Delaware Insurance v. Pennsylvania Fire Insurance

Lumpkin, J.

(After stating the facts.)

1-3. In a suit for damages growing out of a breach of a contract required by the statute of frauds to be in writing, the petition is not demurrable on the ground that it does not state whether the contract was in writing or not. Draper, Moore & Co. v. Macon Dry Goods Co., 103 Ga. 661; Bluthenthal & Bickart v. Moore, 106 Ga. 424; Taliaferro v. Smiley, 112 Ga. 62. Where'a proceeding is brought for the purpose of reforming a written contract, “the instrument which is sought to be reformed should be set forth in the bill, so that from it and the allegations in the bill of complaint it may clearly appear that it does not conform to the real contract made by the parties. The bill should also show the particular mistake or the fraud and mistake complained of and how it occurred.” Van Zile’s Eq. Pl. & Pr. § 419. “It is not sufficient to allege that it was the intention of the parties to make an instrument that would accomplish a certain object, and ask the court to make a writing that will accomplish that object.” 18 Enc. Pl. & Pr. 824; Wall v. Arrington, 13 Ga. 88, 92; Marshall v. Drawhorne, 27 Ga. 275; Ligon v. Rogers, 12 Ga. 286; Smith v. Brooks, 65 Ga. 356; Bell v. Americus Railroad, 76 Ga. 755. “If a clause which the petitioner claims should have been inserted in the contract is not one which the parties agreed on and omitted through mistake, but merely one which ought as a matter of propriety to be inserted, a court of chancery will not interfere; it not being within its province to make or ameliorate contracts for parties.” Thompsonville Co. v. Osgood, 26 Conn. 16; 2 Estee’s Pl. (4th ed.) § 2806. In this State relief may be sought in the same petition by having a written contract reformed, and also enforcing it. Fleming v. Fire Ass’n, 76 Ga. 678. In order to accomplish this result, however, the petition must be adequate for both purposes: first, to reform the instrument; and second, to obtain judgment on it. Here it is sought to reform the alleged contract so as to make the term of insurance three years instead of one. Fairly construed, the petition alleged that the paper attached was the written contract sought to be corrected and enforced. It was alleged that the defendant was one of the. regular insurers of the plaintiff, and by contract and agreement reinsured the plaintiff at the same rates at which the latter effected original insurance; that in this instance the rate charged the property owner for three years was ninety cents on each hundred dollars of value; that the plaintiff reinsured a part of the risk with the defendant and paid to it a premium at the same rate, and that, by error of the scrivener who drew up the writing evidencing the contract, the term was written as one year instead of three years. But it was not alleged that the defendant knew what rate was charged for the original insurance, or that it received the premium as being for three years insurance;' or that the parties ever agreed or intended that the contract should be so written, or instructed the scrivener to that effect; or how the alleged mistake came to be made; or why the plaintiff failed to know the terms of its contract until it had expired. The allegations of the petition were insufficient for the purpose of reformation, and were demurrable.

4. At common law contracts of insurance were not required to be in writing, and generally, in the absence of any statutory or other positive provision, a parol contract of that character will be valid. 1 Cooley's Briefs on Insurance, 364; 1 May on Insurance (4th ed.), § 14. It has been held in Louisiana (Eagan v. Fireman's Ins. Co., 27 La. Ann. 368) that a contract of reinsurance must be in writing, as being the promise to pay the debt of another; but the statement is made without any reasoning or authority, and it has been elsewhere ruled that an agreement of reinsurance is not within the statute of frauds. 1 May on Insurance (4th ed.), § 12 A; Bartlett v. Fireman's Ins. Co., 77 Ia. 155; Com. Mut. Mar. Ins. Co. v. Union Mut. Ins. Co., 19 How. (U. S.) 318. By the Civil Code, § 2089, on the subject of fire insurance, it is declared that "such contract, to be binding, must be in writing.” The defendant contends that this section contemplates that the contract of insurance must be signed. The plaintiff denies this; but insists that, if it be true, the contract under consideration was sufficiently signed to be binding. Without stopping to refer to the distinction between formal and simple contracts, which is less regarded in modern times than formerly, with reference to the point now before us, simple contracts may be considered under three heads: (1) contracts which are in writing, but which are neither required to be in writing, nor to be proved by writing; (2) contracts which are not required to be in writing, but which must be proved by writing; (3) contracts which must be in writing. As to the first class it has been held that at common law if the parties intend for such a contract to take effect without signing, and agree upon and adopt the written paper as being or containing the contract, this will suffice. In Bishop on Contracts, § 342, it is said, “The common and appropriate method of attesting a writing is to sign it. But, in general, a mere oral consent to what has been written out for a contract will, at the common law, suffice.” See also Leake on Contracts, 184. As illustrations, instances are givep where one party signs a ■contract and the other acquiesces in it, as a bill of lading accepted by the shipper, and the like. In the discussion of this class of contracts, the Supreme Court of Maine, in Miss. etc. Co. v. Swift, 86 Me. 248, malms the following concise statement: “Upon the question whether the signing a written draft of the terms is essential to the completion of a contract, Held: if the written draft is viewed by the parties merely as a convenient memorial, or record of their previous contract, its absence does not affect the binding force of the contract; if, however, it is viewed as the consummation of the .negotiations, there is no contract until the written draft is finally signed.” 1 Beach, Mod. Law Con. § 3. In Kidd v. Huff, 105 Ga. 209, it was said that “a written instrument, although not signed, will, if orally assented to by the parties, constitute the agreement. Such instrument, however, will not be admissible in evidence until it is shown, prima facie, that the terms were assented to.” In that case what purported to be a consent verdict and decree was held to be inoperative as a judgment binding upon the parties, on .account of want of jurisdiction in the court, or for other valid reason. It was set up by plea, however, that it had been agreed upon by the parties and carried into effect, and that the fund arising from it had been distributed among the parties, who received their shares with knowledge of the fact. When offered in evidence the verdict and decree were objected to, because defendant had not proved that plaintiffs had assented to it. This court held that it was inadmissible for the reason stated. The language quoted above was used in discussing the plea which set up the agreement to the ■decree and the action under it. It will be perceived that this was not a contract which was required to be in writing, nor did the case involve the enforcement of an executory contract, but included both the agreement and the action taken in reliance upon it. Compare Houston v. Polk, 124 Ga. 103, 110. It is quite clear that if it is contemplated by the parties that the contract shall be signed in order to consummate it, it will not be binding until so signed, but a somewhat informal or preliminary contract may be made binding, although it may be contemplated that the agreement will be put in more formal shape. See, on this subject, Lynn v. Burgoyne, 52 Ky. (13 B. Mon.) 400; (contrast Dayton Ins. Co. v. Kelly, 24 Ohio St. 345; Kelly v. Com. Ins. Co., 10 Bosw. (N. Y.) 82); Arnold v. Scharbauer, 116 Fed. Rep. 492; Vastbinder v. Metcalf, 3 Ala. 100; Keating v. Nelson, 33 Ill. App. 357; Lewis v. Crow, 69 Ind. 434; Thomas v. Caldwell, 50 Ill. 138; Waggeman v. Bracken, 52 Ill. 468; Wetenkamp v. Billigh, 27 Ill. App. 585; Fish v. Johnson, 16 La. Ann. 29; Ayers v. Herring (Tex. Civ. App.), 32 S. W. 1060; Lathrop v. Bramhall, 64 N. Y. 366; Painter v. Mauldin, 119 Ala. 88, 72 Am. St. Rep. 902; Gay v. Murphy, 134 Mo. 98, 56 Am. St. Rep. 496.

The second class of cases to which reference was made above consists principally, if not entirely, of those which fall within the statute of frauds. (The difference in verbiage between the 4th. and 17th sections need not be mentioned.) In Townsend v. Hargraves, 118 Mass. 325, the court said, “the purpose of this celebrated enactment as declared in the preamble, and gathered from its provisions, is to prevent fraud and falsehood by requiring a, party who seeks to enforce an oral contract in the court to produce as additional evidence some written memorandum signed by the party sought to be charged, or prove some act confirmatory of the contract relied on. It does not prohibit such contract. It does, not declare that it shall be void or illegal unless certain formalities are observed. If executed, the effect of its performance on the rights of the parties is not changed, and the consideration may he recovered.” The great object was to require as evidence of the contract some memorandum of the agreement in writing, signed by the party or parties to be charged. Barry v. Coombe, 1 Peters (U. S.), 651; McConnell v. Brillhart, 17 Ill. 360; Obear v. First National Bank, 97 Ga. 590-2. The statute as adopted into our code differs somewhat in language from the original statute of' ■frauds; but how far such changes in expression are to be treated .as material or altering the construction is not here involved. See Turner v. Lorillard Co., 100 Ga. 645; Townsend v. Hargraves, 118 Mass. 325. As to what signing will meet the requirement of the ■statute of frauds more will be said presently.

The third class of contracts referred to are those which must be in writing. As already stated, the statute of this State requires, not merely that there should be some written memorandum as ■evidence of a contract of fire insurance, but that such a contract to be binding must be in writing. While, as shown above, there is high authority for holding that “a written instrument, although not signed by the parties, will, if orally assented to by them, constitute the agreement between them,” it must be confessed that it seems to the writer somewhat anomalous to hold that an instrument can strictly be called a written contract which is entirely unsigned. One would naturally expect, when an instrument is ■claimed to be a written contract, to find that fact apparent on the face of the paper itself. The signature evidences the agreement ■of the parties to be bound by the instrument, and it sounds somewhat inconsistent to speak of a written contract which must be proved to be an agreement at all by a resort to parol evidence Promissory notes must be signed; but it is claimed that they stand ■on a different basis. It may be that a proposition in writing by one party (referred to as “the party to be charged”), which is ■orally accepted by the other, will answer the demands of the statute •of frauds. Merritt v. Clason, 12 Johns, 102, 7 Am. Dec. 286; Ex’rs of Clason v. Voorhees, 14 Johnson, 484; Brandon Mfg. Co. v. Morse, 48 Vt. 322; Browne, Stat. Frauds, § 365; Reuss v. Picksley, L. R. 1 Exch. 342. But without discussing decisions which .seem now to be well settled, it is sufficient to hold that under our •statute it is contemplated that the whole contract of insurance shall be in writing, and that it shall be signed by the insurer. In Planters Assn. v. DeLoach, 113 Ga. 802, it was said: “A writing in the form of a policy of fire insurance will not constitute a valid contract of insurance, when it is not, at the time the contract therein purports to go into effect, executed by one authorized to ■execute contracts in behalf of the alleged insurer.” In the opinion (page 808) it was said: “The writing relied on to make the' contract of insurance not having been signed by any one authorized '.by the association to execute contracts in its behalf at the time that it is claimed that the contract was entered into, the court, erred in not excluding the paper from evidence.” There a former president had signed a number of blanks as a matter of convenience to himself, and after his term of office had expired an agent delivered one of these policies; but the association declined to treat the holder of the policy as a member, or to recognize such delivery by its agents. See also Peoria Ins. Co. v. Walser, 22 Ind. 73; Water Comm'rs v. Brown, 32 N. J. L. 504.

Section 2089 of the Civil Code, which requires the contract of fire insurance to be in writing in order to be binding, was codified in the original code, which went into effect in 1863. Code of 1863, § 2744. In 1893 an act was passed providing for the granting of charters to insurance companies in this State, their organization, and the conduct of business by them. This act is now codified. Civil Code, §§ 2007 et seq. In section 2022 it is provided that “no policy or other contract of said corporation shall be binding except it be signed by the president or vice-president and secretary or assistant secretary of the company.” While this law is applicable only to companies chartered under the act, yet it serves to indicate the legislative policy that insurance contracts should be in writing and signed. The case of Clark, Rosser & Co. v. Brand & Hammons, 62 Ga. 23, was cited by counsel for the plaintiff; but no question was raised or determined there as to the necessity for signing. It was held that an entry by warehousemen on their books in these words: “Two hundred B/C., [W] insured to-day, p. v. o. Mr. II., @ 15c. from date,” unsigned, and with no premium paid, was not sufficient. Bleckley, J., said: “Without scrutinizing it for other defects, it is fatally deficient in not specifying the period of time during which the insurance was to run.” In Mitchell v. Universal Life Ins. Co., 54 Ga. 289, it was held that “A contract required by law to be in writing can not be shown to have been altered by parol after its execution.” In that case the distinction was recognized between a simple contract in writing, and one which is required by law to be in writing, This was again recognized in Simonton v. Liverpool Ins. Co., 51 Ga. 76. In Vidvard v. Cushman, 35 Hun, 18, it was held that where, after the execution of a lease in writing, a clause was inserted in it by the lessors, in the presence and with the consent of the lessee, such insertion modified the original contract, and it was not necessary that the lease should be again signed or re-executed. -In the case of Simonton v. Liverpool Ins. Co., supra, the court treated a permission for the removal of property from one store to another as being in the nature of a new insurance contract. Whether this was a proper view, or whether a provision for a forfeiture of the policy upon removal of the property may be waived by parol, if the agent has authority, is not involved in this case. See Carrugi v. Atlantic Fire Ins. Co., 40 Ga. 135; City Fire Ins. Co. v. Carrugi, 41 Ga. 660; Western Assurance Co. v. Williams, 94 Ga. 128; Morris v. Orient Ins. Co., 106 Ga. 472; Lippman v. Ætna Ins. Co., 108 Ga. 391.

5, 6. If under the statute of this State a contract of insurance is required to be in writing and signed by the insurer or on its behalf, did the allegations of the petition show a sufficient signature ? On this question there is an analogy between the law touching contracts of insurance and the statute of frauds which requires that there shall be a memorandum in writing signed by the party to be charged. Under that statute a signing was necessary. It has frequently been held, however, that signing, whether in the caption or body or at the end of the instrument, will suffice, but that it must be signed with intent to enter into it. See Barry v. Coombe, 1 Peters, 640; McConnell v. Brillhart, 17 Ill. 354, 65 Am. Dec. 661; Tingley v. Bellingham Bay Boom Co., 5 Wash. 644, 32 Pac. Rep. 737; Merritt v. Clason, 12 Johnson, 102, 7 Am. Dec. 286; Noe v. Hodges, 22 Tenn. 162; Browne, Stat. Fr. (5th ed.) § 357. A printed signature will also answer the requirements of the statute of frauds, if there be sufficient evidence of its adoption as such by the party to be charged. Browne, Stat. Fr. § 356. In Bishop on Contracts, § 344, it is said: “The usual and proper place for the signature is at the foot of the matter which it attests. But, in strict law, it will suffice if, with the intent to constitute a signing, it -is inserted in the writing at any other place.” Donnell Mfg. Co. v. Respass, 75 Mo. 420. The petition alleged that the defendant executed and delivered to the plaintiff the paper attached to the petition as and for a written contract of reinsurance, and that it was so received by the plaintiff, and. that it paid the premium due thereon. The paper commences with the name of the defendant and its general agent, and proceeds “do reinsure” the plaintiff, etc-. If it was intended and delivered as a written-contract, this would suffice, although the name may have appeared at the top instead of being subscribed. The allegation on this subject was sufficient to withstand the ground of the demurrer in so far as it attacks the paper as apparently unsigned. Browne, Stat. Fr. § 356, and cit. •

7. Did the signature of the Westchester Fire Insurance Company to the vacancy permit, granted after the time when the alleged contract of the Delaware Company had expired according to its terms, operate as a signature to the paper pleaded as a contract of insurance so as to make it a valid contract under the statute, if it were not so before? Again looking to decisions under the statute of frauds, it has been held that it is not required that all the terms of the contract should be agreed to or written down at one and the same time, nor on one and the same piece of paper, provided the contents of the signed paper make such reference to the other paper or papers as to enable the court to construe them all together as containing all the terms of the bargain. North v. Mendel, 73 Ga. 400; Turner v. Lorillard Co., 100 Ga. 645, 650 (2). The permit signed by the Westchester Company contained the words, “attached to, and forming part of policy No. 4264 of the Delaware Ins Co.” If the Westchester Company was shown by the allegations to be the agent of the Delaware Company, this permit .sufficiently referred to the policy of the number stated, and the signature would supply the lack of signing that policy, if it appeared that in fact there was such a written policy.

It is contended by the defendant that the Westchester Fire Insurance Company was not the agent of the defendant, and that its signature could not bind the defendant. The petition, how■ever, alleges that the defendant ceased doing business in the State «of Georgia, and reinsured its risks in the Westchester Company; that it so notified the plaintiff, and advised it, if policies of the defendant should require approval of transfers or other indorsements, that the plaintiff should make report thereof to the Westchester Company, giving its address; that, in pursuande of this, ,application was made to the Westchester Company, and the vacancy permit was signed and delivered. While the petition does not state that authority was specifically given to sign the particular permit involved, we think it does allege that the defendant referred the plaintiff to the Westchester Company to obtain necessary indorsements on its policies; and -if this was such an indorse-meat, no reason is apparent why it would not fall within that authority. See, on this subject, Browne on Statute of Frauds, § 370. 'The nature of the authority is not questioned, but only whether There was an agency.

8. In so far as the allegations in regard to the reinsurance and ■the obtaining of the vacancy permit are relied on to work an estoppel, they are insufficient. It is not alleged that the defendant misled the plaintiff, or that the latter relied on any representation or •conduct on the part of the former,- and changed its status, or in fact did or omitted to do anything by reason of such conduct. It is alleged that if the defendant had not recognized the contract of insurance as being in force after the lapse of one year from its issuance, but had asserted that it had expired, “this petitioner would have been informed of the claim of the defendant, and could have either caused said contract of insurance to be duly corrected, ■or, in case of dispute or delay concerning the same, could have protected itself by other reinsurance. But by reason of said granting of said permission on said date, this petitioner was confirmed in its belief that said contract of insurance was for three (3) wears, and was of force on said 17th day of June, 1901.” It will be seen at once that this allegation'states what the plaintiff could llave done, but does not allege that it either did anything or failed ■to do anything in reliance on any conduct or representations on "the part of the defendant.

From the foregoing discussion it is apparent that the judge of the trial court erred in overruling some of the grounds of the demurrer. As to others thére was no error.

Judgment reversed.

All the Justices concur, except Fish, G. J., >absent.