The Farmers & Merchants' Ins. Co. v. Chesnut

Decision Date31 January 1869
Citation50 Ill. 111,99 Am.Dec. 492,1869 WL 5184
PartiesTHE FARMERS & MERCHANTS' INSURANCE COMPANYv.JOHN A. CHESNUT et al.
CourtIllinois Supreme Court

OPINION TEXT STARTS HERE

APPEAL from the Circuit Court of Adams county; the Hon. JOSEPH SIBLEY, Judge, presiding.

The facts in this case are very fully presented in the opinion of the court.

Messrs. SKINNER & MARSH, for the appellants. The application for insurance is a plain, clear warranty, part of the contract of insurance, and its truth constitutes a condition precedent to the taking effect of the policy; or, in other words, if the description as to other buildings within the 100 feet, be shown untrue, not to disclose all of them, or not fully to answer the question relative to them, and affecting, in any possible view, the risk, the policy becomes void from the beginning. And it is immaterial whether the company knew of the existence of the other building or not, or, indeed, whether it did or did not, in a greater or less degree, increase the risk, because such is the written contract the parties have made; by it their rights are fixed, and no parol evidence or information can affect or vary the legal force of it.

Nor is it material whether not naming the other building was the result of accident or intention. By the contract the insured guaranteed that the application fully and truly set forth all the buildings within the 100 feet, and agreed that if it did not, the policy should be void, and by that contract only is the insurer bound.

The following cases fully sustain this position: 4 Hill, 188, 190 to 193; 2 Selden, 53; 18 N. Y. R. 373; 2 Denio, 75; 10 Barb. 285; 14 ib. 383; 6 Cush. 42; 7 Cush. 175; 3 Gray, 580; 1 Allen, 305; 7 Watts and Serg. 348; 1 Story's R. 57; 31 Maine, 219; 7 Gray, 364.

A mere promise to pay according to the terms of a written paper, or policy, void from the beginning, is nudum pactum.

If authority may be exercised by secretary or agent, without the sanction of the directors or executive committee, they are, in effect, the corporation, and the charter vesting the power in the directors and executive committee, is a dead letter. Power reposed by law in certain officers of a corporation, can alone be exercised by them--it cannot be delegated, because the law has determined the medium of its exercise. 7 Cow. 462, 464, 465; 12 Cush. 469, 471; 23 Penn. State R. 272; 24 ib. 320; 6 Cush. 42, 49. A warranty in insurance cannot be affected by any parol evidence, or notice, and what is in writing by agreement of the parties, as in this case, cannot rest in parol, but if it could, notice to an agent not authorized to issue policies--make contracts of insurance--would not be notice to the company.

Messrs. WHEAT & MARCY, for the appellees.

The adjustment, settlement, and promise to pay, was a new contract, governed by the general statute of limitations. The adjustment alone, without any express promise, would sustain an action upon an account stated. Angell on Insurance, sec. 361.

The object of the condition (to sue in 12 months,) is to hold the assured to reasonable diligence by suit, where his claim is disputed. The company cannot object to a want of diligence, induced by reliance in good faith upon its own unconditional assurance that the loss will be paid without controversy. As to waiver of this kind of condition, see Grant v. Lexington Ins. Co. 5 Ind. 23; Ames v. N. Y. Union Ins. Co. 14 N. Y. 254; Stout v. City Fire Ins. Co. 12 Iowa, 371; Mayor &c. of New York v. Hamilton Fire Ins. Co. 10 Bos. 537; Peoria Ins. Co. v. Hall, 12 Mich. 202; Eagle Ins. Co. v. Lafayette Ins. Co. 9 Ind. 443; French v. Lafayette Ins. Co. 5 McLean, 461.

An adjustment made with full knowledge of the facts, is binding, although such facts might have been a bar to the action before adjustment. 2 Phillips' Ins. chap. xxi, sec. 1,815; Dow v. Smith, 1 Caines' N. Y. 32.

Mr. JUSTICE LAWRENCE delivered the opinion of the Court:

This suit was brought by the assignees in bankruptcy of one David Wigle, to recover the insurance effected upon a stock of goods. The fire occurred in February, 1867, and soon after wards the company sent an agent to the locality to investigate the facts and determine the amount of loss. The agent estimated it at $1,852.51, to which Wigle would not agree. Subsequently, Wigle went to Quincy, where the company did its business, and renewed his demand for payment. After considerable negotiation, Wigle agreed to take the amount above named, and the proof of loss was made out on that basis, and signed by Wigle. The company, through its secretary, then gave him the following paper:

+-----------------------------------------------------------+
                ¦W. N. Cline, President,    ¦)¦Capital, $700,000.00.        ¦
                +---------------------------+-+-----------------------------¦
                ¦H. M. Van Frank, V. Pres't,¦)¦Office of the                ¦
                +---------------------------+-+-----------------------------¦
                ¦W. R. Van Frank, Secretary,¦)¦Farmers & Merchants'         ¦
                +---------------------------+-+-----------------------------¦
                ¦Levi Coon, General Agent.  ¦)¦Insurance Co.,               ¦
                +---------------------------+-+-----------------------------¦
                ¦                           ¦ ¦Quincy, Ill., March 11, 1867.¦
                +-----------------------------------------------------------+
                

D. Wigle, Esq.,

West Point, Ill.

Dear Sir: Your proof of loss under policy No. 24,266, is at hand this p. m., and accepted, and will be payable at this office 90 days from this date.

Truly,

W. R. VAN FRANK,

Secretary.

According to the testimony of Wigle, the company not only gave him this paper, but the secretary and general agent, in presence of the president of the company, verbally promised to pay him the amount agreed upon, in 90 days. They ultimately refused to pay, and this suit was brought.

The declaration contained four counts. A demurrer was sustained to the first, and it was not amended. The second and third counts were based upon the alleged settlement and promise to pay in 90 days, and the fourth was upon an account stated. The company, by way of defense, insists that Wigle, in his application for insurance, omitted to mention a wooden building which stood within a few feet of the building insured, and hence the policy, by its terms, was void. It also insists that suit was not brought within one year after the fire, as required by the terms of the policy, and that the so-called settlement was a mere adjustment of the amount of the loss, and not a promise to pay, binding upon the company. It is urged that such a promise, if ever made, was without consideration, and that the officers alleged to have made it had no power thus to bind the company.

The jury, by their verdict, found the promise was made, and we cannot say this finding was against the evidence. Wigle, whose interest in the controversy had terminated by his bankruptcy, testified positively as to the promise. The secretary and general agent deny it, but the president, on his cross-examination, says, he “knew a certain sum had been fixed and agreed upon as the amount to be paid Wigle for his loss, and that Wigle agreed to take it.” Wigle is further supported by the written memorandum furnished to him, as above set forth, and which seems to import something more than a mere adjustment of the amount of the loss. We must, therefore, take the special promise as proven.

Considering then, as we must, that promise to have been made, what effect is to be given to the fact that no mention was made of the wooden building in the application for the insurance. Wigle testifies that after he had signed the written application, he remembered he had made no mention of the wooden building, and went...

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