Hicks v. . British Am. Assur. Co. , 162 N.Y. 284 ( 1900 )

It seems to me that we cannot hold that an action may not be brought for the breach of an agreement to insure without distinctly overruling Ellis v. Albany City Fire InsuranceCompany (50 N.Y. 402); Angell v. Hartford Fire Ins. Co. (59 N.Y. 171); Van Loan v. Farmers' M.F. Ins. Assn. (90 N.Y. 281), and Post v. Ætna Ins. Co. (43 Barb. 351). I do not think that the evidence wholly justifies the statement that the action was clearly tried upon the theory of an executed contract of insurance. It is true that the complaint, and the evidence given in support thereof, were undoubtedly appropriate to such an action; but it does not follow that they were, therefore, not appropriate to an action for damages arising out of the alleged breach of the contract to insure. It frequently happens that the same pleadings and proofs will support different causes of actions which are governed by inconsistent legal principles. I am prepared to agree with Chief Judge PARKER in holding that under the law providing for the standard policy it is the logical rule to decide that every contract for insurance made with an authorized agent, whether the same be oral or written, constitutes a valid contract of insurance which requires nothing to complete it except the written evidence of its terms and conditions. The cases ofLipman v. N.F. Ins. Co. (121 N.Y. 454); Karelsen v. SunFire Office (122 N.Y. 545), and Underwood v. Greenwich Ins.Co. (161 N.Y. 413), cited by him, clearly demonstrate that this is the more recent view of our court. But that is very different from deciding that, when a plaintiff claims that a contract for insurance has been made and broken, and a defendant insurance company denies that any such contract was ever made, a plaintiff can recover only upon the theory of an executed and completed contract. Such a rule would result in exempting insurance companies from the application of one of the most familiar principles of the law of contracts. It is a rule of universal application that when a party to a contract refuses to execute it, the other party thereto may treat it as rescinded and sue for the breach. (Beach on Modern Law of Contracts, sec. 788.) In such a case as this the difference in the character of the action is one of form rather than of substance, because the recovery in either case would be the same. But let us assume that it is now the established law that a party claiming under an oral or a written memorandum for insurance must recover, if at all, upon the terms and conditions of a completed policy which are to be read into his tentative contract. It is conceded that Hobart was the duly authorized agent of the defendant for the purpose of issuing policies of insurance. He was provided with blanks for that purpose, which needed only to be countersigned by him to make them executed and binding contracts. The right to issue policies included the right to refuse to issue them. Hobart's agreement to issue a policy was the act of the company. Whose act was Hobart's refusal to issue a policy after he had bound the company by his agreement to issue one?

To my mind there is no escape from the conclusion that if he acted for the company in making the agreement, he acted in the same capacity in breaking it. There was a dispute of testimony as to whether he ever made such an agreement with plaintiff's assignor. This presented a question of fact which the jury have settled in favor of the plaintiff. If, then, we treat this as an action upon the policy, and hold the defendant responsible for the acts of Hobart, what is the effect of such acts? The answer seems obvious. If the defendant, through its proper officers, had issued a policy of insurance, and after a loss under the same, had denied its liability on the ground that it never made any such contract, it would be a distinct waiver of the right to demand proofs of loss. (Shaw v. Republic Life Ins. Co.,69 N.Y. 286; Stokes v. Mackay, 147 N.Y. 223; People v. EmpireMut. Life Ins. Co., 92 N.Y. 105; May on Insurance, sec. 469; Porter on Insurance [American Notes by Darrach, 1889], star page 194; Richards on Ins. sec. 81; Grattan v. Met. Life Ins. Co.,80 N.Y. 281; Payn v. Mutual Relief Society, 6 N.Y.S.R. 365;Knickerbocker Life Ins. Co. v. Pendleton, 112 U.S. 696;Brink v. Hanover Fire Ins. Co., 80 N.Y. 113.)

Is the result any different because these things were done by an agent? As we have seen, this agent had authority to issue, and, therefore, to refuse to issue policies. His agreement to issue a policy was the act of his principal. His refusal to issue a policy after he had agreed to do so falls within the same category. Under these circumstances the refusal of the agent has the same effect as though it had actually been made by the principal. Indeed, for the purposes of the particular act, he was the principal. (Goodwin v. Mass. Mut. Life Ins. Co., 73 N.Y. 490 -491.)

But it is suggested that the policy provides that no agent shall have power to waive any of the conditions thereof. This is undoubtedly true after a policy has been issued, and the limited powers of the agent are spent. But in the case before us, the acts of the agent were within the scope of his authority, for until the policy was actually issued he was the alter ego of the defendant. At every instant, within the period covered by the negotiations between Hobart and the plaintiff's assignor, the former was acting within the scope of his authority. As the case stands, it is just as though the defendant itself had refused to issue a policy after it had agreed to do so. Under these circumstances the plaintiff and her assignor were not required to present proofs of loss, because they had been absolved from this duty by the acts of the defendant.

If these views are adopted, it follows that the charge of the trial court was substantially correct, wherein it stated that it was not necessary for the plaintiff to serve proofs of loss; and by the same rule it would seem to follow that the instructions relating to the waiver by Hobart were harmless because they were immaterial.

GRAY, O'BRIEN and CULLEN, JJ., concur with PARKER, Ch. J., for reversal. LANDON and WERNER, JJ., read for affirmance and HAIGHT, J., concurs with LANDON, J.

Judgment reversed, etc.