Baile v. St. Joseph Fire & Marine Ins. Co.

• Decision Date: 30 April 1881
• Citation: 73 Mo. 371
• Parties: BAILE et al., Appellants, v. THE ST. JOSEPH FIRE & MARINE INSURANCE COMPANY.
• Court: Missouri Supreme Court

73 Mo. 371

BAILE et al., Appellants,

v.THE ST. JOSEPH FIRE & MARINE INSURANCE COMPANY.

Supreme Court of Missouri.

April Term, 1881.

[COPYRIGHT MATERIAL OMITTED]

Appeal from Buchanan Circuit Court.--HON. JOS. P. GRUBB, Judge.

REVERSED.

This was a suit in equity brought by plaintiffs against defendant, and under the following circumstances: One Shotwell, the local agent of defendant at Warrensburg, solicited plaintiffs, who were merchants at that place, to take $2,500 insurance upon their stock of goods, to continue one year. Plaintiffs consented, paid the premium, and received from Shotwell the following receipt:

WARRENSBURG, MO., December 5th, 1873.

Received of Baile & Ridenour $43.75, paid as premium on $2,500 insurance in the St. Joseph Fire & Marine Insurance Company of St. Joseph, for which I agree to deliver a policy.

E. H. SHOTWELL, Agent, etc.

There was a verbal understanding between Shotwell and plaintiffs that the $2,500 should be distributed as follows: $300 on millinery goods, $700 on ribbons, notions and fancy goods, and $1,500 on dress and dry goods. Plaintiffs' application and the premium paid were forwarded by Shotwell to the home office of the company at St. Joseph, but within a few days, and before the delivery of a policy, plaintiffs' store and stock were destroyed by fire. The day after the fire plaintiffs notified the defendant, who immediately sent its secretary to Warrensburg to inquire into the case. In the prosecution of his inquiries he took the affidavits of plaintiffs. Shortly after this, plaintiffs demanded a policy of defendant, who refused to issue one, and denied all liability for the loss on the ground that nothing but a written or printed policy, signed by the president and attested by the secretary, could impose a legal liability on the company, and none such had ever been issued. No formal proofs of loss were furnished to the company until after the lapse of ten months, but no objection on that score was made by the company until the filing of the answer in this case. The answer denied liability on the ground that no verbal contract of insurance was binding on defendant under its charter and the laws of the State; and further set up several affirmative defenses growing out of the character and conditions of the policy that defendant would have issued if it had issued any: (1) That the policy would have contained a prohibition against additional insurance without the consent of the defendant written on the policy; and that there was a breach of such condition. (2) That the policy would have contained a condition against misrepresentations in the application; and that there was a misrepresentation, in this, that it was stated in the application that the plaintiffs' stock of goods was unincumbered, when in fact there was a valid subsisting chattel mortgage thereon. (3) That the policy would have contained a condition that as soon as possible after a loss the insured should render a particular account of the loss duly verified; and that this condition had not been complied with.

To the first of these defenses plaintiffs replied that they did inform defendant of the additional insurance, and that defendant should be estopped from availing itself of this defense, because it had not objected thereto at the time, and had omitted to indorse its consent on the policy. To the second defense plaintiffs replied that the mortgage which defendant alleged constituted the breach, was intended as security for a note made by plaintiff Ridenour, not until it matured, but only until the payee of the note, one Congdon, could assure himself of the solvency of one Glandner, who resided in Ohio, and who was proposed by Ridenour as personal security thereon; and if his solvency was ascertained, his name on the note was to be sufficient security therefor, and the chattel mortgage was thereupon to cease to be a lien on said stock; but that by mistake the mortgage was written as if security for the note until paid, and the true defeasance was omitted; that inquiry was made and Glandner was found to be solvent, and his name was received and accepted by Congdon as ample security; that the function of the mortgage had been thereby accomplished, and although not discharged of record, the same constituted no valid lien or incumbrance on the stock. To the third defense plaintiffs filed a reply in the nature of a demurrer. The case was submitted to the court on these pleadings with the proofs adduced by the parties in support of their several claims, and there was a judgment for the defendant.

Doniphan & Reed and Crittenden & Cockrell for appellants.

1. Defendant had power to enter into a verbal contract. This power is derived from section 8 of the Corporation Law, which declares that “parol contracts may be binding upon aggregate corporations if made by agent duly authorized,” and from section 1 of the Insurance Law, which provides that all companies organized under it shall have “full power and authority to make insurance against loss or damage by fire on every description of property or merchandise.” Wag. Stat., pp. 290, 738. Section of the latter act which provides that “all policies and contracts of insurance made by said company shall be subscribed by the president and attested by the secretary,” does not restrict this power. It only provides a mode in which the power may be exercised, and it does not purport to be even an exclusive mode at that. The right to make a binding parol contract is not taken away expressly by said section 8. No negative words are therein used, and the leading idea of the section seems to be simply to provide that all contracts of insurance when completed must be signed by the president and attested by the secretary-- telling who shall exercise the power when the contract is reduced to writing and completed, and not prohibiting any other existing legal form of contract. The section making parol contracts of aggregate corporations legal, being a part of the general law, is as much a part of the charter of defendant as is section 8 of chapter 67; and as section 8 grants no power in and of itself, and contains no repealing words, and is not necessarily inconsistent with the other section, a parol contract of insurance ought to be held good and binding. Henning v. U. S. Ins. Co., 2 Dill. 26; Trustees, etc., v. Brooklyn F. Ins. Co., 19 N. Y. 310; New Eng. Ins. Co. v. Robinson, 25 Ind. 540; Walker v. Metropol. Ins. Co., 56 Me. 371; Relief F. Ins. Co. v. Shaw, 94 U. S. 577; May on Ins., §§ 128, 43.

2. But even if a verbal contract of insurance be not binding upon this company, a preliminary contract by an agent, who has received the premium, to issue a policy will be binding and will be enforced in equity. Post v. Ins. Co., 43 Barb. 363; Union Ins. Co. v. Commercial Ins. Co., 2 Curtis 524; s. c., 1 Am. Law Reg. (N. S.) 116; Whitaker v. Ins. Co., 29 Barb. 312; Constant v. Ins. Co., 3 Wall. Jr. 316; Commercial Ins. Co. v. Union Ins. Co., 19 How. 319; Ins. Co. v. Colt, 20 Wall. 560; Palm v. Medina Ins. Co., 20 Ohio 529; Davenport v. Ins. Co., 17 Iowa 277; Perkins v. Washington Ins. Co., 4 Cow. 645; Kentucky Ins. Co. v. Jenks, 5 Ind. 96; Hallock v. Ins. Co., 26 N. J. L. (2 Dutch.) 268; Franklin Ins. Co. v. Colt, 2 Cent. Law Jour. 207; Franklin Ins. Co. v. Taylor, 52 Miss. 441; s. c., 3 Cent. Law Jour. 633; May on Ins., §§ 565, 23; 3 Parsons on Contracts, 374, note k.

3. Equity, having jurisdiction to compel by specific performance the issuance and delivery of a policy (as shown by authorities cited in previous point) will, to avoid circuity of action, render judgment for the amount of the policy. May on Ins., § 565, note 1; 2 Curtis 524; 43 Barb. 351; 4 Cow. 645; Carpenter v. Ins. Co., 4 Sandf. Ch. 408; 20 Ohio 529. These decisions but apply to the laws of insurance the well known rule that equity, when once possessed of a case, to avoid litigation, will enter the judgment to which the party is finally entitled. Real Estate Sav. Inst. v. Collonious, 63 Mo. 290; Holland v. Anderson, 38 Mo. 55; Corly v. Bean, 44 Mo. 381.

4. The alleged failure of plaintiffs to notify the company of the additional insurance and to have the same indorsed on the policy, is no defense. 1st, Because, by not having issued the policy the company rendered the performance of this condition impossible. Stewart v. Keteltas, 36 N. Y. 388; Smith v. Gugerty, 4 Barb. 615; The Mayor v. Butler, 1 Barb. 327; 3 Johns. 531. 2 nd, Because, at the most, no policy having been issued, nothing more could be required, in case of an additional insurance, than notice to the company, ( Eureka Ins. Co. v. Robinson,56 Pa. St. 257,) and such notice we did actually furnish to the company's agent.

5. There was no misrepresentation as to incumbrances. The chattel mortgage, though unsatisfied of record, was fully discharged and was no incumbrance. May on Ins., § 292; Hawkes v. Ins. Co., 11 Wis. 188; Newhall v. Ins. Co., 52 Me. 180; Lycoming Ins. Co. v. Jackson, 83 Ill. 302; s. c., 4 Cent. Law Jour. 456.

6. The fact that nearly ten months elapsed before proofs of loss were furnished will not defeat plaintiffs' recovery; 1st, Because immediately after the fire defendant instituted a very thorough and minute investigation as to the cause of the fire, the amount of the loss, the aggregate sum of insurance and all questions relating to the stock of goods and the said fire, and to assist in this purpose, examined under oath these plaintiffs. This examination inures to the benefit of plaintiffs. May on Ins., § 499; Sexton v. Ins. Co., 9 Barb. 191; Roumage v. Ins. Co., 13 N. J. L. (Green) 110. 2nd, Because defendant must be considered to have waived the proofs being furnished by refusing to issue a policy and denying all responsibility. Tayloe v. Ins. Co., 9 How. 390; McComas v. Ins. Co., 56 Mo. 573; Franklin Ins. Co. v. Coates, 14 Md. 285; Ins. Co. v. McDowell, 50 Ill. 120; Edwards v. Ins. Co., 3 Gill 176; Allegre v.Ins. Co., 6 Har. & J. 408; ...