23 N.Y. 516, Ruse v. Mutual Benefit Life Ins. Co.

Citation:23 N.Y. 516
Case Date:September 01, 1861
Court:New York Court of Appeals

Page 516

23 N.Y. 516




New York Court of Appeal

September 1, 1861

Page 517


Alvin C. Bradley, for the appellant.

John W. Edmonds, for the respondent.

Page 518


By the policy upon which this action is brought, the defendants insured the life of Ira D. Bugbee, for the term of his natural life, for the sole use of the plaintiff, in consideration of the sum of $97.40 in hand paid, "and of the annual premium of ninety-seven dollars and forty cents, to be paid on or before the tenth day of April in every year during the continuance" of the policy; and by a subsequent clause it was provided that, in case the plaintiff should not pay the said annual premiums "on or before the day" previously mentioned for the payment thereof, the policy should "cease and determine. " A memorandum upon the back of the policy indicated its date to be the 10th day of April, 1846, although it was not actually delivered until the 15th of July of that year. Bugbee died upon the 13th or 14th of April, 1847, and at that time the premium for the second year of the policy had not been paid. It was, however, tendered, on or about the day of Bugbee's death, to the defendants' agent, who refused to receive it.

From this brief statement it is plain that, if we are to look to the policy alone, as containing the contract between the parties, the obligation of the defendants ceases upon the failure of the plaintiff to pay the annual premium upon the 10th day of April, 1847. Nothing could be more explicit than the language of the policy on this subject, and no reason can be given why this provision should not take effect according to its terms, unless it is to be regarded as modified by the printed prospectus issued by the defendants and delivered by their agent to the plaintiff before his application for the policy. The clauses in the prospectus upon which the plaintiff relies are the following, viz.:

"Every precaution is taken to prevent a forfeiture of the policy. "

"A party neglecting to settle his annual premium within thirty days after it is due, or paying assessments within the sixty days specified within the charter, or refusing to give satisfactory security upon the note, forfeits the interest he has in the policy. "

These clauses are not connected in the prospectus, but are several pages apart from each other.

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The question first to be considered on this subject is, whether the prospectus is to be treated as part and parcel of the contract between the parties. It was not referred to in, nor in any manner annexed to, the policy. Nothing is better settled than that, where two parties have entered into a written contract, all previous negotiations and propositions in relation to such contract, whether parol or written, are to be regarded as merged in the final agreement. Such preliminary matter may sometimes be admissible under the rule which admits evidence of the surrounding circumstances for the purpose of explaining an ambiguous expression; but never where the terms of the contract are clear and explicit. The legal inference, in all such cases, if the contract varies from what has been previously said or written, is, that the parties, upon further consideration, have changed their views. Policies of insurance are no exception to this rule, as a brief reference to the cases on the subject will clearly show.

It was held by Lord MANSFIELD, in the case of Pawson v. Barnevelt, that a written memorandum in regard to the subject of insurance, which was shown to the underwriter at the time of subscribing, and then wrapped up in the policy, did not thereby become a part of the contract; and, in the subsequent case of Bize v. Fletcher, the same judge ruled that a strip of paper, describing the condition of the ship insured, although wafered to the policy itself, was to be regarded as a representation merely, and not as a part of the policy. (Doug., p. 12, note 4.)

It has, however, been decided in this State that where, in making the policy, the insurance company used a printed form covering one-half of a sheet, upon the other half of which was a printed memorandum, headed "conditions of insurance, " this memorandum was to be treated as a part of the contract. The juxtaposition of the papers is, in such a case, considered as affording prima facie evidence that such was the intention of the parties. ( Roberts v. The Chenango Mut. Ins. Co., 3 Hill, 501; Murdock v. The same, 2 Comst., 210.) No case seems to have gone further than these, in incorporating extrinsic documents into a policy of insurance.

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Where the collateral writing is referred to in the policy itself, it has been held, both in England and in this country, that such writing is to be taken as a part of the contract. ( Routledge v. Burrell, 1 H. Bl., 254; Wood v. Worsley, 6 Term R., 710; Duncan v. The Sun Fire Ins. Co., 6 Wend., 488.)In the last of these cases, it was said by COWEN, J., that such memoranda "have the same force and effect as if contained in the body of the policy. " It would seem, however, from the subsequent cases in this State, that to give them this effect, they must be referred to in terms, as forming a part of his policy, or at least in such a manner as to show that this was intended. ( The Farmers' Ins. and Loan Co. v. Snyder, 16 Wend., 481; Burritt v. The Saratoga Co. Mut. Fire Ins. Co., 5 Hill, 188; Jenninys v. The Chenango Mut. Ins. Co., 2 Denio, 75; Egan v. The Mut. Ins. Co. of Albany, 5 Denio, 326.) There is, therefore, not the slightest authority for holding that any preliminary or collateral writing whatever, which is neither annexed to nor referred to in the policy, can be taken as a part of the contract of insurance; and the general principles of law are directly opposed to any such doctrine.

But it is contended, that if the prospectus is not to be regarded as incorporated into the contract itself, it is nevertheless obligatory upon the company as a representation. Undoubtedly a written or printed statement delivered by the agent of the company to an applicant for insurance, relating directly to the insurance applied for, may amount to a representation on the part of the company; but, as a representation merely, the prospectus in this case cannot cannot aid the plaintiff. A representation by the assured, if false, avoids the policy. Here it is not sought to avoid, but to enforce the policy. The only mode, therefore, in which the prospectus can be made to aid the plaintiff is, by treating the company as absolutely bound, by its terms, to the same extent as if it had been incorporated into the policy. The Supreme Court accomplished this, by holding the company estopped, by the terms of the prospectus; but this was clearly a misapplication of the doctrine of estoppel. It has never, I think, been held

Page 521

when the conditions of a contract proposed in the preliminary negotiations between the parties, varied from the contract as finally consummated, that, although such conditions form no part of the contract, they may, nevertheless, operate as an estoppel upon the parties. The reasons given why these introductory propositions do not become incorporated into the contract, viz.: that they are presumed to have been subsequently waived or abandoned, conclusively repel all idea of an estoppel in such a case.

It follows, that the policy must be considered as...

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