Light v. Countrymen's Mutual Fire Insurance Co. of Lebanon Co.

Opinion by

Mr. Justice Green,

There is no doubt that when Light sold and conveyed the land on which the barn in question stood, he parted with all his title and, after that, he had no insurable interest in the barn. It is equally true that the mere holding of a judgment for part of the purchase money of the property sold, would not confer an insurable interest, and no recovery could be had on the policy for the protection of the judgment: Grevemeyer v. Southern Ins. Co., 62 Pa. 342.

The learned court below ruled the case finally on the proposition that the plaintiff had no insurable interest in the bam at the time of the fire, and therefore could not recover.

But the ruling on that question does not dispose of the case. There was raised upon the record a question of estoppel, and if the facts which make out an estoppel were established by the testimony then another question altogether arose. The function of an estoppel is to prevent the party who .is bound by it from alleging the truth of the matter against which he is estopped. In other words although he may have a perfectly good defence he can neither plead it nor prove it. He cannot assert it against the adverse claim.

In this case it is only necessary to inquire whether the facts which establish an estoppel against the defense of want of insurable interest in the plaintiff, appear on the record.' The plaintiff being examined in his own behalf testified: “When I had sold this property and had the papers, then I took the papers and took the insurance policy with it, the deeds for the property and the judgment which I had drawn, and insurance policy. I went to Gettle, the secretary of the company, to get an advice what to do with this policy, so that it would be good. He said you could transfer this, but you have an insurable interest in it as it is, and you had better hold the policy as it is and the assessments will be sent to you; then you will be sure that they are paid, and after Tice pays you jmu can transfer the policy to him. Q. What did you do in accordance with that advice ? A. So then I held the policy and didn’t transfer it. Q. Did you deliver the deed, then? A. Yes. ... Q. In accordance with that arrangement did they afterwards send the assessments to you ? A. Every year. Q. And did you pay them? A. Yes, sir.”

The plaintiff then proved that three assessments were subsequently, in the jrnars 1890, 1891 and 1892, levied upon his policy b3r the compaity and sent to him for payment, and that he paid them all. In all this testimony the plaintiff was substantially corroborated by the defendant’s secretary, Gettle, as to the original transaction, and by their secretary JBomberger, subsequent to Gettle, as to the assessments and their payment. There was no real controversy about these facts, and the jury has found them under the charge of the court.

It appears therefore by the testimony and the verdict that the plaintiff, under the advice of the secretary of the company, continued to hold his policy, that he delivered the deed to the purchaser without transferring the policy, that the company subsequently, during three consecutive years, treated the policy as continuing in force, declared assessments upon it to cover losses, and accepted payment of the assessments from the plaintiff during all that time. They of course knew of the sale of the propert3', and that the policy was retained by the plaintiff, and they undoubtedly treated it as an existing, active policy in full life up until the time of the fire. Can they be permitted now to repudiate their own voluntary action, and assert that it was a void policy for want of an insurable interest in the plaintiff at all times after the deed to Tice was delivered? We think certainly not. To permit such a defense to be made would be highly inequitable and unjust.

The policy was a perfectly good and lawful contract of insurance when it was made, and continued so to be without question up to the time of the sale, and both parties continued to treat it as such until the time of the fire. It was never an instrument void ab initio, as was held by the court below, and therefore never needed an infusion of new life. It is in no sense analogous to the case of a policy effected originally by a judgment creditor, nor to a policy held over after a sale voluntarily by the insured. But it was a valid existing policy at the time of the sale, continued in force by. the voluntary agreement of both parties to the time of the fire. We cannot see how a clearer case of estoppel than this could be made out in any cause.

In the case of Mentz v. Lancaster Fire Ins. Co., 79 Pa. 475, the company’s agent told the policy holder that the proper indorsement on the jmlicy had been made, and we held the company bound by the declaration of their agent on the principle of estoppel. Said Sharswood, J., delivering the opinion, “Now such a declaration made by a duly authorized agent or officer would clearly operate as an estoppel. It lulled the party to sleep by the assurance that the conditions of the policy had been complied with, and that his indemnity was secured.” The present case is much stronger than this because here the company fully ratified the action of their secretary by treating the policy as actually in force, and declaring and collecting assessments upon it for three years after the sale. If it was in force for the purpose of collecting assessments upon it, it was certainly in force for the purpose of paying the loss, for securing indemnity against which those assessments were paid by the plaintiff and received by the defendant. In our opinion it would be perpetrating a gross wrong to take any other view of the undoubted facts of the case.

In Wachter v. The Phœnix Assurance Co., 182 Pa. 428, the insured went to the agent of the company, informed him of the sale of the property, inquired in regard to the transfer of the policy to Wachter, the mortgagee, and was assured by the agent that it was all right as it was, and that nothing more need be done. The company sought to avoid payment because the sale of the property without a transfer or indorsement on the policy rendered it null and void. "We held the company estopped from setting up such a defense. The present chief justice delivering the opinion, said: “In view of the undisputed facts the defense is a most ungracious one, a defense which under the circumstances no reputable underwriter would think of interposing.” And so we say here, this company demanded and received from this plaintiff, as the lawful holder of this policy, all the benefits and advantages which it was entitled to receive under it as a valid subsisting policy, up until the moment of the fire, and it would be a perversion of justice to permit it now to deny its liability and to allow it to escape the payment of its just dues under the contract. That is precisely what estoppel means.

The judgment is reversed, and judgment is now entered on the verdict in favor of the plaintiff and against the defendant for the sum of four hundred and fifty-three dollars and six cents as of the 36th day of October, 1894, with costs of suit.