Eugene B. Pratt, Respondent, v. The New York Central Insurance Company, Appellant

Eugene B. Pratt, Respondent, v. The New York Central Insurance Company, Appellant. Where a mortgagee insures his interest in the mortgaged property and subsequently becomes a purchaser thereof upon foreclosure, a parol consent of the underwriter, after the change of title, that the policy shall continue in force for the benefit of the then owner, confirms the policy as a valid subsisting contract, notwithstanding a provision therein that, upon change of title, the insurance shall immediately cease. It is at the election of the company to insist upon the forfeiture or not, and after an election to waive it; and after a loss it is estopped from averring want of consideration for the agreement to continue, or from insisting upon the previous forfeiture. Plaintiff, a mortgagee, applied for insurance to protect his interest, the nature of which he stated to defendant’s agent. The form of the policy was left to the latter. In the policy the mortgagors were named as the persons insured; loss, if any, payable to plaintiff. Proofs of loss were required to be made by the insured. A loss occurring and the mortgagors declining to sign and verify the proofs of loss, plaintiff, under the direction of defendant’s agent, made the proofs, which were delivered to and retained by defendant. Defendant subsequently served upon plaintiff a notice that the proofs were not in accordance with the conditions of the policy, and that it declined to recognize them. The notice did not specify in what the proofs were defective. Held, that plaintiff was not bound to furnish additional proofs. (Submitted December 23, 1873; decided January 20, 1874.) Appeal from judgment of the General Term oí the Supreme Court in the fourth judicial department, affirming a judgment in favor of plaintiff upon the decision of the court on trial without a jury. (Reported below, 64 Barb., 589.) This was an action upon a policy of insurance. On the 17th June, 1870, plaintiff, having a mortgage upon certain premises in Onondaga county, of about $7,500, applied to defendant’s agent for an insurance upon the buildings, stating to such agent his interest which he desired to protect. The form of the policy was left to the agent. The policy issued in form insured the mortgagors to the amount of $2,200. “Loss, if any, first payable to E. B. Pratt (plaintiff), as his interest may appear.” Plaintiff paid the premium and received the policy, the policy contained these conditions:. “ In case of assignment, either before or after a loss, whether of the whole of this policy or any interest therein, or of any sale, transfer or change of title in the property hereby insured, or of any part of it, or of any incumbrance or change of interest in any wise of the assured, or the foreclosure of a mortgage or levy of an execution or possession by another of the subject insured, without the consent of this company indorsed hereon, this insurance shall immediately cease. “ The insured, within thirty days after sustaining loss or damage by fire, shall deliver a full and particular account of the loss and damage sustained, showing the cash value of each building or article at the time of the fire, and give a true copy of the written portion of each policy, the ownership of the property at the time of the loss, etc., etc.,—the usual requirements in proofs of loss required in fire policies. “ Until such proofs, etc., etc., are produced, the loss shall not he payable. “Also, in case of claim for loss or damage on a policy, made payable to another party, as collateral security, proof of loss shall be made by the party originally insured, in conformity with the conditions of the policy.” Plaintiff’s mortgage was afterward foreclosed, and he became the purchaser of the mortgaged premises. After obtaining his deed, plaintiff gave notice of this change of title to defendant’s agent, and received consent “ that the policy might stand as security for plaintiff’s interest,” the agent agreeing “ that the proper entries would be made in the books.” The next night the buildings were burned. The mortgagors declined to furnish proofs of loss. Plaintiff received a blank form from defendant’s agent, and under the instructions of such agent made the proofs, himself subscribing them; these were received by defendant May 26th, 1871, and retained by it. On the 6th June, 1871, defendant served on plaintiff a notice that the proofs were not in accordance with the conditions of the policy, and that they would not be recognized as proofs in the case. JSTo further proofs were made. The court below held the contract valid, and directed judgment for $1,000, with interest. Judgment was perfected accordingly. W. E. Hughitt for the appellant. Plaintiff was only defendant’s agent to receive the insurance money and account to the mortgagors. (Frink v. Hampden Ins. Co., 45 Barb., 384.) The additional insurance procured by the mortgagors avoided this policy by its terms. (Gilbert v. Phoenix Ins. Co., 36 Barb., 372; Bigler v. N. Y. C. Ins. Co., 22 N. Y., 402; Grosvenor v. At. Ins. Co., 17 id., 391, 401; 43 id., 389.) By consenting to the sale, defendant did not waive the forfeiture on account of the other insurance by the mortgagors, of which it had no knowledge or notice. (Smith v. Sar. Co. M. F. Ins. Co., 3 Hill, 508 ; 22 N. Y., 402.) Knowledge of the matter claimed to be waived is a prerequisite to waiver. (45 N. Y., 138, 149 ; 46 Barb., 333; 30 id., 580; 37 id., 29; 38 id., 402, 569; 4 Bosw., 188, and cases; 7 Hill, 49; Phil. on Ins., chap. 9, § 13; 32 Conn., 31; 7 J. R., 227; 5 Barb., 339, 359; 5 Duer, 507; 46 N. Y., 413; 2 Abb. [N. S.], 199, and cases cited; 48 Barb.,, 148.) Plaintiff is bound by his proofs of loss. (1 Bosw., 514.) Defendant gave plaintiff due notice that his proofs were defective. (Cornell v. Le Roy, 9 Wend., 163; Phil. on Ins., 1813 ; Kimball v. Ham. Ins. Co., 8 Bosw., 503.) L. C. Gardner for the respondent. The acts of the agent’s clerk were binding on the company. (Bodine v. Ex. F. Ins. Co., 51 N. Y., 117.) Defendant became the insurer of plaintiff from the time he received the consent from the clerk of defendant’s agent. (Fish v. Cottenet, 44 N. Y., 538; Sherman v. Nia. F. Ins. Co., 46 id., 526; Wilson v. Hill, 3 Met., 66; Foster v. Eq. Ins. Co., 3 Gray, 219; Flanders on F. Ins., 317.) Even if the clerk acted without authority there was a ratification by defendant’s agent and secretary. (Buchanan v. West. Ins. Co., 5 Alb. L. J., 334; Benedict v. Smith, 10 Paige, 126; Brigham v. Peters, 1 Gray, 139; Rauth v. Thompson, 13 East, 274 ; 4 Ed., 1; Pars, on Con., 46, 47, 70, 72; N. H. Del. Bridge v. Phenix Bk., 3 N. Y., 166; Vienna v. Barkley, 3 Cow., 381; Cairnes v. Bleéker, 12 J. R. 300 ; Johnson v. Jones, 4 Barb., 369.) Parol insurance is good. (Ellis v. Albany City F. Ins. Co., 50 N. Y., 402; Fish v. Cottenet, 44 id., 538 ; 4 Lans., 433; Trustees, etc., v. Bklyn. F. Ins. Co., 19 id., 306; Audubon v. Ex. F. Ins. Co., 27 id., 216; Rockwell v. Hart. F. Ins. Co., 4 Abb., 179; Post v. Etna F. Ins. Co., 43 Barb., 251; Rhodes v. R. R. Pass. Ins. Co., 5 Lans., 71.) The second insurance was void on acount of plaintiff’s policy and could not affect it. (Jackson v. Mut. Ins. Co., 23 Pick., 48; Clark v. N. Eng. Ins. Co., 6 Cush., 342; Gale v. Belknap Ins. Co., 41 N. H., 170; Philbrook v. N. Eng. Mut. Ins. Co., 37 Me., 137; Jackson v. Farmers' Ins. Co., 5 Gray, 52 ; Stacy v. Frank. Ins. Co., 2 W. & S., 506; Handy v. U. Mut. F. Ins. Co., 4 Al. [Mass.], 217; Schenck v. Mercer Co. Ins. Co., 4 Zab., 447; Hubbard v. Hart. F. Ins. Co., 33 Iowa, 328; 8 Alb. L. J., 53; Mursey v. Atlas Mut. Ins. Co., 14 N. Y., 79; Flanders on F. Ins., 49, 50, and cases cited.) The second policy, having be'en declared void and canceled, could not affect plaintiff’s policy. (Power v. Ocean Ins. Co., 19 La., 28; N. E. F. & M. Ins. Co. v. Schettler, 38 Ill., 166; Schmidt v. Peoria M. & F. Ins. Co., 41 id., 166 ; Ins. Co. of N. A. v. McDowell, 50 id., 120; Morrison v. Tenn. M. & F. Ins. Co., 18 Me., 262; Obermeyer v. Globe Mut. F. Ins. Co., 13 Me., 44; Mitchell v. Lyc. M. Ins. Co., 51 Pa. St., 409 ; 1 Phil, on Ins. [5th ed.], 478; Flanders on Ins., 50, and cases cited.) If plaintiff’s proofs were defective they should have been returned at once, or notice of the defects should have been specifically and promptly pointed out. (Bodle v. Chenango Co. Mut. Ins. Co., 2 N. Y., 58; O'Neil v. Buff. F. Ins. Co., 3 id., 128; Kernochan v. N. Y. B. Ins. Co., 17 id., 439; Bumsted v. Div. Mut. Ins. Co., 12 id., 81; Etna Ins. Co. v. Tyler, 16 Wend., 402; O' Conner v. Hart. F. Ins. Co., 25 id., 374; Post v. Etna Ins. Co., 43 Barb., 351.) The proofs of loss were made as directed by defendant’s secretary, and defendant is estopped from objecting to their sufficiency. (Frost v. Sar. Mut. Ins. Co., 5 Den., 54; Carpenter v. Stillwell, 11 Wend., 73.) The findings of facts are conclusive. (Loeschigk v. Peck, 3 Rob., 700; Foot v. Roberts, 7 id., 17; Ritter v. Cushman, id., 294; Hatch v. Fogerty, id., 488.) It is not error for the court to omit to state in its findings all the facts material to the issue. (Manley v. Ins. Co. of N. A., 1 Lans., 20; McKean, v. See, 4 Rob., 449; Ashley v. Marshall, 29 N. Y., 494; Smith v. Coe, 20 id., 666.) [MAJORITY — Andrews, J.] Andrews, J. There are no exceptions to the admission or rejection of evidence relied upon for the reversal of the judgment. The action was tried by the court without a jury. The judge made a finding of facts, and found as a conclusion of law that there was a valid contract of insurance between the parties at the time of the loss by fire of the insured property. There was no request to make other or additional findings of fact; and the only question open to the appellant on this appeal is whether, upon the facts found or which might have been found' from the evidence in favor of the plaintiff, the conclusion of law was justified. (Carman v. Pultz, 21 N. Y., 547; Grant v. Morse, 22 id., 323 ; Meyer v. Amidon 45 id., 169.) This consideration disposes of the principal question argued by the appellant’s counsel in the brief submitted by him, viz.: that the consent of the defendant, after the title to the property vested in the plaintiff by the foreclosure, to continue the policy in force for his benefit, was inoperative, and did not bind the defendant, for the reason that it was given in ignorance of the forfeiture incurred by ■ Tallen & Co., ■ by their having procured additional insurance, without notice to the defendant and in violation of the terms of the policy. The fact that such additional insurance was. procured is not found, nor is it in any way adverted to in the findings of the judge, and the rule is well settled that this court will not look into the evidence to see if any facts were proved, which if found would subvert the judgment. The policy in question was issued upon the application of the plaintiff, and he paid the premium. He had at the time an interest as mortgagee in the.insured property. The nature of his interest was stated to the, defendant when the application was made, and the form of the policy was left to the judgment of the defendant’s agent. It does not appear that the plaintiff was acting, in procuring the policy, as agent for or at the instance of Tallen & Co., the owners of the property. They were named in the policy as the persons insured, but tjie loss, if any, was by its terms payable to the plaintiff as his interest might appear, and his mortgage interest was much greater than the amount insured. The policy was delivered to him, and he retained it in his possession until after the fire. The question, arises, whether the parol consent of the company,' after the title to the insured property vested in the plaintiff by the forelosure, that the policy should continue in force for his benefit, confirmed it as a valid subsisting contract, notwithstanding the provision in the policy that upon a change of title to the, property, by foreclosure or otherwise, the insurance should “ immediately cease.” I think that it cannot be held that the retention of the premium, paid on effecting the insurance, furnished a consideration for renewing and continuing the contract of insurance after it had been avoided by the act of the insured. The policy had attached, and the risk had been assumed by the defendant, liable to be terminated by the occurrence of certain events specified in the policy. If it was terminated pursuant to any condition in the policy, and without fault of the defendant, the whole premium was earned, and the insurer had a legal right to retain it, although the whole term fixed for the running of the policy had not elapsed. (Shaw, Ch. J., Felton v. Brooks, 4 Cush., 207.) It is not like the cases cited where the policy was void in its inception, and no risk had been incurred by the underwriter; nor is it the case of the modification of a contract, which at the time was mutually obligatory. (Fish v. Cottenet, 44 N. Y., 538; Shearman v. The Niagara Fire Ins. Co., 46 id., 526; 2 Phil, on Insurance, § 1819.) But clauses of forfeiture and avoidance are for the benefit of the party in whose favor they are made, and he may insist upon them or not, at his election. (2 Am. Leadg. Cases, 306, and cases cited; Clark v. Jones, 1 Denio, 516.) In many cases the party who could insist upon the forfeiture of a contract, and who could elect to abandon it, has an interest to waive the forfeiture, and treat the contract as subsisting, notwithstanding the failure of the other party. In this case, the defendant elected to continue the insurance in force for the benefit of the plaintiff, who had paid the premium, and for whose immediate benefit the policy was issued, and who was entitled to the insurance money in case of loss, and the company could not afterward, and after a loss had occurred, abandon its election, to the prejudice of the plaintiff. The plaintiff may have been, and upon the evidence it is probable that he was, prevented from procuring other insurance, relying upon the assurance of the defendant that the policy should remain in force. It was the natural result of the defendant’s act, and I am of opinion that the case is within the reason upon which the doctrine of equitable estoppel is founded, and that the defendant is precluded from averring the want of consideration for the agreement to continue the policy, or from insisting upon the previous forfeiture. (Frost v. Saratoga Mutual Ins. Co., 5 Den., 154, and cases cited; Wolfe v. Security F. Ins. Co., 39 N. Y., 52; Atlantic Ins. Co. v. Goodall, 35 N. H., 328.) The proofs of loss were prepared in conformity with the direction of the defendant’s agent and secretary, and were retained by the defendant; and under the circumstances the plaintiff was not boimd to furnish additional proofs upon a general notice by the company, without specification of the points in respect to which they were deemed defective. The judgment should be affirmed, with costs. All concur. Judgment affirmed.