Carpenter v. Providence Washington Insurance

45 U.S. 185 (1846) 4 How. 185

JEREMIAH CARPENTER, APPELLANT
v.
THE PROVIDENCE WASHINGTON INSURANCE COMPANY.

Supreme Court of United States.

The case was submitted on printed arguments, by Mr. Whipple and Mr. Wood, for the appellant, and Mr. R.W. Greene and Mr. Sergeant, for the appellees.

Mr. Justice WOODBURY delivered the opinion of the court.

This was a bill in equity on a policy of insurance made by the defendants. The original policy, executed September 27th, 1835, for one year, and annually renewed till September, 1838, contained the following clauses: — "And provided further, that in case the insured shall have already any other insurance against loss by fire on the property hereby insured, not notified to this corporation, and mentioned in or indorsed upon this policy, then this insurance shall be void and of no effect. And if the said insured, or their assigns, shall hereafter make any other insurance on the same property, and shall not, with all reasonable diligence, give notice thereof to this corporation, and have the same indorsed on this instrument, or otherwise acknowledged by them in writing, this policy shall cease and be of no further effect." A loss having occurred on the 9th of April, 1839, an action at law was instituted to recover the amount of the defendants, on which final judgment was rendered in their favor in this court, at the January term, 1841. (See Carpenter v. Providence Washington Ins. Co., 16 Peters, 495.) This was chiefly on the ground, that another policy had been effected on the same property at another insurance office, in December, 1836, and renewed yearly till December, 1838, but which had not been "mentioned in or indorsed on this policy," "or otherwise acknowledged by them (the defendants) in writing."

For various other particulars connected with the case, reference can be had to the above case, and the statement which precedes this opinion. Under these circumstances, the complainant next resorted to the bill now in consideration, and alleged, that "in the month of December, A.D. 1836, and in the month of December, A.D. 1837, and at divers other times, the said Providence Washington Insurance Company had notice from the said H.M. Wheeler & Co. of the said insurance at the office of said American Insurance Company, in Providence, and said notices, so given, were given for the purpose of having the same indorsed on the policy at the office of said Providence Washington Insurance Company, or otherwise acknowledged by them in writing. And your orator supposed that the said Providence Washington Insurance Company had performed their part of said contract in this behalf, as in equity and good conscience they were bound to do."

He then added, — "Wherefore, inasmuch as your orator is remediless at and by the strict rules of the common law, he prays your honors to issue a decree compelling said Providence Washington Insurance Company to indorse said notice on said policy, or otherwise acknowledge the same in writing, according to the terms of their policy, as they long since ought to have done, and to compel said Providence Washington Insurance Company to pay your orator said sum of fifteen thousand dollars, with interest from the time of said loss, and his costs."

The defendants, in their answer, deny that they ever had notice in any form of the additional insurance, or not till long after the execution of the policy now in question, and object to the admission of any evidence on the subject, except such as is in writing, according to the stipulation in the policy itself. And they further deny, "that the plaintiff has any equity to compel these defendants to indorse a notice of such previous or subsequent insurance on said policy, or to acknowledge the same in writing."

They then aver, that if the additional policy had been communicated to them, and the present insurance still continued, it would have been void, because false representations, material to the risk in respect to the value of the whole property, were made, affecting the additional policy, and that the probability is, the present one would not have been continued on seeing the additional policy, as that is for $6,000, and the present one $15,000, making an aggregate insurance of $21,000, when, in the original statement to the defendants, the whole property was valued at only $19,000, and when it is not the custom of insurance companies to take risks on this kind of property beyond three fourths of its value, in order to keep the insured still interested to the extent of the other fourth, and thus likely to use greater precautions against fire, and lessen the risk of the insurers, compared with what it would be if an additional insurance was obtained covering the whole value.

It will be seen, by this state of the case, that important questions, both of fact and law, are involved in it; — of fact, whether the additional policy was ever made known to the defendants for the purpose of being acknowledged in writing; and of law, whether, in that event, it was their duty so to have acknowledged it, and, not doing so, whether this court can now compel them to do it. There are other considerations which arise in the course of the inquiry that will receive attention, but are incidental, rather than raised directly through the pleadings. The testimony in support of the leading allegation in the bill is not very complicated. But how much of evidence should be required to prove that allegation, under the principles applicable to the circumstances of this case, is one of some difficulty, and is first to be settled. Where an answer is responsive to a bill, and, like this, denies a fact unequivocally and under oath, it must in most cases be proved not only by the testimony of one witness, so as to neutralize that denial and oath, but by some additional evidence, in order to turn the scales for the plaintiff. Daniel v. Mitchell, 1 Story's Rep. 188; Higbie v. Hopkins, 1 Wash. C.C.R. 230; The Union Bank of Georgetown v. Geary, 5 Peters, 99. The additional evidence must be a second witness, or very strong circumstances. 1 Wash. C.C.R. 230; Hughes v. Blake, 1 Mason's C.C.R. 514; 3 Gill & Johns. 425; 1 Paige, 239; 3 Wend. 532; 2 Johns. Ch. R. 92. Clark's Ex'rs v. Van Riemsdyk, 9 Cranch, 153, says, "with pregnant circumstances." (Neale v. Hagthrop, 3 Bland's Ch. 567; 2 Gill & Johns. 208.)

But a part of the cases on this subject introduce some qualifications or limitations to the general rule, which are urged as diminishing the quantity of evidence necessary here. Thus, in 9 Cranch, 160, the grounds of the rule are explained; and it is thought proper there, that something should be detracted from the weight given to an answer, if from the nature of things the respondent could not know the truth of the matter sworn to. So, if the answer do not deny the allegation, but only express ignorance of the fact, it has been adjudged that one positive witness to it may suffice. 1 J.J. Marshall, 178. So if the answer be evasive or equivocal. 4 J.J. Marshall, 213; 1 Dana, 174; 4 Bibb, 358. Or if it do not in some way deny what is alleged. Knickerbacker v. Harris, 1 Paige, 212. But if the answer, as here, explicitly denies the material allegation, and the respondent, though not personally conusant to all the particulars, swears to his disbelief in the allegations, and assigns reasons for it, the complainant has in several instances been required to sustain his allegation by more than the testimony of one witness. (3 Mason's C.C.R. 294.) In Coale v. Chase, 1 Bland, 136, such an answer and oath by an administrator was held to be sufficient to dissolve an injunction for matters alleged against his testator. So is it sufficient for that purpose if a corporation deny the allegation under seal, though without oath (Haight v. Morris Aqueduct, 4 Wash. C.C.R. 601); and an administrator denying it under oath, founded on his disbelief, from information communicated to him, will throw the burden of proof on the plaintiff beyond the testimony of one witness, though not so much beyond as if he swore to matters within his personal knowledge. 3 Bland's Ch. 567, note; 1 Gill & Johns. 270; Pennington v. Gittings, 2 Gill & Johns. 208. But, what seems to go further than is necessary for this case, it has been adjudged in Salmon v. Clagett, 3 Bland, 141, 165, that the answer of a corporation, if called for by a bill, and it is responsive to the call, though made by a "corporation aggregate under its seal, without oath," is competent evidence, and "cannot be overturned by the testimony of one witness alone" We do not go to this extent, but see no reason why such an answer, by a corporation, under its seal and sworn to by the proper officer, with some means of knowledge on the subject, should not generally impose an obligation on the complainant to prove the fact by more than one witness. (5 Peters, 111; 4 Wash. C.C.R. 601.) Here the denial by the corporation is explicit and responsive to the bill, and its truth sworn to by its president, "according to the best of his knowledge and belief." The only difficulty is in respect to the extent of that knowledge. He was not the president of the company at the time the information of the second insurance is alleged to have been given. Nor is it relied on in argument, that he was then a member and lived near, or was for any reason likely to be consulted when such notices were received. But he has since had access to all the files and records, in his official capacity, so as to know if any letter on this subject appears to have been received, and therefore testifies with some means of knowledge. And though it is admitted, that the certainty is not so great against the reception of the notice as if Jackson himself was alive and testified against it, yet, in the nature of the case and by the precedents, the denial is strongly enough made and supported to impose on the complainant the proof of his allegation by something more than the testimony of one witness, though not so much more, it is conceded, as the "pregnant circumstances" before alluded to.

The next inquiry is, whether the material allegation in this case is thus proved? On an examination of the evidence, it will be found that not even one witness swears positively to it; and whatever is sworn in support of it is much impaired by other proof.

The allegation, it will be remembered, is, that in December, 1836, and divers other times, the defendants had notice from the insured of the second insurance, given for the purpose of being indorsed on the policy, or acknowledged in writing.

There is no attempt to prove any such notice except on two occasions, — one in 1836, and one in 1837. The only witness called to support the first is Mr. Wheeler. He testifies, that about the time of the second insurance, in December, 1836, he wrote a letter to the president of the Providence Washington Company, stating that such an insurance had been effected, and thinks he put the letter in the post-office. This is all on that point in behalf of the complainant concerning this notice.

It is to be observed, that the testimony of Wheeler, in its full extent, does not prove the fact that information of the second insurance ever actually reached the defendants for the purpose of being indorsed or acknowledged, but merely that a letter was written for that purpose, and probably put in the post-office.

Though such evidence, standing alone, in the case of notice of non-payment of bills of exchange and promissory notes, is sufficient, under mercantile usage, to raise a presumption that the holder had used due diligence, yet even in such cases it is not held to prove the actual receipt of notice. The Bank of Columbia v. Lawrence, 1 Peters, 582, and Dickins v. Beal, 10 Peters, 581. Much less can it prove the receipt of it where no such usage exists, as in the case of policies of insurance.

When we look for any other proof to sustain or strengthen Wheeler's evidence, thus defective, it will appear to be weakened rather than strengthened by the other testimony and circumstances. Because, first, such a letter, if ever received, would probably be preserved on the files of the office. So would it probably be answered, as that was not only the usage in respect to all letters on official business, but it is shown, specially, to have been the custom of the office to act forthwith and officially on letters like these when received, and to send a reply in conformity to the decision of the company upon them. Yet no answer is stated ever to have been received concerning this; nor is any trace of an answer, or of the original, found in the office, either in the recollection of other officers, or in any files, books, records, or even memoranda.

Again; the insured, if conscious that such a letter had been sent, and reached its destination without being answered, would naturally have written, or called to ascertain, why information of the second insurance was not acknowledged in writing, apprized as the insured must be, both by the published terms of insurance and the policy itself, that the latter was void and ceased to operate without such an acknowledgment, and that it was the duty and interest of the insured to see to this acknowledgment being made. Nor is it a sufficient answer to the last objection, that he might rest quiet without a reply, supposing the acknowledgment had been indorsed on the policy, because the policy was in the possession of the insured, and not of the insurers; and hence it was well known to the insured that no such indorsement had been made on that.

It is difficult, likewise, to discover any adequate motive for not replying to the letter, if it was ever received, unless it be one resting on a gross fraud. If the company, or its president, on a receipt of it, should not choose to continue the policy, as would probably be the case, for reasons before mentioned, they would feel no reluctance to state the fact to the insured, and thus end a risk where the insurance exceeded the value of the property, and differed so much from their usual prudent terms of underwriting. But if they did choose to continue it, they would be likely soon to reply, stating that fact, because, without such a reply, they knew the insured would probably consider the policy terminated, in conformity with the stipulations in it, and would insure elsewhere, and they lose a premium which they had decided it was expedient for the company to retain.

This is all which it is considered necessary to say in respect to the evidence of the notice supposed by the plaintiff to have been given by Wheeler in 1836.

But it is urged, beside this, that another notice of the additional insurance at the Providence American Company was given the ensuing year, in December, 1837, through Mr. Peck. It is manifest, however, that this last notice, like the other, must stand or fall by itself, as they are distinct or disconnected in time and circumstances, — not parts of one transaction, — and are attempted to be sustained by testimony not cumulative but entirely different. What is proved on this matter by Mr. Peck? Merely that a letter, written to him for another purpose, contained a statement of the existence of the second insurance, and his impression that he showed the letter to the president of this company for the other purpose. It will be seen that his testimony is rather argumentative from his usual habits of business, than positive, that he showed the letter at all to the president; but if he did, it is conceded that the object was to communicate merely the other fact, — "the change of owners in the property" (see Wheeler's letter). And if he carried the letter in his hands, which contained other matter, mentioning an insurance at the American Office, he was not desired, as appears by the letter itself, to communicate that part of it, nor does he say, in his written reply, that he had communicated that part, but only "notified the Providence Washington Insurance Company, that Mr. Wheeler had disposed of his interest to you, of which they had made record."

Beside this, and against any such notice having been given or intended for the purpose set up in this bill, there are most of the collateral considerations which have been enumerated in opposition to the other notice, alleged to have been given the previous year.

It must also be recollected, that a letter was written to the president by Wheeler on the same day he wrote to Peck, saying nothing in it concerning any second insurance; and the president promptly answered it, saying nothing in reply concerning that subject, but all which was expected as to the other. On this, it will occur immediately to ask, if Peck had given such notice, or been requested to do it, or even if Wheeler had before given it, why Wheeler did not at once write again, stating that an answer had been received as to the notice of a change of property, but none as to the second insurance. In short, a convincing proof that nothing was communicated but the change of owners in the property is, that nothing more seems intended to have been communicated; that nothing more was contained in the letter to the president, and nothing more wished to be stated by Peck, and no witness testifies that the other information was actually read by, or named to, the president, and no collateral fact renders the last circumstance probable. This is the whole evidence in the case, on this point, that is essential. To show more fully that under it none of the material questions of law arise or can be considered, which might otherwise be presented, it may not be unimportant to discriminate and examine briefly what those questions are, and what must be proved in order to raise them.

Several precedents exist, where respondents in equity are allowed, by way of defence, to prove, by parol, that the written contract relied on does not contain all the original terms agreed, and in this way entitle themselves to be exonerated under the terms proved by parol. (Woollam v. Hearn, 7 Ves. 211; 2 Story's Eq. Jurisp. § 770; and Sugden on Vendors, 125 to 140, and cases cited.) Others exist, of this kind of proof being at times permitted to complainants in relation to separate subsequent terms of agreement modifying the prior ones, and on those subsequent terms being proved by parol, a recovery be allowed. 4 Bro. Ch. R. 514; 1 ibid. 92. There are other precedents of complainants seeking to show by parol a portion of a contract existing when the original was made, but which was omitted from it by accident, and against doing which some of the authorities seem to decide. (7 Ves. jr. 211; 15 ibid. 518; Story's Eq. Jurisp. § 770, and note.) On the contrary, some decide for it. (2 Ves. sen. 375; 1 ibid. 456; 1 Starkie on Ev. 1015-1018.) But neither of these classes of cases can be claimed as embracing this. Here the parol proof is offered by a complainant, rather than by way of defence; and it is not pretended that any omission has happened of a part of the original contract, or that there has been any new separate contract modifying that.

On the contrary, in the most natural aspect of the case, it is one of a complainant attempting to show, by parol, a fact, which, if true, is supposed to establish a neglect or wrong in the defendants, — a breach of official duty happening sometime after the contract of insurance was made, — by not acknowledging then in writing the receipt of information that another policy had been obtained on the property, and saying in reply, under these new circumstances, that the first contract should either continue or terminate.

This presents, it will be seen, a question somewhat novel, namely, whether the specific performance of a duty in private life, not of a contract, can be enforced by courts of equity, and a party compelled, by a sort of mandamus, to acknowledge in writing what he had never promised so to acknowledge.

That question, however, need not now be decided, as such a duty is not claimed to exist except where a notice of the second insurance is actually received. And to prove such a receipt here, the evidence offered is certainly insufficient, whether requiring only one positive witness, unimpaired, or something more than one.

But there is another aspect of the case, which would present a different question of law, if it was set out specially in the bill, and was supported by any stronger proof as to the material fact. It is, that the respondent should be considered as barred or estopped from setting up the want of an acknowledgment in writing, if that want was the result of his own neglect of duty. In that view, both the receipt of the information, and a consequent obligation to make an acknowledgment of it in writing, must be satisfactorily established before any neglect of duty can be imputed. But, as already shown, the first fact, the receipt of the information, is not established in that manner; and, if it were, some difficulty might exist as to the second point, in considering a mere omission to reply as a wrong, and such a wrong as to estop the insurers from making an objection expressly provided for and allowed in the policy. Because it is not the insurer, but the insured, on whom the obligation seems to be imposed to have the notice of the further insurance reduced to writing, as a condition precedent to a recovery. It is the insured who by that further insurance increases the risk of the former insurers, and who ought, therefore, to have it both communicated and acknowledged in the manner stipulated, in order to render it sure that a continuance of the first risk is assented to. And though an omission to answer a letter from the insured might incommode him, and be a breach of comity, it is not easy to discover any engagement or promise which it violates.

Supposing, however, the bill to be broad enough in its allegations, and the sending of notice of the second insurance proved, and the duty to acknowledge it, if received, to be clear, we might, in most cases like this, enforce a discovery of the receipt of it, if coming to hand; and might enjoin the insurers against using, by way of defence, a circumstance caused by their own misconduct. (Baker v. Biddle, 1 Bald. C.C.R. 405.) But whether we could go further, and enforce a recovery for the loss on the equity side of this court, when an action had been brought for it on the law side and failed, and other remedies there may still exist for any wrong done, is a question open to doubt, and need not, for the reasons before stated, be now decided. Le Guen v. Gouverneur, 1 Johns. Cas. 436; Simpson v. Hart, 1 Johns. Ch. R. 91; Gordon v. Hobart, 2 Sumner's C.C.R. 401.

Finally, it is urged, that a fraud has been perpetrated here, and that frauds constitute at all times a distinct and sufficient ground for a recovery in chancery. The fraud, if existing here, would not be in failing to answer the receipt of information of the second policy, stating frankly, as convenience and a spirit of courtesy required, whether the original insurance would be continued longer or not; but in omitting to give full explanations on the subject when the insured applied for a renewal of the policy, and in proceeding then to take a further premium, with a covert design to defeat the insurance on account of the second policy, provided any loss should happen.

The rule of equity is very broad to prevent a fraud, which would exist if one was permitted "to derive a benefit from his own breach of duty and obligation." 2 Story's Eq. Jurisp. § 781. And it has been laid down, that "if by fraud or misrepresentation one prevents acts from being done, equity treats the case as if it were done." 1 ibid. § 439; 11 Ves. 638.

In the bill, there is an averment of fraud, and, at the close, a general prayer for any suitable relief; and it seems plausible, that we might, if satisfied of the existence of fraud, estop the party guilty of it from profiting through his own wrong, by preventing him from setting up, as a defence, the want of an acknowledgment in writing, when such want was the result or the instrument of his own misbehavior. But there is still a difficulty in this view of the case, from the circumstance that redress has been and still is open to the plaintiff, at law, for any fraud; and the Judiciary Act provides, that "suits in equity shall not be sustained in either of the courts of the United States in any case where plain, adequate, and complete remedy may be had at law." (Act of September 29th, 1789, § 16; 1 Story, 59.) And also from another reason, which has affected the previous points, — a want of satisfactory evidence of the facts alleged. The first step in proving a fraud fails. Neither a neglect nor wrong is shown by the positive testimony of any one witness; and whatever is sworn to by any one in behalf of the complainant is counteracted by opposing circumstances, rather than strengthened, as it should be, after a sworn denial in the bill, and in so grave a charge as fraud, by very satisfactory auxiliaries, though not perhaps by so strong evidence as is necessary in reforming contracts; that is, by evidence which is "irrefragable," and not open "to opposing presumptions." 1 Bro. Ch. 347; 2 Cranch, 419; 1 Ves. sen. 317; 6 Ves. 332; 8 Wheat. 211; 1 Peters, 13; 2 Johns. Ch. 595, 630.

It is a matter of regret, that so great a loss, which the plaintiff and those under whom he claims intended to guard against by insurance, should happen entirely without indemnity. But it is to be remembered, that the defendants gave abundant and repeated notice to him in writing and print in the policy itself, as well as other ways, that they would not take any risks on property where it was insured beyond a certain ratio of its full value, unless the circumstances were made known to them, and the additional policy recognized in writing, so as to avoid any mistake, or accident, or want of deliberate attention to the subject.

If the plaintiff, after all this, omitted to comply with so substantial a provision in the contract itself, as we are bound to believe on the evidence now offered, we see no way, equitably or legally, to prevent the consequences from falling on himself, rather than others, being the result either of his own neglect, or that of some of the agents he employed.

An adherence to such important rules is peculiarly necessary for the protection of absent stockholders, often interested extensively in insurance companies; and so far from its being unconscientious to enforce them, when their existence is well known, and when the risk has been increased without conforming to them, it is the only and just safeguard of all concerned in such institutions.

Let the judgment below be affirmed.

Mr. Chief-Justice TANEY, being sick, did not sit in this cause.