Emery v. Boston Marine Insurance

138 Mass. 398, 1885 Mass. LEXIS 207

• Court: Massachusetts Supreme Judicial Court
• Decided: January 10, 1885
• Status: Published

Opinion

C. Allen, J.

The plaintiff sought to escape from the effect of the provision in the policy, “ no risk to be binding until accepted by the company and indorsed herein,” by proof of an oral contract; and the defendant, while denying that such oral contract had been made, sought to "confirm its view by calling a witness familiar with the customs and usages of the business of marine insurance in Boston, and asking him the question “ whether there is any usage as to the matter of making written applications for marine insurance.” The question was excluded ; and the grounds upon which the defendant urges its competency are, that the evidence of the usage would have tended to show an improbability of the truth of the plaintiff’s testimony as to the making of oral applications for the insurance, and that the oral applications, if made, were merely preliminary negotiations, and not designed to override the usage. The bill of exceptions contains no statement of what the defendant offered or expected to show by this witness; but we do not dwell upon this consideration, because we are of the opinion that evidence of a usage to require written applications would be incompetent, for the purpose of meeting evidence on the part of the plaintiff tending to prove an oral contract of insurance. The fact that contracts of insurance are usually in writing, and expressed in the form of policies, is a matter of common knowledge, and needs no witness to prove it, and it might have been, and doubtless was, assumed on the trial of the present case; and indeed this appears by implication from the whole course of the bill of exceptions.

But it is also well settled, and it is now too late to question the doctrine, that an oral contract of insurance may be valid. Sanborn v. Fireman’s Ins. Co. 16 Gray, 448. As was said in that case, “ It is not easy to see the force of the reasoning which would infer that, because parties usually make their contract in one way, it would be void when they choose to make it in another, equally good at common law, and not prohibited by any statute.” See also Relief Ins. Co. v. Shaw, 94 U. S. 574. A usage that an oral contract, if made, is considered invalid, would be plainly repugnant to law, and void. In the present case, the evidence of usage was offered, not in aid of the construction of a contract, but to support the position that no contract whatever had been made. If a contract had in point of fact been made as alleged, it was of no consequence whether it was according to general usage or not. The defendant’s own usage sufficiently appeared from the provision in the policy already copied, and its by-laws were in evidence, with a provision that “ the president shall receive applications for insurance ; fix the rates of premium, and the sums to be taken ; sign all policies,” etc. The plaintiff’s case proceeded with a full recognition of the fact that it was necessary for him to show a contract not according to the usual course of the defendant’s dealing; and direct testimony w;as introduced, on both sides, upon the precise point whether an oral contract of insurance had been made or not. There is nothing to show that any restriction was put upon any inquiry as to the defendant’s own usage. It is no legitimate confirmation of the defendant’s position, under such circumstances, to show that other insurance companies usually require applications for marine insurance to be in writing, as a condition of making the contract. This fact, if proved, would have no legal tendency to show that these parties did not make a contract orally., The plaintiff was not bound in law by such custom, if it existed. Whether other parties were or were not in the habit of making their contracts in a particular form, was nothing to him. An oral contract was lawful; and the evidence was properly confined to the question whether this par-, ticular oral contract had been made, as testified by the plaintiff, without going into the general inquiry, whether other parties were accustomed to make such contracts. The issue being whether a particular contract had or had not been orally made, as it might lawfully be, evidence that contracts in that form were unusual was not admissible to meet and control evidence that such a contract had in fact been made. To hold otherwise would be to extend the office of a usage beyond any known precedent.

In Sanborn v. Fireman’s Ins. Co., ubi supra, which was an action upon an oral contract of insurance, the book of entries of the defendant’s agent, in which the alleged contract was not entered, was offered in evidence to corroborate his testimony that no contract had been made, and was excluded; and a point settled in Rennell v. Kimball, 5 Allen, 356, is in principle precisely like the one before us. In that case, the plaintiff, a master mariner, purchased of the defendant, by a written contract and a bill of sale, one twelfth of a vessel then undergoing repairs. It was in dispute, and there was a direct conflict in the evidence, whether the parties agreed that the title should not vest in the plaintiff till the repairs were completed, and whether the defendant promised to pay for the repairs. A ship-broker of long experience was allowed to testify, at the hearing before a master in chancery, “ that it was very unusual for a master to buy a master’s interest in a vessel undergoing repairs, and that it would be an unheard of case to sell such an interest to a master, and he to pay his contributory share of the expenses of the repairs.” The court say, in reference to this: “ The admission of the testimony as to a usage or custom in the purchase of masters’ interests in vessels was incorrect, and a finding based in any degree upon it would be erroneous. The evidence did not ¿tend to prove any custom valid in law.” 5 Allen, 365. It may also be added, as further reasons for holding the exclusion of the testimony in the present case correct, that there was no offer to show that the plaintiff was acquainted with the supposed usage, or that the usage related to the indorsement of particular risks upon open policies as well as to the original contract of insurance, nor can we know that the defendant expected to prove that the custom was not only general, but universal and uniform. Porter v. Hills, 114 Mass. 106. Scudder v. Bradbury, 106 Mass. 422. Howard v. Great Western Ins. Co. 109 Mass. 384.

The defendant asked the court, at the close of the evidence, to rule that, upon the evidence, the plaintiff could not maintain this action ; which .the court refused to do. In support of this request, the defendant has argued to us that, under the provision of the open policy already cited, an acceptance of the risk by the company and an indorsement of it on the policy are made conditions precedent to the commencement of the risk; and it is urged that the language used is widely different from that used in E. Carver Co. v. Manufacturers’ Ins. Co. 6 Gray, 214, and in Kennebec Co. v. Augusta Ins. Co. 6 Gray, 204. But we think there can be no doubt that an oral agreement for a present insurance according to the terms of a written and existing open policy, which insurance is to- continue until it is superseded by the entry of the risk upon the policy, must mean according to those terms so far as they are applicable to such an oral agreement ; and if such policy contains a provision that no risk shall be binding until indorsed therein, such provision is annulled by the later contract, or is not included in it. The oral agreement necessarily implies that such condition is excepted out of it, and is not a part of it. The circumstance that the policy, as issued, contains such a condition precedent, does not preclude the company from orally accepting a new risk, subject to all the other provisions of the policy, with an agreement to put it in writing thereafter by indorsing it upon the policy. There is no legal difficulty in such a construction. Parties to an existing written agreement may, by a new contract not in writing, annul it, or add to or subtract from it, or vary or qualify its terms, and thus make a new contract, which is to be proved partly by the written agreement, and partly by the subsequent verbal terms engrafted upon what will then be left of the written agreement. 1 Chit. Con. (11th Am. ed.) 154, 155. 1 Greenl. Ev. §§ 302, 304. Illustrations of the application of this rule, pertinent to the present case, are numerous. Goodrich v. Longley, 4 Gray, 379. Kennebec Co. v. Augusta Ins. Co., ubi supra. Commercial Ins. Co. v. Union Ins. Co. 19 How. 318. Rathbone v. City Ins. Co. 31 Conn. 193. Ins. Co. v. Norton, 96 U. S. 234. It is as if the insurance company through its officers should say, “We will take the risk now, and put it upon the policy.” The case does not fall within the principle of Batchelder v. Queen Ins. Co. 135 Mass. 449, and other similar cases, where it was sought to prove an oral agreement contradicting the writing, and contemporaneous with it.

The defendant also contends that there was no sufficient evidence of Lord’s authority to make a contract of insurance in the absence of the president, and on this ground excepts to the admission of the evidence of the alleged contract between the plaintiff and Lord. The provision of the by-laws, that, “ in case of the absence, inability, or death of the president, policies and other papers shall be signed by two directors,” relates only to the formal execution of papers which require signing, and does not exclude the making of oral contracts of insurance by any officer who may have authority, or be held out as having authority, to make such contracts. Sanborn v. Fireman’s Ins. Co. 16 Gray, 454. Commercial Ins. Co. v. Union Ins. Co. 19 How. 321. Ins. Co. v. Colt, 20 Wall. 560. Eames v. Home Ins. Co. 94 U. S. 621. Walker v. Metropolitan Ins. Co. 56 Maine, 371. Davenport v. Peoria Ins. Co. 17 Iowa, 276. In the present case, the plaintiff testified to certain conversation with Lord, the secretary, which included the contract relied on. He added, that Fuller was not present at the time, and that his talk was with Lord alone; that a few days before he had told Littlefield, the clerk, that he wanted him to enter up $10,000 on this cargo, to which Littlefield answered, “ All right.” He also testified to an earlier conversation with Fuller, the president, in which the latter said that the defendant would take the cargoes of the Bridgeport. Fuller himself testified that Lord was secretary, and next officer after himself and the vice-president, who was in Hew York; that he (Fuller) sometimes signed policies in blank and left them in order that Lord might make the contract and deliver the policy; that probably Lord had received applications and made indorsements upon policies of this description in his (Fuller’s) absence, though he did not remember any particular case; that it was his belief that it had been done; that he presumed people had been in and had indorsements when he was away; that he had never forbidden the secretary to make such indorsements, and, so far as he knew, nobody had ever forbidden it, though he had known of it all through the time the company had been in existence; that he did not think the business of the company stopped when he was gone, and did not intend that it should; that all the directors were in the habit of dropping in at the office, but “ did not pretend to have much to do about the business, except we asked their advice sometimes.” Lord also testified, that while the office was open for business they intended to have some one there to attend to business; that for two or three years he had been in the habit of taking risks when Fuller was away, subject to his approval on his return; that in such cases he completed the contract with the assured in the absence of Fuller, and could not name an instance in which Fuller had revoked or changed a policy issued or risk taken by him; and that this practice had been known in the office to all the clerks. From this testimony the inference might properly be drawn by the jury, that Lord had the requisite authority, express or implied, to enter an indorsement • upon the open policy, and to make a binding oral agreement to do so, and meanwhile to carry the risk. Relief Ins. Co. v. Shaw, 94 U. S. 574, 579. Smith v. Hull Glass Co. 8 C. B. 668; 11 C. B. 897, 927. Allard v. Bourne, 15 C. B. (N. S.) 468.

The defendant further contends, that, even supposing Lord’s authority sufficient, the words which the plaintiff puts into his mouth do not necessarily or naturally imply an intention on his part to waive or annul the condition precedent contained in the policy. But, in the opinion of a majority of the court, the jury might properly be left to say what the conversation meant, in view of all the circumstances. If the jury gave credit to the plaintiff’s testimony, we cannot say, as matter of law, that no contract was proved.

Finally, it is urged that, by the plaintiff’s failure to bring in the invoice, or the information contained therein, to the defendant, within a reasonable time after its arrival, the contract was not completed, and the defendant is not liable. But it was for the jury to determine whether September 12 was a reasonable time; and, if they found that the defendant then disclaimed having any contract with the plaintiff in respect to this cargo, there was no occasion for him to bring in the invoice after-wards. Exceptions overruled.