Cohen v. Home Ins., Co.

• Decision Date: 08 March 1918
• Citation: 111 A. 264,31 Del. 51
• Court: Supreme Court of Delaware
• Parties: DAVID COHEN, plaintiff below, plaintiff in error v. THE HOME INSURANCE COMPANY a corporation of the State of New York, defendant below, defendant in error

111 A. 264

31 Del. 51

DAVID COHEN, plaintiff below, plaintiff in error v. THE HOME INSURANCE COMPANY a corporation of the State of New York, defendant below, defendant in error

Supreme Court of Delaware

March 8, 1918

Error to Superior Court for New Castle County, No. 3, January term 1917.

ACTION by David Cohen against the Home Insurance Company, a corporation of New York, for recovery on two fire insurance policies. Judgment for defendant. Plaintiff brings error. Judgment affirmed, the court being equally divided.

S. c on demurrer, 5 Boyce, 531, 95 A. 238; 6 Boyce, 6, 95 A. 912; 7 Boyce, 122, 102 A. 621; 6 Boyce, 210, 97 A. 1018, on trial.

Judgment affirmed.

Robert H. Richards and Aaron Finger, also T. Allen Golds-borough, of Maryland, for plaintiff in error.

Hugh M Morris (of Saulsbury, Morris and Rodney) also W. Calvin Chestnut, of Maryland, for defendant in error.

CURTIS Chancellor, PENNEWILL, C. J., BOYCE and Conrad, Associate Judges, sitting.

OPINION

CURTIS, Chancellor

Because of the importance of this case, and in view of an equal division of opinion among the judges sitting in the cause, it is thought well to report a summary of the facts and arguments of counsel, with the order affirming the judgment below.

In the latter part of 1913 and the early part of 1914, David Cohen, the plaintiff below, was engaged in a mercantile business in the town of Greensboro, Caroline county, Maryland, where he conducted a general store. In September, 1913, he applied to T. Clayton Horsey, of the firm of Jones & Horsey, local agents for defendant company, for a policy of fire insurance, upon his stock of merchandise. On September 15, 1913, the said agents delivered to Cohen a policy of fire insurance, in the defendant company, for the sum of $ 4,000, covering the plaintiff's stock of merchandise, without the premium for the policy being paid by the plaintiff. This policy was of the form known as the Standard fire insurance policy of the state of New York, and attached thereto was what is commonly known as the iron safe clause. About a week after the delivery of this policy, and before the payment of the premium, Cohen brought to Horsey the policy and called attention to the acetylene permit being incorrect because electricity was used. Cohen testified:

"I said, 'Mr. Horsey, what is this iron safe business here?' and he said, 'The company won't expect you to comply with any of the provisions in this iron safe clause, and you needn't pay any attention to it.'"

Horsey testified:

"Mr. Cohen asked me about the iron safe clause, and I told him he needn't pay any attention to it, that in my opinion it was put there for crooks."

Horsey sent the policy to the office in Baltimore, and asked that an electrical permit be placed on the policy and return same to him. Subsequently, Cohen received the policy and paid the premium thereon. The conversation between Cohen and Horsey in respect to the iron safe clause was never brought to the attention of any officer of the company.

Some time after the date of this conversation and about the latter part of October, Cohen applied to Horsey for additional insurance and the latter suggested to Cohen that he take an inventory of his stock, which he did, commencing the latter part of October and finishing November 3d. When it was completed, the plaintiff took it to Horsey, who footed up the totals of the valuations of the several articles on an adding machine in the bank, of which he was the cashier. This inventory, as prepared by Cohen and his clerks and added up by Horsey, showed a value of total stock in excess of $ 9,000, and thereupon Horsey recommended, and the defendant company issued, another policy of $ 4,000 on the same stock of merchandise, containing the iron safe clause, and covering the period from November 1, 1913, to November 1, 1914.

On January 6, 1914, a fire occurred at Cohen's store which resulted in Cohen's stock of merchandise being entirely consumed and destroyed. Proofs of loss were subsequently submitted to and filed with the insurance company, showing that the value of the stock destroyed by the fire exceeded the total amount of the two policies. The insurance company refused to pay the loss upon the ground that Cohen had failed to comply with the iron safe clause. Cohen brought this action to recover the amount claimed to be due upon the two policies, being the sum of $ 8,000.00, with interest.

The declaration, as amended, contains nine counts, but only the eighth and ninth counts were relied on.

The eighth count is upon the first policy, and alleges a general performance of the terms and conditions of the policy "excepting, however, that the said plaintiff did not comply with the requirements of that portion of said policy known as the iron safe clause, but as to said requirements of said policy the said plaintiff alleges that the defendant instructed the plaintiff that he, the plaintiff, need not comply with said portion of said policy known as the iron safe clause, as aforesaid. * * *"

The ninth count is the same as the eighth, except that it is upon the second policy.

In addition to pleading the general issue, the defendant below pleaded specially the failure of the plaintiff below to comply with the provisions of the iron safe clause, upon which pleas issue was joined.

The iron safe clause in the policies appears in the report of the case below. 6 Boyce 201, 97 A. 1014.

At the trial below, evidence of the above conversation between Cohen and Horsey, was introduced by which it was contended that compliance with the provisions of the iron safe clause was waived by the insurance company, or as a result of which the insurance company was estopped from relying upon a failure to comply with said clause as a defense to the action on the policies.

The defendant below contended that the agent had no authority to make the alleged waiver, and that the same was not binding upon it, relying particularly upon the following language of the policies:

"This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements or conditions as may be indorsed hereon or added hereto, and no officer, agent or other representative of this company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto, and as to such provisions and conditions no officer, agent or representative shall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached."

At the conclusion of the testimony in the trial below, counsel for the defendant requested that the jury be instructed to find a verdict for the defendant, and the jury was so instructed.

The only error assigned was that the court below erred in granting the prayer of the defendant below for binding instructions and in charging the jury to find a verdict in favor of the defendant below.

Jones and Horsey were the general agents of the defendant company within the classification known as "writing agents" or "countersigning agents." Hartford Fire Ins. Co. v Keating, 86 Md. 130, 38 A. 29, 63 Am. St. Rep. 499. Horsey would receive applications for insurance, bind the risks, and to save himself much clerical work would send the data to the Baltimore office where the policies would be made out and returned to him. He would then countersign the policies in behalf of the company, deliver the same to the insured and collect the premiums. Such was the practice followed in this and other cases with the knowledge and consent of the company.

The policies sued on being contracts made in the state of Maryland, it was admitted and agreed by the parties that the law of that state must control if applicable to the facts. But if the Maryland law is not applicable to the facts of the case, then it must be decided under general law as gathered from decisions of the courts in other states.

Assuming that the law of Maryland does not apply to the present case, the plaintiff in error contended:

First. That general agents, such as Jones and Horsey were, had authority to waive the iron safe clause of the policies at any time before loss, as fully as the company would have had. Ins. Co. v. Allen, 119 Ala. 436, 24 So. 399, 403; Ins. Co. v Smith, 65 Fla. 429, 62 So. 595, 47 L. R A. (N. S.) 619; Ins. Co. v. Shader, 68 Neb. 1, 93 N.W. 972, 60 L. R. A. 918; Ins. Co. v. Spiers, 87 Ky. 285, 8 S.W. 453; Ins. Co. v. Buckley, 83 Pa. 293, 296, 24 Am. Rep. 172; Ins. Co. v. Burget, 65 Ohio St. 119, 61 N.E. 712, 714, 55 L. R. A. 825, 87 Am. St. Rep. 596; Pace v. Ins. Co., 173 Mo.App. 485, 158 S.W. 892, 897; 19 Cyc. 777. And in respect to the two cases cited by the court below in holding "that an agent having the power and authority of the agent Horsey, has not the authority in law, by his act or statement, to waive the conditions of the iron safe clause after the delivery of the policy and before the loss," viz. Finleyson Bros. v. Globe Ins. Co., 16 Ga.App. 51, 84 S.E. 311, and N.W. Ins. Co. v. Mize (Tex. Civ. App.) 34 S.W. 670, the first of these cases does not turn upon the question involved in this case, but is based upon a rule which can have no application in this case; and the second was directed by the Court of Civil Appeals of the state of Texas in 1896, but in 1904, the same court, in the case of Fire Ass'n of Philadelphia v. Masterson (Tex. Civ. App.) 83 S.W. 49, being an iron safe clause case, held that the agent had the...