Planters' Mutual Insurance v. Deford

Robinson, J., delivered the opinion of the Court. This action was brought on a policy issued by the appellant on the 6th of May, 1871, insuring the property of the appellees, known as the Bottle Bun Tannery, against loss by fire, to the amount of eight thousand dollars, distributed as follows: Cl On tannery with additions.............$3000 Hides and leather tanned, and in pro- cess of tanning 200 .Bark ins heds...... 3000" On the 30th of June, 1871, the tannery building was entirely destroyed by fire, and the stock of hides in part destroyed and in part injured. The loss on the building was estimated at twelve thousand dollars, and on the stock of hides and leather, $18,507.05, thus making the entire loss $30,507.55. ³⁹⁶ The building was insured in different companies, including a policy of $4000 in favor of Deford & Appold, trustees, to the amount of $10,500, and the stock of hides and leather $18,500, making altogether $29,000. The policy of the defendant, provided that any subsequent insurance of the property by the appellees, should render it null and void.

At the trial, a policy of $5000 on the stock of hides and leather issued by the Union Eire Insurance Company of Baltimore, on the 2nd of May, 1871, was offered in evidence, upon which was the following endorsement: “ 1871, June 3rd, after this .date, this policy covers $2500 on stock, and $2500 on building.” This endorsement by which $2500 of the $5000 was transferred to the tannery building, being subsequent to the date of the defendant’s policy, the plaintiffs offered to prove by Thomas Deford, a member of their firm, and also by Otis Spear, agent and actuary of the Union Eire Insurance Company, that he, Deford, just before the issuing of the policy applied to the Union Insurance Company for a policy of $2500 on the building and $2500 on the stock of hides and leather, but by a mistake of the clerk of said Company, the policy was filled up for $5000 on stock, that this error was not discovered by the plaintiffs until about the 3rd of June, following, when upon their application the Company made the endorsement of June 3rd, as it now appears on the face of the policy, in order to correct the mistake thus made, and for the purpose of making the policy conform to the original contract of insurance made on the 2nd of May, the day it was issued. This evidence is objected to on the ground, that the effect of it is to contradict or vary the terms of the policy issued by the Union Insurance Company on the 2nd of May, 1871. Although a policy of insurance may be reformed in a Court of Equity, where, by a mistake it does not express the contract between the parties, it is very clear ³⁹⁷ that in an action at law, upon the policy between the parties thereto, parol evidence is inadmissible to contradict or vary the terms of the same. But the evidence offered here does not contradict or vary the policy upon which this suit is brought, but is offered to prove an independent and collateral J'act, namely, that the plaintiffs had not insured the property subsequent to the issuing of the defendant’s policy.

The latter denied its liability on the ground of a subsequent insurance, to prove which it relied on an endorsement made upon the policy of another Company. On the other hand, the plaintiffs offered to prove not only by themselves, but also, by the agent of the Union Eire Insurance Company, being the two parties to the contract, that the endorsement thus relied on by the defendant was made for the purpose of correcting a mistake of the clerk in filling up the policy, and that the original contract of insurance was as it now appears by said endorsement; under such circumstances, we take the law to be, thatwbere the writing itself does not constitute the cause of action or contract between the parties, but is offered in evidence to prove a distinct collateral fact; parol evidence is admissible in respect of such fact, although it may contradict or be inconsistent with the written evidence. There may be exceptions to this rule, in cases of deeds and mortgages, or other instruments which are required by law to be recorded in order that the public may have notice of their contents, and in regard to which the parties thereto, in a suit with strangers, will not be permitted to contradict the same by parol evidence. Such are the cases relied on by the appellant.

In Henderson vs. Mayhew, 2 Gill, 393, an action was brought to recover for supplies furnished a master of the ship, and it was held that the grantees of an absolute bill of sale could not prove by parol evidence, that it was intended as a mortgage, and that by mistake it was drawn as an absolute bill of sale. The Court say; ³⁹⁸ <cThe appellants, after obtaining an absolute deed, and authorizing the community to regard them as owners of the vessel, cannot now, for their own benefit, be permitted to allege that their bill of sale is a mortgage.” The effect of the evidence here offered not being to contradict or vary the terms of the policy upon which the suit was brought, but to prove a collateral fact, we are of opinion that it was admissible.

II

The by-laws of the defendant provide in case of loss by fire, the insured shall give notice of the same within thirty days, and, shall deliver to the Secretary a particular account of such loss, verified by affidavit of the insured, or his agent, &c. The proof of loss was made out and verified by three disinterested persons, an employe of the plaintiffs, and two farmers living in the neighborhood, and is objected to on tbe ground, that it is not verified by the plaintiffs or their agent. Preliminary proofs are furnished for the benefit solely of the insurer, and if they are defective in any respect, good faith and fair dealing require that the insured should be notified of such defect within a reasonable time, in order that he may correct the same. If, however, instead of doing this, the Company puts its refusal to pay upon other distinct and independent grounds, it will be considered as having waived objections to such defects, and will not be permitted to rely upon the same as a defence to an action on the policy.

The preliminary proof here, was furnished on the 15th of July, and in the correspondence extending from that time to October 24th, in regard to an adjustment of the loss, not a word is said about any defect in the proof; on the contrary, the refusal to pay, was placed upon other distinct and independent grounds, namely a subsequent insurance of the property, and over-estimate of the loss. Conceding then that the proof furnished in this case was defective, we are of opinion that the defendant has waived the right to object to it on that ground. ³⁹⁹ III. Appended to the proof of loss was a statement by the plaintiffs of the several insurances on the property, and also the following statement in regard to the value of the property: Machinery.....................................$1000 Stock in tannery, hides and leather. .$56,500 The defendant’s second prayer assumes that his statement refers exclusively to the hides and leather, and if the plaintiffs knowingly misrepresented the value of same, they are not entitled to recover, although the jury should find the loss equal to the amount of the insurance. On the other hand the plaintiffs contended, that the sum of $56,500, was intended to represent the value not only of the hides and leather, but also bark and other stock properly belonging to the tannery, and that this interpretation is warranted not only by the language used, but also by the circumstances under which the statement was made.

The interpretation of a written instrument belongs no doubt as a general rule to the Court, and where parties have expressed their intention in clear and definite terms, the paper must be construed according to the true meaning of the words used. The question here is what did the plaintiff's mean by this statement : “Stock in tannery, hides and leather $56,500” appended to the proof of loss? Did they mean to value the hides and leather at $56,500? or did they include in addition thereto, bark and other stock in the tannery at the time of the fire ? Now if the language used be liable to the construction assumed in the defendant’s prayer, no one will question, hut what it is equally susceptible of the meaning placed upon it by the plaintiffs.

Here then is a paper which upon its face is liable to more than one interpretation, and the prayer was therefore properly rejected. The question as to whether parol evidence was admissible to show what the plaintiffs meant, becomes unnecessary to decide. ⁴⁰⁰ IV. It appears the whole number of hides sent