Satz v. Massachusetts Bonding & Insurance

125 Misc. 798, 211 N.Y.S. 718, 1925 N.Y. Misc. LEXIS 1020

• Court: City of New York Municipal Court
• Decided: September 21, 1925
• Status: Published

Opinion

Callahan, J.:

This is an action on a policy of theft insurance. The answer asserts certain breaches of warranties on the part of the assured with respect to declination by other companies and cancellations of prior policies (fourth and fifth defenses). Plaintiff’s reply concedes that such warranties were contained in the policies and concedes that the facts were contrary to those warranties. He seeks to avoid same, however, by setting forth in his reply that the true facts with relation to prior decimations by other companies and cancellations of other policies were made known to defendant’s agent prior to the issuance of the policy and that defendant is accordingly estopped from asserting the defenses pleaded. Defendant contends that no such estoppel arises, for the reason that in order to prove knowledge by the agent of any contrary fact the parol evidence rule would be violated. Plaintiff, in turn, argues that parol evidence may be received to show knowledge by the insurance company before the issuance of the policy, citing Van Schoick v. Niagara Fire Ins. Co. (68 N. Y. 434) and Lewis v. Guardian Fire & Life Assur. Co. (181 id. 392, 395). The state of the law with respect to this interesting question is somewhat uncertain. By statute (Ins. Law, § 58) this situation nothing shall be incorporated in the policy unless indorsed upon it. This has been held by the Appellate Division, Second Department, in the case of Grubiak v. John Hancock Mutual Life Ins. Co. (212 App. Div. 126) to prevent recovery by the basis of estoppel such as plaintiff claims here. This statute, however, is confined to life insurance contracts. (Baumann v. Preferred Accident Ins. Co., 225 N. Y. 480.) The common-law rule seems to apply here. That rule, in this State, permits proof of facts to show fraud on the insurance company’s part on the basic principle, well settled in law, that proof of such fraud does not violate the parol evidence rule. Plaintiff here does not plead fraud. Its claim is one of estoppel based on alleged knowledge of the true facts by the defendant and its agent prior to the issuance of the policy. The weight of authority does not sustain such a defense. (Metzger v. AEtna Ins. Co., 227 N. Y. 412, 415; Gaines v. Fidelity & Casualty Co., 188 id. 411; Baumann v. Preferred Accident Ins. Co., supra; Stanulevich v. St. Lawrence Life Assn., 228 N. Y. 586, 587.) The contrary view appears to have been taken by the Appellate Division, Fourth Department, in the case of Hessler v. North River Ins. Co. (211 App. Div. 595), but I feel bound by the decisions of the Court of Appeals above cited, and hence decide accordingly. No plea of waiver by act of an agent, which relates to something subsequent to the making of the contract, is involved here. This determination renders unnecessary a consideration of the other questions raised. Motion to dismiss complaint granted. Order signed.