Viele v. Germania Ins. Co., 26 Iowa 9

The answer of the defendant admits the issuing of the policy, the loss by fire, notice of loss to defendant, ownership of property in plaintiff, and that there was no further insurance, but sets up the following special defense: That, at the time the policy was issued, the building lost by the fire was used for mercantile purposes, and for “ manufacture of materials which were not of an extra combustible nature; ” that, after the contract of insurance was entered into, and before the fire, the plaintiff leased portions of the building, to be used for the manufacturing therein of “rustic window shades,” without having obtained the written consent of defendant, and contrary to the terms of the policy; that, in the manufacturing of said rustic window shades, pine slats and splinters of wood, benzole, benzine or naptha, varnish, paints, etc., are used, and large quantities of shavings were constantly being made, and other combustible substances created, greatly increasing the risk and hazard of the building insured in said p. 14policy; that such risk and hazard was not covered by the policy, and continued to the time of the fire; that plaintiff paid no additional premium on said policy on account of said increased risk, and defendant waived no rights accruing on account of the same; that, contrary to the terms of the policy, plaintiff permitted benzine to be kept upon the premises; whereby plaintiff lost all right to recover under said policy, and it has become void, etc.

Plaintiff moved for the consolidation of the cause with three other causes pending in the same court, each upon the same policy, for the same loss, and respectively against the Hanover, Niagara and Pepublic Insurance companies, or that all four of said causes abide the event of the one first tried, subject to the same exceptions, motions, etc. This motion was based upon the affidavit of plaintiff’s agent, to the effect, that all of said actions are brought upon the same policy of insurance to recover for the same loss; that the same defenses are set up in all of them, and the defendants are represented by the same attorneys in each cause; that the defendants have entered into a mutual arrangement for issuing policies of the kind and character of the one upon which the said suits are based, and have a joint agency, representing all of said companies, called the' “ Underwriters’ Agency,” under which the policy sued on was issued, and under which all such joint business is conducted, including the settlement and adjustment of losses and settlements of suits, etc.; that said companies have, under such “Underwriters’ agency,” a general agent for this State, who attends to the defense of said suits, and who has given personal attention to said suits, and that the attorneys of defendants in all of said actions are employed by said agent of p. 15all of said defendants to defend all of said suits. A like motion was made in each, of the other cases, based upon like affidavits. Upon these motions and affidavits, the court ordered, that the other causes abide the event of this cause, and that the same verdict and judgments be entered therein as shall be rendered in this cause, unless defendants should show cause to the contrary, by affidavit, before the conclusion of the trial in this cause. To which defendants respectively excepted.

“ Did the defendant, by its agent Yerder, with knowledge of all the facts claimed -by defendant to constitute breaches of the conditions of the policy sued on, by its conduct and language to the plaintiff, or his agent, recog* p. 16nize and treat said policy and the insurance thereby made, as still continuing and in force, and induce the plaintiff, or his said agent, so to regard it ? ” To which the jury answered: “Tes.”

Plaintiff moved the court to set aside the special verdict of the jury upon question No. 6, because the finding is contrary to the evidence, and also moved for judgment on the general verdict. Defendant moved the court to set aside the special findings upon questions asked by plaintiff numbered one, -two, four and five, and upon question five submitted by defendent, and also the general verdict; because, first, such findings are contrary to the evidence; second, because of errors of law in the instructions of the court; third, the verdict and special findings are contrary to law; fourth, because of error in refusing to submit to the jury other questions requested by defendant; fifth, because of error in refusing certain instructions rep. 18quested by defendant. The defendant also moved for judgment upon tbe special findings. The motions of defendant were overruled and exceptions taken thereto. The motion of plaintiff to set aside the special finding was also overruled and exceptions taken, and judgment rendered upon the general verdict against defendant for the sum of $3,421.80.

That is, the very instrument under which plaintiff claims, stipulates in plain, unmistakable terms, that if the p. 19risk be increased through means within the control of plaintiff without the written assent of defendants indorsed thereon, then and thereupon the policy shall be void.

Phillips on Insurance (vol. 1, p. 8, § 10) states the law to be; “a policy being forfeited by a violation of some of its conditions, a mere oral waiver of the forfeiture is not p. 20sufficient to revive it, unless some new consideration on the part of the assured supervenes, or some transaction takes place between the parties under the contract importing a waiver, — such, for instance, as would be equivalent to receiving rent from a tenant for a time posterior to the forfeiture of a lease by non-payment of rent.”

In Smith v. The Saratoga County Mutual Fire Insurance Company (3 Hill, 509), which was an action on a policy that had been assigned notwithstanding the provision that it should become void if assigned without the consent of the company in writing, the court say: “ It is said that the defendants by making and collecting assessments upon a premium note after they had notice of the assignment of the poiicy, have waived the forfeiture and affirmed the continuance of the contract, and this is likened to the case where a landlord after notice of some act or omission by his tenant which gives a right of re-entry, receives or distrains for the subsequent accruing rent, or does some other act by which he plainly affirms the continuance of the lease. This is held to be a waiver of the forfeiture. But this doctrine only applies when the act or omission of the tenant renders the lease voidable, and not where it is declared absolutely void on the happening of a particular event. The distinction is between cases where the landlord may put an end to the lease by an entry for the wrong done, and those where the wrong terminates the lease without any act on the part of the landlord. In the former case the landlord may waive the forfeiture by an act which affirms the continuance of the tenancy; but in the latter the lease being ipso facto void, is incapable of confirmation. Finch v. Throck p. 21me» ton, Cro. Eli-z. 221; Mulcany v. Eyres, Cro. Car. 511; Anon, 3 Salk. 4, and see Co. Litt. 295, b; Rickman v. Garth, Jac. 173; Jones v. Verney, "Willes’ Bev. 169, 176, 177 ; Jenkins v. Ghwrch, Cowp. 482; Doer. Watts, 7 O. B. 79; Doe v. Rees, 4 Bing. N. O. 384; Goodwright v-. Dmids, Comst. 803.

Unless, therefore, it was, in effect, a waiver or an estopp. 22pel, it was immaterial, and tended to mislead the jury. It was neither.

Proof of a mere waiver of forfeiture already occurred, p. 23or estoppel as to an act already passed, is insufficient to authorize a continuing act which creates forfeiture.

By the increase of the risk as admitted by plaintiff the policy became absolutely void. Waiver applies only to contracts which are voidable upon the happening or omission of a certain event or contingency. Smith v. The p. 24Saratoga County Mutual Fire Insurance Company, 3 Hill, 508.

The case of Frost v. The Saratoga Mutual Insurance Company was an action on a policy issued by a mutual insurance company. The defense was on the ground of a false warranty, in that the insured, in his application, which was made part of the policy, had untruly stated that there were no buildings within ten rods of the buildings insured, but the insurers, with a knowledge of the loss, and of the inaccuracy of the statement, had afterward made assessments on the premium note given by the insured, which h'e had paid: held, that the insurers, in affirming the validity of the premium note, necessarily affirmed that the policy was also originally valid; and the p. 25court say, “the defendants shall not now be allowed to set up any fact dehors the policy, in order to impeach the original validity.”

In the following cases relied upon by the counsel for plaintiff in this suit, the insurance companies were held to have waived conditions in the applications, requiring written notice or consent to certain things, or were estopped from setting up that the contract of insurance, the policy, had never been in force, or had effect; it having been shown that the company, with full knowledge of the breach of the conditions, had received the premium and issued the policy and delivered the'same, after such breach and after such knowledge. Smith v. Gtigerty, 4 Barb. 614; Goit v. National Protection Ins. Go., 25 id. p. 26190; Liddle v. Marhet Fire Ins. Co., 4 Bosw. 179; New Yorh Central Ins. Co. v. National Protection Ins. Oo., 20 Barb. 468; Bigler v. New Yorh Ins. Co., 22 N. T. 402; Brown v. Cattaraugus County National Ins. Co., 18 id. 385.

YII1. The doctrine is established by an unbroken series of decisions, that, after a policy has once been forfeited, no waiver or estoppel can be set up successfully against the company by parol, unless made by the company or by an agent fully authorized, and upon a new and valuable consideration. 1 Phillips on Ins. § 10, p. 8 (5th ed.); also, §§ 904, 1040, and authorities cited; also, 2 id. § 2155; Cocherill v. Cincinnati Ins. Co., 16 Ohio, 149; Frost p. 27v. Saratoga Go. Mut. Ins. Go., 5 Denio, 154; Gates v. Madison Go. Mut. Ins. Go., 2 N. T. 43; Smith v. The Saratoga Go. Mut. Ins. Go., 3 Hill, 508 ; Neely v. Onondaga Go. Mut. Ins. Go., 7 id. 50; Phoenix Ins. Go. v. Lawrence, 4 Mete. 9 ; Forbes v. Agawam Mut. Ins. Go., 9 Cush. 470; Worcester Bank s. Hartford Ins. Go., 11 id. 265; Lee s. Howard Ins. Go., 3 Gray, 583 ; Barrett v. Un. Mut. Ins. Go., 7 Cush. 175 ; Murphy v. Peoples Ins. Go., 7 Allen (Mass.) 239; Evans v. Timountain Ins. Go., 9 id. 329; Muvey v. Shammut Ins. Go., 4 id. 116; Tebbetts v. Hamilton Ins. Go., 3 id. 569; Hales. Meehanics’ Ins. Go., 6 Gray, 169; Eimbal s. Howard Ins. Go., 8 id. 33; Philbrook s. New Englcmd Ins. Go., 37 Maine, 137; Gardiner s. Piscataquis Ins. Go., 38 id. 439 ; Hazard s. Frankl/i/n Ins. Go., 7 H. I. 429; Trask s. State Fire and Marine Ins. Go., 29 Penn. St. 198 ; Bipley v. Etna Ins. Go., 30 N. T. 136; New Englcmd Fire da Marine Ins. Go. s. Scheulter, 38 111. 166.

Gity of Davenports: Peoria Ins. Go. (17 Iowa, 276) simply holds, that a parol contract to insure, followed by p. 28delivery of a policy, is good, and the policy relates back to the parol contract, so as to cover an intervening loss.

It is expressly agreed in the policy, that, unless the consent to the increase of the risk be in writing, it avoids the policy. This is an agreeement by the plaintiff in effect, that no other consent than in writing will be suffip. 30cient. The plaintiff, holding this policy in his hand, knew that the agent Yerder could not give any other than yritten consent. This is a limitation on the power of the agent, brought home to the plaintiff. He had agreed with the principal, that the agent could give no assent which would bind the principal otherwise than in writing.

"We further claim that there were special instructions to the defendant’s agent, not only in the printed regulap. 32tions in evidence, but in the contract itself, and known to the plaintiff. The court entirely ignore this view of the law in this case in its instructions.

I. The main point urged by defendant on the trial in various forms (as objections to evidence, requests for instructions and exceptions to charge), viz., that a breach of the condition in the policy, avoiding it if the risk be p. 33increased without the written consent of the insurers, is incapable of being waived by parol, is wholly untenable, because,

IY. The evidence of the agent. Yerder’s directions to Skeel (one of the window shade manufacturers), as to the precautions he should take to avoid danger of fire, was properly received, and rests on the same ground precisely as Yerder’s similar directions, given to Camp (the other manufacturer), and the employees on the insured premises. It was not evidence of mere conversations or statements of facts made by the agent to third persons. It was an act done by the agent, as agent, in the discharge of his duties to the insurers. Skeel was the plaintiff’s tenant of the insured premises, the character of whose occupation is claimed to constitute a breach of the policy. p. 39As such, he was in privity with the plaintiff. The conversations with him, also, occurred immediately after, and are part of the same course of conduct, or res gestee, with the acts and declarations of Yerder on the insured premises, already alluded to, and in his interview with New-comb, plaintiff’s agent, and are explanatory and confirmatory thereof, and of the construction claimed for them by the plaintiff. Even if not themselves acts of waiver, they are acts from which a waiver could be inferred. Waiver, like other matters resting in parol, may be proved by indirect and circumstantial, as well as by positive, evidence. Indeed, it is not so much a distinct act, as the legal result or effect of other acts.

YI. The keeping of benzine was not a separate and distinct thing from the window-shade factory, but part and parcel thereof, and the very thing, most of all, claimed to render said factory an increase of the risk. Hence a waiver of objection to the factory necessarily involved a waiver of objection to the benzine, and vice versa; and the court’s charge to that effect was correct. Oitizentf Inswranoe Go. v. McLaughlvn, 6 Am. Law Reg. N. S. 374; Pindar v. Kings Co. Ins. Go., 36 N. Y. 648; p. 41Harper v. Albany Mut. Ins. Co., 1Y id. 194; Same v. H. Y. Ins. Co., 22 id. 441.

Upon the defendant filing such admission, his answer p. 43sets up the facts relied upon as matter iu avoidance; but when filed by the plaintiff, the replication being dispensed with, there is no pleading prescribed by the Revision in which such matter may be embodied. TJpon. an admission by the plaintiff, it is evidenly proper that he should in some way advise the court that matter in avoidance of the facts admitted is relied upon to defeat their effect, for, without being so advised, the court, upon the pleadings, would be justified in rendering judgment for defendant. This may be done by a separate paper, by an entry of record, or, as in the case at bar, which seems to be the better practice, by embodying the notice in the admission itself. This practice, we think, is contemplated by section 2917, above cited. If, upon filing an admission, the plaintiff would be precluded from setting up matter in avoidance, it would practically defeat the intention of the section, and render it impossible for such admissions to be .made when facts in avoidance are relied on. But the law expressly provides that the admission may be by the plaintiff as well as the defendant. When made by the plaintiff, it may be without the abandonment of his right to defeat the effect of the facts admitted, by evidence of other independent facts. How can this be done? The obvious solution of the difficulty is a statement or notice of intention to prove matter in avoidance. Such a statement or notice is not expressly provided for by the Revision, but, from the nature of the case, is necessary, and is in harmony with our system of pleading, and, therefore, proper. It matters not whether it be classed as a pleading or not, nor what name be given it, though it may be properly designated an admission and avoidance, in imitation of the name of pleas and replications of like character under the common law pleading.

As no replication to the answer is necessary, the matter of avoidance relied upon need not be specifically set out p. 44with, oi’ as a part of, the admission. Without the admission, the defendant would not be informed specifically what facts in avoidance of his defense would he given in-evidence. It is certainly imposing no hardship upon him, nor could it be a surprise, for the plaintiff to admit the facts he pleads, without stating the matters in avoidance to be given in evidence. Having been relieved of the necessity of proving his defense, he cannot, on that ground, base a claim to be informed .fully of the evidence relied on by plaintiff.

Section 2764 of the Revision provides, that, “ when two or more persons are bound by contract, or by judgment, decree or statute, whether jointly only, or jointly and severally, or severally only, and including the parties to negotiable paper, common orders and checks, and sureties p. 46on the same or separate instruments, the action thereon may, at the plaintiff’s option, be brought against any or all of them.” Under this section, in my opinion, the defendants in the several actions could have been sued jointly. Though, by the terms of the policy, each company is severally liable thereon, yet the same evidence which would charge liability upon one, would fix it upon 'all the others. We cannot conceive of any state of facts which, under the terms of the policy, would render one, and not all, liable. The several companies united in one agency to do business. Risks were jointly taken, and losses jointly adjusted and paid through this agency. Their manner of business was as though they were one company. The condition of the policy, whereby their liability becomes several, is defeated, so far as it tends to prevent a joint action thereon, by the section of the Revision above cited. The companies defended the suits through the joint agency, and all of them were engaged in the defense of each suit, — each one thus became a party to each suit. 1 Greenl. Ev. § 522-3. A judgment in one suit would be conclusive against all the companies. Lovejoy v. Murry, 3 Wallace, 18. The several suits are upon the same instrument, for the same cause of action, supported and defended by the same evidence, prosecuted by the same party plaintiff, against several parties that could have been joined as defendants, and that are, in fact, parties to each suit in contemplation of law, and each would, therefore, be concluded by a judgment recovered in any one of the actions. Under these circumstances, the order of consolidation was properly made.

The power of the 'court thus to consolidate the several actions, upon motion of plaintiff, is not expressly confered by the Revision. Section 2980 authorizes consolidation on motion of defendant. The same reason and necessity exists for allowing the relief, in a proper case, p. 47to plaintiff, upon his motion. The power of courts to consolidate actions, has been long exercised in the absence of of any express statutory directions. Clason v. Church, 1 Johns. Cas. 29; Hollingsworth v. Broderick, 31 Eng. Com. Law, 162; Lewis v. Barkes, 93 id. 329.

The construction above given to section 2764 of the Eevision, whereby an action would be sustained upon ,the policy against all of the underwriters jointly, is not concurred in by my brothers, who unite in holding that such an action could not be maintained. They consider the policy operates precisely as though there were four separate contracts, and that the several underwriters are separately bound thereon, and that it must be considered as the separate contract of each of the obligors, and not as one contract upon which all are severally bound. I am constrained to regard it, as it is in fact, as one contract, upon wdiieh the obligors are severally bound. The fact that each obligor is severally bound to pay a separate sum, to my mind, does not give a character to the instrup. 48ment, nor remedy tbereon, different from such as would exist -were the obligors severally bound to pay the same sum. The extent or amount of the liability of the obligors upon the instrument, does not, in my opinion, sustain the view that it is, in contemplation of law, four separate instruments. It is in fact one instrument, upon which the obligors are severally liable, and, in my opinion, comes within the purview of the section above referred to. I state these views with diffidence, and would not urge them were they not at the very foundation of my conclusion upon this point.

The question above stated is fairly presented by the record, and is of very great importance, not only in its p. 50relation to this case, but to the business of insurance generally. We have endeavored to give it the careful and patient consideration, aided by the able argument of the counsel for the respective parties, which its importance demands. ‘

"'""The policy which is the foundation of this action, though a unilateral contract in form, contains covenants of the assured as well as of the underwriters, and mutual agreements of the parties. Some of these covenants on the part of the assured, are in the nature of warranties, and conditions precedent; others are in the nature of obligations imposed by the conditions limiting or measuring the liability of the underwriters. The covenants of the insurers are mostly, if not all, dependent upon the obligations or covenants of the insured, expressed or implied in the policy. The policy, though subscribed only by the underwiters, is evidence of the contract entered into by both parties, and binds both. 2 Parsons’ Maritime Law, 27; Parsons’ Mercantile Law, 404. Contracts of this character, binding the obligor upon conditions to be performed by the obligee, but subscribed only by the obligor, are not uncommon. Those for the sale of real estate are often in this form. The language used to express the idea that the obligor is not bound to perform his covenant, until the conditions imposed upon the other party are performed, or, in other words, that the obligor’s covenants are dependent, is usually a recital of the conditions which are to be performed by the obligee, following with the declaration that if they are not performed, the instrument shall become void, or forfeited. The policy under consideration is in this form. It declares, that if the risk is increased by means within the control of the assured, without the assent of the underwiters, it “ shall be void.” By the conditions expressed, the assured is prohibited from increasing the risk, and he obligates himself that it p. 51shall not be increased in the manner prohibited. This is his undertaking, and, as we have seen, he is bound thereby as though he had subscribed the policy. This is obvious; but a word or two more may express the idea more clearly. The underwriters obligatq-th,emselves to pay a certain sum in case of the loss of the building by fire, with the condition, however, that the risk shall not be increased in the manner prohibited. To this condition the assured assents by the acceptance of the contract, and he thus obligates himself and becomes bound by the policy, that the risk shall not be increased. If he permits it to be increased, his covenants are broken. The condition which he is bound to perform is precedent to the underwriters’ covenant. The underwriters are, therefore, not liable on the policy, which ceases to bind them, and to that extent the policy becomes void.

Unsound conclusions in the argument of defendant’s counsel, result from an improper understanding of the expression “ shall be void,” used in the condition above quoted from the policy. It is insisted, that the instrument, by force of these words, upon the increase of the risk, became absolutely null and void. The phrases and words used to convey the idea are, “ ipso facto void;” “ dead;” “ extinct;” “ defunct;” “ of no effect,” etc., etc.; meaning thereby that the instrument has no force or effect, in the sense of these terms when applied to instruments void in law, as the deeds of parties having no legal capacity to contract, or contracts against public policy, etc. But the term “ void,” as used in the policy, has no such meaning. It simply means that the underwriters, upon the violation of his covenants by the assured, shall cease to be bound by their covenants in the policy; and this is in accordance with the true definition of the word, and its common use in like connections. The policy does not cease to have a legal existence, it is the only compep. 52tent evidence of the contract it embodies, and in truth is not void except so far that the underwriters are no longer bound thereby. Neither will they be discharged therefrom unless they plead the fact that the insured failed to perform his covenants contained in the policy. Their silence would waive the default of the opposite party.

We conclude, therefore, that the forfeiture of the policy on account of the breaches of the conditions thereof, could have been waived by the defendant, and if waived, the policy continued of the same binding force which it originally possessed. This view is sustained by the following p. 53authorities: Keenan v. Mo. State Mut. Ins. Co., 12 Iowa, 126; David v. The Hartford Ins. Co., 13 Iowa, 69; Carpenter v. The Prov. Wash. Ins. Co., 16 Pet. 509; Coursen v. Penn. Ins. Co., 46 Penn. St. 323; Atlantic Ins. Co. v. Goodale, 35 N. H. 328; Frost v. Saratoga Ins. Co., 5 Den. 154; Clark v. Jones, 1 id. 516; Cartwright v. Gardner, 5 Cush. 281; North Berwick Co. v. Ins. Co., 52 Maine, 336; Warner v. Peoria Ins. Co., 14 Wis. 323; Smith v. Gugerty, 4 Barb. S. C. 614; N. E. F. & M. Ins. Co. v. Schettler, 38 Ill. 166; Viall v. Ins. Co., 19 Barb. 440; Ins. Co. v. Stockbower, 26 Penn. St. 199; Buckbee v. Life Ins. Co., 18 Barb. 541; Beal v. Park Ins. Co., 16 Wis. 241; Wing v. Harvey, 27 Eng. Law & Eq. 140; Peoria F. & M. Ins. Co. v. Hall, 12 Mich. 202.

These exceptions to the rule, or rather the rule admitting parol evidence for these purposes, may not apply to specialties; but a contract of insurance need not be by specialty, or even in writing. It seems to be the better opinion that it may be oral only. Parsons’ Mercantile Law, 403 and notes; 2 Parsons’ Maritime Law, 19 and notes; City of Davenport v. Peoria Ins. Co., 17 Iowa, p. 54276; Commercial Ins. Co. v. Union Ins. Co., 19 How. 321; Baptist Church v. Brooklyn Ins. Co., 19 N. T. 305. We need not, then, inquire whether a policy executed by an incorporation and attested by its corporate seal is a specialty, for the policy sued on is not sealed by the companies, and is therefore a simple contract and not a specialty. The rule therefore will not, in this suit exclude parol evidence for the purposes above mentioned. The cases which we will hereafter cite, in considering what acts may amount to a waiver of conditions or forfeiture on account, of breaches of conditions, support this doctrine and will illustrate its application.

The knowledge of the officers of an insurance company taking a risk upon the life of a party, that he intended to go south of a certain degree of latitude, is a dispensation of a condition that the insured should not go beyond that latitude. Bevin v. Connecticut Life Ins. Co., 23 Conn. 244.) The renewal of a life policy which had expired by non-payment of premium, in favor of one who at the time was sick, and so known to the officer renewing the policy, is a waiver of conditions against ill health of the assured, which otherwise would have avoided the policy. Buckbee v. United States Ins. & Trust Co., 18 Barb. 541. The following cases which illustrate the p. 56doctrine under discussion, we have not space to classify or further notice in this connection. Peoria Ins. Co. v. Hall, 12 Mich. 202; Sheldon v. Atlantic Ins. Co., 26 N. Y. 460; Warner v. Peoria Ins. Co., 14 Wis. 318; N. E. F. & M. Ins. Co. v. Schettler, 38 Ill. 166 , Coursen v. Penn. Ins. Co., 46 Penn. St. 323; Ruse v. Mutual Ben. Life Ins Co., 26 Barb. 556.

It is not an accurate use of terms to say that the condition of a contract must be supported by a consideration. The contract itself must be, but the condition is a mere incident thereto, and its sufficiency, validity or force is in no way affected or dependent upon the consideration. It is true the condition may influence the parties in fixing the amount of the consideration, but the law will not, in the absence of fraud, inquire into its sufficiency, nor hold a contract invalid because a full or just value has not been received by the obligor. The case of a policy of insurance illustrates the point. The underwriter is bound thereby to pay the assured the amount of any loss by fire which may happen to his property within a certain time. p. 57The consideration of this contract is the premium received by the underwriter. The assured is bound not to permit the risk to be increased; this obligation is the condition of the policy, and with it we can associate no idea of consideration. It may enter into the contemplation of the underwriter when fixing the value of the risk, which may be worth a greater premium without the condition in the policy, but the adequacy of the consideration, as we have remarked, is not a matter of inquiry, and the consideration itself no element of the condition. We conclude, therefore, that, as the condition is not dependent upon nor supported by the consideration, it may be waived or dispensed with even by an agreement without consideration.

The instructions to the jury, and the rulings upon objections to evidence, in effect, hold, that the authority of p. 58the agent to waive forfeitures and dispense with conditions may be sufficiently shown by proof of the possession and exercise of the powers above stated, and that express authority need not be shown in order to bind the defendant thereby. This we conceive to be the law.

Such is the express provision of the policy upon which this suit is brought, and there is not one word of limitation upon the authority of the agent contained in it. No attempt was made to prove knowledge on the part of the assured of any limitation of the power of the agent, further than by the policy itself, and a general custom or rule of insurance companies and agents that no change can be made by agents in the printed conditions of the policy. The effect of such limitation will be hereafter noticed. The powers of the ageut, then, are those of a general agent, and the companies are bound by his acts which are within the scope of the general authority he possesses, even though he violates limitations upon that authority which are not brought home to the knowledge /of the party with whom he deals. Story on Agency, §§ 126, 134; Keenan v. Mo. State Mut. Ins. Co., 12 Iowa, 131; City of Davenport v. Peoria Ins. Co., 17 id. 276; Warner v. Peoria Ins. Co., 14 Wis. 318, 323; North p. 59Berwick Co. v. N. E. F. & M. Ins. Co., 52 Maine, 336; Post v. Æna Ins. Co., 43 Barb. 351; Sheldon v. Atlantia Ins. Co., 26 N. Y. 460.

It appears that insurance agents usually exercise supervision over the property insured by them, and this necessarily results from the character of the business and their authority to cancel policies on account of increase of risk. The agent is charged, by the terms of the policy on which this suit is based, with the power to determine whether the risk is increased. If he so determines, he may cancel the policy and put an end to the contract. This involves the necessity of examination of the condition of the insured property during the life of the policy, and constant watchfulness to protect the interest of the underwriters. If he determines that the risk is increased, such determination p. 60is final, for it seems the assured has no appeal therefrom and no redress for loss that may be sustained thereby. Such being the great, and in some respects extraordinary, powers of the agent, it follows that he is clothed with the power to dispense with conditions and waive the effects of breaches thereof, in contracts of insurance made by him. These powers are necessary incidents of his general authority, and without their exercise he could not act to its full extent. If he, can determine that the conditions of the contract have been broken, surely he can also determine that they have not been broken. If he can put an end to the contract because of the increase of the risk, and the consequent forfeiture, certainly he can waive that forfeiture. If,-possessing such full authority to make the contract, determine that it is performed, and to put an end to it, he can not dispense with its conditions after it is executed, the rules of law controlling agents generally and all kinds of contracts, must be held not applica“'ble to insurance policies and insurance agents., These companies have no way of dealing with their customers and the public, except through their agents. They are „ incorporations existing under the laws of another State. Practically those powers can only be exercised by agents. They are inherent in the corporations, whose interest as well as fair dealing toward others (as it did in the ease before us), may require their exercise. The agents, therefore, must be held to have full authority to dispense with the conditions of policies, after their execution, and to waive forfeitures for breaches thereof.

As we have already intimated, the law, in its application to other kinds of contracts, and to agents transacting other kinds of business, fully sustains the doctrines we have announced. This may readily be illustrated by facts disclosed by the record. The owner of the property upon which the policy in question was issued was a nonp. 61resident of the State, and the business was transacted for him by an agent, who, it seems, exercised general powers in all matters pertaining to the property. Now, suppose this agent had executed a contract for the rebuilding of the property burned, or his principal had executed it, and it was delivered by the agent, blanks being filled by him under proper authority, with the name of the other contracting party, sums to be paid, etc. This contract contained many conditions, as we may suppose, for the benefit of the property owner, and the agent was authorized to' assent in writing to the dispensation of certain of them, and the power to put an end to the contract in case of the failure of the other party to comply with its conditions. During the progress of the work, questions arose whether certain things done or omitted to be done by the builder, were in violation of the conditions of the contract. The agent, as to whose power not one word of limitation existed in the contract, or was otherwise known to the builder, asserts that the matters in question are not in violation of the contract, and treats it as complied with, or verbally assents to the dispensation of certain conditions. When the building is completed, in accordance with the contract as thus modified, the principal refuses to pay the sum agreed on, because of non-compliance on the part of the builder with the conditions thus waived by the agent. Upon no recognized rules of law could this defense be sustained, and we would have no difficulty in finding ample authorities in support of the doctrine that the waiver of forfeitures by reason of the breaches of the conditions, and the dispensation of the conditions by the agent, were binding on the principal. This supposed case is not distinguishable upon principle from the ease disclosed by the record.

The views above advanced are fully sustained by the more recent decisions of the courts. In the Peoria Fire p. 62and Marine Ins. Co. v. Hall (12 Mich. 213) the knowledge of the agent when the policy was issued, that gun powder was kept on the premises insured, was held to be a waiver of a condition prohibiting the keeping of it without written permission. In Warner v. The Peoria Fire and Marine Ins. Co. (14 Wis. 319) the policy required notice to be given of additional insurance, and consent thereto indorsed on the policy. The agent indorsed a waiver of this condition as follows: “ Other insurance permitted without notice until required.” The court held this to be a sufficient waiver, and that the agent had. authority to make it. In N. E. Fire and Marine Ins. Co. v. Schettler (38 Ill. 110) the agent, upon the receipt of additional premium, gave permission, indorsed on the policy, for the removal of the building and goods to another lot. In a suit upon the policy, the insurance company claimed, that the agent had no power to consent to the removal of the property. The court held, that the power will be presumed without proof.

It is not to be disguised, that, upon this question, there is very great conflict of authorities, some cases restricting the power of the agents to the most narrow limits of the express terms of their appointments, and circumscribing p. 63it strictly by tbe restrictions imposed by tbe principals, tbe insurance companies. But the more recent cases support the contrary view, and are in consonance with the doctrines we have attempted to maintain in this opinion.

It is argued, that, inasmuch as - by the restrictions imposed on the power of the agent by custom, as well as by the rules of the company, he can make no change in the printed conditions of the policy, therefore he had no authority to waive a forfeiture of such terms, or dispense with their performance. Without determining whether this could be done by agreement at the p. 64time the policy was issued, we are clearly of the opinion, that such restriction of authority in no way affects his power so to do after the policy is issued, in a proper case, and without fraud on his part, or by the assured.

10._waiver arising from failure to cancel. Till. /By the terms of the policy the underwriters reserved the right to cancel it upon the risk being increased, or for any other cause, “ by paying to the assured the unexpired premium pro rata” The point is made by the plaintiff, that if the risk be increased, of which the underwriters have notice, and the right to cancel is not exercised, this amounts to a waiver of the forfeiture incident to a breach of the condition against increase of risk. The decision of this question is not necessary, as the case is determined without it. But, for myself, I am free to admit the force of the position, in view of the peculiar facts of the case, and that I believe it is supported by sound reason. Without discussing the legal principles upon which it is founded, it will readily be seen to be in harmony with our ideas of fair and honest dealing. The agent had full notice of the increase of the risk, obtained upon an examination of the property, made in discharge of his duty, for the express purpose of determining whether there had been such increase. This notice to the agent bound the comp. 65panies. Keenan v. Missouri State Mutual Ins. Co., 12 Iowa, 131. If the agent determined that the risk was increased, his duty to his principals and good faith toward the assured, and every principle of honesty, required him to cancel the policy and advise the assured of the fact. It was bad faith of the darkest hue for the agent, upon determining that the risk was increased, so to act and speak as to induce the assured to believe that the policy continued to cover the property. The companies thereby retained the money paid as premiums, which they had not earned, and which their contract, required should be repaid to the assured upon canceling the policy, and induced their confiding customer to trust for indemnity, to the extent of many thousand dollars, for loss of his property, upon a contract which they had predetermined was avoided, and upon which, according to their interpretation of the law, he could not recover one cent. Such a course of dealing indicates a reckless and fraudulent spirit of gain, which will hazard the property of others to the value of tens of thousands in order to secure an inconsiderable and paltry sum. On the other hand, if, upon such examination of the property, the agent ^honestly determined that there was not such increase of risk as required the exercise of his power to cancel .in order to protect the interest of his principals, and acted upon that determination, whereby the plaintiff was induced to rely upon the policy as a valid, binding contract, the underwriters ought to be bound by such determination and acts of their agent, and ought not to be permitted to set up, as a breach of the conditions, the very things which the agent decided were not breaches. In such a case, while the agent would be relieved of the charge of dishonesty, it would be successfully sustained against his principals. In whatever light we may view the facts that the increase of the risk was fully known to p. 66the agent, and no steps were ■ taken to cancel the policy in accordance with its terms, they involve bad faith and deceit, whereby one party in order to realize a small sum puts at hazard great interests of another, a course of dealing repulsive to all right notions of justice, and nowhere practiced among honest men.

The importance and somewhat leading character of this case, and the interesting nature of the questions discussed, have induced the p. 69Reporter, believing it would be of use to the profession, and facilitate future investigation, to publish the following valuable note written by John N. Rogers, Esq., for the Western Jurist.

The foundation principle of the decision may, in a general form, be thus stated: when a written contract between two parties,'imposing obligations to continue through a given period of time,'contains a condition intended for the benefit of one party only,- and providing that on its breach during such period, the written-instrument shall, be void (or words of that import), the le^al effect is, that, on the happening of a breach, the contract, so far as it imposes obligations on the party for whose protection the condition is intended, becomes void only on the election of such party so to treat it. The other party cannot take advantage of his own breach to avoid the contract. It follows, of course, that the forfeiture incurred by the breach may be waived by the party entitled to enforce it; and that such waiver, being simply the exercise of the right to elect ‘whether to terminate or continue the contract will be effected by any act or conduct toward the other party, with knowledge of the breach, recognizing'or treating the contract as still continuing in force. The result is, that the rights -of both parties are the same as though no breach had occurred.. The waiver, not being in itself a new contract, nor a change of the terms of the original contract, but merely the legal consequence-of an election not to avoid such contract on account of a specific breach of con- ' dition, requires neither writing nor consideration. And this is equally so, where (as in the principal case) the condition prohibits the doing p. 70of some act, without the written consent of the other party. In such case the absence of written consent is simply an essential element in the breach of condition, without which there would be no breach, and nothing requiring a waiver. The consequences of a breach of such condition, when it has happened, may be dispensed with in any mode which would be effectual in case of a condition otherwise framed.

In Smith v. Saratoga Ins. Co. (3 Hill, 508), it was decided, wholly on the old authorities, as to leases for years, that a breach of condition in a fire policy, rendering it, by its terms, “ void,” could not be subse quently waived so as to continue the policy in force. This case, however, has been frequently disapproved (see 2 Am. Lead. Cas., p. 624; Keenan v. Mo. State Mut. Ins. Co., 12 Iowa, 26), and was virtually overruled in the same court, in Clark v. Jones, 1 Den. 516, a case of a lease, in which Bronson, J., who delivered the opinion in Smith v. Saratoga Ins. Co., expressly abandons the doctrine there laid down, admitting that the modern decisions are against it. See also Frost v. Saratoga Ins. Co., 5 Den. 154; Viall v. Genesee Mut. Ins. Co., 19 Barb. 440; Keenan v. Dubuque Mut. Ins. Co., 13 Iowa, 375; Wing v. Harvey, 27 Eng. Law & Eq., 140. A fair test of the question is afforded by the case of an insurance for a term of years, with a premium payable annually, in advance. If, immediately on a breach of a condition, which, by the terms of the policy, is to render it “ void,” and independent of any election by the insurer, the policy becomes extinct, it is plain, that the insured could, on this ground, successfully resist a suit by the insurers for subsequently accruing premiums. It seems clear, however, that no such defense could be maintained, and equally so, that the insurer, by p. 71bringing such an action, with knowledge of the breach, would affirm the continuance of the insurance, and be estopped from setting up the breach as a defense against liability for a subsequent loss. See Cartwright v. Gardner, 5 Cush. 273, 281.

There is an obvious difference between waiving a forfeiture already incurred by a specific breach of condition, and waiving the condition itself prospectively. The former simply reinstates the contract, without changing its terms ; the latter operates directly on the terms of the p. 72contract, by eliminating the condition. Since no rule of law forbids a parol modification of a previous written contract, it follows, that a waiver of the condition itself, subsequent to the inception of the contract, equally with a waiver of a past breach of it, may be established by parol evidence. A different question arises, when matters preceding or concurrent with the inception of the policy, and resting in parol, are relied on to establish waiver of its written conditions. In Massachusetts (where the general course of decision on fire policies seems to be much stricter against the insured than elsewhere), such evidence is held inadmissible, as contradictory to the written contract. Barrett v. Union Mut. Ins. Co., 7 Cush. 175; Lee v. Howard Ins Co., 3 Gray, 583.

The decision in the principal case as to the powers of the agent of the insurers is of very great practical importance, since the business of fire insurance, particularly the Western States, is very largely transp. 73acted by foreign corporations, through their local agents, who in fact exercise almost unlimited powers as representing the companies, and are the only parties with whom the insured hold direct communication. There can be no doubt that the general tendency of the latest decisions has been more and more in favor of holding insurance companies to responsibility for the conduct of the agents through whom their business is transacted. Warner v. Peoria Ins. Co., 12 Wis. 818; Beal v. Park Ins. Co., 16 id. 241; N. E. Fire & Marine Ins. Co. v. Schettler, 38 Ill. 166; Rowley v. Empire Ins. Co., 36 N. Y. 550; Anson v. Winneshiek Ins. Co., 23 Iowa, 84. The case of Rowley v. Empire Ins. Co. is a remarkable illustration of the progress being made in this direction. It is there held (overruling several prior cases to the contrary) that the insurer was estopped to deny the correctness of the representations in the written application signed by the insured, where an error in such application was due to the agent of the company, authorized simply “to take applications for insurance,” and who prepared the application in question. Fullerton, J., delivering the opinion of the court, says: “ The conditions of insurance plainly contemplate that it ” (the application) “ should be in writing, and such was the intention of the parties. When, therefore, was the duty which the agent owed to the company at an end, so that he ceased to bind his principal ? It is not establishing a harsh or unreasonable rule in reference to insurance companies, to hold that their agents, authorized “ to take applications for insurance,” are acting within the scope of their authority, in every thing which they do which may be necessary to complete such applications. I must therefore regard Dean as in the act of taking the application when he was filling up the blank signed by the plaintiff, and therefore acting on behalf of the defendant. Any other rule would be fraught with mischief. Insurance companies send out an army of agents to solicit business. Property holders are waited upon by them at their residences; and it is not going too far to say that many of the applicants would be unable to make a proper application and survey to meet the rigid and elaborate requirements of these corporations, while experience shows that they are not expected to do so. Hence these agents render such services as are necessary to enable the contracting parties to attain their respective objects, the one to insure, and the other to become insured against fire. To hold that in performing these preliminary labors touching the very business which must necessarily be transacted before a policy can be effected, the insurance broker becomes the agent of the applicant for insurance, would seem to be an unnecessary and undesirable refinement. I repeat, that, in performing these preliminary labors, the agent is engaged in taking the applications, which is strictly within his duty, and the principal should be held responsible for any error he may commit.”