Henning v. United States Ins. Co.

• Decision Date: 31 March 1871
• Citation: 47 Mo. 425
• Parties: ROBERT M. HENNING et al., Appellants, v. THE UNITED STATES INSURANCE COMPANY, Respondent.
• Court: Missouri Supreme Court

47 Mo. 425

ROBERT M. HENNING et al., Appellants,

v.THE UNITED STATES INSURANCE COMPANY, Respondent.

Supreme Court of Missouri.

March Term, 1871.

Appeal from St. Louis Circuit Court.

T. T. Gantt, for appellants.

A parol contract of insurance, such as (we say) was made with defendant in March, 1864, acted upon and carried into effect as it was, is binding and enforceable at law. That such a contract may be made, and that it binds the corporation, though without writing, has been repeatedly decided by courts of the highest authority, viz: Kennebec Co. v. Augusta Insurance & Banking Co., 6 Gray, Mass., 204; First Baptist Church v. Brooklyn Fire Ins. Co., 18 Barb. 75; 19 N. Y. 305; Halleck v. Ins. Co., 2 Dutch., N. J., 268-76; Mobile Marine Dock & Mutual Ins. Co. v. McMillan & Son, 31 Ala. 711; Commercial Mutual Marine Ins. Co. v. Union Mutual Ins. Co., 19 How. 318, 321.

The rule laid down by Judge Curtis in 19 Howard, which has been adopted in Massachusetts, New York, New Jersey and Alabama, is entirely compatible with the statute law of Missouri.

Under the act of 1845 (R. C. 1845, p. 232, § 8), the capacity of a corporation to make a parol contract, and the liability of a corporation to be bound by an implied contract, differs in no respect from that of an individual or natural person. This section is part of the charter of the defendant. All corporations created after the passage of that act are subject to the disabilities and restrictions of the general law on the subject. But as to this provision in section 8, it is believed that it became operative immediately on its passage, with respect to all existing corporations. When, in 1855, the charter of the defendant was given, the seventh and fifteenth sections of the act of 1845 were declared to be not a part of its charter. This is quite equivalent to saying that the other sections of that act were applicable to the new company.

So far as the case of Plahto v. Merch. & Manuf. Ins. Co. (38 Mo. 248) is concerned, it is submitted that all which is said in that instance respecting the non-validity of verbal contracts for insurance is obiter dictum; the question was not presented to the court then, whether such a contract was binding. No reference appears to the authorities now cited, and indeed the decision is rather one that asserts the general rule that is common to natural and artificial persons alike than one which exempts a body politic from liability. The more recent case of Mound City Mutual Ins. Co. v. Curran, 42 Mo. 374, agrees with Plahto v. Merch. & Manuf. Ins. Co., supra, and it was no doubt upon the authority of these cases that the Circuit Court decided the case at bar. But the precise point which this case presents has now been argued for the first time before this court. If there is a contradiction between the law declared by the courts of Massachusetts, New York, New Jersey, Alabama and the United States, and that which has been laid down obiter by this court on a matter of commercial law which ought to be uniform throughout the land unless controlled by positive statute, we are well warranted in asking this court to pause before making a different rule inflexible. According to the decision of this case the rule will henceforth be fixed in Missouri.

Geo. P. Strong, for appellants.

It was competent for the parties, by their course of dealing, to show the sense in which they used the terms employed in their contract, and to give the contract a construction different from the natural and ordinary signification of the words used in it. It was also competent for them to vary the terms of the contract by parol. (Chapman v. Black, 5 Scott, 530, 533; Bunce v. Beck, 43 Mo. 266; Eyre v. Marine Ins. Co., 5 Watts & Serg. 122; Mead v. De Golyer, 16 Wend. 632; Chit. Cont. 89; Protective Ins. Co. v. Wilson, 6 Ohio St. 533, 560; 25 Barb. 189; 23 How. 420; Kennebec Co. v. Augusta Insurance & Banking Co., 6 Gray, 204, 214; Mobile Marine Dock & Mutual Ins. Co. v. McMillan & Son, 31 Ala. 711; Warren v. Ocean Ins. Co., 16 Me. 439.) It was competent for the parties to make a valid contract of insurance by parol, and such contract ought to be enforced. (First Baptist Church v. Brooklyn Ins. Co., 18 Barb. 69; same case, 31 N. Y. 305; Kennebec Co. v. Augusta Insurance & Banking Co., supra;Mobile Marine Ins. Co. v. McMillan & Son, supra; Com. M. M. Ins. Co. v. Union M. Ins. Co., 19 How. 318; 11 Paige Ch. 555; 4 Sandf. Ch. 408; Palm, Adm'r, v. The Medina Ins. Co., 20 Ohio, 529; E. Carver Co. v. Manuf. Ins. Co., 6 Gray, 214.)

The case in Ohio (16 Ohio, 148), and that of The Mound City Co. v. Curran, 42 Mo. 374, are not in point. In them the policy had become absolutely dead, and the decisions merely hold that in the absence of all proof of authority it was not competent for the secretary, either orally or by writing, to issue what in effect was a new policy. In the case at bar there was a valid subsisting policy, all the time so treated and so regarded by both parties, and one that the courts would enforce. In this case it was mutually agreed that defendant's policy should cover just such risks as those now insured for, and both parties acted upon this construction for years and until this loss. The plaintiffs entered upon the policy books all their shipments, irrespective of the points of shipment or of destination, and the defendant accepted the risks and received the premiums. No such proof appeared in the Ohio case, nor in the Mound City case, supra, nor did any such facts appear in the Plahto case, 38 Mo. 248. In the latter case both parties had expressly stipulated that the policy should only cover certain risks “in such sums, on property, from and to such places and on board such vessels, as shall be specified by application and mutually agreed upon and written on this policy.” When this policy was signed, some matters were left open, but, by its express terms, before it could take effect everything must be closed; there must be an application, a mutual agreement, and a writing of the risk upon the policy. Nothing of this kind was required of Henning & Woodruff. They were authorized and required to enter all their shipments. Neither party could refuse to be bound. Justice Holmes recognized the distinction in the Plahto case, 38 Mo. 255 Bodley was the secretary and general agent of defendant and had authority to make such a contract. He had been making just such contracts for nine years, and the defendant had received the benefits growing out of them. These benefits, during the last eighteen months prior to the loss in this case, had amounted to $50,000. All this the company received, without a word of dissent, upon contracts of insurance almost identical with that upon which this suit was founded. Such dealings, assented to by the corporation, were proof sufficient of authority in the agent; and from such a course of dealing the law will imply the authority of the agent, and also the existence of the contract itself. (Bank of the United States v. Dandridge, 12 Wheat. 68, 70; Gen. Stat. 1865, p. 327, § 6; Mechanics' Bank v. Bank of Columbia, 5 Wheat. 326; Bank of Vergennes v. Warren, 7 Hill, 91, 94; Bank of Columbia v. Patterson, 7 Cranch, 305; 27 Conn. 538, 554; 6 Barb. 576.)

The provisions of the charter in the case at bar ought not to be so construed as to exclude the power to make such contracts as that sued on. They were designed merely to enlarge the powers of the corporation, and to point out the agents by whom such formal contracts as might be made by the formal acts or resolution of the board of directors might be completed. They were not designed to repeal or annul the provisions of the General Statutes of the State which hold corporations bound on implied contracts as well as their more formal contracts. (19 How. 318.)

Glover & Shepley, and Sharp & Broadhead, for respondent.

I. There can be no such thing as an oral insurance in any case. There will be cases cited to support such a view, but upon examination they will be found to be either ( a) cases of a written contract and parol waiver of conditions, such as the case of Horwitz v. Equitable Ins. Co., 40 Mo. 557; ( b) or cases enforcing a parol agreement to make a written contract; in this class comes 19 How. 318, which was a bill in equity to enforce a parol agreement to insure (2 Dutch. 268); ( c) or cases of a parol contract to renew a written policy for a further period. In this class comes the First Baptist Church v. Brooklyn Ins. Co., 19 N. Y. 305, which was a case where there had been a policy taken out for a year, and by agreement it was to continue on at the same premium till either party notified the other, and on the faith of it a number of premiums had been paid. Both sound reason and authority are on the side that an oral insurance is a thing unknown to the law. (1 Duer on Ins. 60, § 5; 16 Ohio, 148; 6 Duer, 6; 9 Lower Canada, 488; 2 Cranch, 168; Plahto v. Merch. & Manuf. Ins. Co., 38 Mo. 252; Mound City Ins. Co. v. Curran, 42 Mo. 374.)

II. But if it be admitted that in some cases oral insurance is valid, yet in the case of this company the charter and by-laws of the company prohibit any oral insurance.

WAGNER, Judge, delivered the opinion of the court.

An exceedingly wide range was taken by the counsel in the argument of this case, but upon an examination of the pleadings as embodied in the record, the decision must be confined within much narrower limits. The amended petition on which the case was tried alleges that the plaintiffs were partners, and that on the 25th of March, 1864, they made with defendant a contract and agreement by which the defendant agreed that any shipment of cotton made by Butler & Co., of which firm plaintiffs were members, on any steamboat from any point on the Mississippi river and its tributaries to any point on said river, and consigned to either Butler & Co. or the plaintiffs, might be at the time of shipment entered on the bill of lading as insured by the...