Wachter v. Phœnix Assurance Co.

1. A principal is bound by the acts or conduct of his agent within the scope of his apparent authority, unless done with knowledge or notice in the person dealing with him of the actual extent of the agent’s authority: Griswold v. Gebbie, 126 Pa. 353; Hubbard v. Tenbrook, 124 Pa. 291. 2. An insurance company that approves, the act of a soliciting agent in indorsing upon a fire policy a clause making it payable to a mortgagee, thereby accredits such agent as authorized to represent it, at least as to that particular risk; and if such agent afterward assure the parties that nothing more need be done to secure the mortgagee, in the event of a sale by the mortgagor, the company will be estopped from alleging the contrary. 3. The court must submit a case to the jury when there is a conflict of testimony, although the testimony tends to raise an estoppel against one of the parties; but if all the facts essential to create the estoppel are admitted or established beyond all controversy, there is no necessity for such submission, as it then becomes the province of the court to declare the law applicable to such facts.

APPEAL BY DEFENDANT FROM THE COURT OF COMMON PLEAS NO. 3 OF PHILADELPHIA COUNTY. No. 37 July Term 1889, Sup. Ct.; court below, No. 345 December Term 1887, C. P. No. 3. On December 3,. 1887, Noah Wachter brought assumpsit against the Phoenix Assurance Company of London, upon a policy of insurance against loss by fire. The defendant pleaded non-assumpsit and payment with leave. •' At the trial on February 11, 1889, the following facts were shown: The defendant company was an English corporation, engaged in the business of insurance against fire within the United States. Its business in this country was under the direction of a general agency at New York city. Washington Irving, one of its special agents, had the general control in its New York office of the business in the state of New Jersey. In the year 1885, Tuller & Wanser of Vineland, New Jersey, were the agents of the company for the southern part of that state, and J. P. Spofford, of Holly Beach, N. J., was under appointment by Tuller & Wanser, ratified on behalf of the company by Irving, to act as a solicitor of insurance of said company. Irving testified that Spofford had no authority to make contracts for the company, his authority being limited to soliciting applications for policies. During the summer of 1885, Charles Otto Wade erected a cottage upon a lot of ground owned by him, at Anglesea, N. J. While it was in process of erection Spofford went to Wade and asked him to have the building insured in the defendant company. Wade agreed to take a policy for $1,000, and such a policy was issued on December 24, 1885, by Tuller & Wanser at Vineland, and delivered to Wade through Spofford, who collected the 'premium upon it. The policy contained the following provisions : “1. If the property be sold or transferred.....or any change take place in title or possession.....whether by legal process or voluntary transfer, or conveyance.....this policy shall be void.” “ 6. The use of general terms, or anything less than a distinct, specific agreement, clearly expressed and indorsed on this policy, shall not be construed as a waiver of any printed or written conditions or restrictions therein.” “ 8. It is a part of this contract that any person, other than the assured, who may have procured this insurance to be taken by this company, shall be deemed to be the agent of the assured named in this policy and not of this company, under any circumstances whatever, or in any transactions relating to this insurance. “ 9. If this policy is made payable in case of loss to a third party, or held as collateral security, the proof of loss should be made by the party originally insured, unless there has been an actual sale of the property insured. All fraud, or attempt at fraud, by false swearing or otherwise, shall cause a forfeiture of all claim on this company under this policy.” Some time after the date of the policy, Wade borrowed from Noah Wachter $850, upon a mortgage of the property covered by the policy, and went to Spofford and requested that the policy be transferred to Wacbter as mortgagee. Spofford took the policy and said he would attend to it. Subsequently, Wade and Wacbter went together to see Spofford about the matter of a transfer. Spofford then took the policy out of his desk and in the presence of Wade and Wachter wrote upon it the words, “loss, if any, payable to Noah Wachter, mortgagee,” handed the policy back to Wade, and said it was all right now. Wade at once handed it over to Wachter. Spofford reported the indorsement of this clause upon the policy to Tuller & Wanser, who made an entry thereof upon their books and forwarded a report of it to the general office at New York. The latter report was received at New York in February, 1886, and upon its receipt, the clause “ loss, if any, payable to Noah Wachter, mortgagee,” was entered upon the company’s books in the New York office. In the summer of 1886, Wade sold his property to one Dougherty, subject to Wachter’s mortgage, the sale being consummated by a deed dated June 2,1886. Wade went to Spofford at the time of making thjs sale, told him of it and asked him about making a transfer of the policy. Spofford replied, “ You don’t need to do that, because it is already transferred to Wachter as mortgagee.” Wade said, “Then it is all right as it is, is it?” Spofford answered that it was, and nothing more need be done about it. Irving testified that the company had in use a blank form containing a mortgagee clause, known as a “ rider to policy,” providing that no act of the mortgagor in violation of the conditions of the policy should affect the mortgagee ; and, for attaching such a clause to a policy, taken out by a mortgagor and desired to be used as collateral security for the payment of a mortgage, there was no extra charge. The insured building was totally destroyed by fire during the term of the policy, on December 5,1886, being at that time in the possession and occupancy of Dougherty. Proofs of the loss were sent to the company by Wachter. Soon after, he was informed by an agent of the company that new proofs must be executed by himself and Wade. This was done. In the second set of proofs the ownership of the property was stated to be in Wade. The plaintiff was offered as a witness to prove that this statement was understood by him at the time of it to mean that Wade was the owner of the property when the policy was issued, and that there was no fraud intended in the statement as to ownership in the second proofs of loss; that this misstatement was a simple mistake. Objected to by the defendant. By the court: Objection overruled; exception.1 Witness then testified as followsThe first proofs of loss were made by Mr. Black in Camden and he sent them on to the company. (Proofs of loss shown witness.) Yes, these are the papers. I signed them. Q. What was said when the proofs were signed ? A. Some time after the first proofs were sent, Mr. Black sent for me again, and said the company required Wade to sign the proofs, because the policy was in Wade’s name. I hunted up Wade, and got him afterwards to go over to Camden with me. I think Mr. Learning was in the office that time. Learning was Black’s partner; he said the company wanted Wade to sign too, and he had made out the second proofs; he told us the second proofs were just like the first, only they were to be signed by both Wade and myself. They were not read to us. He explained what they were. I understood they were like the first ones, and we both signed them. At the close of the testimony, the defendant requested the court to charge the jury: 1. The insurance being upon the interest of Wade, the mortgagor and owner, if you find that he had parted with that interest before the fire, no loss was sustained by him and none is recoverable by his appointee, and your verdict should be for the company defendant.2 2. The defendant contracted with Wade, and not with the plaintiff. The company agreed, upon the performance of certain conditions, to pay for Wade to the plaintiff certain money. There is in evidence a deed from Wade to one Dougherty, made prior to the fire. If you find this to be the deed of Wade, its effect was to devest him of his interest as owner, and in accordance with the conditions of the policy, the insurance immediately terminated, and your verdict should be for the company defendant.3 3. If you find from the evidence that Wade violated any other of the conditions of the policy, either as to the ownership of the property, encumbrances thereon, its occupation in such a way as to increase the risk, or by false representations in the proofs of loss, then his appointee, Wachter, cannot recover, and your verdict should be for the company defendant.4 4. The execution and validity of the deed from Wade to Dougherty are not disputed; therefore, I instruct you that at the time of the fire Wade had no interest in the property destroyed, and his appointee and mortgagee cannot recover in this suit. Your verdict must be for the defendant.5 5. As the proofs of loss did not show the true ownership of the property, your verdict should be for the defendant.6 6. Under all the evidence in this case, your verdict must be for the defendant.7 The court, Fjoelexier, P. J., refused these points, and instructed the jury to find a verdict for the plaintiff, subject to the opinion of the court in banc upon two questions of law reserved, to wit: (1) Whether the misstatement in the second proofs of loss “ that the property insured belonged to Charles Otto Wade, and no other person had any interest therein except Noah Wachter, whose only interest was as mortgagee,” whereas the said Wade had conveyed the property to Dougherty by deed dated June 2, 1886, duly recorded, avoided the claim under the policy; and (2) Whether the sale of the property and the change in the title by the conveyance by Wade to Dougherty, under the deed of June 2, 1886, and the taking of possession by Dougherty thereunder, avoided the policy.8 The jury rendered a verdict in favor of the plaintiff for §980.50, subject to the questions of law reserved. Subsequently the court, after argument, discharged a rule for a new-trial and entered judgment for the plaintiff, Finlexier, P. J., filing an opinion in part as follows: We might very well regard Spofford as the agent of the defendant for all that was said and done in reference to the assignment of the policy. It is not, however, necessary to consider his general agency, or the extent of it. The company confirmed his act in altering the policy and delivering it in that condition to Wachter. He thereby became their agent for this particular matter, and what he said and did in reference bo it was binding upon them. The purpose of the alteration, as is manifest from the evidence, was to secure the mortgagee in the sum of $850. This was made known to Spofford, and he informed them that this purpose was effected by the alteration. Can there be any doubt that the words, “loss, if any, payable to Noah Wachter,” induced Wachter and Wade to believe that the mortgage loan was thereby secured, and that this confidence was confirmed by what Spofford said to them ? If there is any ambiguity about the words themselves, or their effect, they should be construed most favorably to the plaintiff. The company knew that this was not the usual way in which a mortgagee was secured. When they changed the form, it was their duty to see that no one who might have an interest in the matter was misled. Even upon the trial, and argument upon the rule, they have not attempted to explain what the alteration meant, or was intended to secure, or why they have departed from their regular form in securing a mortgagee. We have come to the conclusion that the policy as altered by the defendant was intended, either to make a new and independent contract with the plaintiff, or to give him the position and advantage which would have resulted to him if the policy had been assigned to him in the usual way. If we are correct as to this, it is not necessary to consider the question involved in the notice of loss. Judgment is entered for the plaintiff upon the points reserved. Thereupon the defendant took this appeal, specifying that the court erred: 1. In admitting the plaintiff’s offer.1 2-7. In not charging as requested in the defendant’s points.2 to 7 8. In instructing the jury to find for the plaintiff, subject, etc.8