Mitchell v. Lycoming Mutual Insurance , 51 Pa. 402 ( 1866 )

The opinion of the court was delivered, by

Agnew, J.

We 'agree with the learned judge in the court below that this policy was only upon the mill, machinery, engine and fixtures, excluding the flour, barrels, &c., and the valuation therefore was $11,810. We also concur with him, that a breach of the covenant not to insure beyond two-thirds of the estimated value, was a forfeiture of the policy. This was .our judgment when this case was here before (12 Wright 368), and the point had been decided in Lycoming Ins. Co. v. Slockbower, 2 Casey 199. We see no reason to retract. Good faith is the life-breath of insurance where a heavy risk is taken for a small premium. The right to insure ad libitum is detrimental to good faith, leading always to carelessness and often to fraud. The limitation of the insurance to two-thirds of the estimated value is therefore essential to secure fidelity, and to make the assured watchful over his own interest in the remainder. It is a fundamental condition in procuring the policy. Its violation runs back, therefore, to the issuing of the policy, and undermines the very ground on which its origin stands; and forfeiture is the necessary penalty and protection of the contract. The covenant against insurance over two-thirds has no relation to the pro rata clause, which refers to additional insurance when less than two-thirds. The over-insurance was attempted to be surmounted by the alleged invalidity of the subsequent policies. We think the court adopted the proper distinction — if they were void at the time of the loss they constituted no obstacle; but if voidable only by reason of some breach of condition enabling the insurers to avoid them but which they had waived, the over-insurance undoubtedly existed. None of the cited cases to be looked upon as authority carry the doctrine beyond. Omitting the Pittsburgh policies, the two granted by the Cumberland Yalley Company, added to the one in suit, made the total insurance $>8500, which is more than the two-thirds of the estimated value. These two were not void, either .in the beginning or afterwards, and had not expired by efflux of time, and were actually sued and paid. The plaintiff was therefore driven to contend that they did not cover the same property, and complains here that this fact ought to have been submitted to the jury. Had the question been one of identity in the application of the terms of the description to the property described, it belonged to the jury. But this was not the real question before the court. There was no dispute as to the identity of the property described, but the real question was, whether the terms of the two Cumberland Yalley policies were substantially the same as the terms of the policy in suit. This was a subject of comparison between the writings, and not of extrinsic proof; unless, indeed, the plaintiff had given evidence of the property described which would vary the application of the language to the subjects of description in the different policies. But, without this proof, the jury would have nothing to determine their decision but the language of the policies, which would be to refer to them the mere construction of the writings, contrary to the rule which gives it to the court. We agree with the learned judge that substantially the description in the different policies is the same.

Failing in this, the plaintiff next resorted to the allegation that the defendants knew the fact of over-insurance and waived it. There is no proof of actual knowledge — the contrary is expressly proved. But McCabe, the agent who consented to the assignment of the policy by Mitchell to Ralston, Ellis and Carter, undoubtedly did know of it, and made a memorandum of the subsequent policies in the same writing containing his consent. This brings up the extent of his authority and his power to commit the company by his knowledge. He held a written appointment as local agent of the company under a bond for his faithful performance of the duties required of him in accordance with the by-laws. The section read in evidence made it the duty of the agent to take surveys and receive applications for insurance, and, when required, to examine into the circumstances of a loss and make report. Under the regulations printed on the back of the policy the agent is also empowered to approve of assignments of the policy following a sale of the property, and to demand payment of assessments. Now it is very clear none of these powers authorize an agent to accept notice of over-insurance, and visit the company with a waiver of its consequences. Indeed no notice is required to be given of additional insurance within the limit until the assured comes to make proof of his loss, and then merely to enable the company to avail itself of its right to pay but pro rata. But the act of over-insurance is a forbidden act and not the subject of authorized waiver, by any officer or agent under the rules and regulations prescribed. It is on the principle of estoppel and not of authority, the waiver takes effect. The knowledge of a mere agent unauthorized to represent the company beyond the specific powers committed to him, cannot be the ground of estoppel in a matter unconnected with the exercise of his powers. This can take place only when the knowledge, lying at the foundation of the estoppel, comes home to these officers who exercise the corporate powers of the company, or to an agent whose powers relate to the very subject out of which the estoppel arises. These general principles are made doubly binding upon the assured in this instance by his relation. He becomes a member of the corporation by the act of insurance, and therefore bound to become informed of its rules and regulations: Hackney v. Allegheny Mutual Ins. Co., 4 Barr 185. These views dispose of the testimony of Snyder, the notice of assessment and acknowledgment of payment endorsed, and McCabe’s written memorandum. His being engaged in the notification or collection of assessments or approval of the assignment, carried with it no authority to receive notice of the over-insurance and no duty to communicate it to the company. As a member of this company, the plaintiff was no stranger to the powers committed to the local agents under its rules and regulations. He had no right to believe that notice to this agent could relieve him from the forfeiture of his policy, or that his knowledge was notice to the company. No implied waiver or estoppel, therefore, arose out of his knowledge.

This disposes of all the questions in the cause.

Judgment affirmed.