O'Brien v. Prescott Ins. Co.

• Decision Date: 31 May 1892
• Citation: 31 N.E. 265,134 N.Y. 28
• Parties: O'BRIEN v. PRESCOTT INS. CO.
• Court: New York Court of Appeals Court of Appeals

134 N.Y. 28

31 N.E. 265

O'BRIEN

v.PRESCOTT INS. CO.

Court of Appeals of New York, Second Division.

May 31, 1892.

Appeal from supreme court, general term, third department.

Action by James B. O'Brien against the Prescott Insurance Company. From a judgment of the general term affirming a judgment entered on a report of a referee, defedant appeals. Reversed.

A. H. Sawyer, for appellant.

John H. Gleason, for respondent.

The other facts fully appear in the following statement by VANN, J.:

This was an action upon a policy of insurance, whereby the defendant insured one Patrick O'Brien against loss or damage by firs to his building in West Troy, used as a grocery store, meat market, and dwelling, for the term of one year from January 3, 1882. The policy was continued in force by renewals until January 3, 1886. It was issued and countersigned by one Hulsapple, the agent of the defendant, who, ‘as such agent, appraised the value of buildings on which the defendant was asked to issue policies of insurance, leceived applications for insurance, issued policies and renewals thereof, recived the premiums in payment thereof, and in some cases adjusted losses, and transacted the general business of the defendant in the village of West Troy.’ The building so insured was partially destroyed by fire on the 28th of December, 1885, at which time it was not occupied, and had not been since the middle of the preceding month. During November, 1885, the agent of the lnsured called on the agent of the company, ‘and informed him that the building was vacant, and inquired how it would be in case it burned. Said Hulsapple replied that it was all right, as long as he notified the agent.’ Not long after the fire occurred said Patrick O'Brien transferred the policy to his son, the plaintiff in this action. The referee found the foregoing facts, among others, and ordered judgment in favor of the plaintiff for the sum of $800, besides interest. Further facts appear in the opinion.

VANN, J., ( after stating the facts.)

The policy in question was issued to the plaintiff's assignor ‘subject to the following terms and conditions: (1) Warranty of the assured: The assured, by the acceptance of this policy, hereby warrants that any application, survey, plan, statement, or description connected with procuring this insurance, or contained in or referred to in this policy, is true, and shall be a part of this policy; * * * and this company shall not be bound under this policy by any act of, or statement made to or by, any agent or other person, which is not contained in this policy, or in any written paper above mentioned. * * * This policy shall become void unless consent, in writing, is indorsed by the company hereon, in each of the following instances: * * * If any building herein described be or become vacant or unoccupied for the purposes indicated in this contract.’ Various other conditions follow in groups, with appropriate headings, numbered from 2 to 6, inclusive, and at the end of all the conditions, and just before the attestation clause, is the statement that ‘this policy is made and accepted upon the above express conditions, no part whereof can be waived, except in writing, signed by the secretary.’ The referee found that ‘the building at the time of the fire was not occupied by any person for the purpose indicated in the policy of insurance,’ and that ‘no written consent of any description was ever given by the company or its agent that such building might be or remain vacant or unoccupied.’

The stipulation in regard to occupancy was an express warranty, and, unless it was either performed or waived, the policy became void. Halpin v. Insurance Co., 118 N. Y. 165, 23 N. E. Rep. 482; Herrman v. Insurance Co., 85 N. Y. 162. As it was not performed, the validity of the contract depends on whether it was waived, and the question of waiver depends upon the power, actual or implied, of the agent who issued the policy for the defendant. The referee found, as a conclusion of law, that said agent ‘had authority to waive by oral consent any condition in the policy in question,’ and that he did orally waive the warranty under consideration. The learned general term based its judgment of affirmance mainly upon the case of Pechner v. Insurance Co., 65 N. Y. 195, where it was held that a general agent, authorized to issue policies and write consents thereon, had power to bind the company by a parol waiver of warranty against other insurance. In that case, however, there was no provision in the policy limiting the power of the agent, ‘who testified, without contradiction, that he had issued hundreds of * * * consents to further insurance.’ Page 208. The courts below also relied upon Insurance Co. v. Wilkinson, 13 Wall. 222, where it was held that an insurance company is responsible for the acts of its agent, within the general scope of the business intrusted to his care, and that no limitation of his authority, unless brought to the knowledge of the persons with whom he deals, will be binding upon them. Mr. Hulsapple was the general agent of the defendant at West Troy, and unless his powers were expressly limited, and the insured had notice of the limitation, he will be presumed, from the nature of his agency, to have had power to modify the contract that he made, and to waive strict compliance with the conditions therein contained. While it does not appear that, except in this instance, he ever consented in behalf of the company that a building insured by it might be or remain vacant or unoccupied, the power to give such consent, in the absence of known restrictions upon his authority, may be fairly inferred from the powers that he habitually exercised. Whited v. Insurance Co., 76 N. Y. 415.

The policy had been in the possession of the plaintiff's assignor for more than three years when the firs occurred, and hence, if the contract itself contains clear restrictions upon the power of the agent, the insured must be presumed to have had notice thereof. The provision that the company will not be bound by any act or statement not contained in the policy, application, etc., has no bearing upon the point in controversy, as it relates only to acts done and statements made before the policy...