Underwood v. Greenwich Ins. Co.

• Decision Date: 09 January 1900
• Citation: 55 N.E. 936,161 N.Y. 413
• Parties: UNDERWOOD et al. v. GREENWICH INS. CO.
• Court: New York Court of Appeals Court of Appeals

161 N.Y. 413

55 N.E. 936

UNDERWOOD et al.

v.GREENWICH INS. CO.

Court of Appeals of New York.

Jan. 9, 1900.

Appeal from supreme court, appellate division, First department.

Action by Emory M. Van Tassel against the Greenwich Insurance Company. From a judgment of the appellate division (51 N. Y. Supp. 79) affirming a judgment in favor of plaintiff, defendant appeals. On death of plaintiff, William J. Underwood and others, executors, were substituted as plaintiffs. Reversed.

Bartlett, Martin, and Vann, JJ., dissenting.

John Notman, for appellant.

George Richards, for respondents.

O'BRIEN, J.

In this case the trial court directed a verdict for the plaintiff for nearly $14,000 for a loss arising upon a contract of insurance. The defendant's counsel excepted to this direction, and requested the court to submit the case to the jury, which request was refused, and an exception taken. The learned trial court virtually held that none of the facts pleaded, or as to which proof was offered, constituted any defense to the action. The proof offered by the defendant was excluded upon the plaintiff's objection, and to this ruling in various forms an exception was taken.

It is alleged in the complaint that on or about the 11th day of January, 1889, the defendant delivered to the plaintiff's intestate its policy of insurance in the standard form, whereby it insured his building for the sum of $10,000 for one year from the 1st of January of that year. It then alleges that this policy was renewed during the two following years by two successive renewals, and receipts delivered by the defendant to the plaintiffs' intestate as owner of the property. The most material allegation then follows, which is that the defendant, on or about the 1st of January, 1891, executed and delivered to the plaintiff, in the form of a binding slip, a further renewal of the policy for another term of one year, which expired on the 1st of January, 1892. This binder, or ‘binding slip,’ as it is called in the pleading, appears in the record, and is in the following words:

‘189

‘Beecher & Benedict, New York:

‘Insure E. M. Van Tassel $10,000 for 12 months on Building N. E. corner 13th Ave. & W. 11th Street, N. Y. City, In Store Binding this 1 day of January, at noon (this memo. to be void on delivery of the policy at the office of Beecher and Benedict).

Amount. $10,000.

Accepted.

‘Company.

‘Greenwich.

‘Renewal.

‘559,298 not in force. Wm. Adams.’

There is some confusion in the dates of the two renewals appearing in the record when compared with that of the original policy, which may be accounted for either by a mistake of the printer, or, as is more probable, by the withdrawal or cancellation by the defendant of the last renewal receipt sent out by mistake, and the substitution of the binder in place of it; since the latter states, in the last clause, that the renewal is not in force. But this is not material, except possibly so far as the intention of the defendant not to renew the old policy is disclosed. If it was the intention of the parties to renew the old insurance, that would have been accomplished by allowing the last renewal receipt to remain in force, and the binder would have been unnecessary.

The defendant denied that it ever made or delivered the contract upon which the action is based, and for a separate defense alleged the following facts, viz.: That on or about the 30th day of December, 1890, the plaintiff, through his brokers, applied to the defendant for insurance of $10,000 on the premises in question for one year from the 1st of January following; that upon such application, and in connection therewith, the brokers submitted to the defendant an application form of such proposed insurance, and at the same time requested that the defendant give them what is known as a ‘binding slip’ to cover temporarily said risk pending the consideration of such application by the defendant, in accordance with the practice, usage, and understanding then existing and prevailing in the city of New York between insurance brokers and insurance companies, then and there well known to plaintiff's said brokers, namely, that in case said application was declined by the defendant, and notice of declination was given to such brokers, said binding slip immediately then and there ended and fell, and no premium was charged for the time that the same was in force; and that, in case said application was accepted, a policy of insurance in the New York standard form should be issued as of the date when the application was made, the binding slip thereupon marging in said policy, and premiums to be paid from the time the binding slip took effect. The answer then proceeds to state that when this application was made to the defendant by the brokers it did not accept the same, but took it under consideration, and upon the request of the brokers, and in accordance with such usage, practice, and understanding, and not otherwise, it gave to them a binding slip on a form prepared and presented to it by the brokers, which is the binder above set forth. It is then alleged that the binding slip was not a contract or agreement for one year's insurance, and that the words, ‘Insure E. M. Van Tassel $10,000 for 12 months,’ therein contained, simply denoted that, pending the defendant's consideration of the application, it insured the plaintiffs' intestate in that amount in the mantime, until it should decline the application or until it should accept the same and issue a policy therefor in accordance with the usage, practice, and understanding above set forth; that the binding slip was so signed and issued by the defendant, and was so accepted by the brokers, under such usage, practice, and understanding, and not otherwise. It is then alleged that the defendant, on the 7th day of January following, having in the meantime considered such application, and decided to decline it, notified the brokers in writing that such application for $10,000 of insurance for the plaintiff was declined, and that, according to the custom and usage existing in the insurance business in the city of New York, the binding slip and insurance carried thereby was held terminated and ended upon such notice; that this understanding and usage were known and understood by the brokers, who accepted the declination, and acquiesced in the same, and thereupon attempted to procure insurance for the plaintiff elsewhere. It is further stated in the answer that the defendant sent with the notice of declination to the brokers an offer to accept a $5,000 risk, if wanted by the plaintiffs' intestate, but that such offer was not accepted by the brokers, nor was any notice of acceptance given to the defendant. The notice referred to in the answer appears in full in the record, bears date January 7, 1891, and is addressed to the brokers in the form of a letter signed by the defendant's secretary, the body of which is in the following words: ‘Your application for renewal of insurance for E. H. Van Tassel, at n/e cor. 13 Ave. & W. 11 St. is declined for $10,000; would renew for $5,000 if wanted. You will therefore consider that the risk is not held binding by this company for more than $5,000.’ It appears from the pleading and proof given at the trial that on the 13th or 14th of January, 1891, the premises mentioned in the binding slip were destroyed by fire, and that the owner was damaged thereby in a sum exceeding any insurance in force covering the property.

In the form in which the case is presented by the record, the question really is whether the facts stated in the answer, above referred to, constituted any defense to an action based upon the binding slip above described. The view of the learned court below that reviewed the case upon appeal seems to be that this paper constituted a contract between insurer and insured so complete and perfect in its character and terms that it could not be affected or explained by any evidence of usage, though known and understood by both parties; nor by parol evidence as to the purpose for which it was delivered, or the scope and effect which it was intended to have by the mutual agreement of the parties at the time of delivery.

Before proceeding to discuss the question involved in the case, it may be well to note with all distinctness what this case was and what we decided when it was here upon the former appeal. 151 N. Y. 130, 45 N. E. 365. In the action as then presented the plaintiff sought to recover $5,000 upon the alternative proposition for insurance contained in the letter above quoted. The trial court held that, inasmuch as this proposition had never been accepted, it did not bind the defendant, and so the plaintiff's complaint was dismissed. This court held, as I understand the opinion, that there could be no recovery upon this unaccepted proposition of the company, and, if there could be a recovery at all, it must be, not upon the letter, but upon the binder. The case comes here now upon an amended complaint and a new answer, interposing a new defense presenting issues of fact and law that, in the nature of things, could not have been considered or decided upon the former appeal. It is very correctly stated in the opinion of the court below that on the former action this court did not undertake to give definition to the full contract relations between the parties and arising upon the binding slip, inasmuch as it was not determined whether the binding slip was a renewal of the policy or an independent contract of insurance. It is very dvident, as the learned court there remarked, that it was either one or the other. It may also be observed that the learned court below did not attempt to give any definition of the relations of the parties in that respect either, contenting itself with the statement that, if it were a renewal, then the insurance effected by it became subject to all the conditions of the policy, while, if an independent arrangement, it amounted...