Carrugi v. Atlantic Fire Insurance

McCay, J.

This is an'important question, one,' within the last few years, of very common occurrence, but never yet distinctly before this Court. Insurance agents, of whom every hamlet has its supply, are very anxious to take risks, and our people are too prone to trust entirely to them, as to what it is necessary to do to comply with the terms and regulations of their companies. A man frankly informs the agent' that he has already one insurance, and desires another. Perfect good faith exists on his part. He tells the truth and-the whole truth. He trusts the preparation'of the papers to the agent, and finds, when a loss occurs, that because tire agent has failed to enter in writing upon the policy the fact that the company is aware of, and consents to, the prior insurance, the policy is said to be void. So too, after the policy has issued, he desires additional insurance; he informs the agent of it, he approves and consents, and the insured, thinking all right, takes new risks, pays out his money, and at the very time he feels that he has made himself doubly safe, he has only done that which makes his policy void. This is an every day occurrence, and arises from the introduction of this new clause, only lately thought of, in insurance policies.

We have given this matter great consideration, and have come to the conclusion, that, if the agent be, in fact, informed, and do, in fact, consent, and the insured, relying on that con-' sent, do, in good faith, pay out his money,, it does not make the policy void.

The company, in this case, is a foreign corporation, its agent here is its representative, and is a general agent, for all the purposes of taking and revoking risks; prima fade, those who deal with the agent, in the line of the business, have á right to consider .him as authorized to do and consent to all acts, within the scope of the business. Consent to a prior or subsequent insurance, is within that scope, as the every day practice of the country proves, and if an agent does, in fact, so consent, and the insured, in good faith, acts upon it, we think it is fraud upon the insured for the company to set up that they had stipulated this consent to be in wilting.

It will be noticed that this stipulation has nothing really to do with the contract of insurance. Double insurances are perfectly legal. They are, in fact, an advantage to the company, since, in case of loss, they can compel a division of the loss. The only Object of this clause, at least the only legitimate object, is to guard against the over insurance of the property, and the consequent temptation to crimes. But when it affirmatively appears that the consent was given, and that the insured has acted upon it, we think it would but be the perpetration of a fraud to permit the company, to take advantage of its own wrong, and escape liability; because its agent has failed to do his duty to the insured.

For myself, I am of opinion that such stipulations are void. Parties may stipulate as they please, in their contracts, as to the several rights and obligations of each, but the mode by which it shall be proven whether or not there has been a breach or performance of those stipulations, is matter to be regulated by law^and not by the stipulations of the parties. Whether parol evidence is admissable' to prove the facts, or whether they can only be proven by writing, it seems to me is regulated by law, on grounds of public policy, and for the, public convenience, and is not matter of stipulation. Would a promissory note from A to B, stipulating that no proof of its discharge should be taken, unless it were proven by two witnesses, be binding ? Would a contract, to be performed on a certain day, and stipulating that the day should not be altered, by a subsequent contract, without proof in writing, signed by the obligee, bind the obligor, if, in fact, for a new consideration, there should be a change of the day, and no writing be taken? I think not, and I think these stipulations stand on the same footing. It is an attempt to change the rules of evidence, to make a new law,- to regulate the proceedings of the Courts. This is not like the execution of a promise, which contains limitations as to the mode of its exercise. This is a simple attempt to change the mode by. which the Courts should arrive at whether there has been a performance or breach of a contract. In my judgment, parties cannot do that. Such rules and modes are regulated by law, on grounds of public'policy. They might as well stipulate that the fact of consent should be proven-only by the personal attendance of the witness, and not by interrogatories, or that it should not be proven, as our law now permits, by the parties.

The judgment of the Court, in this case, is, however, put upon the ground that it would be a fraud upon the rights of the insured, after he has got the consent of the agent, and acted upon it, to insist upon the written consent. The issue before the jury, in this case, is wholly one of bona fides. If there was an intent, on the part of Carrugi, to defraud, as a matter of course the policy is void. It is the essence of these contracts that there should be the utmost good faith, and this on grounds of public policy, independent of the rights of the parties in the particular case.

It must be a strong case, to induce us to interfere with the discretion of the Court, in motions for new trial. The law gives him a discretion. He has opportunities for knowledge about the witnesses, and the degree of credit to be given them, which cannot be gotten before this Court. We do not think he has abused his discretion in this case.

Judgment affirmed.