Lipman v. Niagara Fire Ins. Co.

• Decision Date: 03 June 1890
• Parties: LIPMAN v. NIAGARA FIRE INS. CO.
• Court: New York Court of Appeals Court of Appeals

121 N.Y. 454

24 N.E. 699

LIPMAN

v.NIAGARA FIRE INS. CO.

Court of Appeals of New York.

June 3, 1890.

Appeal from supreme court, general term, first department.

Action by Martin Lipman against the Niagara Fire Insurance Company on a contract of fire insurance. Defendant had issued a ‘binding-slip’ for insurance to brokers for plaintiff, which it afterwards notified the brokers was terminated. A judgment for plaintiff was affirmed by the general term, and defendant appeals.

Robert W. De Forest, for appellant.

Adolph L. Sanger, for respondent.

ANDREWS, J.

The binding-slip signed by the defendant was not a mere agreement to insure, but was a present insurance to the amount specified therein. The instrument is informal. It states on whose account the insurance is made, the property covered, the amount insured, the term of insurance, and the date; but it does not specify the risk insured against, nor does it contain any conditions such as are usually found in insurance policies. The evident design of the writing, as disclosed by the testimony, was to provide temporary insurance pending an inquiry by the company as to the character of the risk, or, if that was known, during any delay in issuing the policy. The secretary of the defendant signed the binding-slip upon the solicitation of Pell, Wallack & Co., insurance brokers of the plaintiff, in the afternoon of September 2, 1885. The officers of the defendant, having made inquiry as to the risk, notified the plaintiff's brokers before 1 o'clock on the afternoon of September 3d that the defendant declined it. The property described in the binding-slip was destroyed by fire in the afternoon of September 3d, the fire having commenced about 3 o'clock. The claim on the one side is that the binding-slip was a complete and perfect contract, binding the defendant, according to its language, ‘until policy is delivered at the office of Pell, Wallack & Co.;’ and not terminable, therefore, by notice prior to that time, or, if so terminable, then only upon reasonable notice, which, as is claimed, was not given, nor in any event upon notice to the plaintiff's brokers, they not being agents of the plaintiff for the purpose of receiving such notice.

It is insisted on the other side that the contract evidenced by the binding-slip was a contract subject to the conditions contained in the ordinary policy in use by the company, one of which contained the following clause: ‘This insurance may be determined at any time by request of the assured, or by the company on giving notice to that effect to the assured, or to the person who may have procured this insurance to be taken by this company.’ The notice given on the 3d of September, prior to the fire, terminated, as is insisted, the contract of insurance pursuant to this condition. We think there can be no doubt that the true construction of the binding-slip only obligated the defendant according to the terms of the policy in ordinary use by the company. There is no other reasonable interpretation of the transaction. The binding-slip was a short method of issuing a temporary policy, for the convenience of all parties, to continue until the execution of the formal one. It would be unreasonable to suppose either that the brokers expected an insurance except company to terminate a risk is an important company, or that the secretary of the company intended to insure upon any other terms. The right of an insurance company to terminate a risk is an improtant one. It is not reserved in terms in the binding-slip, and could not be exercised at all, so long as no policy should be issued, unless the condition in the policy is deemed to be incorporated therein. Upon the plaintiff's contention, the company could not cancel the risk so long as the binding-slip was in force, and the only remedy of the company to get rid of the risk would be to issue the policy, and then immediately cancel it. The binding-slip was a mere memorandum to identify the parties to the contract, the subject-matter, and the principal terms. It refers to the policy to be issued. The construction is, we think, the same as though it had expressed that the present insurance was under the terms of the usual policy of the company, to be thereafter...