Carrollton Furniture Mfg. Co. v. American Credit Indemnity Co. of New York

• Decision Date: 01 July 1903
• Docket Number: 14.
• Citation: Carrollton Furniture Mfg. Co. v. American Credit Indemnity Co. of New York, 124 F. 25 (2nd Cir. 1903)
• Parties: CARROLLTON FURNITURE MFG. CO. v. AMERICAN CREDIT INDEMNITY CO.
• Court: U.S. Court of Appeals — Second Circuit

124 F. 25

CARROLLTON FURNITURE MFG. CO. v. AMERICAN CREDIT INDEMNITY CO.

No. 14.

United States Court of Appeals, Second Circuit.

July 1, 1903

Before WALLACE, TOWNSEND, and COXE, Circuit Judges.

WALLACE Circuit Judge.

The reargument of this cause was granted upon the application of the defendant in error because it was urged that the decision of the Supreme Court in Northern Assurance Co. v Building Association, 183 U.S. 308, 22 Sup.Ct. 133, 46 L.Ed. 213, was so wide a departure from some of its previous decisions as to virtually overrule them-- especially those which had been referred to in the opinion of this court. At the time of the former argument that decision had just been announced, and, although it was adverted to by counsel, it was not cited in the briefs, and was only cursorily discussed; and it was not referred to in the opinion of this court. Upon the reargument, not only has the bearing of that opinion been discussed, but all the questions presented by the writ of error have been discussed; and, as one member of the court was present who was absent at the former argument, all the questions have been reconsidered.

In the former opinion the reasons for the conclusion that the contract was a Kentucky contract were not assigned, because we did not suppose that conclusion to be reasonably debatable. Its correctness, however, has been challenged upon the reargument, and the defendant in error insists that the contract was a New York contract. This contention rests wholly upon the fact that the contract, upon its face purports to have been executed at the city of New York. The policy provides that the proofs of loss are to be presented at the central office of the company, in St. Louis, Mo., and is silent as to the place where payment of losses is to be made. It provides that no claim shall be provable under it for a loss accruing prior to the payment of the premium 'even though the policy has been delivered prior to such payment. ' When the cause was before this court on a previous writ of error, the facts with reference to the making of the contract did not fully appear, and the contract was held to be a New York contract, because, so far as appeared, the application for insurance was accepted in New York, and the policy had been executed there, and from there transmitted to the plaintiff. It appears by the evidence in the present record that the application for the policy was made at Carrollton, Ky., and forwarded thence to the office of the defendant at St. Louis, Mo., which office seems to have been the principal place of business of the defendant. It further appears that the application was not accepted by the defendant, and, after a correspondence between the defendant and plaintiff, the defendant sent to the plaintiff a policy which did not conform to the original application, or to the terms suggested in the correspondence, with a letter expressing the hope that the plaintiff would accept the policy 'as now submitted,' and remit a check for the premium. This letter was addressed to the plaintiff at Carrollton, Ky., and thereafter at that place the plaintiff mailed his check to the defendant at St. Louis. Thus the application was made in Kentucky, the policy was accepted in Kentucky, and the premium was paid in Kentucky. The facts bring the case directly within the decision in Equitable Life Assurance Society v. Clements, 140 U.S. 226, 11 Sup.Ct. 822, 35 L.Ed. 497, where the application was made in Missouri, and the policy, although executed in New York, was accepted in Missouri. The court said:

'The conclusion is inevitable that the policy never became a complete contract, binding both parties to it, until the delivery of the policy and the payment of the first premium in Missouri, and consequently that the contract is a Missouri contract, and governed by the laws of that state.'

In the former opinion we did not consider and did not intend to decide whether the untruth of the representations in respect to the gross sales and losses should preclude a recovery by the plaintiff for the losses arising upon the sales to Elliott & Cougle. As that question has been somewhat discussed upon the reargument, we deem it proper to give our views in regard to it. By a rider annexed to the policy the defendant undertook to insure the plaintiff against losses upon sales to that firm to an amount not exceeding $7,500. The rider contained the clause, 'all other terms and conditions of the said policy to remain in full force and effect. ' This was a very different contract from that embodied in the original policy, not being an insurance against losses upon sales to the plaintiff's debtors generally. However influential information as to the amount of the plaintiff's gross sales and gross losses during previous years might be in estimating the risk like to arise in insuring the plaintiff's debtors generally, it could not be of any importance in estimating the risk arising from sales to a particular debtor. The risk as to the latter would depend wholly upon circumstances peculiar to that debtor-- such as the antecedents of that debtor, or the nature of the business transactions and relations between the plaintiff and such debtor. The clause incorporating the other terms and conditions of the policy into the contract made by the rider was not intended to refer to those which were wholly foreign to the particular insurance, and which the parties must have understood to be exclusively applicable to a different class of risks, and it should not be construed as importing into the contract a representation of the truth of immaterial statements.

Upon the question whether the materiality of the representations was for the jury or for the court, in addition to what was stated in our former opinion we quote the language of the court in some of the adjudged cases. In Campbell v. New England Mutual Life Insurance Co., 98 Mass. 402, in an opinion by Gray, J. (the late Justice Gray of the Supreme Court), after stating that where the question of the materiality of the representations depends upon circumstances, and not upon the construction of any writing, it is a question of fact to be determined by the jury, he said:

'But where the representations upon which the contract of insurance is based are in writing, their interpretation, like that of other written instruments, belongs to the court; and the parties may, by the frame and contents of the papers, either by putting representations as to the quality, history, or relations of the subject insured into the form of answers to specific questions, or by the mode of referring to them in the policy, settle for themselves that they shall be deemed material; and, when they have done so, the applicant for insurance cannot afterward be permitted to show that a fact which the parties have thus declared to be material to be truly stated to the insurers was in fact immaterial, and thereby escape from the consequence of making a false answer to such a question.'

Lord Chancellor Cranworth, in Anderson v. Fitzgerald, 4 H.L.Cas. 484, used this language:

'Whether certain statements are or are not material, whether parties are entering into a contract of life assurance, is a matter upon which there must be a divided opinion. Nothing, therefore, can be more reasonable than that the parties entering into that contract should determine for themselves what they think to be material; and if they choose to do so, and to stipulate that, unless the assured has answered a certain question accurately, the policy or contract which th

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