Kiernan v. Dutchess County Mut. Ins. Co.

• Decision Date: 06 October 1896
• Citation: 150 N.Y. 190
• Court: New York Court of Appeals Court of Appeals
• Parties: JOHN KIERNAN, Respondent, v. THE DUTCHESS COUNTY MUTUAL INSURANCE COMPANY, Appellant.

150 N.Y. 190

44 N.E. 698

KIERNAN

v.DUTCHESS COUNTY MUT. INS. CO.

Court of Appeals of New York.

Oct. 6, 1896.

Appeal from supreme court, general term, Third department.

Action by John Kiernan against the Dutchess County Mutual Insurance Company. From a judgment of the general term of the supreme court in the Third judicial department (29 N. Y. Supp. 1126) affirming a judgment of the special term for plaintiff, defendant appeals. Affirmed.

This was an action to set aside an award, made by appraisers under a policy of fire insurance, as fraudulent and void, and to recover the amount of the policy. The complaint, in addition to such allegations as are necessary to authorize a recovery upon a policy in an action at law, also set forth the award, and alleged that the plaintiff was induced to execute the arbitration agreement, and to accept the nominee of the defendant as one of the appraisers, by certain false representations made by a general agent of the company; that the award, made without the aid of an umpire, was inadequate and unfair, and was owing to prejudice and partiality on the part of said appraiser nominated by the defendant, and his control over the appraiser nominated by the plaintiff. The answer denied all allegations tending to show that the award was unfair or fraudulent, and alleged that the policy was void, because the personal property insured thereby was incumbered by a chattel mortgage, in violation of a warranty to the contrary. Although the action was in equity, the court took an advisory verdict from a jury upon certain questions relating to the award; but the final decision, which adopted the verdict so far as it went, and at the same time disposed of the other issues, was made by the court. The trial judge found the facts in accordance with the theory of the complaint, so far as the award was concerned, and also found that the defendant waived any forfeiture that it might have invoked ‘by virtue of any chattel mortgage upon the whole or any part of the personal property insured.’ Judgment was directed vacating the award, and that the plaintiff recover the full value of the property destroyed, so far as it was covered by the insurance. The policy, dated June 15, 1891, made insurance from that day until June 15, 1894, to an amount not exceeding $2,200, upon certain property of the plaintiff, as follows: $200 on his barn, $400 on his dwelling house, $420 on his household furniture, $100 on his farming implements, $200 on his horses, $360 on his cows, $400 on his hay and grain, and $160 on his wagons, sleighs, harnesses, etc. On the 7th of December, 1891, the house, barn, and substantially all of the personal property, were destroyed by fire, being then worth over $2,200, as found by the court, but only $1,037, as determined by the appraisers. Further facts appear in the opinion.

Robert F. Wilkinson, for appellant.

Howard Chipp, Jr., for respondent.

VANN, J. (after stating the facts).

Two questions are presented by this appeal: (1) Whether the defendant waived any forfeiture that otherwise it would have had the right to insist upon; (2) whether the award was properly set aside. The policy in question contained the following clause: ‘This entire policy * * * shall be void if * * * the interest of the insured be other than unconditional and sole ownership, * * * or if the subject of insurance be personal property, and be or become incumbered by a chattel mortgage.’ It also containedthe usual provision for an appraisal, in case of loss, by ‘two competent and disinterested appraisers,’ aided, if necessary, by an umpire to be chosen by them, and expressly provided that the company should not ‘be held to have waived any provision or condition of the policy, or any forfeiture thereof, by any requirement, act, or proceeding on its part relating to the appraisal.’

As the policy was issued upon different kinds of property, each separately valued, the contract is severable, although but one premium was paid, and the amount of insurance was the sum total of the valuations. Pratt v. Insurance Co., 130 N. Y. 206, 221,29 N. E. 117. A policy containing the provision above quoted, in relation to a forfeiture in case of incumbrance by chattel mortgage, was recently held by this court to be void at the option of the company only as to the property mortgaged, but not as to such property, separately insured, as was free from mortgage. Knowles v. Insurance Co., 142 N. Y. 641, 37 N. E. 567, adopting opinion below, as reported in 66 Hun, 220,21 N. Y. Supp. 50. As a warranty is for the benefit of the company, it may take advantage of a forfeiture based thereon, or may waive the same, if it thinks the latter course will better promote its interests. There may be a waiver by express agreement, or through estoppel; but neither is required to effect that result, as words or acts from which an intention to waive may reasonably by inferred are sufficient, at least when acted upon. Titus v. Insurance Co., 81 N. Y. 410, 419;Roby v. Insurance Co., 120 N. Y. 510, 517,24 N. E. 808;Armstrong v. Insurance Co., 130 N. Y. 560, 29 N. E. 991. The distinction between waiver and estoppel, as applied to the law of insurance, is not in all respects clearly defined. An express waiver is in the nature of a new contract, modifying to some extent the old one. It does not require a new consideration, unless it is by inducing a change of position; for the law of waiver seems to be a ‘technical doctrine, introduced and applied by courts for the purpose of defeating forfeitures.’ People v. Manhattan Co., 9 Wend. 351, 381;Insurance Co. v. Norton, 96 U. S. 234. An estoppelforbids the assertion of the truth by one who has knowingly induced another to believe what is untrue, and to act accordingly. While express waiver rests upon intention, and estoppel upon misleading conduct, implied waiver may rest upon either; for it exists when there is an intention to waive unexpressed, but clearly to be inferred from circumstances, or when there is no such intention in fact, but the conduct of the insurer has misled the insured into acting on a reasonable belief that the company has waived some provision of the policy. Ronald v. Association, 132 N. Y. 378, 30 N. E. 739; Armstrong v. Insurance Co., Supra; 2 Biddle, Ins. § 1052. While the principle may not be easily classified, it is well established that if the words and acts of the insurer reasonably justify the conclusion that, with full knowledge of all the facts, it intended to ‘abandon, or not to insist upon, the particular defense afterwards relied upon,’ a verdict or finding tothateffect establishes a waiver, which, if it once exists, can never be revoked. Trippe v. Fund Soc., 140 N. Y. 23, 35 N. E. 316;Benninghoff v. Insurance Co., 93 N. Y. 495;Brink v. Insurance Co., 80 N. Y. 108; Clement, Dig. Fire Ins. p. 624, § 6; 2 May, Ins. 504a; 2 Biddle, Ins. 1053.

As the forfeiture claimed in this case did not extend to all the personal property, because the chattel mortgage covered only a part thereof, an adjustment of the loss was necessary; and the company had the right to demand an appraisal, even if it intended to insist upon the breach of warranty as a defense. Hence it is unnecessary to consider the effect of the provision in the policy that the insurer should not be held to have waived any condition or forfeiture ‘by any requirement, act, or proceeding on its part relating to the appraisal.’ As an appraisal was proper in any event, the mere fact that one was had at the request of the company has no bearing upon the question of forfeiture; and, in reviewing the facts relied upon to...