Weed v. London & Lancashire Fire Ins. Co.

• Decision Date: 08 October 1889
• Citation: 22 N.E. 229,116 N.Y. 106
• Court: New York Court of Appeals Court of Appeals
• Parties: WEED v. LONDON & LANCASHIRE FIRE INS. CO.

116 N.Y. 106

22 N.E. 229

WEED

v.LONDON & LANCASHIRE FIRE INS. CO.¹

Court of Appeals of New York,

Second Division.

Oct. 8, 1889.

Appeal from an order of the general term of the third judicial department, which reversed a judgment entered in favor of the plaintiff upon the report of a referee, and directed a new trial. The action was upon a policy of insurance against fire upon a gristmill and machinery, issued January 13, 1882, which purported to insure ‘estate of O. Richards,’ and was made payable to the plaintiff ‘mortgagee as his claim might appear.’ Orson Richards, in his life-time, was the owner of the property in question. Having mortgaged it to the plaintiff, he and his wife, in May, 1875, executed and delivered to Dean Sage, of the city of Brooklyn, a deed therefor, in trust to sell the same, and distribute the proceeds of such sale pro rata among the creditors of said Richards, and providing that the residue of said proceeds after the payment of the debts should be reconveyed to said Richards, or to his heirs or legal representatives. Richards died intestate and insolvent in September, 1879, leaving a widow and three children. The property was destroyed by fire February 4, 1882. The policy in suit was issued by an agent named Ketcham, who resided a few miles from the mill, and who had known Richards in his life-time, and knew that he had failed and knew of his death. He did not know of the trust-deed to Sage. He learned of the loss within 24 hours after the fire, and immediately notified the defendant by telegram. After the fire one J. H. Rice, an insurance adjuster, acted for the defendant in the matter of the loss. He testified that he had ‘entire and sole charge of the loss from a day or two after the fire until the suit.’ The policy required that immediate notice of loss should be given by the insured to the company or its agents, and that proofs of the loss should be delivered within 14 days after the fire. No notice of the loss was given to the company other than that sent by telegram by Ketcham. Proofs of loss were served on the company on February 24th, 20 days after the fire, and were retained by them until April 22d. On that day Rice, in response to a request from the plaintiff for payment, wrote to the plaintiff stating the proofs were not in conformity to the requirements of the policy, and pointing out defects, and, among others, that it was not shown that the Richard estate had title to the property destroyed. Negotiations were thereupon had in respect to additional proofs, and subsequently other and additional proofs were furnished. The policy contained other conditions to the effect that ‘if the interest of the insured in the property, whether as owner, trustee, * * * or otherwise, be not truly stated in this policy, then in every such case this policy shall be void. If the interest of the insured in the property be any other than the entire, unconditional, and sole ownership of the property, for the use and benefit of the assured, it must be so represented to the company, and so expressed in the written part of the policy; otherwise the policy shall be void.’ The referee found as facts that Rice was informed and knew of the Sage deed, and understood the facts concerning the title to the property; and that, in conducting the negotiations in reference to additional proofs of loss, he induced the belief that the loss would be paid if such proofs were furnished. He decided as conclusions of law that notice of loss was given in due time, and service of proofs within 14 days, as required by the policy, was waived; that, by the use of the indefinite phrase ‘estate of Richards,’ the defendant intended to and did waive the condition relating to sole and entire ownership, and having, through its agent, Rice, knowledge of the condition of the title, it did, by his acts, subsequent to the fire, waive any defense based upon the breach of the condition of the policy in reference thereto.

G. B. Wellington, for appellant.

A. H. Sawyer, for respondent.

BROWN, J., ( after stating the facts as above.)

The defendant, by the policy in question, undertook to insure ‘the estate of O. Richards' against loss or damage by fire upon property described as a ‘grist-mill and fixed and movable machinery,’ etc. The referee found as facts that the defendant intended to insure such persons, and their interests in said premises, as were or might be represented under the name or title aforesaid. The contract cannot, therefore, be considered as one insuring the interest of the plaintiff as mortgagee. The undertaking to pay the loss to him is collateral to, and dependant upon, the principal undertaking to insure the estate of Richards; and, if the evidence shows a breach of the conditions of the policy by the assured, the plaintiff cannot recover. Grosvenor v. Insurance Co., 17 N. Y. 391;Bidwell v. Insurance Co., 19 N. Y. 179;Perry v. Insurance Co., 61 N. Y. 214. The referee further found that at the time of the issuing of the policy the interest of the ‘estate of O. Richards' in the property insured was not the entire, unconditional, and sole ownership thereof, for the use and benefit of the assured. One of the conditions of the policy was that it should be void if the interest of the assured in the property was other than the entire, unconditional, and sole ownership thereof; and, under the finding I have quoted, that Richards' estate was not the entire and unconditional owner at the time the policy was issued, the insurance was void, and plaintiff was not entitled to recover, unless the condition quoted was dispensed with or in some way obviated or waived. Lasher v. Insurance Co., 86 N. Y. 423. The referee found that such condition was waived- First, by the employment in the policy of the indefinate phrase ‘estate of O. Richard;’ second, by negotiation between Rice, the defendant's adjuster, and the plaintiff and assured subsequent to the loss, and after full information about the facts relating to the title to the property. When an agent who effects the insurance has knowledge, or is informed by the assured, of the true condition of the assured's interest in the property, and with such knowledge accepts the premium and delivers the policy, his acts will be deemed a waiver of such provisions of the policy as would be inconsistent with the real facts of the case. VanSchoick v. Insurance Co., 68 N. Y. 434. In the case cited the policy contained a provision that if the building insured was upon leased ground it must be so represented to the company, and expressed in the policy; otherwise, the insurance would be void. The building insured was on leased ground, and was known so to be to the agent who issued the policy. The court held the condition waived, saying: ‘We cannot suppose that either the plaintiff or defendant would do the utterly absurd thing of making, with deliberation and knowledge, a contract that was void from inception, and was in contradiction of the facts and statements of the negotiation.’ Insurance policies must, however, like other written contracts, be construed so as to give effect to the intent of the parties, as indicated by the language employed. Words and phrases must be taken in their ordinary and popular sense, unless it is apparent that they have been used in a different sense; and the knowledge possessed by the parties to the subject-matter of the contract is always a guide to ascertain the meaning of the terms used. Such a construction should be adopted as will uphold the whole contract, and give effect to all its provisions, in preference to one that will render some of its provisions nugatory. We should therefore endeavor to give to phrase ‘estate of Richards' such meaning as will harmonize it with the condition of the policy, if we can do so without doing violence to the words used.

It is not necessary to the validity of the policy that the name of the assured should appear in the contract. He may be described in other ways than by name; and, if the description is imperfect or ambiguous, extrinsic evidence may be received to ascertain the meaning and the intent of the parties in its use. Burrows v. Turner, 24 Wend. 277;Davis v. Boardman, 12 Mass. 80. Applying these rules of construction to the evidence in this case, it leaves no reasonable doubt as to the persons intended by the expression ‘estate of O. Richards.’ No doubt the phrase might include the administrator; so it might,...