McSparran v. Southern Mutual Insurance

Opinion by

Mr. Justice Mitchell,

The evidence going to the credibility of McSparran should have been admitted. He was the main witness for the plaintiffs, and it was conceded that his testimony as to the value of the goods burned differed materially from the value as stated by himself in the proofs of loss. He had offered an explanation, the truth and satisfactoriness of which was for the jury to pass upon. Defendant offered to show that he had made an intentional misstatement as to double insurance, in another proof of loss to the same company on goods claimed to have been lost in the same fire. For the purpose of testing the truthfulness of his present testimony the other was sufficiently a part of the same transaction. It was error to exclude it. The judge accompanied the exclusion with the remark, “ The witness is entitled to see the proofs of loss,” but it nowhere appears that the witness had asked to see them, or in any way denied their execution. Nor is the argument of appellees that it was an effort to interject the defense into the cross-examination tenable. The offer was not part of a new defense, nor offered as such, but expressly as going to the credibility of the witness and therefore to the plaintiffs’ proof of their own case: Huoncker v. Merkey, 102 Pa. 462.

It was also an error for the judge to assume that the explanation was true. That was for the jury, and it was a vital point in the case, for if the value as stated in the proofs of loss was the correct one, then the goods were confessedly overinsured, and plaintiffs could not recover at all.

The policy in suit contained a provision that, “ Notice of all other insurance upon the property herein described, whether made prior or subsequent to the date hereof, must be indorsed on this policy, otherwise this insurance shall be void.” And one of the by-law^, also printed on the policy, provided that “Any person having property insured in this company, may partly insure the same property in another company, provided the whole of the insurance does not exceed three-fourths of the cash value of the property so insured, and such person will be required to give notice to the directors of this company of the amount so insured, and where insured, otherwise the insurance will be void hr case of loss.” The plaintiffs received policies for additional insurance on August 12, and gave evidence that notice was mailed to the secretary of the company the same evening or the next day. The judge charged the jury as matter of law that this was sufficient compliance with the policy and the by-law. In so doing he went far beyond the rule to be found in any of our cases.

Notice is knowledge or information legally equivalent to knowledge, brought home to the party notified in immediate connection with the subject to which the notice relates. It is not therefore the sending but the receipt of a letter that will constitute notice, and there is no presumption of law that a letter mailed has been received. Our earlier cases were inclined to exceptional strictness on this point. In Tanner v. Hughes & Kincaid, 53 Pa. 289, it was held that the only cases in which there is a legal presumption of receipt are those concerned with notice of dishonor of bills or nonpayment of notes, and that this laxity grew up by commercial usage, and even by that is confined to cases where the parties do not live in the same place. This was repeated in First Nat. Bank of Bellefonte v. McManigle, 69 Pa. 156, and Kenney v. Altvater, 77 Pa. 34, in which it was said, “ Letters properly directed and duly mailed are sufficient evidence of notice of the dishonor of bills, or nonpayment of negotiable notes. This rule is restricted to commercial paper. It establishes no such legal conclusion in other business relations.” In Susquehanna Mut. Ins. Co. v. Toy Co., 97 Pa. 424, a distinction was laid down more specifically that while there is no legal presumption of receipt, yet where by the contract (in that case a policy of insurance) notice was to be given by one party to another in a distant place, the custom and usage of business justify the use of the mail, and proof of a letter properly addressed and mailed is prima facie evidence for the jury of its receipt by the person addressed. This was followed in Whitmore v. Ins. Co., 148 Pa. 405, where the rule was thus stated by the present Chief Justice : “ The fact of depositing in the post-office a properly addressed, prepaid letter, raises a natural presumption, founded in common experience, that it reached its destination by due course of mail. In other words, it is prima facie evidence that it was received by the person to whom it was addressed; but that prima facie proof may be rebutted by evidence showing that it was not received. The question is necessarily one of fact, solely for the determination of the jury under all the evidence.” This was followed in Jensen v. McCorkell, 154 Pa. 323, and London Assurance Co. v. Russell, 1 Pa. Superior Ct. 320, and is now the settled rule in this state, as it is generally in others: 16 Am. & Eng. Ency. of Law, 825, title “ Notice.”

In the present case the prima facie evidence of receipt of the letter by due course of mail was fully rebutted by the uncontradicted testimony of the person addressed that it did not reach him until August 27, confirmed by the stamp of the receiving post-office on the same date. In the mean time the fire had occurred on August 21.

The policy requires that the additional insurance shall be indorsed on it, or the insurance shall be void. It is not necessary to go the full length of appellant’s argument that the indorsement is indispensable' to the plaintiffs’ recovery. It may be waived by delay of the company to act on the notice, as in Kalmutz v. Ins. Co., 186 Pa. 571, or in other ways. But the object of the clause is to give the company an opportunity to examine into a new factor which may alter its position in the contract, and to regulate its action accordingly. This opportunity it cannot have until the notice is received. In the present case the additional insurance brought the total amount up to within a few dollars of the three-fourths value which would constitute overinsurance, by plaintiffs’ own testimony, and if the value was as stated in the proofs of loss, then the limit was passed and the insurance void for that reason. The case in that respect is a notable illustration of the purpose and necessity of such a clause. The company was entitled to notice of such a material change in the relation of the amount insured to the value of the property, and an opportunity to accept and approve the contract in its new condition, or to terminate and cancel the insurance in the method provided in the policy. This opportunity was not given it until after the fire had taken place. It was then too late. By the explicit terms of the policy the insurance was void until the additions were indorsed on the policy, and the company was in no default and did no act which could be treated as a waiver. The risk of the delay therefore was by the terms of the contract on the insured.

The evidence of conversations between one of plaintiffs and the secretary of the company in regard to sending notice by mail, does not affect the result. Even if the secretary had power to alter a condition of the policy, which nowhere appears, the evidence does not show that he did so. The conversations testified to were very vague as to time and circumstances, and the latest of them was admittedly several years before the contract in question. The by-law indorsed on the policy requires notice to be given to the directors, and the utmost that the secretary’s conversation can in any view amount to is that notice might be given to him instead of the directors, and by mail instead of in person by plaintiffs, as the witness expressed it, running to Quarryville to see him, which was nine miles from my home.” By no stretch of construction can this be treated as an agreement that a letter posted should be accepted as notice before it was received. This default of timely notice being fatal to plaintiffs’ recovery, defendant’s seventh point should have been affirmed and the verdict directed in its favor.

Judgment reversed.