Phenix Ins. Co. of Brooklyn v. Munger

• Decision Date: 11 June 1892
• Citation: 49 Kan. 178,30 P. 120
• Parties: THE PHENIX INSURANCE COMPANY v. FRANK N. MUNGER
• Court: Kansas Supreme Court

30 P. 120

49 Kan. 178

THE PHENIX INSURANCE COMPANY v. FRANK N. MUNGER

Supreme Court of Kansas

June 11, 1892

Error from Republic District Court.

THE facts are fully stated in the opinion. Judgment for plaintiff, Munger, at the May term, 1889. The defendant Company comes to this court.

Judgment reversed.

T. M Noble, and W. C. Webb, for plaintiff in error:

Munger testified as to Bell's statements, as follows:

"Mr Bell told me it was not necessary; that he never had made proofs of any losses that he had had in town, and that none of the companies doing business here ever made proofs. that he knew of. He told me that he had notified the company of the loss, and that there would undoubtedly be an agent here in a very few days to attend to it. He also cited me to a building on the corner that he had a risk on; that they made no proof, and that the adjuster had been here and adjusted the loss. Told me it would be better to let it stand until the adjuster came, and then if he required proof I could make it, or he could ask me any questions he saw fit about the fire."

Every word of that "testimony" (so-called) was incompetent, and it was error to admit it. Munger had on that very day, only "two days after the fire," read over his policy, and his attention was "attracted particularly" to that clause in the policy which "demanded proof of loss within 30 days after the fire." He had no right to "suppose" Bell could waive or dispense with the written requirement which he had seen and read in the policy. A motion was promptly made to strike out this incompetent testimony, but the motion was promptly overruled by the court. And then Munger was permitted, over objection and exception, to tell five different times what he "supposed" respecting Bell's being an agent of the company, and as such what he was capable of doing, and what "connection" there was between his "supposition" respecting Bell's capacity and the "supposed fact that Bell was agent of the Phenix Insurance Company." And motions to strike out this incompetent stuff (it does not rise to the dignity of testimony) were as promptly overruled as the objections first made to it. Munger said that about a week later he asked Bell if he had heard from the company, and Bell said he had, and "their man would be here to attend to the loss in a few days." This proves nothing; but it is explicitly shown elsewhere that Bell was not authorized nor even requested to communicate any information to Munger, nor to show him any letters, nor to adjust any losses whatever for defendant, nor to adjust the loss of Munger, nor to waive any condition of the policy.

Geo. S Simonds was next called by Munger. He had been "agent for different insurance companies for about 10 years, as local or recording agent." This witness was asked if he "had become familiar with the practice and rules of insurance business, in reference to losses, and the conduct of the business after the loss has occurred, in this vicinity." This question was objected to by defendant as being incompetent, irrelevant, and immaterial, which objection was by the court overruled, to which ruling the defendant duly excepted.

Now we submit that the ruling of the court in all these instances was gross error. Not one of the questions was competent at all. "Custom," and especially local custom, never overrides or destroys plain written contracts. The court below refused to permit the witness Bell to testify to the "custom" of insurers. How it could change its rulings, and allow the questions and the incompetent testimony last above quoted, is amazing. No authority can be found in the books which will sustain the court below in overruling defendant's objections. In the case of Graham v. Trimmer, 6 Kan. 230, there was no express contract between the parties, and it was held competent to prove the "customary method" of measuring certain work; but in the opinion this court (6 Kan. 237) says:

"It is, however, to be remarked that evidence of the nature referred to will not have the effect of changing or affecting an express contract of parties in regard to the subject-matter to which it is directed."

In the case at bar, the contract was alike express and written, and was between the Phenix Insurance Company and Munger; yet the court below allowed proof of a "local custom" said to exist between strangers to the contract in question to be given in evidence to destroy or vary that contract!

In Stout v. McLachlin, 38 Kan. 120, there was a written contract, which is copied in the opinion, at page 122. An attempt was made to prove a custom on the part of Wilson, one of the parties to the contract, which was at variance with the written contract. This court held that such proof was incompetent. It states the well-understood rule respecting "usage and custom," and how far they are admissible when the party to be affected has knowledge of them, and says:

"The proof of usage can only be received to show the intention or understanding of the parties in the absence of specific agreement, or to explain the terms of a written contract."

And in that case this court quotes with approbation from the opinion of Mr. Justice Miller, in Partridge v. Insurance Company, 15 Wall. 375, where it is explicitly asserted that proof of custom cannot be made "to add to, vary or contradict the well-expressed intention of the parties made in writing." See, also, other cases cited by this court in 38 Kan. 125, 126.

Had the local agent of defendant at Belleville any power or authority, after the policy contract had been delivered and accepted by the parties thereto, and after a loss had occurred, to waive its written conditions or provisions? The provisions of the policy issued to Munger are plain and explicit. That they are valid and mean something, is shown by innumerable authorities. Wood, Ins., 2d ed., §§ 144, 436, 437.

That a policy of insurance is a contract, binding upon both the insured and insurer; that the provisions requiring proofs of loss within a certain time are valid; and that such provisions are conditions precedent to the right to recover upon the policy, are questions that have been answered in the affirmative so many times that they are not, in the absence of special circumstances, open to dispute or argument; and it is hardly necessary to more than refer to some of the many cases declaring this to be well-settled law. See Worsley v Wood, 6 Term R. 710; Columbian Fire Insurance Co. v. Lawrence, 10 Pet. 107; Noonan v. Hartford Insurance Co., 21 Mo. 81; N. W. Insurance Co. v. Atkins, 3 Bush, 328; Central City Insurance Co. v. Oates, 18 Ins. L. J. 761; West v. Lockyer, 2 H. Bl. R. 574; Blakely v. Insurance Company, 20 Wis. 205, 209; Blossom v. Insurance Company, 64 N.Y. 162; Angell, Ins., §§ 223-227.

This court, in the case of Dwelling-House Insurance Co. v. Hardie, 37 Kan. 674, 676, plainly recognizes the right of the parties to the contract to insert in the policy express provisions for its forfeiture, and that such provisions, when made a part of the contract itself, are valid.

In this entire case, from the petition to final judgment, there is not one word stating or showing that Munger, either within "six days" next after the fire, or at any other time, gave any notice, oral or written, to the company, until his pretended proofs of loss, made on 28th February, 1888, were forwarded to Chicago, and respecting which General Agent Burch wrote to Munger on 5th March, 1888. True, in his petition, Munger alleges that "after said loss he performed each and all of the matters and things required of him to be done by the terms of said policy, and has and did perform all the conditions precedent on his part, except," etc. He thus shows that he knew what was required of him. But this allegation was denied by the defendant, and at the trial he neither proved nor offered to prove that he had given or served any "notice" at all.

The powers of a mere local or soliciting agent are not so extensive respecting contracts already made as in negotiations prior to the issuing of the policy; and several recent cases decide that the local agent has no power to change, modify or waive the conditions of policies already issued requiring the assent of the company to any change which affects the risk or liability of the company: Kyte v. Assurance Company, 144 Mass. 43; Queens Insurance Co. v. Young, 5 So. Rep. 116. The following cases in effect decide the same way: Bush v. Fire Insurance Company, 63 N.Y. 531; Wilson v. Insurance Company, 14 id. 418; Sohnes v. Insurance Company, 121 Mass. 439; Reynolds v. Insurance Company, 36 Mich. 131.

In determining the authority of an insurance agent in any particular matter, regard must be had to the manner in which he is held out by the company, and the character of the authority known to have been granted. See numerous cases cited in note 1, page 351, of Am. & Eng. Encyc. of Law, and Southern Life Insurance Co. v. McCain, 96 U.S. 84. Nowhere in the record in this case does it appear that the defendant company, by word or act, or even by silence, held out to Munger or to any one else that Bell was authorized to speak or act for the company in any way beyond the plain letter of his commission. The case of Melleville Fire Insurance Co. v. Mechanics' Association, 43 N.J.L. 458, and other cases where the "policy contained no limitation upon the agent's authority," are not applicable to this case.

Munger knew that no waiver in writing of any clause was indorsed upon the policy. He therefore acted, or omitted to act, at his peril. On this question the authorities are uniform:

"Notice to an agent is notice to the principal only when it is accepted while engaged in the business of the principal within the scope of his...