such contract on account of a specific breach of con- ' dition, requires neither writing nor consideration. And this is equally so, where (as in the principal case) the condition prohibits the doing *70of some act, without the written consent of the other party. In such case the absence of written consent is simply an essential element in the breach of condition, without which there would be no breach, and nothing requiring a waiver. The consequences of a breach of such condition, when it has happened, may be dispensed with in any mode which would be effectual in case of a condition otherwise framed.
The above principles have been, perhaps, most frequently illustrated and applied in the law of landlord and tenant. Nothing is better settled than that if the landlord, with knowledge of breach of a condition by the tenant, which by the terms of the lease avoids it, does any act treating the tenancy as still continuing, he waives the forfeiture. And though a distinction was formerly taken in this respect between leases for life, which, creating a freehold, requires a re-entry to take advantage of a breach of condition and leases for years — it being then held, in respect to the latter class, that the lease became void by the mere happening of the breach and could not be set up again by a waiver thereof — the modern decisions have exploded the distinction, holding that in either case, the lease becomes void only on the lessor’s electing so to treat it, and that the only difference between a lease for life and one for years is, that in case of the former, that election must be manifested by a formal entry, which is unnecessary in case of a lease for years. 1 Smith’s Lead. Cas., notes to Dum/por’s case, where the subject is fully discussed and authorities cited.
In Smith v. Saratoga Ins. Co. (3 Hill, 508), it was decided, wholly on the old authorities, as to leases for years, that a breach of condition in a fire policy, rendering it, by its terms, “ void,” could not be subse quently waived so as to continue the policy in force. This case, however, has been frequently disapproved (see 2 Am. Lead. Cas., p. 624; Keenan v. Mo. State Mut. Ins. Co., 12 Iowa, 26), and was virtually overruled in the same court, in Clark v. Jones, 1 Den. 516, a case of a lease, in which Bronson, J., who delivered the opinion in Smith v. Saratoga Ins. Co., expressly abandons the doctrine there laid down, admitting that the modern decisions are against it. See also Frost v. Saratoga Ins. Co., 5 Den. 154; Viall v. Genesee Mut. Ins. Co., 19 Barb. 440; Keenan v. Dubuque Mut. Ins. Co., 13 Iowa, 375; Wing v. Harvey, 27 Eng. Law & Eq., 140. A fair test of the question is afforded by the case of an insurance for a term of years, with a premium payable annually, in advance. If, immediately on a breach of a condition, which, by the terms of the policy, is to render it “ void,” and independent of any election by the insurer, the policy becomes extinct, it is plain, that the insured could, on this ground, successfully resist a suit by the insurers for subsequently accruing premiums. It seems clear, however, that no such defense could be maintained, and equally so, that the insurer, by *71bringing such an action, with knowledge of the breach, would affirm the continuance of the insurance, and be estopped from setting up the breach as a defense against liability for a subsequent loss. See Cartwright v. Gardner, 5 Cush. 273, 281.
The applicability of the rule above stated, as to waiver of forfeitures, to the contract of insurance, is involved in and indeed constitutes the basis of the decisions holding that the existence of a policy, the conditions of which have been broken by the insured, rendering it by its terms “ void,” may nevertheless constitute a breach of the condition in another policy on the same property, prohibiting other insurance not notified to the insurers in such second policy. Carpenter v. Prov. Wash. Ins. Co., 16 Pet. 495; Bigler v. N. Y. Central Ins. Co., 22 N. Y. 402; David v. Hartford Ins. Co., 13 Iowa, 69.
The Supreme Court of Massachusetts, while apparently, in Cartwright v. Gardner {supra), recognizing the rule as applied to other written contracts, have refused to apply it to insurance policies, and maintain, as to them, a doctrine directly contrary to the cases last cited. Jackson v. Mass. Mat. Fire Ins. Co., 23 Pick. 418; Clark v. N. E. Mut. Fire Ins. Co., 6 Cush. 342.
The weight both of authority and reasoning, however, would seem to be opposed to the Massachusetts doctrine, and no sound reason appears to exist for distinguishing the contract of insurance, in'this respect, from other written contracts.
In Cockerill v. Cincinnati Ins. Co. (16 Ohio, 148), it is said, that by the law merchant, both the contract to insure and a waiver of a breac¡i of condition in such contract, are required to be in writing. It is believed, however, that neither branch of this position is correct. In Baptist Church v. Brooklyn Fire Ins. Co. (19 N. Y. 305), it is expressly held, that, by the common law a verbal contract of insurance is valid; and to the same effect see Commercial Ins. Co. v. Union Ins. Co., 19 How. 318; Baxter v. Massasoit Ins. Co., 1 Allen, 294; City of Davenport v. Peoria Ins. Co., 17 Iowa, 276. And even were this otherwise, since a waiver of a forfeiture is not a new contract to insure, but merely the legal consequence of the insurer’s declared election to treat the insurance as continuing, notwithstanding the breach, on no sound principle can written evidence of such election be required. By the statutes of frauds, a writing is essential to a lease for longer than a specified term; but this has never been held to exclude parol evidence of a waiver by the lessor of a forfeiture of such lease, incurred by the lessee.
There is an obvious difference between waiving a forfeiture already incurred by a specific breach of condition, and waiving the condition itself prospectively. The former simply reinstates the contract, without changing its terms ; the latter operates directly on the terms of the *72contract, by eliminating the condition. Since no rule of law forbids a parol modification of a previous written contract, it follows, that a waiver of the condition itself, subsequent to the inception of the contract, equally with a waiver of a past breach of it, may be established by parol evidence. A different question arises, when matters preceding or concurrent with the inception of the policy, and resting in parol, are relied on to establish waiver of its written conditions. In Massachusetts (where the general course of decision on fire policies seems to be much stricter against the insured than elsewhere), such evidence is held inadmissible, as contradictory to the written contract. Barrett v. Union Mut. Ins. Co., 7 Cush. 175; Lee v. Howard Ins Co., 3 Gray, 583.
Whatever may be thought of these decisions, considered on principle, the weight of authority is decidedly the other way. Sheldon v. Atlantic Ins. Co., 26 N. Y. 460; Amos v. New York Union Ins. Co., 14 id. 253; Boehen v. Williamsburgh Ins. Co., 35 id. 131; Goit v. Nat. Prot. Ins. Co., 25 Barb. 189; N. Y. Central Ins. Co. v. Nat. Prot. Ins. Co., 20 id. 468; Peoria ins. Co. v. Hall, 12 Mich. 202; Beal v. Park Ins. Co., 16 Wis. 241; Insurance Company v. Rogers, 12 id. 337; Hough v. City Fire Ins. Co., 29 Conn. 10; Anson v. Winneshiek Ins. Co., 23 Iowa, 84. In all these cases, parol evidence of conduct of the insurers or their agents, prior to or concurrent with the issuing of the policy, was held admissible to establish a waiver of conditions expressed therein. Some of them strikingly illustrate the view of waiver above taken, as being rather the legal result of acts or conduct of the party than itself an independent act; holding that issuing the policy, with knowledge at the time, by the insurers or their agent through whom the insurance was effected, that the building is occupied and intended to be occupied for a purpose prohibited by the terms of the policy, or that a prohibited article is kept on the premises, operates as a waiver of such condition in the policy, or (what amounts to the same thing) estops the insurers from setting up such occupation as a breach of the condition. Peoria Ins. Co. v. Hall, Beal v. Park Ins. Co., Insurance Company v. Rogers, ubi supra. The cases holding the insurers to be estopped from denying the correctness of the representations contained in the written application for insurance, when such application was prepared by their agent, and contains misstatements, or omits to disclose material facts, through the fault of such agent, rest on the same principle. Rowley v. Empire Ins. Co., 36 N. Y. 550; Plumb v. Cattaraugus Ins. Co., 18 N. Y. 392. Jennings v. Chenango Co. Ins. Co., 2 Den. 75, holding a contrary doctrine, must be considered as overruled by the cases last cited.
The decision in the principal case as to the powers of the agent of the insurers is of very great practical importance, since the business of fire insurance, particularly the Western States, is very largely trans*73acted by foreign corporations, through their local agents, who in fact exercise almost unlimited powers as representing the companies, and are the only parties with whom the insured hold direct communication. There can be no doubt that the general tendency of the latest decisions has been more and more in favor of holding insurance companies to responsibility for the conduct of the agents through whom their business is transacted. Warner v. Peoria Ins. Co., 12 Wis. 818; Beal v. Park Ins. Co., 16 id. 241; N. E. Fire & Marine Ins. Co. v. Schettler, 38 Ill. 166; Rowley v. Empire Ins. Co., 36 N. Y. 550; Anson v. Winneshiek Ins. Co., 23 Iowa, 84. The case of Rowley v. Empire Ins. Co. is a remarkable illustration of the progress being made in this direction. It is there held (overruling several prior cases to the contrary) that the insurer was estopped to deny the correctness of the representations in the written application signed by the insured, where an error in such application was due to the agent of the company, authorized simply “to take applications for insurance,” and who prepared the application in question. Fullerton, J., delivering the opinion of the court, says: “ The conditions of insurance plainly contemplate that it ” (the application) “ should be in writing, and such was the intention of the parties. When, therefore, was the duty which the agent owed to the company at an end, so that he ceased to bind his principal ? It is not establishing a harsh or unreasonable rule in reference to insurance companies, to hold that their agents, authorized “ to take applications for insurance,” are acting within the scope of their authority, in every thing which they do which may be necessary to complete such applications. I must therefore regard Dean as in the act of taking the application when he was filling up the blank signed by the plaintiff, and therefore acting on behalf of the defendant. Any other rule would be fraught with mischief. Insurance companies send out an army of agents to solicit business. Property holders are waited upon by them at their residences; and it is not going too far to say that many of the applicants would be unable to make a proper application and survey to meet the rigid and elaborate requirements of these corporations, while experience shows that they are not expected to do so. Hence these agents render such services as are necessary to enable the contracting parties to attain their respective objects, the one to insure, and the other to become insured against fire. To hold that in performing these preliminary labors touching the very business which must necessarily be transacted before a policy can be effected, the insurance broker becomes the agent of the applicant for insurance, would seem to be an unnecessary and undesirable refinement. I repeat, that, in performing these preliminary labors, the agent is engaged in taking the applications, which is strictly within his duty, and the principal should be held responsible for any error he may commit.”
*74This case is approved and followed in Anson v. Winneshiek Ins. Co., ubi supra. These decisions do not, perhaps, necessarily conflict with Ayers v. Hartford Ins. Co. (17 Iowa, 176, 190), where it is held, that, if the authority of the agent is only “ to receive and forward applications,” the company is not responsible for his errors in drawing up the application; while, if he had power to take risks, and did, in fact, take the risk in question, the insurers would be estopped from disputing the correctness of the representations contained in the application prepared by him. It must be admitted, however, that the distinction between the power “ to take applications,” and the power “ to receive and forward applications,” is a very fine one. See also, Bartholomew v. Farmen's’ & Merchants’ Ins. Co., 25 Iowa, 507.
To this late course of decision as to the responsibility of insurance companies for acts of their agents, the Massachusetts cases, again, are a marked exception. Not only is it there held, that in drawing up the application the agent is in all cases to be regarded as the agent of the applicant, whose duty it is to see that it is correctly framed (Lowell v. Middlesex Mutual Fire Insurance Co., 8 Cush. 127; Forbes v. Agawam Ins. Co., 9 id. 470; Lee v. Howard Ins. Co., 8 Gray, 588); but a peculiar doctrine has been established in respect to mutual insurance companies, viz.: that neither their agents nor officers have any power to waive conditions of insurance, imposed by the policy or by-laws of the company (Hale v. Mechanics' Ins. Co., 6 Gray, 169; Brewer v. Chelsea Mutual Ins. Co., 14 id. 203; Baxter v. Chelsea Mutual Ins. Co., 1 Allen, 294; Tebbetts v. Hamilton Mutual Ins. Co., 3 id. 569; Mulrey v. Shawmut Ins. Co., 4 id. 116; Murphy v. People’s Mutual Ins. Co., 7 id. 239; Evans v. Trimountain Mutual Ins. Co., 9 id. 329), though they may waive formal preliminary proofs of loss. Priest v. Citizens Mutual Ins. Co., 3 Allen, 602. These decisions appear to be based on the ground that in mutual companies the insured parties constitute the only members, and are affected with notice of and bound by their rules, which are for the common benefit and protection of all, and that the officers have no other powers than those given by the by-laws.
In Worcester Bank v. Hartford Ins. Co. (11 Cush. 265), there appears to be manifested a disposition (so far as can be gathered from the very brief and unsatisfactory opinion delivered) to apply a similar rule to stock companies. On the whole, the Massachusetts cases on the subjects discussed in this note may be fairly said to stand apart by themselves, and to breathe a spirit of sternness toward the insured, in marked contrast with the tone of decision in New York, and still more so with that prevailing in the courts of the Western States.