Commercial Fire Insurance v. Morris & Co.

COLEMAN, J.

The plaintiffs, Morris & Co., sued the defendant upon an insurance contract to recover damages sustained in the loss of drugs, merchandise,-&c. destroyed by fire. There are several counts in the complaint, one or more counting upon an agreement to insure, another upon a contract of insurance, and another upon an agreement to renew, and one upon an agreement of renewal of an existing policy of insurance, alleged to have been made a few days before the period of its expiration. As this case must be reversed for reasons which will appear in the opinion, we deem it proper to state general rules which seem to us to govern the case, without considering specifically and in detail each of the several assignments of error. First, we hold that neither an agreement to issue a policy of insurance, nor an agreement to renew an existing policy, nor a contract of insurance, is within the statute of frauds, and such contracts or agreements need not be in writing. Second, that a count which seeks a recovery upon a mere agreement to issue a policy, or to. procure a policy, or an agreement to renew an existing policy, which does not aver a breach of the agreement, is defective. A mere allegation that the defendant agreed to insure, or to renew a policy, followed by an averment of the loss and destruction of the property intended to be covered, does not show a breach of the agreement. We are aware, that a similar count was held good in the case of Mobile *505Marine Dock & Mutual Ins. Co. v. McMillan & Sons, 31 Ala. 711, but au examination of the case shows, chat the grounds of the demurrer assigned, did not specifically raise the objection we are considering, and was not passed upon by the court. In the later case of Home Ins. Co. v. Adler, 71 Ala. 516, the character of the complaint is not stated, but the principle is declared that an action at law may be maintained upon a parol agreement to insure, “if all the terms of the contract wore agreed upon, so as to cover the time of the loss and the breach consisted in the failure to issue the policy as agreed on.” Courts of equity entertain bills filed to enforce specific performance of parol agreements to insure, which would be wholly unnecessary if an agreement to insure was ih legal effect, the same as a contract of insurance. Having jurisdiction to enforce specific performance, upon proper prayer, courts of equity administer full relief.—Ala. Gold Life Ins. Co. v. Mayes, 61 Ala. 163; Tayloe v. Merchants’ Fire Ins. Co., 9 How. (U. S.) 390; Commercial Mut. &c. Ins. Co. v. Un. Mut. Ins. Co., 19 How. 318-321.

In the case of Lancaster Mills v. Merchants' Ins. Co., 89 Tenn. 1, S. C. 24 Amer. St. Rep. 586, the court uses this language: “A contract to carry insurance or to cover with insurance, as a representation to a depositor that his deposit is insured, is very different in its legal effect from the absolute liability of an insurer. In the latter case the action is upon the risk or policy for the value of the property destroyed, if within the amount of the risk. In the other case, the action would be for such damages as resulted from the breach of the obligation to carry insurance. The measure of damages may be the same." The demurrer to the second count raised this question directly', and probably the objection was applicable to other counts. The reaso ning of the court in Tayloe v. Merchants’ Fire Ins. Co., 9 How. 390, supra, p. 405, is in direct line with our conclusion.

The authorities agree, that before a contract of insurance, or to insure, is binding, all the essential elements and terms of the contract, must be understood and mutually assented to. A mere expression of a desire by one intending to procure insurance, or a proposition made to an insurance agent to insure property, and an assent or acceptance by the agent to insure without more, *506would not amount to a contract of insurance or an agreement to insure. The subject matter, period, rate to be paid, and amount of insurance and perhaps other elements must- be agreed upon expressly or by implication before there can be an absolute binding agreement between the parties; nor would the mere fact that there had been previous dealings of insurance, between the parties, alone, without some reference to such previous dealings, be sufficient to show a completed and binding contract that the parties intended to and did adopt the provisions of the former dealings. Where, however, there exists a contract of insurance, not expired, and there is an agreement between the parties to renew the policy, and no change is suggested or agreed upon, it will be implied that the renewal contract included and adopts all the provisions of the existing contract of insurance. Such a contract is complete in all respects, and upon failure to comply with the agreement, the party offending, may be compelled by bill in equity, specifically to perform the agreement, or held liable in a court of law for damages, resulting from a breach of the agreement.—Mobile Marine Dock & Mut. Ins. Co. v. McMillan & Sons, 31 Ala. 711, supra; Home Ins. Co. v. Adler, 71 Ala. 524; Ala. Gold Life Ins. Co. v. Mayes, 61 Ala. 163 supra; 9 How. (U. S.) supra, p.405; Lancaster Mills v. Merchants Ins. Co. 89 Tenn. 1, supra. Where the evidence shows that the parties contracted with reference to provisions of previous dealings, it is competent to show the terms of such previous dealings, in order to arrive at the intention of the parties and to ascertain all the terms of the contract made ; and where the agreement was to renew an existing contract of insurance, it was proper and necessary to admit in evidence such existing contract of insurance. Whether or not there was a parol contract to insure, or a parol contract to renew or of renewal, was a question of fact to be determined by the jury. It is not competent to prove a contract by the declarations or admissions of an agent, subsequently made. Such declarations or admissions are no part of the res gestae, but are mere declarations or admissions of a past transaction and are never competent to prove a fact against the principal of the agent making them. The objection to this evidence should have been sustained. On cross-examination of *507the agent he might have been asked, if he had not made such declarations or admissions, giving time and place, and upon his denial, it would have been proper to show, for the purpose of impeachment, that he had made them. The admissions then would be admissible, not to show a contract, but to be considered by the jury in determining the credibility of the witness.

It was competent to show that the agent waived the payment of the premium, and the manner of their previous dealings in this respect could be looked to by the jury in determining whether there was a waiver.—Home Ins. Co. v. Adler, 71 Ala. 524, supra; Long v. North British & Mer. Ins. Co., 137 Penn. St. 335, 21 Amer. St. Rep. 879.

It is competent to show by parol that the insurer has been furnished with a written statement of the loss.—Hagan v. Merchants’ & Bankers’ Ins. Co., 81 Iowa 321, 25 Amer. St. Rep. 493. In this case the following declaration is made : “There being no issue as to the form or sufficiency of the notice and proof, there was no necessity for introducing evidence of the contents of either; and hence the admission of the copy could not have prejudiced any rights of the defendant, and is, therefore, not ground for reversal.”

A person dealing with a general agent, acting within the apparent scope of his authority, is not bound by private or secret instructions from the principal to the agent, not made known or of which such person has no knowledge. The court did not err in any of its rulings on this question.—Hahn v. Ins. Co., 23 Oregon, 576, 37 Amer. St. Rep. 709.

The phrase “as shown by the evidence” assumes as proven the fact referred to, and when used in a charge to the jury, with reference to a material fact which is controverted, renders the instruction erroneous.

Reversed and remanded.