Goddard v. East Texas Fire Ins. Co.

• Decision Date: 30 November 1886
• Citation: 1 S.W. 906
• Court: Texas Supreme Court
• Parties: GODDARD v. EAST TEXAS FIRE INS. CO.

1 S.W. 906

GODDARD v. EAST TEXAS FIRE INS. CO.

Supreme Court of Texas.

November 30, 1886.

Appeal from Kaufman county.

Action on a policy of insurance. Judgment for defendant. Plaintiff appealed. The facts are stated in the opinion.

Wood & Charlton, for appellant. Whitaker & Bonner, for appellee.

WILLIE, C. J.

It is apparent from the case made by the evidence that the failure of Goddard to keep his books and inventory in an iron safe at night did not arise from any intention on his part to deprive the insurance company of evidence as to the amount of stock, tools, and machinery he had on hand at the time of the fire. He was wholly ignorant of the existence of any clause in the policy imposing this duty upon him. It is not made to appear that the company has been damaged in the least by reason of Goddard's default in this respect; for the value of the stock at the time the inventory was made was fully proved, and the amount of subsequent sales, which were all for cash, could be easily ascertained from the accounts kept in the books which were preserved and open to the inspection of the company and the court. If there has been neither fraud on the part of Goddard, nor loss to the company by reason of his non-compliance with said clause, it cannot be said that it was material to the risk, and the policy is not avoided unless the provisions of the clause constitute a warranty. If they did, the law exacts a compliance with their terms, according to their true intent and meaning, whether material or not, or whether known to the assured or not, if he had the opportunity; and it was his duty, under the circumstances, to acquaint himself with them. Ripley v. Ætna Ins. Co., 30 N. Y. 136; Witherell v. Insurance Co., 49 Me. 200; May, Ins. 161; Wood, Ins. §§ 58, 176.

Treating this as a case where the assured was charged with knowledge that the clause in question was attached to the policy, as it appears in the original sent up for our inspection, the question is, did this constitute it a warranty that the assured would perform the promises contained in the clause, or the policy should be void? It is a cardinal principle of the insurance law that, in order to constitute any statement or promise of the insured a warranty, it must be made part of the policy, either by appearing in the body of the instrument, or by a proper reference in the policy to some other paper in which it is to be found. Wood, Ins. § 176, p. 340. It is in the nature of a condition precedent, and, as such, must form a part of the contract between the parties. Id. § 58; Farmers' Loan, etc., Co. v. Snyder, 16 Wend. 481. The policy is the contract; and if outside papers are to be imported into it, this must be done in so clear a manner as to leave no doubt of the intention of the parties. Farmers' Loan, etc., Co. v. Snyder, supra; Insurance Co. v. Southard, 8 B. Mon. 634. When there is doubt as to the intention of the parties to treat the paper as part of the policy, the courts give the benefit of the doubt to the assured, and construe the policy liberally in his favor. Stone v. United States Casualty Co., 34 N. J. Law, 376. This is in accord with the general rule that the language of the policy, being in the language of the underwriters, if susceptible of two interpretations, that must be adopted which will sustain the claim of the assured, and give him the indemnity it was his object to secure. Western Ins. Co. v. Cropper, 32 Pa. St. 351.

The clause which the appellee seeks in this case to have construed as part of the policy is not written or printed upon the same paper with the rest of that instrument, nor was it referred to in the policy as forming a part of the contract between the appellant and the insurance company. It is clear, therefore, that its conditions cannot be treated as entering into that contract, if it is to be considered as a separate and detached paper. But the edge of the paper upon which the clause is printed is made, by means of mucilage, to adhere to a blank space on the face of the policy, and upon this single fact rests the whole claim of the appellee to have the clause considered as one of the warranties and conditions of that instrument. In the case of Bean v. Stupart, 1 Doug. 11, these words were written on the margin of a marine policy of insurance: "Thirty seamen, besides passengers." Those words were held by Lord MANSFIELD to constitute a warranty that the insured ship sailed with that number of seamen, so that the policy would be avoided if a less number of seamen manned the vessel. He gave to the words the same effect as if they had been written in the policy itself. In the subsequent case of Kenyon v. Berthon, reported in a note to Bean v. Stupart, the same principle was announced by the same judge, and the words, "In port twenty-ninth of July, 1776," written transversely on the margin of the policy, were held to constitute a warranty, which, if not strictly complied with to a day, would avoid the policy. In the subsequent case of Pawson v. Barneve, 1 Doug. 12, note, Lord MANSFIELD held that though a written paper be wrapt up in the policy when it is brought to the underwriters to subscribe, and shown to them at the time, it is not a warranty, or to be considered as a part of the policy itself, but only as a representation. He held the same thing in Bize v. Fletcher, 1 Doug. 284, in reference to the statements in a piece of paper wafered to the policy at the time the underwriters subscribed it. The statements on the papers in question in these two last cases were similar to those passed upon in Bean v. Stupart and Kenyon v. Berthon. In one case they related to the equipment of the ship in men and guns; and in the other to her condition as to repairs and strength, several particulars of the intended voyage being also mentioned.

Thus, a clear distinction is drawn by that eminent judge between statements and promises written in the policy itself, though upon the margin, and those detached from it, or contained in a separate piece of paper, and made to adhere to the policy. In the former case they are warranties; in the latter, they are, at best, no more than representations. These cases are old, but we are not informed that they have ever been overruled. On the contrary, they are cited with special approbation by some of the most respectable courts of the United States, and quoted by text writers as expressing the law of the present time. Insurance Co. v. Southard, 8 B. Mon. 637; Farmers' Loan, etc., Co. v. Snyder, 16 Wend. 492; May, Ins. 162, 163; Wood, Ins. 416, 419.

These decisions may well be supported by the principles we...