Sandford v. Trust Fire Insurance , 11 Paige Ch. 547 ( 1845 )

The Chancellor.

From the view I have taken of this case, it is not necessary for me to decide the question whether a parol agreement of insurance, not evidenced by writing in any way, is valid and binding; or whether there is any thing in the charter of this particular corporation to prohibit it from contracting to insure, by a mere parol agreement, not evidenced by writing and subscribed by some of the agents of the corporation. In England, the stamp act necessarily requires all contracts for insurance to be in writing. The French code also requires the contract of insurance to be in writing. (Com. Code of Fr. Book 2, art. 332.) And the Spanish law is the same, in substance. (Span. Code of Com. art. 812, 841.) Millar says the importance of the contract of insurance, and the singularity of those obligations which it is intended to create, have, in all commercial states, rendered a deed in writing essential to its validity. (Millar on Ins. 30.) But he refers to no authority ; and I have not been able to find any thing in the common law of England, rendering it absolutely necessary that contracts for insurance should be in writing; although the custom has been, so far as I can ascertain, to have sonde written evidence of the agreement to insure. A policy of insurance necessarily imports a written contract, as the name of the instrument, derived from the Italian, necessarily implies. I am not prepared to say; however, that in this state there may not be a valid parol agreement, founded upon a good consideration, to execute a written policy Of insurance, which a court of equity may enforce ; although there is no written evidence whatever of the agreement, or of any of its stipulations or conditions.

The agreement in the case under consideration; however, was clearly not a consummated contract of insurance; and neither of the parties could have so understood it, at the timé it was entered into. But it was an agreement, on the part of Wheelwright, that the corporation, of which he was the president, would give to Cowles, Brother & Co. a policy, in the usual form and lipón the usual conditions of insurance by such corporations, insuring $5000 upon the premises, for one year from the first of July, 1839, upon being paid the premium of one and a half per cent for the risk; such risk to be apportioned as then stated, unless the assured, previous to the consummation of the insurance, should desire to have such apportionment of thé risk changed. And both parties unquestionably understood that if a loss should occur before the insurance could be consummated in the usual form, the corporation would be answerable therefor. But as there was no agreement to give credit for the premium, and no implied agreement for a credit beyond the time which was necessary to prepare the policy, the neglect of Cowles, Brother,& Co. to pay. the premium after they were called upon to complete and consummate the insurance, would of itself have been such an abandonment of the agreement, of the first of July, 1889, as to deprive them of all right to claim pay for the subsequent loss; either at law or in equity. In this case also, the notice given by H. B. Cowles, a few days after the first of July, that the apportionment of the risk as then specified was not right, and that he wished it changed, was of itself an abandonment, or at least, a suspension of the contract, until the apportionment should be adjusted according to his wishes. And he having been expressly notified that if he did not come to the office and complete the 'arrangement by a particular time, the insurance company would no longer consider itself hol'den to insure, ór to be responsible for any loss that might thereafter occur, his neglect to attend, as requested, put an end to the «previous agreement to insure; so that neither party was thereafter bound, either at law or in equity, to proceed further in the consummation of the bargain. The notice, given by the corporation, was an election on their part to abandon their claim to the premium unless the contract should be completed, if they ever had any legal claim upon Cowles, Brother & Co. therefor. And the neglect of the latter to pay the premium, or to enable the insurance company to execute and tender the policy, because the distribution óf the risk was not ascertained, put an end to all pretence of claim on the part of those who were to have been insured, for any subsequent loss they might sustain. And after what occurred at the last interview between Dammers and H. B. Cowles^ previous to the fire, in connection with the other evidence in this case, I am perfectly satisfied that Cowles, Brother & Co. Would not have considered themselves under any legal or even honorary obligation to pay the premium had no subsequent loss taken place.

In deciding this case, I lay entirely out of view what H. B. Cowles testified to, on his examination before, the master in the creditor’s suit. The insurance company not being a party to that proceeding, had no right to cross-examine; and his exami-

nation is not legal evidence against the respondents in this case, for any purpose. Besides, he was directly interested against the insurance company in relation to the matter of that examination. For whatever might be recovered by the receiver would, at the termination of the creditor’s suit, either be applied to pay the debt of the firm, or if the complainant in that suit did not succeed in obtaining a decree against Cowles, Brother & Co., the funds in the hands of the receiver would of course be paid over to them. The proceedings upon the creditor’s bill, therefore, are not legal evidence, in this suit, for any other purpose than to show that the present complainant had been duly appointed a receiver of the property and effects of the firm of Cowles, Brother & Co., and the time of such appointment; and that they had assigned such property and effects to the receiver, to abide* •the further order of the court in that suit. And upon the evidence which was properly before the assistant vice chancellor, I have no doubt that he arrived at the correct conclusion, that the appellants were not liable, either at law or in equity, for the loss occasioned by the fire of August, 1839. ,

The decree appealed from is therefore affirmed, with costs.