North River Ins. of New York v. O'Conner

On rehearing it is urged that the opinion by the commission has not passed upon the real question claimed to be decisive of this case. viz., that the alleged agreement of the agent who countersigned and delivered the policy was a parol variance of a written contract, and that the opinion is in conflict with prior and controlling decisions of this court which have been overlooked. The decisions referred to are in cases where the contract of insurance was written prior to statehood, at which time the rights of the parties were determined by the rule announced by the Supreme Court of the United States in Northern Assurance Co. v. Grand View Building Ass'n, 183 U.S. 308, 22 Sup. Ct. 133, 46 L.Ed. 213, which was held to be controlling, or in cases not involving insurance contracts. In all of that class of decisions affecting insurance contracts relied upon the question as to whether the court would follow the same rule was reserved with reference to contracts made after statehood. The opinion of the commission discloses that this court has declined to follow the rule in cases involving contracts made after the admission of the state. The present case is not different in principle from those cited in the opinion where the issuing agent, with authority to countersign and deliver the policy, did so with knowledge of an existing incumbrance or of concurrent insurance or of a breach of the warranty of title. The agent was informed prior to and at the time the policy was delivered that the insured possessed no iron safe, and had been in the custom of sleeping in the rear of the store building where the books were kept. When the agent, with knowledge of these facts, delivered the policy and accepted the premium, this constituted a waiver of this condition, and the company is precluded from setting up failure to comply therewith as a forfeiture of the policy. Sprott v. New Orleans Ins. Assn., 53 Ark. 215, 13 S.W. 799; Bush v. Mo. Town Mut. Ins. Co., 85 Mo. App. 155; Rudd v. Am. Guar. Fund. Mut. Fire Ins. Co., 120 Mo. App. 1, 96 S.W. 237; Phoenix Ins. Co. v. Randle, 81 Miss. 720, 33 So. 500; Mitchell v. Miss. Home Ins. Co., 72 Miss. 53, 18 So. 86, 48 Am. St. Rep. 535; Harvey v. Parkersburg Ins. Co., 37 W. Va. 272, 16 S.E. 580; Hanover Fire Ins. Co. v. Dole,20 Ind. App. 333, 50 N.E. 772; Germania Ins. Co. v. Ashby, 112 Ky. 303, 65 S.W. 611, 99 Am. St. Rep. 295; Home Ins. Co. v. Gurney,56 Neb. 306, 76 N.W. 553; 3 Cooley's Briefs on Ins., 2644.

In Rudd v. American Guaranty Fund Mutual Fire Insurance Co., 120 Mo. App. 1, 96 S.W. 237, defendant claimed that the oral assent by its agent to plaintiff's keeping his books and inventories in the storeroom and exposed to destruction by a fire which would destroy the merchandise was given during the negotiations for insurance and anterior to the delivery of the policy, and that such oral agreement was superseded by the policy, which when delivered became the sole evidence of the contract. It was held that the trial court committed no error in refusing to instruct a verdict for the company, because plaintiff failed to preserve his books and inventories safe from fire, and instructing that, if he communicated to the agent the facts regarding his inability to comply with the iron safe clause, and the agent consented to waive compliance, the failure of plaintiff to comply therewith was not a defense.

Mitchell v. Mississippi Home Insurance Co., 72 Miss. 53, 18 So. 86, 48 Am. St. Rep. 535, involved the same question. The trial court refused to permit appellant to file a replication to a plea setting up a failure to comply with the iron safe clause. Her replication alleged, in substance, that when the contract for insurance was made the defendant knew that plaintiff had no safe and did not intend to procure one, and that plaintiff intended to keep her books in the store and at her dwelling house just as they were kept when the contract of insurance was made. The refusal of the court to permit this plea to be filed was held error, and in so holding the court said:

"To ask us to hold that an insurance company shall ostensibly contract for keeping an inventory and books of account in an iron safe or at some secure place apart from the premises on which the property insured is kept, and yet, with full knowledge that the insured had and intended to have no safe, and with full knowledge that such inventory and books of account had been kept and were to be continued to be kept, at the store, to receive the insured's premium as for a valid policy, the company intending to deny its validity if loss should occur, is to ask us to sanction trickery and fraud. The insurer cannot be permitted to collect premiums with full knowledge of the existence of facts which might avoid the policy, and with full knowledge of the insured's purpose to continue, in disregard of a provision working a forfeiture, to conduct the business as theretofore in such disregard. We cannot legalize by our sanction such perfidy."

The Supreme Court of Nebraska, in Home Fire Ins. Co. v. Gurney, 56 Neb. 306, 76 N.W. 553, considered a similar question. The plaintiff in that case had told the agent of defendant that he had no safe and had no place to keep the books other than his store and was informed by the agent that it would make no difference, and upon this statement the plaintiff paid and the company received the premium for the policy, and it was held that the company was bound thereby. We are not without authority upon this question in this state. While not involving the precise facts, the case of Scottish Union National Ins. Co. v. Cornett Bros., 42 Okla. 645, 142 P. 315, supports the conclusion of the commission. In that case it was said that the company should be held to have waived the iron safe clause because the agents who issued the policy had knowledge that the insured had no iron safe, and for that reason kept the policy in their own safe for safekeeping for the insured, but these facts were held not sufficient to constitute a waiver of the provision for keeping the books and inventories safe from loss by keeping them in a safe place elsewhere. The policy of the law in this state is well summed up in Liverpool London Globe Ins. Co. v. Cargill, 44 Okla. 735, 145 P. 1134, in the third paragraph of the syllabus, as follows:

"Any agreement, declaration, or course of action on the part of the insurance company which leads a party insured honestly to believe that, by conforming thereto, a forfeiture of his policy will not be incurred, followed by due conformity on his part, will estop the company from insisting upon the forfeiture, although it might be claimed under the express letter of the contract."

We think the commission has reached the correct result, and that its opinion should be approved. When the agent, with full knowledge of the facts, accepted the premium and delivered the policy, he was acting for the company with authority to waive any provision of the policy and knowledge imparted to him was notice to the company, and with that notice and knowledge it accepted and retained the premium paid by plaintiff, and will not now be heard to urge a forfeiture of the policy because of the failure of plaintiff to comply with a provision thereof which has been waived.

The rule which defendant urges does not apply upon the state of facts here presented, and the petition for rehearing is therefore denied.

All the Justices concur.