Commercial Union Assurance Co. v. Norwood

Allen, J.

The pleadings, evidence and instructions in this case, squarely present -the question, whether a prior parol agreement made with the general agent of an insurance company concerning the amount of concurrent insurance to be carried on the property insured, controls and defeats the express terms of the policy. It appears, without dispute, that one of the conditions of the policy was, that it should be void if the insured should procure any other insurance on the property without the consent of the insurer, and that consent was indorsed on the policy for only $32,500 of concurrent insurance. The prior parol agreement with Ormandy with reference to the total amount of insurance to be carried on the property, and the fact that the plaintiffs had neglected to read the policy before the fire, are alone relied on to avoid the condition above mentioned. There is no more wholesome or well-settled rule of law than that parol evidence of prior or contemporaneous conversations and oral agreements is inadmissible to contradict or vary the terms of a written contract. Drake v. Dodsworth, 4 Kan. 159; Cornell v. St. L. K. & A. Rly. Co., 25 id. 613; Brenner v. Luth, 28 id. 581; Hopkins v. St. L. & S. F. Rly. Co., 29 id. 544; Windmill Co. v. Piercy, 41 id. 763; Willard v. Ostrander, 46 id. 591; Safe and Lock Co. v. Huston, 55 id. 104.

*6161. Provision in policy rendering void in certain case, valid. 2. Procuring additional insurance avoids policy, when. *615Provisions in policies of insurance providing that the policies shall be void if other insurance be taken without the consent of the insurer, are valid. 2 May, *616Ins. § 364. And subsequent insurance, taken out without the consent of the insurer, either expressed or implied, avoids the policy. Allen v. Merchants’ Mutual Ins. Co., 31 Am. Rep. 243; Funk v. Insurance Association, 29 Minn. 347; Bard, Appellant, v. Penn. Mut. Fire Ins. Co., 153 Pa. St. 257. And taking insurance in excess of. the amount consented to avoids the policy. Allen v. G. A. Ins. Co., 123 N. Y. 6; Union Nat’l Bank v. German Ins. Co., 71 Fed. Rep. 475. Counsel for the defendant in error do not question these propositions, but they insist that the Company had notice of the intention to take out insurance to the amount of $40,000, and expressly assented thereto, and that it is estopped from denying liability by the parol agreement made with Ormandy, as agent. The cases of Am. Cent. Ins. Co. v. McLanathan, 11 Kan. 549; Continental Ins. Co. v. Pearce, 39 id. 396; Insurance Co. v. Wood, 47 id. 521, and numerous other cases decided by courts of other States, are cited in support of this position. We are entirely satisfied with the law as declared in all the cases heretofore decided by this Court, cited on behalf of the defendants in error. The difficulty in this case is, that there is no proof, either of the existence of insurance on the property in excess of the amount authorized at the time the policy was issued, or that the Company, or its agent, was informed at any time before the fire of the full amount of insurance taken out. It appears that of the policies mentioned in the proofs of loss, five policies aggregating $17,300 were issued prior to the one sued on; that another for $2,500 was issued on the same day, and that all the others bear date subsequent to the one issued by the defendant. Altough it is shown that the plaintiffs had carried $40,000 insurance during the preceding *617year, it nowhere appears from the evidence whether the whole or any part of the old insurance was still in force when this policy was issued. It was incumbent on the plaintiffs when seeking to charge the Insurance Company with knowledge that the property was insured at the time the policy was issued, to an amount exceeding that authorized by the consent indorsed on it, to prove the fact. This was not done ; and, so far as we are informed by the evidence in the record, the whole amount of concurrent insurance, at the time this policy was issued, was $19,800. Although Norwood testified that he got 10 policies from Ormandy, the agent of the defendant, it does not definitely appear that the last one received from him. rendered the whole amount of insurance on the property more than $35,000. It cannot be said then, that, at the time the policy was issued, either the-Company or its agent, Ormandy, had notice of the existence of so much insurance as would avoid the policy; nor can it be said that at any subsequent time, Ormandy knew that the condition of the policy had been violated, and received or even retained the premium paid on it. There is, therefore, no element of estoppel in the case. The plaintiffs rested on timbare proposition that Ormandy had verbally agreed, prior to the date of the policy, that there should be-$40,000 insurance on the property. Afterward, when the written contract was made, the total insurance-was limited to $35,000. Do the prior parol negotiations control, or the subsequent written contract ?' Unquestionably the latter.

We have carefully considered the case of Fireman’s Fund Ins. Co. v. Norwood, 69 Fed. Rep. 71, which arose on one of the policies of insurance on this same-stock of goods, issued on the 5th of November, 1891. *618We.find ourselves unable to concur in the conclusion reached by that eminent Court that, “by delivering the policies with knowledge, through their agent, of the amount of insurance intended to be taken, the companies waived the condition as to other insurance,- and were estopped to set the same up after a loss.” We think there is a clear distinction between a case where there is knowledge of the existence of a fact -which would avoid the policy and this, in which it is merely claimed that there was a prior agreement contradicting the terms of the written contract as to the amount of insurance the party should be permitted to carry. We are better satisfied with the reasoning of Judge Sanborn, in his dissenting opinion, than with the views of the majority of the Court.

3. Prior parol agreements inadmissible. In the case of Union Nat’l Bank v. German Ins. Co., 71 Fed. Rep. 473, it was held, that “parol negotiations leading up to a written contract of insurance are merged in the contract, which cannot be controlled by parol evidence of the understanding of the parties.” If it were claimed that the indor semen t on the policy was a mistake, under proper averments and proof it might have been corrected, and the policy enforced according to the real agreement and intent of the parties. But no such claim is made in this case. The plaintiffs maintained from first to last that the prior parol agreement overturned the written contract on which they based their suit. This position is untenable.

The judgment is reversed, and a new trial ordered.

All the Justices concurring.