Imperial F. Ins. v. Dunham , 117 Pa. 460 ( 1888 )

Opinion,

Mr. Justice Clark:

It was certainly competent for the plaintiff to show by parol what the contract was, with reference to the existing insurance, at the time of the transaction of March 29,1883 ; not, perhaps, to add to or modify the forcé of the written contract then made as between the parties, but to explain the subsequent act of the parties, in making the assignment of the policy; to exhibit their good faith in so doing, and to fix the admitted consideration upon which this was done; especially as it appears that the parol understanding was shortly after-wards communicated to Clarke, the agent of the company, and met with, his approval, which approval he subsequently entered in due form upon the policy. If the parties to the written contract saw fit to allow a portion of their agreement to rest in parol, and subsequently executed the assignment in pursuance of it, in good faith, certainly the company, having approved of it, cannot complain.

It may be conceded that, if any change should take place “ in the title, interest, or location, or in the possession of the property,” or if an assignment of the policy were made without notice to the company, and permission therefor in writing, the policy would have become forfeited; but it must also be conceded that the company, before, at the time of, or even after the transfer, had the undoubted right to ratify or consent to it, and thus to continue the policy in the hands of the transferee, who had become the owner of the property under the agreement of March 29,1883. It would certainly be in conflict with the plainest provisions of the law, as well as with the general usage and practice of insurance, to hold that the parties being sui juris might not by consent, in conformity with the provisions of the contract itself, renew and continue its obligation, although, according to its terms, without that consent it was null and void.

If it was competent for the company to consent to the transfer, it was competent for the duly authorized officers or agents of the company to give that consent. Corporations, of necessity, act through the agency of persons authorized to act for them, and the act of the agent is in all respects to be regarded as the act of the corporation itself. David A. Clarke was at the time admittedly the agent of the company; his commission was in writing; he was the “duly constituted agent” of the company, “ with full power to receive- proposals for insurance against loss and damage by fire in Orcutt Creek and vicinity, to receive moneys, and to countersign, issue, renew and consent to the transfer of policies of insurance, subject to the rules and regulations of said company and such instructions as may from time to time be given,” etc. Now there was no rule or regulation of the company, nor were there any instructions to Clarke exhibited in evidence, restricting his authority to the approval of transfers made before or at the time of the conveyance of the property. The authority is conferred in the most general terms. Clarke, as the agent of the company, in the absence of such restriction, possessed the full power of the company in the several matters committed to his charge; he represented the company, and what he did within the scope of his appointment the company did. It was not required of the plaintiff to prove acts of ratification; the company was bound to know that what it directed to be done might or would be done, and without proof of ratification it must be treated as having itself done, what was done under its express authority. Where the property covered by the policy is transferred, and the policy is assigned to the vendee before the consent of the insurer is obtained thereto, although the policy may thereby be rendered void, yet by subsequently assenting to such transfer the policy is revived and becomes an operative instrument in the hands of the vendee : 1 Wood on Ins., § 116. The consent of the company’s agent to the transfer revived the policy: Shearman v. Niagara Fire Ins. Co., 46 N. Y. 526.

It is true, Clarke had no power to waive any condition of the contract, but he waived no condition; the contract expressly provided for the contingency of a change in the title and for a transfer of the policy, and Clarke was duly authorized to give the consent of the company to that transfer. How can Clarke be said to have waived any condition of the contract in doing just what the contract provided for, what he was .appointed to do, and what, in the exercise of a reasonable discretion for the interest of the company, it was his duty to do. Clarke knew, when he gave his approval to the transfer, that the title had changed; this fact was found by the jury, and the knowledge of Clarke was notice to the company. Moreover, by the report of Clarke to the company’s office, the company had notice that the policy had become forfeited, for that report expressly stated that the title had heen transferred on April 14, 1883, and that the agent’s consent had not been given until the 17th of the same month. These dates were not strictly accurate, perhaps, the transfer having been effected on the 29th March preceding, but the forfeiture of the policy was as absolute after the lapse of three days as after the lapse of three months. Yet the company silently acquiesced in the act of the agent; no objection was made that the agent had exceeded his powers; in fact, no objection of any kind or character was made until after the property had been destroyed by fire. In Farmers’ Mut. Ins. Co. v. Taylor, 73 Pa. 342, the policy was to be void if assigned without the written approval of the secretary; it was assigned, and an approval given in writing by the agent “ for the secretary; ” the agent was accustomed to approve assignments and report monthly to the company on blanks furnished for that purpose by the company ; this assignment was immediately reported, in addition to the monthly reports; held, that the policy was not thereby avoided.

The assignment to Page after the loss is not within this condition of the policy; in such case the relation of insurer and insured is changed to that of debtor and creditor, and the consent of the company is not required: West Branch Co. v. Helfenstein, 40 Pa. 289; Wood on Ins., § 99.

The cases cited by the plaintiff in error, Waynesboro Co. v. Conover, 98 Pa. 384, and Pottsville Co. v. Minnequa Co., 100 Pa. 142, are wholly inapplicable to the facts in this case. That an agent may not waive the provisions of a policy, in a matter outside the scope of his agency, cannot be doubted. Nor is the view we have taken in conflict with Trask v. State Fire Ins. Co., 29 Pa. 198, or with the remaining cases cited by the plaintiff in error. It is undoubtedly true that where an insurance company is, from any cause, discharged from liability, responsibility for the loss will not re:attach by waiver without proof of authority in the party whose act of waiver is relied upon, or without a new consideration to sustain it; but where the act of the agent executing the waiver is contemplated in the contract, and the power expressly conferred upon him in writing, no new consideration is required.

The application was rightly excluded from the testimony. The provisions of the act of May 11, 1881, P. L. 20, are conclusive on this point. No copy of the application or of the by-laws of the company was attached to the policy as that act requires; it constituted, therefore, no part of the policy or of the contract between the parties, and was not receivable in evidence. The case is to be considered as if no such paper existed.

The insurance company further contends, however, that Seeley, at the time the insurance was effected, was not the absolute owner of the premises insured. ■ By the second condition of the policy it is provided, that “ if the interest of the assured be other than the entire, unconditional, and sole ownership, or if the property insured be a building standing on ground not owned by the assured in fee simple,” the policy shall be void and of no. effect. On April 21, 1880, O. A. Seeley, by agreement in writing, purchased the lands in question from T. Smull’s Sons; the consideration of his purchase was $5,129.50, payable in three equal annual payments, the first instalment becoming due December 1, 1880. On November 11, 1881, T. Smull’s Sons conveyed the legal title and assigned the Seeley contract to F. T. Page, the effect of which was merely to put Page in the place of T. Smull’s Sons as to Seeley. On February 8, 1883, the policy in suit was issued to Seeley. There is no evidence that Seeley paid any part of the purchase-money; he erected a sawmill, however, and made other improvements, and it is claimed that his interest in the land was greatly enhanced thereby at the time the insurance was effected. On March 29, 1883, Seeley, by contract in writing, assigned his interest under the contract with T. Smull’s Sons to Page, who thereupon at the same time sold by articles to Henry Dunham. The consideration of the last mentioned sale was $10,000; Page to receive $5,759.18, being the balance, with interest unpaid, on the contract between T. Smull’s Sons and Seeley; the residue, being $4,240.82, to be paid to and received by Seeley. There, was a reservation of the title to certain timber and bark until the purchase-money was paid, an arrangement to apply part of the proceeds thereof to the purchase-money, and a provision that in the event of Dunham’s failure to fulfill his contract, Seeley would resume his former relation to Page under the Smull contract. But we find nothing in the details of the several contracts of March 29, 1883, to vary the question already stated, viz.: whether or not Seeley’s interest in the property insured was such as was required by his contract with the company. Where the title to property passes, and the policy is assigned to the vendee with the insurer’s consent, the policy has sometimes been treated as a new contract with the vendee: Wood on Ins., § 110. But, under the decisions of this court, the assignee has always been held to take subject to all the stipulations contained in the policy, and in an actionjby the assignee, the question of interest to be referable to the time of the issuing of the policy: State Mut. Co. v. Roberts, 31 Pa. 438; Lycoming Co. v. Mitchell, 48 Pa. 367.

At the time the insurance was effected, Seeley, as we have said, had become the purchaser in fee of the property, under articles of agreement with T. Smull’s Sons ; he had the equitable title only, but he was to all intents and purposes the “ owner ” of the property; he was the equitable owner in fee, and, in respect to the insurance, we think he may be said to have been the entire, unconditional, and sole owner. This provision of the policy does not necessarily distinguish between the legal and the equitable estate. If the title is conditional or contingent, if it is for years only, or for life, or in common, it is not the entire, unconditional, and sole ownership; but the interest is the same, as it affects the contract of insurance, whether the title of the assured be legal or equitable. The purpose of this provision is, to prevent a party who holds an undivided or contingent but insurable interest in property, from appropriating to his own use the proceeds of a policy, taken upon the valuation of the entire and unconditional title, as if he were the sole owner, and to remove from him the temptation to perpetrate fraud and crime. For without this, a person might thus be enabled to exceed the measure of an actual indemnity. But where the entire loss, if the property is destroyed by fire, must fall upon the party insured, the reason and purpose of this provision does not seem to exist; and in the absence of any particular inquiry as to the specific nature of the title, or of any express stipulation in the policy that the insured held the legal or equitable title, either being available to secure an entire unconditional and sole ownership, the provision referred to can, we think, have no force to defeat the plaintiff’s recovery in this case.

Where articles of agreement are entered into for the sale of land, the purchaser is considered the owner. “ It does not seem to be necessary to produce this effect, that any part of the purchase-money should be paid; it results from the contract. When a part of the purchase-money is paid, the interest of the purchaser in the land is not circumscribed by the extent of the money paid, but embraces the entire value of the land over and above the purchase-money due. He is treated as the owner of the whole estate, incumbered only by the purchase-money. If the land increase in value, it is his gain; if it decrease, if improvements áre destroyed by fire, or otherwise, it is his loss: ” Siter, James & Co.’s Appeal, 26 Pa. 180. Where the vendor retains the legal title he has a lien for the unpaid purchase-money:' Zerby v. Zerby, 9 W. 234; Bradley v. O’Donnell, 32 Pa. 279; Zeigler’s Appeal, 69 Pa. 471; but he may use the legal title to compel payment thereof: Thompson v. Carpenter, 4 Pa. 132; Woodward v. Tudor, 81* Pa. 382; Washabaugh v. Stauffer, 81* Pa. 497.

Upon these general principles of the law, the case of Millville Mut. Co. v. Wilgus, 88 Pa. 107, was decided. Wilgus had purchased the premises insured at an Orphans’ Court sale, the terms of which were one half in hand, balance in one year. He made the first payment, the vendor retaining the legal title, and before the year expired the loss occurred. The condition of the policies upon which the company relied was, “ that if the interest of the assured in the property be any other than the entire, unconditional, and sole ownership of the property, for the use and benefit of the assured,” it must be so represented and expressed. Mr. Justice Shakswood, delivering the opinion of this court, says: “ The plaintiff’s title was an equitable one, but it nevertheless vested in him the entire, unconditional, and sole ownership, subject to the payment of the balance of the purchase-money. This balance was practically an incumbrance. It is true the legal title was in the hands of the vendors, but they could use it only to enforce the payment of the price agreed upon. In this respect it is exactly the case of a mortgage which vests the legal title in the mortgagee for the same purpose. Had the property been swallowed up by an earthquake the entire loss would have fallen on the plaintiff.” The case of Reynolds v. State Mut. Co., 2 Gr. 329, which would appear to express a different view of the law, is commented upon in the case last cited, and whilst it is said to have been correctly decided on other grounds the reasoning of the case is distinctly disapproved.

So in Kronk v. Birmingham Ins. Co., 91 Pa. 300, where the assured had executed a bill of sale of the property assured to a third party, retaining the possession, it was held, that as the bill of sale was simply a security for money advanced, the interest of the assured was, nevertheless, as respects the insurance, to be considered “ the entire, unconditional, and sole ownership of the property, for the use and benefit of the assured,” whether the bill of sale was delivered before or after the insurance was effected.. The Pennsylvania Fire Ins. Co. v. Dougherty, 102 Pa. 568, and Lebanon Mut. Co. v. Erb, 112 Pa. 149, although not precisely similar, are cases in confirmation of the doctrine as we have stated it.

The purchaser of real estate by articles, being responsible for the purchase-money, is liable to the whole loss that may befall it, including the loss of buildings by fire: Reed v. Lukens, 44 Pa. 200 ; therefore he is not guilty of misrepresentation if he states that the premises are his, that he is the absolute owner, although he has not paid the purchase-money: Coursin v. Penn. Ins. Co., 46 Pa. 323.

We believe the doctrine, as we have stated it, has been generally adopted, in this as well as in the other states; no case has been cited winch is in conflict with ,the views we have expressed. In Hough v. City Fire Ins. Co., 29 Conn. 10, the insured, in his application, described the property as his house, and the policy contained a condition that “ if the interest in the property is less than absolute it must be so represented to the company and expressed in the policy in writing, otherwise the insurance shall be void.” The legal title to the property was in another party; the insured had an equitable title only; he had made a parol contract for the purchase of the property; had entered into the possession and made valuable improvements; had paid a part and agreed to pay balance of purchase-money. In a suit upon the policy the company’s contention was that the title was not absolute;'that as its true condition was not represented in the application, or expressed in the policy, the insurance was void. It was held, however, that if the plaintiff had the equitable title, and his interest was such that the whole loss by fire would fall on him, he must be regarded as the absolute owner of the property. To the same effect is Rockford Ins. Co. v. Nelson, 65 Ill. 415; Lorillard Fire Co. v. McCulloch, 21 Ohio 176; Noyes v. Hartford Ins. Co., 54 N. Y. 668. The omission of the owner of the equitable title to state the nature thereof will not render a policy of insurance invalid, under a condition therein forfeiting the insurance in case the interest is other than the entire, unconditional, and sole ownership, if the fact is not so represented to the company : Pelton v. Ins. Co., 77 N. Y. 605; and he will be regarded as the absolute owner, although he may not have paid the purchase-money: Remsey v. Phoenix Ins. Co., 17 Blatch. 527.

We are of opinion, upon a full examination of this case in the light of all the authorities, that Seeley’s title, under his contract, must be regarded as an equivalent to a fee simple; that the unpaid purchase-money must be treated as an incumbrance' upon it; and that, in respect of the insurance, he must be considered the entire, unconditional, and sole owner. The previous decisions of this court will justify no other conclusion ; and the cases in the other states, and the views of the text writers, we find to be in harmony with our own.

The judgment is affirmed.