Farmers' Mutual Fire Insurance v. Marshall , 29 Vt. 23 ( 1856 )

The opinion of the court was delivered by

Redfield, Ch. J.

I. Some question is made whether Palmer is to be regarded as the agent of the plaintiffs in effecting the insurance. It is certain the plaintiffs were aware that the insurance was effected through Palmer at the time they ratified the policy, and also that he claimed to act as their agent, as he was then in treaty for such agency which was soon after conferred by the company, and a bond taken from him, dated February 25, 1851, (the defendant’s policy bearing date March 17, 1851,) by which it is recited, that Palmer “is appointed agent for the company and for those who apply for insurance,” and binding him with surety in the penal sum of five hundred dollars to the faithful performance of the duty of such agency. We think, therefore, there can be little doubt, that, as the plaintiffs knew of the act done on their behalf, and took security for the faithfulness of such agent, from a date prior to the act, they must be regarded as intending to ratify his agency in the transaction.

To what extent his representations, in effecting insurances, will bind the company, is a question of more difficulty. For although he is undoubtedly a general agent for transacting a particular department of the business of the company, in a limited district, still his power to bind the company is certainly not unlimited. The authority of a general agent is restricted to the range of his employment and the acts and representations which a prudent and ordinarily sagacious and experienced person might expect him to do, or to be authorized to make, on behalf of his principal. The representation claimed in the present case ivas a remarkable one, and one not very well calculated to impose upon men much experienced in the manner of transacting the business of such companies. But so large a proportion of the people, especially in the remoto rural districts of the state, are almost wholly ignorant upon these points, and are, in consequence, so readily made the victims of interested solicitors on behalf of the numerous insurance companies, who are found, I believe, always ready and urgent to insure one against all the calamities of life, that courts ought not, perhaps, to require any Very rigid rules of circumspection in these matters from wholly inexperienced persons. It seems to us altogether a question of fact, whether a given representation was really calculated to impose upon a careful and prudent man. And in a case where that question should become important it would be proper, when raised by counsel, to submit it to the jury.

II. But it seems to us that the representation of the agent in this case or stipulation, if we so consider it, is not of the class which will avoid the policy, if it would not equally-avoid a written contract upon any other subject. It is. undoubtedly true that, in regard to representations and concealments affecting materially the risk, both in marine and fire insurance, policies may be avoided, when in other contracts such representations certainly would not have that effect. The law of insurance has been regarded as specially requiring the utmost good faith. Hence all representations inserted in the policy, or contained in the application, and expressly referred to in the policy, as part of it, are denominated warranties, and must be strictly complied with, or the policy is avoided. And in regard to representations and concealments which are material, and directly affect the risk, whether on the part of the assured or the insurer, unless the representations are substantially true, the policy is void, although such representations are merely by parol, and made at and before the time of effecting the insurance, and not inserted in the policy; they being regarded as substantial fraud in regard to a policy of insurance, while in regard to ordinary contracts similar representations would perhaps be held as within the fair range of allowable embellishment and chaffer in the matter of bargain, or, if in the nature of express warranties, would be held to have been waived, by not being inserted in the written contract. Ellis on Ins., 81, 82, 84, 85, 100, Shaw’s Ed., and the very elaborate note of the Am. Cases, by Mr. Shaw, where most of the cases are collected and satisfactorily digested; Phillips on Ins., secs. 846, 865, 524, 765. And policies of insurance often contain a clause, that if the assured shall make any false claim for loss under the policy, it shall avoid it. Ellis on Ins., 52, et seq. and notes.

III. But in regard to the other incidents of a contract of insurance, we are not aware that it is subject to any different rules of construction from those which apply to similar contracts upon other subjects. The effective portion of the representation here, so far as the defendant was concerned, or may be supposed to have been deceived and injured by it, was in regard to the conditions of the contract, or the premium, which it would be necessary for him to pay Upon the policy. Palmer assured him that five dollars would be all that it would cost him, and he would probably obtain a dividend out of the surplus funds of the company at the end of the five years. It is true that he connected with this, as a sort of outwork or barricade, an assurance that the company had a large fund on hand, but the real matter affecting defendant’s interest was, that five dollars would be the extent of his premium, and this he paid down.

Now in regard to the premium for the insurance, the contract is specific. A note of one hundred and eighty-nine dollars is given, and the defendant expressly stipulates to pay such portion of it as the directors may, from time to time, assess. He became a member of the company, and is affected by a knowledge of the charter and by-laws of the company, a copy of which is attached to his policy.

He therefore expressly bound himself to pay every assessment within thirty days after notice, or else to pay the whole note at the election of the company. This is altogether at variance with the stipulation of the agent upon which the defendant claims to have made the contract, and which cannot be received to contradict it any more than could evidence that the note was agreed to be but five dollars, or that it was agreed the policy should contain the stipulation made by the agent. The writing excludes all parol declarations and stipulations made at the time, or before, except representations affecting the risk.

If the defendant could have any redress, it would be by reforming the contract in a court of equity, probably. For this is no .more a fraud to be redressed in defense of this suit than if one should offer to show that the payee of any note promised never to collect it, and that the party relied solely upon that assurance.

It is not essentially different from some of the cases in our reports, where parol defenses to notes have been excluded; Saunders v. Howe, 1 D. Ch. 263, where the note was promised to be surrendered upon proof that the maker did not originate certain slanderous reports of the payee; Bradley v. Anderson, 5 Vt. 152, where it is held that the maker of a promissory note* shall not be allowed to give evidence of what is in fact a mere mistake in reducing the contract to writing, under the pretence that it amounts to fraud; Bradley v. Bentley, 8 Vt. 243, where it is held that it is not competent to defeat a recovery upon a promissory note, given for the price of a cooking stove, by proving, by oral evidence, that it was agreed by the parties to the note, at the time of executing it, that if the maker elected, at the end of the year, to return the stove and pay six dollars for the use of it, the note should be surrendered; Isaacs v. Elkins, 11 Vt. 679, where the note was given for the price of a horse, and it was offered to prove in defense, that it was orally agreed, at the time of executing the note, (which was made payable absolutely in ten days,) that, if the horse did not answer the expectation of the party, it might be returned, and the note surrendered.

In all these cases, and many others which might be referred to, it operated a wrong upon the party to enforce the written contract, but the defense was held inadmissible. That rule is now too firmly established, in this state, to be departed from. And we cannot perceive why, in regard to a representation of this character, a contract of insurance should not exclude oral declarations of the party in contradiction of the terms of the written contract, as much as any other contract. It would seem the rule ought here to be enforced with more than ordinary strictness. And, where the party has really been made the victim of a sharper, and induced to sign a contract which he never understanding^ made, he is entitled to the same remedy as in other similar cases in a court of equity.

IY. In regard to the jurisdiction of the county court, if the case stood upon the statute of 1821, by which it was enacted that whenever it appeared, by the note and endorsements thereon, or by the declaration, that the sum due was less than one hundred dollars, justice courts shall have jurisdiction, I should certainly find difficulty in sustaining the jurisdiction of the county court upon this declaration, which counts expressly upon the assessments, and nothing else, which fall clearly below one hundred dollars.

But the present statute is differently expressed. It is that “ the matter in demand, in an action on note, shall be considered the amount of the note, deducting endorsements.” And having held, in the case of the Washington County Mutual Insurance Co. v. Miller, 26 Vt. 77, that such a premium note is a note within this statute, and was to be regarded as a note for the full amount, so far as the exclusive jurisdiction of justices is concerned, we do not see very well how we can turn the party over to a justice’s jurisdiction in this case, without holding that the premium note is not a note within the statute, for the full sum expressed, which would be wholly in conflict with the former view taken. For if this is a note for the full sum expressed, there being no indorsements, by the express terms of the statute as it now stands, the county court have jurisdiction. And when it appe'ars that the party had his election to declare for the whole note, by the very terms of the contract, we think the motion to dismiss was correctly overruled. Judgment affirmed.