Home Ins. Co. v. Stone River Nat. Bank

• Decision Date: 14 January 1890
• Citation: 12 S.W. 915,88 Tenn. 369
• Parties: HOME INS. CO. v. STONE RIVER NAT. BANK.
• Court: Tennessee Supreme Court

12 S.W. 915

88 Tenn. 369

HOME INS. CO. v. STONE RIVER NAT. BANK.

Supreme Court of Tennessee.

January 14, 1890

Error to circuit court, Rutherford county; CANTRELL, Judge.

J. C Bradford, for plaintiff in error.

Palmer & Palmer, for defendant in error.

FOLKES J.

This was an action at law to recover the amount of a policy of insurance for the sum of $2,000, issued by the plaintiff in error upon a "one-story brick, metal-roof building situated in the town of Murfrees-borough, Tennessee," the property of defendant in error. To the declaration the defendant pleaded nil debet and non assumpsit. The case was tried by the circuit judge without the intervention of a jury, resulting in a judgment for the full amount of the policy, with interest. Motion for a new trial having been overruled, the defendant has appealed in error.

The policy contained among its printed provisions the stipulation that "if the interest of the assured in the property be any other than the entire, unconditional, and sole ownership of the property, for the use and benefit of the assured, or if the building insured stands upon leased grounds, it must be so represented to the company, and so expressed in the written part of the policy; otherwise, the policy shall be void." It was agreed at the trial below that the house insured stood on leased ground; that the building belonged to the bank, and the ground to the Nashville, Chattanooga & St Louis Railway Company; that the lease was made in March, 1868, to run for 20 years; that the bank had made out and furnished to the insurance company the preliminary proofs of loss as required by the policy, and proof of the fact that such preliminary proofs of loss had been so furnished was waived. It was not stated in the written portion of the policy that the house insured stood upon leased ground. Proof was admitted, over the objection of counsel for the company, that the cashier of the bank, at the time the insurance was applied for, informed the local agent of the company, who countersigned and issued the policy, that the house sought to be insured stood upon leased ground. The agent, in his testimony, says if such information was given he did not hear it; but further on in his proof the agent says that he "had an idea that the house stood upon leased ground." Both the agent and the cashier were residents of the town of Murfreesborough, and the locality of the building, near the depot, was well known. Without imputing the slightest dishonesty to the agent, the circuit judge has found as a fact, from the proof, that such information was given at the time of the application, and that the agent, in a few days thereafter,-- perhaps the next day,--delivered the policy, folded, to the cashier of the bank, who paid the premium to the agent, and, without reading it, put the policy among the valuable papers of the bank, and did not know, until after the fire, its contents. There was no written application. The trial court held that the issuing and delivery of the policy, with the knowledge of the agent concerning the fact that the house stood on leased ground, without calling the attention of the assured to the clause in question, amounted to a waiver of the condition, leaving the company liable as though no such condition had been contained in the policy. This is assigned as error. For the plaintiff in error, it is insisted that parol evidence of a notice to the agent is inadmissible as tending to vary the terms of the written contract; that mere knowledge on the part of the agent is of no avail to the assured, if not indorsed or written in the policy, where the instrument itself requires such writing; and that such is certainly the rule at law, whatever may be the relief obtainable in equity.

It is not to be denied that each of the above contentions is sustained by the authority of adjudged cases. But it is equally true that the converse of each proposition is amply fortified by numerous adjudications of the highest authority. The question has been so much discussed, and the grounds upon which the antagonistic conclusions rest are so familiar, that it would be uninstructive, at this late day, and certainly unprofitable, to attempt a review of cases, or a criticism thereof. We content ourselves, therefore, with a statement of our holding. The knowledge of the agent that the building sought to be insured stood upon leased ground, obtained by the direct information furnished by the assured, amounts to a waiver of the printed condition requiring the fact to be written in or upon the policy, and, in the absence of collusion between the assured and the agent to mislead the company, is binding upon the latter. To so hold is not to innovate upon the general rule concerning the inadmissibility of parol proof to alter or vary the terms of a written contract. The ground of the company's liability in such cases is that the knowledge of the agent is in law the knowledge of the principal; and to permit the insurance company, possessed of such knowledge, and itself required to do the writing upon the policy, to accept the premium, and deliver the policy containing such condition, without writing the fact...