Egan v. Westchester Fire Ins. Co.

• Decision Date: 09 December 1895
• Parties: EGAN v. WESTCHESTER FIRE INS. CO.
• Court: Oregon Supreme Court

42 P. 611

28 Or. 289

EGAN v. WESTCHESTER FIRE INS. CO.

Supreme Court of Oregon

December 9, 1895

Appeal from circuit court, Multnomah county; E.D. Shattuck, Judge.

Action by B.F. Egan against the Westchester Fire Insurance Company on a fire insurance policy. From a judgment for plaintiff defendant appeals. Reversed.

L.B. Cox, for appellant.

S.C Spencer and C.H. Carey, for respondent.

BEAN C.J.

This is an action upon a fire insurance policy issued by the defendant on the 17th day of March, 1893, covering loss or damage by fire to the personal property therein described for the term of one year. The contract of insurance was made and the policy issued by one Hart, general agent of the defendant, residing in Portland, who was empowered to make such contracts and issue policies furnished in blank by the company to be countersigned by him, to renew the same, and to assent to transfers and assignments thereof within the territory covered by his agency. The policy in question is known as the "New York Standard Policy," and is in the form and contains the printed conditions usual in such policies, among which are the following: "This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void *** if the subject of insurance be personal property and be or become incumbered by chattel mortgage." "No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity until after full compliance by the insured with all of the foregoing requirements, nor unless commenced within twelve months next after the fire." By the concluding clause it is provided that "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." Some two or three months after the policy had been issued and delivered, and before the fire, which occurred in August, 1894, a chattel mortgage was placed on the property with the oral consent of Hart, but no indorsement to that effect was ever made upon the policy, nor was the company advised of the arrangement. It is admitted that, unless the stipulation in regard to the effect of placing a chattel mortgage on the property was waived, the incumbrance rendered the policy void; so that the right of plaintiff to recover depends upon whether the agent, Hart, had authority to bind the company by an oral consent or agreement to waive or modify the stipulations and conditions of the policy in this respect.

There is a class of cases which hold that, where a person is authorized by an insurance company to make a contract of insurance, he thereby becomes invested with authority to modify or waive the printed stipulations in the policy as to the condition of the property or other facts then existing. This doctrine proceeds on the theory that the contract or knowledge of the agent, within the scope of his real or apparent authority, is the contract or knowledge of his principal, and to that extent modifies or suspends the printed terms of the policy, which is prepared for general use, without reference to the particular case, contains numerous complex conditions and stipulations, and is generally not delivered to the insured until after the contract is closed. In such case it would certainly not be consonant with fair dealing to permit an insurer to escape liability because of some stipulation in the policy, which it knew from the very threshold of the transaction, through the agent who made the contract, was not in accordance with the agreement between it and the assured, or to allow it to take advantage of some cause of forfeiture which it knew, at the time the contract was closed, would invalidate the policy from the time of its inception, and thus render it of no more use to the assured than so much waste paper. There is another class of cases which hold that a parol waiver of the conditions of an insurance policy by a general agent is binding on the company, although the policy may provide that such waiver can only be made in writing indorsed thereon, if the insured, dealing with the agent, has no notice of a limitation upon his authority to bind the company. But neither...