Walker v. Metropolitan Insurance , 56 Me. 371 ( 1868 )

Dickerson, J.

Assumpsit on an alleged contract of fire insurance where no policy had been issued.

The case is submitted on report, upon the evidence deemed admissible, the action to stand for trial if it, or any form of action, in law or equity, can be maintained; otherwise the plaintiff to be nonsuit.'' •

At common law, contracts of insurance are placed on the same footing with other contracts, in respect to the capacity of the parties to contract, the subject matter of the contract, and the mode of contracting. There is, indeed, nothing in the natiire of a contract of fire insurance which requires it to be in writing. The issuing a policy furnishes a convenient mode of proving the contract, but is not essential to its validity. Trustees of First Baptist Society v. The Brooklyn Fire Ins. Co., 19 N. Y., 305.

Section 12, of c. 49, R. S., provides that,—"insurance companies may make insurance * * * * against fire, on dwellinghouses or other buildings, and on merchandize or other property within the United States; and fix the premiums and terms of payment.” This language does not confine such companies to any particular mode of insurance, either verbal or written, but gives them authority to make contracts of insurance, with all their incidents and accessories, in as broad and ample a manner as that enjoyed by natural persons. This provision makes it a corner-stone principle of their franchise, that they have authority to do in the way of insurance, as corporators, whatever private persons may do in their individual capacity. The intention of. a statute to limit the general power thus granted must be clear and explicit, in order to authorize the Court to give it that construction.

We do not find such intention expressed or implied in section fourteen of the same chapter, which requires that " all policies of insurance shall be signed by the president, or, in case of his death, inability or absence, by any of the directors, and countersigned by the secretary and it also provides that policies thus executed " shall be binding upon the company as if executed under its corporate seal.” This section does not in terms, or by implication, abridge the powers granted in § 12, in respect to the mode of effecting insurance. It provides that insurance companies can make valid " policies of insurance” only when attested in the mode prescribed; and that, when thus verified, they shall bind the company, though they do not bear its corporate seal. The language is not, all contracts of insurance, as it would have been if it had been the intention to prohibit ail other modes of insurance, but it is " all policies of insurance.” Insurance companies may still exercise their right at common law, of making parol contracts of insurance, if there is nothing in their charter to prevent, but, when they insure by issuing a policy, they must conform to the statute mode. The purpose of this provision undoubtedly was to designate the mode in which the corporate sanction of " policies” of insurance should be expressed, and to relieve the assured from the burden of proving the authority of the persons who thus execute a policy, to bind a corporation.

The construction we have given to these sections of the statute is the same as that given to similar provisions of the statute of New York, in 19 N. Y. above cited, and .by the Supreme Court of the U. S. to a section of a statute of .Massachusetts, almost identical in language with § 14 of our statute, as well as by the Courts of Massachusetts. The Commercial Mutual Marine Ins. Co. v. The Union Mutual Ins. Co. of New York, 19 How., 319; New England Ins. Co. v. DeWolf, 8 Pick., 63.

The writ in the suit at bar contains several counts, but the one relied upon alleges an insurance effected July 2, 1866, for a year, in the sum of $3500. The evidence shows,

1. That the agents of the defendants, residing in'Portland, had authority to make any contract of insurance in behalf of the company which it was competent for the company itself to make.

2. That whatever the defendants’ agents did in the premises, they did in accordance with the usage at the home office in New York, and all the insurance offices in the city of Portland; and the defendants knew the manner in which their agents conducted their business in Portland, and made no objection to it.

3. That the plaintiff applied to the defendants’ agents for a builder’s risk of $3500 upon the property alleged to be insured, in May, 1866, and, at the same time, l’equested them to keep the property insured. This the agents agreed to do, at the same time entering the builder’s risk in " their blotter,” and subsequently, upon the termination of that risk, carrying it into a permanent yearly risk, commencing July 1, 1866, for the same sum, upon the same "blotter.”

4. No specific premium was agreed upon, but it was agreed between the parties that the amount of the premium should be deducted from the amount due the plaintiff from the defendants, for a previous loss, upon the same property, when that should be paid; and this deduction was made subsequently to the loss, by the defendants’ agents, though the defendants declined to allow the deduction.

5. When a policy is issued, in such cases, the custom is to date it as of the entry in the blotter, though it may be, and usually is made out on a subsequeut day. In contemplation of the insurance agents, the risk commences on the day of the entry in " the blotter.”

6. After hearing the statements of their agents in this case and other cases, the defendants declared themselves satisfied with the manner in which their agents had conducted their business.

7. No policy was ever issued or demanded; and the property alleged to be insured, together with " the blotter,” was destroyed by fire on the night of the fourth of July, 1866.

The question to be determined is whether enough was done to make a complete contract of insurance. It being competent for the defendants, as we have seen, to make a contract of insurance without issuing a policy, the decision of this question must depend upon the intention of the parties, as shown by their acts and declarations. There was an application for a builder’s risk, and a permanent yearly risk, and a verbal acceptance of the application; and there were corresponding entries upon the blotter. Though the amount of the premium was not fixed, its payment was provided for by means of money due the plaintiff from the defendants ; and it was not customary to pay the premium till the expiration of a month, and, before that had elapsed, the property was destroyed. Besides, the premium was subsequently paid, as agreed. The plaintiff seems to have been content with the arrangement, and undoubtedly intended to effect an insurance, and understood that she had done so. The defendants’ agents did the same in this case to bind the parties as was their custom to do in similar cases, as was the universal custom of insurance agents in Portland to do, and as the defendants held them out as authorized to do. The property had but recently been damaged by fire, under a risk assumed at the defendants’ office, and the defendants’ agents knew the importance to the plaintiff of having it insured; if they did not intend to insure the property, they would have so informed the plaintiff, that she might have procured insurance elsewhere. The pre-payment of the premium was an advantage to the defendants which they might and did waive. The agreement to insure, without fixing the rates of insurance, is an agreement to insure at the customary rates. What these rates would be, at the termination of the builder’s risk, the parties may not have known, and hence they may have purposely omitted to fix the amount of the premium, leaving that to be determined by the rates existing when the yearly risk should commence. All the essential terms of a contract of insurance were agreed upon.

After a somewhat careful examination of the evidence, and the law applicable to it, we think that it was the intention of the parties to make a valid contract of insurance in the- sum of $3500 for one year, commencing on the first day of July, 1866, at the customary rates of the defendant company, and that they did all that, was necessary to bind the parties by such contract. This conclusion is consistent with public policy, as it legalizes the long established usage of insurance companies in an important particular, and saves the assured from the danger of losing his property during the interval between his application for insurance, and the receipt of his policy.

The same question came before the Court of Appeals of New York, and the Court held that an agreement to insure and to send the policy to the assured at a subsequent time, was a contract to insure presently, though the amount of the premium was not agreed upon by the parties. Audubon v. The Excelsior Ins. Co., 27 N. Y., 223.

As the liability under the contract might accrue within a year, it is not within the statute of frauds.

It is no part of the duty of the assured, in case of a loss, to notify the company of the time and nature of the risk, as these are within its knowledge. Any misrecital, therefore, upon these points, in the notice of a loss, is immaterial, and may be regarded as surplusage.

If the defendants intended to rely upon the, insufficiency of the preliminary proofs of loss, they should have requested further proofs of the plaintiff upon receipt of notice of the loss. Failure to do this is a waiver of the right to require such proofs at the trial. Bartlett v. Union M. F. Ins. Co., 46 Maine, 503; lewis v. Monmouth Ins. Co., 52 Maine, 497. Action to stand for trial.

Appleton, C. J., Walton, Barrows, Daneorth and Tapley, JJ., concurred. Kent, J., did not concur.

Appleton, C. J.,

submitted his views as follows: — A contract of insurance is completed when there is an assent to its terms by the parties, upon a valuable consideration. Neither the giving the premium note nor the reception of the policy of insurance by the insured are prerequisites to its consummation. Blanchard v. Waite, 28 Maine, 51. The acceptance of a written offer to insure, before its withdrawal, completes the contract. The acceptance may be verbal or in writing, by the principal or his agent.

So, if the insurance company make a verbal offer through their authorized agent to make or renew a policy of insurance on certain terms and conditions, and the offer is accepted, this constitutes a contract binding on both parties. There is, in such case, the assent of both parties ad idem. The insurers agree to issue a policy. The insured promise to pay the premium agreed upon. The acceptance of a proposition to insure completes the contract between the insurers and the insured. Com. Ins. Co. v. Hallock, 3 Dutcher, 645. If the premium is tendered to an agent of an insurance company and he does not receive it, but says he will consider it as actually made, and authorizes the applicants to retain the money till the policy arrives, the contract will be as binding upon the company as if the money had been actually paid to the agent. If the insurance company take the risk previous to the date of the policy, and the property is destroyed before the policy is actually executed and delivered, when there is no fraud nor concealment, the company will be as much bound as if the loss occurred after the policy was delivered. Com. Ins. Co. v. Hallock, 2 Dutcher, 269. "I have not been able to find anything in the common law of England rendering it absolutely necessary that contracts of insurance should be in writing,” remarks Walworth, Chancellor, in Sanford v. The Trust Ins. Co., 11 Paige, 556, "although the custom is, so far as I can ascertain, to have some written evidence of the agreement to insure. A policy of insurance imports a written contract, as the name of the instrument derived from the Italian, necessarily implies. I am not prepared to say, however, that, in this State, there may not be a parol agreement, upon a good consideration, to execute a written policy of insurance, which a court of equity may enforce; although there is no written evidence whatever of the agreement, or of any of its stipulations or conditions.” In Union Mutual Ins. Co. v. Com. Mut. Ins. Co., 2 Curtis, 545, Curtis, J., says,—"that he is not aware of any grounds upon which it can be maintained, that the common law requires a contract for a policy of insurance to be in writing.” This same view of the law was affirmed by the Supreme Court of the United States, when the same case came under their consideration. 19 How., 318. Indeed, by the entire concurrence of decisions, it may be regarded as established that a contract for a policy of insurance heed not be in writing. Hamilton v. Lycoming Ins. Co., 5 Barr., 339; 2 Parsons on Maritime Contracts, 19.

If there be an agreement to issue a policy, and the insurers, upon reasonable demand and tender of the premium, refuse to issue it, a court of equity will enforce the performance of the contract. Perkins v. Washington Ins. Co., 4 Cow., 645; Carpenter v. Mut. Safety Ins. Co., 4 Sandf., 408; Union Mut. Ins. Co. v. Com. Mut. Ins. Co., 19 How., 313.

It there be a valid contract, upon sufficient consideration, to issue a policy, an action at common law may be maintained upon such contract, in McCulloch v. Eagle Ins. Co., 1 Pick., 278, which was an action of assumpsit upon an agreement to insure, Parker, C. J., says, "a policy never having been made, the only question submitted is whether there was an agreement to insure; every thing necessary to entitle the plaintiff to recover being agreed by the parties. And, it is certain that, if a contract was made, the mere want of a policy will not prevent the plaintiff from recovering.” In Lightbody v. N. A. Ins. Co., 23 Wend., 18, Bronson, J., thought the plaintiff in that case could have maintained an action on the case against the defendants for a refusal to deliver the policy, in which he would have recovered damages to the full amount of his loss. "If the defendants had tendered the policy, we have no doubt,” remarks Curtis, J., in delivering the opinion of the Court, in Commercial Mut. Mar. Ins. Co. v. Union M. Ins. Co.,

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19 How., 318, "an action for not delivering the premium note would have at once lain against the plaintiffs; and we think there was a mutual right on their part, after the tender of the note, to maintain an action for the non-delivery of the policy.”

It may be regarded as settled that a verbal agreement upon sufficient consideration to issue a policy of insurance is binding upon the parties thereto, and may be enforced by a suit at law. The promise to pay the premium or give a note therefor is a sufficient consideration for the promise to make a policy.

It is insisted in the defence that the rules of the common law have been changed by the provisions of R. S. of 1840, c. 79, § 14, relating to insurance companies, by which it is enacted that "all policies of insurance made by such companies shall be subscribed by the president, or in case of his death, inability or absence, by any two of the directors, and countersigned by the secretary of the company; and they shall be binding upon the company in like manner as if executed under the corporate seal thereof.”

But the distinction between a contract to issue a policy of insurance or to renew one already issued, and the policy to be issued or renewed in pursuance of such agreement, has always been recognized by the Courts and the text writers upon the subject of insurance. It is the same as that existing in bills of exchange, between an agreement to accept and the acceptance of a bill. They are distinct. The agreement to issue or renew a policy is one thing, the policy issued or renewed is another and different thing. The policy is the consummation of the agreement, the performance of' what by its terms is agreed to be done.

The statutes of New York are very similar to those of this State. It was held in The Trustees of the First Baptist Church v. Brooklyn Fire Ins. Co., 5 Smith’s Reports, Court of Appeals, 305, that a provision, in the charter of such a corporation, that contracts of insurance signed by certain officers shall be valid and obligatory, as if under the corporate seal, does not abridge its general power, but is merely a specification of a mode in which it may be bound by its agents, without subtracting from its power to control otherwise. "There is nothing,” remarks Comstock, J., in delivering the opinion of the Court, "in the nature of insurance which requires written evidence of the contract. To deny, therefore, that parol agreements to insure are valid, would simply affirm the incapacity of parties to contract, when no such incapacity exists, according to any known rule of reason or of law.”

The section in question was in force, at the time of the separation of this State from Massachusetts, and since has been a part of the statute laws of both States. It regards in its terms only the formal mode of signing policies, and has no application to agreements to make insurance. There is no provision of any statute requiring an agreement to make a policy to be in writing. The practice of insurance companies has been in accordance with these views, and the repeated adjudications of cofirts of the highest authority has affirmed the legality of this practice. The case of the Com. M. M. Ins. Co. v. The Union M. Ins. Co., 2 Curtis, 545, affirmed in 19 How., 318, is conclusive upon this point. In McCulloch v. Eagle Ins. Co., 1 Pick., 278; Perry v. Newcastle M. F. Ins. Co., 8 Up. Can., Q. B., 360, and in Goodall v. N. E. M. F. Ins. Co., 25 N. H., 169, the same principle was fully affirmed.