Bitting v. Home Insurance

Offutt, J., delivered the opinion of the Court. This is an appeal from a “judgment on demurrer” entered in the Circuit Court for Prince George’s County, for the defendant, in an action on a fire insurance policy, issued by the Home Insurance Company of New York to John E. Bitting, insuring tobacco stored in a barn on the insured’s farm in Prince George’s County, Md. Bitting filed in that court an amended declaration, in which, in substance, he stated that on October 17th, 1928, the deféndant issued to him a fire insurance policy insuring him to the extent of $2,000 against loss through the damage or destruction by fire of tobacco owned by him and stored in his barn; that on December 12th, 1928, the tobacco was totally destroyed by fire, and that on the following day a written notice of the loss was served upon defendant’s agents, as a result of which it sent its agent to inspect the loss, but that it has “totally refused” to pay the “amount of insurance called for in said policy” or any part thereof. By way of defense the insurance company filed a special plea in which it alleged that “one of the conditions of said policy was and is that unless otherwise provided by agreement in writing added hereto the defendant shall not be liable for loss or damage to any property insured under said policy while encumbered by a chattel mortgage and said policy also provides that ‘no one shall have power to waive any provision or condition of this policy except such as by terms of this policy may be the subject of agreement added hereto, nor shall any such provision or condition be held to be waived unless such waiver shall be in writing added hereto’; and the said tobacco insured under said policy was at the time of the fire referred to in the declaration encumbered by a chattel mortgage and there was not added to said policy any agreement of defendant in writing consenting to said ⁵⁹ chattel mortgage or agreeing otherwise than to defendant’s non-liability while said mortgage covered said tobacco.” To that plea the plaintiff replied, and in his replication admitted that the policy contained the conditions alleged in the plea, and that at the time of the loss the property insured was incumbered by a chattel mortgage, but sought to avoid by averring the following facts, that is to say, 'that, prior to the issuance of the policy, defendant’s soliciting agent saw the plaintiff in reference to renewing a fire insurance policy which he had held in another company, that he “advised” the agent that he “wanted insurance in the sum of $2,000” on a crop of tobacco then stored in his barn and owned by him “in some company” which would permit him to borrow money secured by bill of sale or chattel mortgage on the tobacco; that the agent told him that the company in which he had been insured might object to insuring the tobacco if it “was subject to or would be subjected to” such a lien, but that “he as said agent of the defendant would insure him in the sum of $2,000 on said crop of tobacco, which policy would permit him, the plaintiff, to borrow money on said crop of tobacco, either by way of bill of sale or chattel mortgage.” but that such a policy would “cost him more money”; that relying upon the “advice and assurance of the said agent and solicitor of the defendant,” he consented to the issuance of “a policy” by said defendant in the sum of $2,000 on said tobacco, and “a policy” was in fact issued to him, and the premium thereof paid, and that thereafter “by reason of the assurance of the said agent and solicitor of the defendant, and relying on the same,” he borrowed “by way of chattel mortgage” $500 on the tobacco covered by the policy. The replication then concludes as follows: “Wherefore, the plaintiff relying as aforesaid on the statements made by the agent and solicitor of the defendant both prior to the issuance of said policy and at the time of the procurement of said chattel mortgage as aforesaid, and that the terms and conditions of said policy were in accord with the representations made by said agent and solicitor of said defendant, felt secure in that he was protected under said policy to the extent of $2,000; ⁶⁰ and at the time of the execution of the chattel mortgage aforesaid, he was not aware of nor did he know by reason of the assurance of the agent and the solicitor of the defendant that because he had in fact borrowed money on said tobacco, insured as aforesaid, there was any obligation on his part to have endorsed thereon or added to said policy any agreement in writing on the part of the defendant consenting to said chattel mortgage, or any waiver in writing added to said policy in this regard.” A demurrer to that replication was sustained on December 9th, 1930, and on March 4th, 1931, a judgment “on demurrer” for the defendant was entered by “order of court.” That reply to appellee’s defense involves two propositions; one, that the assurance given by defendant’s agent before the policy was issued, that he as defendant’s agent would insure the plaintiff in the sum of $2,000 on said crop of tobacco, which policy would permit him to borrow money on said crop of tobacco either by way of bill of sale or chattel mortgage, estops the insurer from asserting a provision in the policy actually delivered to and accepted by him which relieved the insurer from loss, if at the time it occurred the property was incumbered by a chattel mortgage, unless it had in writing assented to such incumbrance; and two, that such statements repeated by the agent at the time plaintiff placed a chattel morgtage on the property amounted to a waiver by the insurer of that provision.

Estoppel is cognizable at common law either as a defense to a cause of action, or to' avoid a defense (21 C. J. 1244), and while ordinarily an estoppel in pais need not be specially pleaded (Id. 1240; National Shutter Bar Co. v. Zimmerman., 110 Md. 313 , 73 A. 19 ; Albert v. Freas, 103 Md. 583 , 64 A. 282 ; Babylon v. Duttera, 89 Md. 444 , 43 A. 938 ; Brooke v. Gregg, 89 Md. 234 , 43 A. 38 ; Higgins v. Carlton, 28 Md. 115 ), yet where it is relied upon tu avoid a defense set up in a special plea it too must be specially pleaded. Hayes and Wife v. Va. Mut. Protection Assn, 76 Va. 231 .

Such a pleading is sufficient if, without reference to mere form, it states facts which are in substance a sufficient reply ⁶¹ to the defense (Code, art. 75, secs. 2, 3, 8), provided it gives color to defendant’s plea by confessing its averments. 49 C. J. 292. So that the question is, are the facts stated in the replication sufficient to estop the defendant from asserting the defense relied upon in its special plea, identified as Defendant’s Plea Ho. 4? In dealing with that question, it may be assumed that any knowledge of defendant’s soliciting agent, acquired before the issuance of the policy and while acting within the scope of his authority in its negotiation, will as to that particular business be imputed to his principal. 26 C. J. 296; West End Hotel Co. v. American F. Ins. Co. (C. C.), 74 F. 114, 115 ; Travelers' Ins.

Co. v. Melman, 147 Md. 459 , 128 A. 125 ; Mut. F. Ins. Co. v. Owen, 148 Md. 257 , 129 A. 214 . And it has repeatedly been held by this court that provisions in a policy which deny to- the agent the power to waive any ■of its conditions have no application to acts clone or statements made at its inception (New York Life Ins.

Co. v. Rogers, 156 Md. 92 , 143 A. 651 ; Dulany v. Fidelity & Cas. Co., 106 Md. 34 , 66 A. 614 ; Forwood v. Prudential Ins. Co., 117 Md. 260 , 83 A. 169 ; Hartford Fire Ins. Co. v. Keating, 86 Md. 130 , 38 A. 29 ), and in themselves impose no limitation upon the agent’s authority to bind his principal by representations material to the negotiation of the policy made before the issuance thereof.

The demurrer concedes the truth of all well-pleaded averments of fact iu the replication, and it may therefore be as^ sumed that, prior to the issuance of the policy which is the basis of this action, the defendant promised the plaintiff that it would issue to him a policy insuring him to the extent of $2,000 against loss by the destruction or damage by fire of tobacco owned by him, which policy would permit him to incumber the insured property by a chattel mortgage, but would “cost him more money” than a policy which permitted no such incumbrance. But the language of the pleading is too vague and indefinite, considered in its entirety, to be ■accepted as a sufficient statement that the plaintiff agreed to accept such a policy, if offered to him. And the policy ⁶² which actually was issued to him aud which he accepted contained a provision that, unless otherwise agreed to by the insurer in writing, it should be relieved of liability for any loss or damage to the property while incumbered by a chattel mortgage. The replication further states that, by “reason of the assurance” of defendant’s agent and “relying” upon