Swift v. Central Union Fire Ins. Co.

• Decision Date: 01 December 1919
• Docket Number: No. 19865.,19865.
• Citation: 216 S.W. 935,279 Mo. 606
• Parties: SWIFT et al. v. CENTRAL UNION FIRE INS. CO.
• Court: Missouri Supreme Court

216 S.W. 935

279 Mo. 606

SWIFT et al. v. CENTRAL UNION FIRE INS. CO.

No. 19865.

Supreme Court of Missouri, Division No. 1.

December 1, 1919.

Case certified from Circuit Court, Jackson County; Kimbrough Stone, Judge.

Action by William S. Swift and another, copartners under the name of the American Scale Company, against the Central Union Fire Insurance) Company. Judgment for plaintiffs in the circuit court was reversed by the Court of Appeals (217 S. W. 1003) and the case was duly certified to the Supreme Court. Reversed and remanded.

Hugh C. Smith, of Kansas City, Paul E. Bradley, of Joplin, and Leslie J. Lyons, of Kansas City, for appellant.

George H. English, Jr., of Kansas City, for respondents.

GRAVES, J.

This case reaches us upon due certification by the Kansas City Court of Appeals. Majority and minority opinions are here to enlighten us.

The action is one on a parol contract of insurance and such contract, omitting description of the property, is thus averred in the petition:

"Plaintiff states that on or about the 15th day of July, 1913, defendant by its oral contract of insurance made and entered into between the plaintiff and the defendant insured for one year the following described property, the same being the property of these plaintiffs, namely:

"Said contract of insurance so entered into as aforesaid between plaintiffs and defendant was upon the same general terms and conditions so far as those embraced in a certain written contract of insurance made and entered into between the defendant and these plaintiffs under date of July 30, 1912, which said last-named contract or policy of insurance is in words and figures as follows."

Following this was set out in hæc verba an old policy on the same property, which covered a period from noon July 30, 1912, to noon July 30, 1913. Then followed averments of due performance of the contract by plaintiffs, and of the destruction of the property by fire.

Plaintiffs had judgment hi the circuit court, which judgment is reversed by the majority opinion of the Court of Appeals, and the cause remanded.

Defendant urges two reasons for the reversal of the judgment: (1) That the petition failed to state a cause of action, in that it failed to allege a consideration for the pleaded parol contract of insurance; and (2) that the contract proven by the evidence was not the contract pleaded, and that this variance between proof and pleading was fatal.

The trial court, after judgment, permitted the petition to be amended so as to aver a consideration, and this is urged by plaintiff. Defendant says that the petition was fatally defective and it was error to permit its amendment. Such are the issues here.

I. This action is on a parol contract of insurance. Whilst the parties may differ as to the exact nature of the contract, there is no disagreement upon the matter of it being a parol contract. It is further clear that the petition avers no consideration for this parol contract. It is averred that defendant agreed to insure the property of plaintiffs, but in consideration of what is not stated. The petition neither avers the payment of a premium, nor a promise to pay such. In actions upon the kind of contract here sued upon, the petition is fatally defective without an allegation as to a consideration for the promise alleged to have been made by the defendant. In 4 Ency. of Plead. & Prac. it is said:

"In the absence of statutory enactments to the contrary, it is necessary, in actions upon contracts, to allege a consideration, except in the case of contracts under seal, bills of exchange, and negotiable promissory notes, all of which by intendment of law import a consideration."

In Missouri we have a statute (section 2774, R. S. 1909), but it only applies to instruments in writing. It does not cover a parol contract of insurance as here involved: The very recent work, 13 C. J. p. 722, thus states the rule:

"If the contract in suit is under seal it imports a consideration and none need be alleged, and the same is true if the instrument sued on is negotiable according to the law merchant. And by statute in some jurisdiction every written contract is made to import a consideration, and where this is so, it is not necessary for plaintiff to allege the consideration. But the consideration is an essential part of a contract, and, in the absence of statutory relief from the rule, a party declaring on a contract which at common law does not import a consideration must fully and truly state the consideration as well as the promise founded on it, and must prove it as laid. If no consideration is stated, it is a fatal defect which may be taken advantage of by demurrer, motion in arrest of judgment, or writ of error."

The rule above stated is practically a rescript from 9 Cyc. p. 717.

Going to the text-writers, we find that Bliss on Codes Pleading (3d Ed.) D. 400, § 268, says:

"Contracts, to be valid, must be founded upon a consideration, and, except as to those that import it, the consideration must be proved, and, consequently, should be stated. The petition should set it out, or show the contract to be one where the law so imports it as dispense with the proof. Contracts, thus, at common law, importing consideration, are: First, `Deeds,' that is, instruments of writing executed with the formality of a seal, our law thus following the Roman, which validated contracts without consideration if `clothed' with certain, though not the same, formalities, while those unclothed were `nude' and invalid, unless supported by a consideration; and, second, `bills of exchange' and `negotiable promissory notes.'"

See, also, section 308 of same author.

In Chitty's Treatise on Pleading (16th Am. Ed.) vol. 1, star page 300, we find:

"In declaring upon a contract not under seal, it is in all cases necessary to state that it was a contract that imports and implies consideration, as a bill of exchange or promissory note, (i) or expressly to state the particular consideration upon which it was founded; (k) and it is essential that the consideration stated should appear to be legally sufficient to support the promise, for the breach of which the action is brought."

And further, on the same page, we find:

"In declaring upon bills of exchange and promissory notes and some other legal liabilities, the mere statement of the liability which constitutes the consideration is sufficient; (1) but in other cases of simple contracts, it is necessary that the declaration should disclose a consideration, which may consist of either benefit to the defendant, or detriment to the plaintiff; (2) or the promise will appear to be nudum pactum, and the declaration will consequently be insufficient.",

So in the case at bar the promise of the defendant to insure the property of the plaintiffs is a nudum pactum under the facts pleaded. No consideration for the promise Is averred. Boone's Code Pleading, p. 29, § 19, states the rule very tersely in this language:

"Where a consideration is not implied, it is the very gist of an action founded upon contract, and must be specially averred."

As seen from the authorities cited supra, the contract involved here is not one which imports a consideration, or one wherein there could be an implied consideration. In other words, the very gist of this action has been omitted in the pleading.

This court from an early day has recognized this rule. In one of the later cases (county of Montgomery v. Auchley, 92 Mo. loc. cit. 129, 4 S. W. 425) Black, J., said:

"Generally, in cases of simple contracts, the consideration should be formally and expressly pleaded."

See, also, Hart v. Harrison Wire Co., 91 Mo. 418 et seq., 4 S. W. 123; McNulty v. Collins, 7 Mo. 69; Wesson v. Horner, 25 Mo. loc. cit. 82.

In the latter case the answer pleaded an alleged contract or agreement. To this agreement the plaintiff made the point that no consideration was pleaded. This court said:

"The agreement set up in the defendants' answer amounts to no defense to the plaintiffs' action. There is not the slightest consideration set forth or mentioned moving to plaintiffs for any such promise or agreement; it is a mere nudum pactum."

From these authorities it is clear that the petition in this case is defective in its failure to plead a consideration for the contract sued upon herein. To our mind it is fatally defective, but this question we take next.

II. Plaintiffs contend that the defect was cured by amendment after trial and judgment; defendant, contra. We think this...