author: Mr. Justice Gordon

text:
    The State Insurance Company of Missouri versus Todd et al. Same versus Todd.
    1. A policy of insurance provided that proofs of loss should bo sent to the office of the company within thirty days after a fire; and another clause of the same policy provided that no condition of the policy should be waived except by a general officer of the company by writing endorsed on the policy. After the property insured had been destroyed by fire, the secretary of the company notified the insured that the company would replace the property destroyed, and unwarrantably interfered with the agent of the insured in making out the proofs of loss, directing him not to complete them; the proofs wore consequently not sent in within thirty days; the company did not replace the property. Held, that these facts made out evidence of a waiver of the condition requiring proofs of loss within thirty days, and that the facts were for the jury.
    2. The policy further provided that a failure on the part of the insured to notify the company of any mortgage on the property would avoid the policy. There was a mortgage on the property (of which the company never had actual notice) when it was insured in February 1872; in October 1872, the company insured the interest of the mortgagees under this mortgage in the premises, and in February 1873 renewed the first policy. Held, that the above facts were enough to warrant a finding that the company knew of the mortgage when they renewed the first mortgage, and’ that the question of knowledge was for the jury,
    3. In an action on this policy, the narr. averred a waiver of the condition requiring notice in thirty days; the defendant went to trial on this narr., and objected, on the ground of variance, to any evidence tending to show a waiver of this clause in any way except that provided in the policy, i. e., by endorsement on the policy. Held, that the general allegation of waiver in the narr. was sufficient to support proof of a waiver in any way. Held, also, that il the defendant chose to go to trial on a narr. technically objectionable, it thereby waived the defect.
    January 12th 1877.
    Before Agnew, C. J., Sharswood, Mercur, Gordon, Paxson and Woodward, JJ. Williams, J., absent.
    Error to the Court of Common Pleas, No. 4, of Philadelphia county: Of January Term 1876, No. 21.
    These were actions of assumpsit upon two policies of insurance against fire. The first w'as brought by J. C. Todd and M. Ritchey, upon a policy dated February 16th 1872, insuring them to the amount of $2500, on machinery, &c., contained in their mill at Paterson, New Jersey, for one year from February 12th 1872. .This policy was renewed for another year on February 13th 1873. The second action was on a policy dated October 3d 1872, insuring the same property to the extent of $1500, for one year, from October 18th 1872. The loss, if any, under this policy was “payable to J. 0. Todd and P. Bafferty, mortgagees.” This action was brought by Todd as surviving partner of Bafferty. The property was destroyed by fire on April 12th 1873.
    The policies of insurance contained, among others, these provisions :—
    “ Sect. 2. * * * If the interest of the assured in the property, whether as owner or trustee, consignee, factor, mortgagee,' lessee or otherwise, is not truly stated, or if a.ny encumbrance exists on the insured property or any portion thereof, at the date of this policy, or if the title of the assured thereto be any other than the absolute, unconditional, entire, and sole ownership thereof, and the assured shall fail in any such case, or neglect to notify the secretary of this company thereof in writing, and have the same endorsed hereon, then, and in every such case, this company shall not be liable for loss or damage under this policy.
    “ Sect. 9. The assured shall forthwith give notice of any loss or damage claimed under this policy to the secretary of the company, and within thirty days from the date of the fire causing such alleged loss or damage, deliver at the office of the company in the city of Hannibal, Missouri, either in person, by his agent; or express, a particular account of such loss or damage, signed and sworn to by him or them, naming each article lost or damaged separately, &c.
    “ Sect. 12. * * * No agent or other person, excepting one of the general officers of this company (and then only by endorsement hereon, made and signed by said officer), is authorized to waive, change, alter or amend any condition or provision of this policy, or to obligate this company in any way, excepting as set forth in these, printed conditions, and no act ot omission on the part of any officer' of this company shall be construed to operate as a waiver, unless so expressed in writing hereon. This policy is made and accepted subject to the above-expressed conditions,” &c.
    The declarations, as amended, set forth fully the contents of the two policies and contained an averment of a waiver by the company of the ninth condition of the policies, as given above. Pleas, nonassumpsit.
    At the trial it appeared that notice of the fire had been given soon after its occurrence, but that proofs of loss were not sent to the company till after the expiration of more than thirty days after the fire; and that there had been a mortgage on the property from 1867 up to the time of the trial. The counsel for the plaintiffs offered to show by a witness, Berne, that at a meeting held at New York, two days after the fire, between the agents of the various companies who had insured the mill, one Wallace was appointed to adjust the loss; that after Wallace had completed the adjustment, Todd had requested Wallace to make out his proofs of loss for him, which Wallace promised to do; that about April 24th, Strong, the secretary of the defendant company, visited the place of the fire and had estimates made of the damage, which were only about one-half of the estimates of the appraisers, and then had desired another meeting of the agents of the different companies, sending word meantime to Wallace not to make out the proofs of loss for the plaintiffs; that, at the meeting held April 26th, a committee was appointed, of which Strong was a member, to offer the plaintiffs a settlement on the basis of the estimate obtained by Strong, and it was decided, if the plaintiffs were not Avilling to accept this offer, that the companies would contribute to rebuild the premises; that Strong was suddenly called away from New York, and before leaving there he instructed the rest of the committee to act for him, and especially directed the witness, who was also a member of the committee, to look after the interest of the State Insurance Company and to make the committee’s offer for that company; that theAvitness called on Todd on May 5th and offered to settle on Strong’s estimate, and upon Todd’s refusal of this offer, notified Todd that tire companies would rebuild; that it was then decided by the companies to contribute and deposit seventy per cent, of their policies for that purpose; that this Avas made knoAYn to Strong, who agreed to it for his company; and, finally, that this amount was not deposited.
    The defendants’ counsel objected to this offer on the ground that as the proofs of loss were not sent to the company within thirty days from the fire the policies Avere void; that, by the terms of the policies, the terms of the contract could only be waived by a general officer of the company by endorsement on the policies, and the plaintiffs accepted the policies subject to this condition; that the policies shoAved no such endorsement, and therefore, evidence tending to show a waiver of the condition of the ninth proviso was not admissible under the terms of the contract. The court overruled the objection and admitted the evidence under exception. Evidence Avas then given in accordance with the offer.
    The defendant subsequently objected to evidence being given which tended to prove a Avaiver of the tAvelfth condition of the policies, on the ground that such evidence was a variance from the declaration, which did not aver any Avaiver of the conditions imposed by that clause. This objection was likeAvise overruled, under exception.
    Eor the defendant, Strong testified that he had never agreed to waive any of the conditions of the policies, and had never done so.
    Apart from the fact that the loss arising under the second policy was therein made payable to the mortgagees of the property insured, there was no evidence tending to show that the company knew of the existence of the mortgage.
    The learned judge (Thayer, P. J.), after stating at length the facts, charged, in part, as follows:—
    [“ Now, a waiver of an agreement or of a condition, such as this is, may either be by word of mouth, or it may arise out of such acts and conduct of the party as would naturally and properly give rise t.o an inference that he intends to waive the agreement or conditioni A waiver takes place where a man dispenses with the performance of something which he has a right to exact. A man may do that not only by saying that he dispenses with it, that he excuses the performance, or he may do it as effectually by conduct which naturally and justly leads the other party to believe that he dispenses with it.] * * *
    [“Now, if you think that delay was caused by an assurance given by the company that they could not pay the loss in money, but that they intended to rebuild, and that there is anything in that transaction which would justify you in finding that they had excused the performance of this condition, you will, as I said before, be at liberty or not to draw that inference, according as you shall think the evidence on that subject justifies you in so doing it or not.]
    [“ The whole question of waiver I leave to you to determine as a question of fact. If you find that the conduct of the defendants did operate as a waiver of the performance of this condition, or that the unwarrantable interference of their officers and agents (Mr. Strong and the committee) misled the plaintiffs, and that that was the cause of the delay, then, as I said before, the plaintiffs will be exonerated for the delay which occurred; otherwise not.”]
    As to the effect of the existence of the mortgage on the policies, the court charged:—
    [“As to the other policy, the situation is different, because that policy was renewed after the companies defendant had insured the mortgagees’ interest, so that it is perfectly plain that when they renewed this policy they knew of the outstanding mortgage, for they insured the interest of the mortgagees; and of course, when they had insured the interest of the mortgagees, they must have known of the existence of the mortgage. That seems to me to be a very good waiver of non-performance of the condition, so far as regards that policy.] But with regard to the other, I am bound to tell you that I see no evidence in the case which would justify you in finding that the plaintiffs had performed the condition upon which the policy was dependent.”
    The court refused to charge, as requested, that the plaintiffs could not recover, by reason of this breach of the conditions of the policies given above.
    The defendants’ 8th point was:—

      The defendants have not waived any of the conditions of any of the provisos by their conduct.
    Answer: “ I decline so to instruct the jury. It is a question of fact for them to decide.”
    The defendants’ 9th point was —
    That no authority to waive any of the conditions of any of the provisos of the policies have been shown to have existed in the secretary.
    Answer: “ With regard to the secretary’s authority, there is no proof in the case of any express authority given to Mr. Strong to make a waiver. Nevertheless, if you should be of the opinion that Mr. Strong’s conduct and directions — he being a general officer, the secretary of the company — proved a waiver, you may, if you see proper to do so, find his authority from the office which fie held. If the secretary of an insurance company ordinarily has such authority, if ho assumes to exercise powers which such officers ordinarily possess, then people who deal with him upon the footing that he possesses that authority, are to be protected. In other words, if what he did fell within the scope of the general authority which is committed to such officers, the company is bound by his act. If it was beyond the scope of the authority which such an officer usually possesses, then the company is not bound by what he did or said.”
    The charge concluded in these words:—
    “ I have said all that I consider my duty renders it necessary for me to say to you on the questions of law in this case. The facts are entirely for you, and the verdict which is to be rendered will be upon your own responsibility, not upon mine.”
    There was a verdict for the plaintiffs in both cases. After judgment, the defendants brought this writ of error, assigning for error, among other things, the admission of the plaintiffs’ offer of testimony of the witness Berne, and of the admission of evidence tending to show a waiver of the twelfth condition of the policies; also the answers to the defendants’ points, and the parts of the charge enclosed above in brackets.

      A. S. Biddle (with him W. B. Miller), for the plaintiffs in error.
    —There was a variance from the declaration in those portions of the testimony tending to show a waiver of the twelfth condition. The declaration averred only a Ayaiver of the ninth condition, and upon this averment the plaintiffs could prove a waiver of that con-, dition only in the method provided in the twelfth condition of the policies, that is, by a AArritten endorsement, signed by a general officer. That Avas the only kind of waiver which the defendant, under the pleadings, was bound to meet. But the court below admitted evidence tendjpg to prove a waiver of the twelfth condition. It is not argued thai this condition could not have been waived, but there was no averment of its waiver, and the evidence of it was inadmissible: Diehl v. Adams County Ins. Co., 8 P. F. Smith 445.
    The terms of the contract between the parties expressly limited the power of the company’s agent to waive any part of the contract, and the plaintiffs would be bound by this limitation. The agent’s waiver would only be binding on the company so far as it was authorized: Delafield v. State of Illinois, 26 Wend. 221; Baring v. Peirce, 5 W. & S. 548; Hackney v. Alleg. Mut. Ins. Co., 4 Barr 185; Mitchell v. Lycoming Mut. Ins. Co., 1 P. F. Smith 402; Loehner v. Home Mut. Ins. Co., 17 Mo. 248; Brewer v. Chelsea Ins. Co., 14 Gray 203.
    The distinction sometimes drawn between mutual and stock companies does not affect this case, because the conditions were on the face of the policy and were thus brought home to the insured: Dawes v. North River Ins. Co., 6 Cow. 462; Mound City Ins. Co. v. Curran, 42 Mo. 374.
    As to the waiver of notice of the mortgage on the property: notice to an agent would not, per se, be notice to the company, and even if the endorsement on the second policy, that the loss under it was payable to mortgagees, was notice to the company of the mortgage quoad that policy, it would not be notice relatively to the other policy, which was a separate transaction: N. Y. Central Ins. Co. v. Nat. Protection Ins. Co., 20 Barb. 468; Custar v. Titusville G. & W. Co., 13 P. F. Smith 306; Vose v. Eagle Ins. Co., 6 Cush. 42; Houseman v. Girard Build. Asso., 2 Weekly Notes 573.

      C. W. Katz, for the defendants in error.
    The case was tried as if the narr. had contained an averment of a waiver of the twelfth condition, and the omission is amendable: Waite v. Palmer, 28 P. F. Smith 192.
    A limitation in a policy may be waived (Coursin v. Ins. Co., 10 Wright 320), by implication from the acts of the company: Diehl v. Ins. Co., 8 P. F. Smith 444.
    Conditions that certain acts avoid the policy unless permission to do them is endorsed, may be waived: Eureka Ins. Co. v. Robinson, 6 P. F. Smith 268; Horwitz v. Eq. Ins. Co., 40 Mo. 557; People’s Ins. Co. v. Spencer, 3 P. F. Smith 353.
    Corporations can act only through their officers, and are bound by their acts; Strong might have waived notice of the mortgage by endorsement, under the very terms of the policy, and if he waived it by his acts the company is bound: Parker v. Arctic Ins. Co., 59 N. Y. 1; West Chester Ins. Co. v. Earle, 33 Mich. 143; Blake v. Exchange Mut. Ins. Co., 12 Gray 271; Pitney v. Glens Falls Ins. Co., 61 Barb. 345.
    The facts tending to show a waive'r are for the jury: Lycoming County Ins. Co. v. Schollenberger, 8 Wright 259.
    There was evidence enough here to warrant a finding of a waiver: Dohn v. Ins. Co., 5 Lans. 275; Greenfield v. Ins. Co., 47 N. Y. 430; Bersche v. St. Louis Ins. Co., 31 Mo. 555; Von Bories v. Ins. Co., 8 Bush (Ky.) 133; Viele v. Germania Ins. Co., 26 Iowa 9; Miner v. Ins. Co., 27 Wis. 693.
    Notice to the agent is notice to the company: People’s Ins. Co. v. Spencer, 3 P. F. Smith 353; Rowley v. Ins. Co., 40 N. Y. 557.
   Mr. Justice Gordon

delivered the opinion of the court, February 5th 1877.

The defence, in the court below, was rested on two grounds: 1. That the plaintiffs had not complied with that condition in the policy which requires a detailed statement of loss to be delivered at the office of the company, within thirty days after the, happening of such loss. 2. That the policy was avoided by non-compliance with the stipulation, therein contained, inquiring a disclosure, at the time of the acceptance of the risk, of any encumbrances which might exist against the insured premises. Neither of these conditions were complied with, nor was there a waiver of either endorsed upon the policy, as required by that instrument; hence, prima facie, the defence, on both points, was made out. ■ But the court was of the opinion that the evidence exhibited by the plaintiffs of a parol waiver was such as warranted the submission thereof to the jury. In this opinion we concur; for, as to the first condition, the testimony warranted the belief that a detailed statement of loss was not required. Immediately after the fire, the defendant, with other interested companies, appointed appraisers to examine the premises and adjust the loss, who went upon the ground, made the requisite examination, and made report to the committee of the companies. The secretary of the defendant company, not being satisfied with this report, had a re-examination made under his own supervision; and the amount of loss arrived at by this second examination was pro[}Qsed to the plaintiffs as a basis of settlement. This they refused; and then it was that they were informed that the companies would take the matter into their own hands, rebuild the factory and replace' the machinery. More than this, the testimony fully justified the conclusion that the delay in furnising the required statement was brought about by the unwarranted interference, by the secretary of the defendant company, with Wallace, whom the plaintiffs had employed to make the necessary examinations and draw up the papers, in advising him to proceed no further in the matter, as the companies had objected to the adjustment, and that it would be better for him to wait before making out the proofs of loss. One of two conclusions results from this testimony: ejther it was intended to waive proofs of loss within the required time, or, if not this, then the object was to occasion such delay as would necessarily cause the proofs of loss to reach the office of the company after the expiration of the thirty days. As the latter conclusion presents the presumption of gross fraud, it is better to assume the former as the correct one. This evidence certainly makes out a waiver quite as clearly as that found in the case of the Inland Insurance Company v. Stauffer, 9 Casey 397. But in the opinion in that case, delivered by Strong, J., it is held that it is competent for insurers to waive performance of a formal condition introduced into a policy solely for their own benefit. Also, that such waiver need not be express, but may be inferred from the acts of the insurers, evidencing a recognition of their liability, or even from their denial of obligation exclusively for other reasons, citing Heath v. Ins. Co., 1 Cush. 257; Clark v. Ins. Co., 6 Id. 342; Francis v. Ins. Co., 1 Dutch. (N. J.) 78. This same doctrine may be found in Buckley v. Garrett, 11 Wright 204, and in Ins. Co. v. Taylor, 23 P. F. Smith 343. There is, therefore, no lack of authority in support of the ruling of the learned judge of the court below on this point.

Having thus disposed of the first ground of defence, let us turn our attention to the second. In the case of The Peoples’ Insurance Co. v. Spencer, 3 P. F. Smith. 353, the policy contained the usual clause that, “ if the risk shall be increased by any means whatever, within the control of the insured, during the continuance of the insurance, and notice thereof be not given to the company, and such increased risk be allowed and endorsed thereon, the policy shall be of no force,” &c. The property underwritten was barley in the “ malt-house and brewery” of the assured; the fact was that the business of distilling was carried on in the same building, which largely increased the risk; it was held, however, that though ordinarily this, without notice to the company, would be fatal to the plaintiffs’ claim, yet if the insurance was made with knowledge, by the agent who negotiated the contract, that distilling was to be carried on in the premises, the condition, as to notice and endorsement, did not apply, and the company had no ground to allege an increase of risk. So in the case of the Eureka Insurance Co. v. Robinson, 6 P. F. Smith 256, where the policy contained a prohibition of other insurance without notice to the company, and where there was a violation thereof of which the company afterwards had knowledge and yet continued to treat the policy as of force, it was held, that it could not, afterwards, be permitted to set up such breach to defeat the contract. “It was not,” says Strong, J., “that knowledge was equivalent to notice, but that knowledge, followed by acts that amounted to a subsequent recognition of the contract as still in-force, dispensed with the necessity of proving notice.” It is- obvious that the above cases govern the one now in hand; for.- observe how this matter is presented. The property (machinery, utensils, &c., in a mill or factory) was first insured by a policy, dated 16th of February 1872, and expiring February 12th 1873. At the-time of this insurance there was a mortgage on the premises in. favor of Todd & Rafferty, the existence of which does not appear to have been communicated to the company or.its agent. This condition of affairs, without more, would be fatal to the claim of the plaintiffs. But subsequently a policy was issued to the same parties upon the same premises, running one year from the- 18th of October 1872, payable, in case of loss, to Todd & Rafferty,' mortgagees. When, therefore, this company, on the 13th of February 1873, renewed the policy now in suit, there was evidence, if not conclusive, yet sufficient to warrant the jury in finding that the defendant had knowledge of the outstanding mortgage. It is urged, however, that the judge, in his charge, spoke of this evidence as though it conclusively proved knowledge and, hence, did not properly submit it to the jury. We do not think such to be the case, for though the judge speaks in a very positive manner of the effect of this testimony, yet he finishes his charge by saying, “ the facts are entirely for you, and the verdict which is to be rendered will be upon your responsibility, not mine.” It is not probable that the jury, under such language as this, did not understand that they were to pass, not upon some of the facts only, but all that were involved in the case.

The exception taken to the evidence because of its alleged variance from the declaration, cannot be sustained. A general allegation, such'as that found in the narr., is sufficient to support proof of waiver however it might occur, whether according to the terms of the policy or otherwise, and if the defendant, without demurrer, chose to go to trial upon a declaration, embracing terms technically objectionable or too broad for accurate pleading, it thereby waived the defect and its complaint cannot now be heard.

Judgment affirmed.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Rand versus Dovey.
    1. The negotiability of a promissory note is not destroyed by the fact that the endorsement of a corporation thereon was made through its seal.
    2. D., the holder of the note, brought this action against R., the payee and endorser: Held, that D. need not trace his title through this irregular endorsement, as the relation between the corporation and R. cannot affect D., who takes title by the endorsement of R., as payee, and the latter, therefore, cannot set up the irregular endorsement to affect him.
    January 12th 1877.
    Before Agnew, C. J., Sharswood, Mercur, Gordon, Paxson and Woodward, JJ. Williams, J., absent.
    Error to the Court of Common Pleas, No. 1, of Philadelphia county: Of January Term 1876, No. 67.
    This was assumpsit, brought by John J. Dovey against Abraham W'. Rand, upon the following note:—
    “$3750. Philadelphia, September 14th 1874.
    “ Two months after date I promise to pay to the order of A. W. Rand, Esq., thirty-seven hundred and fifty dollars, payable at 432 Walnut street, without defalcation. Value received.
    “ George E. Hilt.”
    Endorsed — “Safeguard Insurance Company of Pennsylvania.”
    Seal of Insurance Company.
    “Per George E. Hilt, Secretary,
    “A. W. Rand.
    “ September 28th 1874. Paid on account $1000.”
    The narr. of plaintiff contained the common counts and the following special count:—
    “ Whereas, one George E. Hilt, on the 14th day of September, in the year of our Lord 1874,- at Philadelphia, made his promissory note in writing, and thereby promised to pay to the defendant’s order thirty-seven hundred and fifty dollars, two months after date thereof, which period has now elapsed; and the defendant then and* there endorsed the same to the plaintiff; and the said George E. Hilt did not pay the amount thereof, although the same was there presented to him on the day when it became due; of all which the defendant then and there had notice.”
    The pleas were the ordinary pleas -in assumpsit. At the trial before Peirce, J., the defendant .objected to the admission of the writing in evidence, first, because it is not a promissory note; is not negotiable as such by endorsement; that its negotiability was destroyed by the endorsement under seal; and second, because it is not the instrument described in the, special count of the narr.

    The court overruled the objections and admitted the writing in evidence.
    The verdict was for the plaintiff for $2648.78, upon which judgment was entered.
    The defendant took this writ and assigned for error the admission of the note in evidence.

      Henry T. King, for plaintiff in error.
    The sealed endorsement destroyed the negotiability of the instrument as to all parties claiming subsequently thereto, and through that endorsement. The holder did not strike out that endorsement, nor, indeed, could he, and thus make negotiable that which in its inception was not so. There was a fatal variance between the instrument declared on and the writing offered in evidence. It was required that the plaintiff should state in his declaration the endorsement between himself and the party he sues, and on the trial of the cause prove that endorsement or strike it off, neither of which was done in this case.

      A. Sidney Biddle and R. C. McMurtrie, for defendant in error.
    The holder of a negotiable note may strike out any endorsements which are not stated in the declaration: Merz v. Kaiser, 20 La. Ann. 379. To the same effect see Mayer v. Jadis, 1 M. & Rob. 247.
    No one has as yet asserted that an endorsement of a note by a corporation makes the note a bond. The drawing does, if it is sealed, but not the transfer. The contract of endorsement may he by deed, though the primary debt be by parol.
   The judgment of the Supreme Court was entered, January 22d 1877,

Per Curiam.

This suit was brought by Dovey, the holder of the note against Rand, the payee and endorser. Dovey does not need to trace his title through the irregular endorsement of the Safeguard Insurance Company. No question arises in this action between Rand and the insurance company, as to their relations to each other. That relation does not affect Dovey, who takes title by the endorsement of Rand as payee. The latter cannot set up the endorsement of the insurance company as an irregularity to affect Dovey. Judgment affirmed.


author: Chief Justice Agnew

text:
    Johnson versus McCurdy.
    1. L. duly executed two mortgages on certain property to S., and recorded the same, but retained the mortgages in his possession, as they were without consideration. L. afterwards transferred these mortgages to M. for value, the assignments being duly executed by S. Subsequently and before the assignments wore recorded, L. sold the mortgaged property to J., who purchased for value and without knowledge of the existence of the mortgages. M. brought suit on the mortgages, and the above facts having been found in a special verdict, the court entered judgment for the plaintiff. Held, not to be error.
    2. The mortgages originally were inchoate, but not void, and when negotiated and delivered, they bound not only the mortgagor, but subsequent purchasers with notice, actual or constructive, and this latter was clearly supplied by the record of the mortgages.
    3. Per Agnew, C. J. — How far such a negotiation as took place here will T\a <rr\nrl Ivrr -ral obi mi orroinsf. on itrfcAvvA.mn o* Art An m hvn n aav av rvmv>lio.sAv is Tint.
    January 15th 1877.
    Before Agnew, 0. J., Sharswood, Mercur, Gordon, Paxson and Woodward, JJ. Williams, J., absent.
    Error to the Court of Common Pleas, No. 3, of Philadelphia county: Of January Term 1876, Nos. 139 and 140.
    These were two writs of scire facias sur mortgage, issued by John McCurdy, assignee of Alexander Smith, against Charles M. S. Leslie and Charles E. Johnson, terre-tenant, to recover the principal and interest on two mortgages of $300Ó each, made by Leslie on the 9th of April 1869, to Alexander Smith, and by him assigned, on the 2d of December 1871, to McCurdy, the plaintiff. A number of questions were submitted to the jury at the trial, the parties to the suit agreeing that the questions and answers of the jury should together form a special verdict. From these questions and answers the following facts were disclosed: That neither the bonds nor the mortgages were ever delivered by Leslie to Smith; that there was no debt due from Leslie to Smith, nor was any consideration given by Smith to Leslie therefor; that Smith had no knowledge that such mortgages were made; that Leslie put the mortgages of record on the 9th of April 1869, of which Smith had no knowledge; that on the 2d of December 1871 McCurdy gave to Leslie a bond and mortgage of $5000, on which one year’s interest was due for the two mortgages on which this suit is brought, and the bonds secured thereby; that the assignments of said mortgages from Smith' to McCurdy, duly executed by Smith, were delivered by Leslie on the 2d of December 1871, and were put on record by McCurdy June 9th 1873; that Smith was not present when the two mortgages and assignments were delivered to McCurdy, and had no personal knowledge of the delivery; that Leslie continued to be the owner of the mortgaged premises until July 30th 1872 ; „that Johnson, on the 30th of July 1872, became the purchaser of said premises, giving therefor $12,000, money previously deposited with Leslie; that Johnson had no knowledge of the existence of the mortgages in suit, nor of the assignments, and did not become informed thereof until after April 1st 1873; that Leslie represented to Johnson, at the time of the purchase by the latter, and that Johnson believed these representations, that the premises in question were not mortgaged otherwise than by the first two mortgages from Leslie to Johnson (not those in dispute); that Leslie had acted as the attorney and confidential adviser for Johnson; that Johnson could not have obtained by inquiry any knowledge contrary to the information given him by Leslie, as Smith himself had no knowledge of the contents of the mortgages or the assignments he had signed; that at the time Leslie made the mortgages sued on, no one, other than Leslie, was interested as owner of the mortgaged property; that at the time Leslie made these mortgages to Smith, there were other mortgages and titles to property belonging to Leslie standing in Smith’s name; that there was no evidence that McCurdy knew that there had been no delivery of the mortgage, in fact, to Smith; that it was not shown whether McCurdy, when he took the mortgage, inquired of Leslie if the same were really due.
    The jury rendered a verdict for the plaintiff for $3706 in each case, subject to the opinion of the court on the facts found as above.
    The court was -afterwards asked to enter judgment for the defendant, which motion they discharged and entered judgment on the verdict for the plaintiff, which was the error assigned by the defendant, who took this writ.

      J. Fallon, for plaintiff in error.
    The mortgages sued upon having never been delivered have never existed as valid mortgages: Van Amringe v. Morton, 4 Whart. 382; Blight v. Schenck, 10 Barr 285; Parmentier v. Gillespie, 9 Id. 87; Younge v. Guilbeau, 3 Wall. 641; Rigler v. Cloud, 2 Harris 361; Chess v. Chess, 1 Penna. Rep. 32; Harrison v. Trustees of Phillips Academy, 12 Mass. 456; Hatch v. Hatch, 9 Id. 307; Hadlock v. Hadlock, 22 Illinois 384.
    All that McCurdy acquired on December 2d 1871, was an equitable right* against Leslie, estopping the latter from denying that what purported to be assignments from Smith, of valid bonds and mortgages, theretofore executed and delivered by him, Leslie, to Smith, for full consideration, were in fact what they purported to be.
    This right of equitable estoppel which, as against Leslie alone, gave McCurdy what would have been equivalent to mortgages, if sued out while Leslie remainéd owner of the premisos, ivas an estoppel in pais, not enforceable against a subsequent bond, fide purchaser for value, Avithout actual notice of the record of such alleged mortgages, or either actual or constructive notice or knowledge of the assignments or sale thereof, from Avhich the equitable estoppel arises. As against such purchaser, the mortgages have no existence, and their record was a nullity.
    If the law be that such estoppel as that in question may, under any circumstances, be enforced against Leslie’s assigns for value, the right of equitable estoppel carried with it the duty of recording the assignments on Avhich that right depended, as a pre-requisite to enforcing it against such subsequent purchaser. McCurdy having neglected to record the assignments, and thus voluntarily elected to keep secret the existence of his right of estoppel, cannot enforce it against Johnson, who, without actual or constructive notice of the existence of such right, or of the assignments on which the right was founded, for full value purchased the property of Leslie, relying on the latter’s express representation that no such right existed: Pepper’s Appeal, 27 P. F. Smith 373; Fisher v. Knox, 1 Harris 625; Campbell’s Appeal, 5 Casey 401; Fraley’s Appeal, 26 P. F. F. Smith 42; Coates v. Gerlach, 8 Wright 46.

      John Gr. Johnson, for defendant in error.
    There was no notice to McCurdy, Avhq Avas a purchaser for value, that there had been no actual delivery of the mortgages to Smith, and the fact of such non-delivery cannot be set up against him.
    Leslie and all his subsequent grantees are estopped from setting up the fact of such non-delivery.
    Though there Avas no actual delivery to Smith in person, there Avas a legal delivery by reason of the delivery of these two mortgages to the recorder, for the purpose of being recorded, under the orders of Leslie, who intended that such recording should be a delivery: Doe v. Knight, 5 B. & C. 671; Blight v. Schenck, 10 Barr 290; McCurdy’s Appeal, 15 P. F. Smith 291; Lessee of Mitchell v. Ryan, 3 Ohio St. Rep. 377.
    There was a valid delivery on the 2d day of December 1871, to McCurdy, who .paid full value for the mortgages, and from that time they were good against Leslie and all who acquired rights under subsequent deeds from him: Caldwell v. Fulton, 7 Casey 482; Parker v. Hill, 8 Metc. 447 ; 3 Washburn on Real Property 294; Parmelee v. Simpson, 5 Wall. 86; Rathbun v. Rathbun, 6 Barb. 103.
   Chief Justice Agnew

delivered the opinion of the court, January 22d 1877.

It must be conceded that the mortgages in these cases, while remaining in the hands of Leslie, the mortgagor, were not available to any one else. Even the bonds accompanying were not voluntary until delivery. A voluntary bond is protected by the seal as evidence of consideration after delivery, as regards the obligor. These cases are peculiar and depend on their own circumstances. The intent of the mortgagor, who had entire control over the instruments, was to raise money upon them. Smith, the nominal mortgagee, was but an instrument in his hands to effectuate his purpose. He could not have used the mortgages without Leslie’s consent, for Leslie retained their possession for his own lawful end. But when Leslie negotiated them, using the signature of the nominal mortgagee, he then parted with them, making them binding-on himself, and on all others possessed of no inconsistent rights attaching to the mortgaged premises. Johnson having purchased afterwards, was, therefore, bound by the mortgages, unless he had no notice of them, actual or constructive. It is obvious that it is the recorded mortgage, not the assignment, which concerns him as a purchaser, and of which he should have notice. The encumbrance, not the ownership of it, was important. If he knew, or ought to have known of it, he did not stand as a bond, fide purchaser, protected against a secret encumbrance upon the land he was bargaining for. The mortgages were clearly constructive notice, being duly recorded, and lying directly in the line of his search. He was bound to inquire into their existence as valid encumbrances; and. inquiry would have traced them to the possession of McCurdy as a bond fide holder by the negotiation of Leslie himself. It is said inquiry would have led to no result, for Leslie deceived him when he purchased by withholding the information. But that is nothing-; the law imposed the duty of a search on the purchaser, which would have led to a knowledge of the mortgages. These Leslie could neither produce nor explain away, for they were in the hands of McCurdy.

It is argued that the mortgages, when recorded, were not binding on Leslie and were therefore void. The conclusion is not logical. They were not binding, it is true, until he negotiated them. They were not absolutely void, for if so Leslie could infuse no life into them by negotiation. They were inchoate, but not void, until he negotiated and delivered them. Tlie purpose of recording was to enable him to negotiate, by anticipating other liens. How far such a negotiation as took place here would be good by relation, against an intervening encumbrancer or purchaser, is not a question now, for they were actually negotiated long before Johnson bought. No one has been injured, for, like a judgment to secure future advances, the recording was notice, and the actual advance was precedent. Unless we hold that a mortgage for the purpose of negotiation is absolutely void, because no immediate consideration passed, we must sustain these. True, the consideration was not complete, and Leslie could have defended against one who obtained surreptitious possession, without delivery; yet his act became complete when he himself negotiated and delivered them, and there is no intervening bon& fide encumbrancer or purchaser to complain. It is not necessary, therefore, to invoke the doctrine of equitable estoppel.

Judgment affirmed in each case.


author: Mr. Justice Paxson

text:
    Hart et al. versus Kelley.
    1. In an action to charge II. as a partner of P. and F., he filed an affidavit of defence which set forth that he was not a partner, and that his only connection with them was this: that after the work, to recover for which the suit was brought, was in great part performed, he signed an agreement with P. and F. to advance them money in their business, and to receive, in lieu of interest, a share in the net profits of the firm; that he never did advance any money under this agreement, but, on the contrary, the agreement was rescinded immediately after it was made.

      Held (reversing the court below), that the affidavit was sufficient, that the agreement did not constitute H. a partner, and the case ought to have gone to a jury.
    2. It seems, that even if considered a partner, H. would not, ipso facto, be liable for the debts of the firm incurred before the date of this agreement, and that he would not be liable for any debt incurred by the firm after his withdrawal to one who never knew of his connection with the firm.
    3. Per Paxson, J.' — One who agrees to advance money to a firm, receiving a share of the profits in lieu of interest, does not, ipso facto, become a partner, since the Act of 6th April 1870, if he has not held himself out to the world as a partner; especially where he has never received any profits.
    January 16th 1877.
    Before Agnew, C. J., Sharswood, Mercur, Gordon, Paxson and Woodward, JJ. Williams, J., absent.
    Error to the Court of Common Pleas of Philadelphia county: Of January Term 1877, No. 49.
    Assumpsit by H. H. Kelley against A. Hart, Pincus, Faucett, Sauter and Clarence A. Hart, for work and labor alleged to have been done about the defendants’ property, as shown by the copy of book entries filed.

      The defendant, 0. A. Hart, filed an affidavit of defence, as follows:—
    “ That neither he nor any one for him, either individually or in partnership, or jointly with others, obtained from the plaintiff the work and materials charged for in this suit, nor is he indebted to the plaintiff on any account whatever.”
    Afterwards, by order of court, he filed a supplemental. affidavit, as follows:—
    “ That he has a full defence to the whole of the plaintiff’s claim, the nature of which is as follows: That he is informed and believes that, prior to December 13th 1875, one Edward Pincus and one Hiram W. Faucett became co-partners, trading under the firm-name of the International Restaurant and Hotel Company; that on December 13th 1875, the said Pincus and the said Faucett, so trading, leased the premises No. 1220 Chestnut street, in the city of Philadelphia, for the purpose of carrying on at that place the business of a hotel and restaurant; that in order to properly fit up the said premises for the proposed business, considerable plumbing work was necessary to be done, and the said Faucett and the said Pincus, so trading as aforesaid, agreed with the said plaintiff, that he, the said plaintiff, should do the work; that the said plaintiff, being unwilling to do the work on the credit of the said Faucett and Pincus, required better security, and it was agreed that Abraham Hart should become responsible; that thereupon, and in pursuance of the said agreement, the said plaintiff did work and furnished materials to the premises 1220 Chestnut street, which work and materials constitute the greater portion of the plaintiff's claim in this case, to wit: the items charged between December 16th 1875, and about February 25th 1876; that this deponent had nothing to do with the said agreement, nor with the ordering of said work, nor did he ever assume to be a partner with the said Faucett and Pincus, or hold himself out as such, nor was the work done on his credit in any manner, but on the contrary thereof the said plaintiff well knew that the lease of the premises in which he was making the fixtures for which he claims, was in the said Pincus and Faucett, in whom the same has remained from that time hitherto; that after the completion of the work by the plaintiff, he presented his bill, and received for the amount thereof, $500 in cash, and the promissory notes of Abraham Hart for the balance, which is the amount claimed in this suit; that he, the plaintiff, accepted said promissory notes of said Abraham Hart, and brought suit thereon against the said Abraham Hart, in the Court of Common Pleas, No. 4, of this county, to June Term 1876, No. 947, and recovered judgment against said Abraham Hart in said suit, which suit and judgment were for the same matters as this present suit.
    “ That the only connection this deponent ever had with the other defendants, in the matter of the International Hotel and Restaurant, was the following: That sometime after the agreement between Eaucett and Pineus on the one hand, and Kelley on the other, and when the greater part of the work contracted to be done by the said plaintiff, Kelley, had already been done, to wit, on or about January 7th 1876, this deponent of one part, with Edward Pineus, Paul Sautter and Abraham Hart,'signed an agreement, erroneously dated December 13th 1875, with the aforesaid Hiram W. Eaucett of the other part, wherein and whereby he, the said deponent, and the parties joining with him, agreed to furnish the said Eaucett of the other part, as a loan, such amounts as might be necessary to carry on the business at 1220 Chestnut street for one year, in compensation for which loan the said deponent, and the parties joining with him, were to receive, in lieu of interest, three-fourths of all net profits; that this deponent, immediately after the signing of the agreement, found that he would be unable to furnish any money to the said Faucett and Pineus, and hence refused to act under the agreement; that he furnished no money to the said Eaucett and Pineus, nor did he ever receive any profit or advantage from the business, nor did he ever perform any act whatever under the said agreement, but on the contrary thereof, immediately after the execution of the said agreement, the same was rescinded by the parties thereto, so far as this deponent was concerned; that subsequently, to wit, on March 23d 1876, this deponent, being thereunto requested, acknowledged this rescission in writing, by an instrument written on the same paper whereon the previous agreement had been written, acknowledging that all the interest he, the said deponent, had had in the International Restaurant, had been theretofore disposed of to the said Pineus, Sautter, and Abraham Hart; that copies of said agreement and acknowledgment are hereto annexed, marked ‘A’ and ‘ B’ respectively. * * *
    “ That this deponent was not, at any of the times at which the work and materials claimed for by the plaintiff were done and furnished, in partnership with the other defendants, nor did he, or any one for him, either individually or in partnership with any one else, order, procure, or receive any of the said work and materials, nor is he indebted to the said plaintiff in any manner, or on any account whatever. ’
    A.

      “ Whereas, Hiram W. Eaucett, of the city and county of Philadelphia, and state of Pennsylvania, having the knowledge and ability to organize and manage the business under the name and title of the International Restaurant and Hotel Co., for which purpose the said H. W. Eaucett and Ed. Pineus have leased the property No. 1220 Chestnut street, and that he, the said H. W. Eaucett, agrees to give his personal attention to the successful management and development of the business, for the purpose of promoting its character and making it profitable: It is therefore agreed between the said Hiram W. Faucett of the first part, and Ed. Pincus, C. A. Hart, Paul Sautter and Abm. Hart, all of the city of Philadelphia, and state of Pennsylvania, of the second part, — that the party of the second part will furnish such amounts as may be necessary to carry on the business for one year at 1220 Chestnut street, on the terms as follows :—
    “ That the party of the second part shall be entitled to receive three-fourths of aH net profits, and the said party of the first part, the other one-fourth part of said net profits, but before any party, either of the first or second part, shall be entitled to receive any dividends of profits, the sum or sums loaned or furnished by the party of the second part, or any one of them, shall first be returned or paid back to said party of the second part, after which the profit to be divided shall be as follows: One-fourth of the whole of net profits to Hiram W. Faucett, and the remaining three-fourths of said net profits to be divided equally, share and share alike, to said Paul Sautter, Eli Pincus, C. A. Hart and A. Hart, party of the second part.
    “ It is also understood and agreed by and between all the parties to this agreement, that the restaurant shall be carried on at the premises No. 1220 Chestnut street, by Messrs. Faucett, Pincus and Sautter, who will each use their best undivided exertions and influence to make it profitable, without any further remuneration than the interest they have in the undertaking.
    “ It is further understood and agreed that all sums to be received under this agreement shall be paid to A. Hart, one of the party of second part, who shall also receive the daily amount of sales, and make all disbursements, and out of the net profits, as soon as any may be set aside, the said A. Hart shall return to each party of the second part the sum or sums so furnished, before any dividend of the profits shall be made.
    “ The c'ost of fitting up the said premises, as well as all outlay for furnishing, &c., shall be considered as expenses to be first deducted, and moneys borrowed or furnished returned before dividing any profits.
    “Witness our signatures, this 13th day of December 1875.
    “Witnesses present: H. W. Faucett,
    “J. B. Bush, E. Pincus,
    “James A. Moss. Paul Sautter,
    Clarence A. Hart,
    A. Hart.”
    B.
    “Whereas, The within-named Clarence A. Hart having disposed of all his interest in the International Bestaurant and Hotel Company to Edward Pincus, Paul Sautter and Abraham Hart, — they will therefore each be entitled to one-fourth interest in the whole, instead of one-fourth of three-fourths, as stipulated in the foregoing articles of agreement.
    “Philadelphia, Pa., March 23d 1876.
    “Witness, Clarence A. Hart,
    “ G. B. Brown, Jr. „ H. W. Eaucett,
    Paul Sautter,
    A. Hart,
    E. PlNCUS.”
    The court below entered judgment for want of a sufficient affidavit of defence; whereupon C. A. Hart, one of the defendants, brought this writ of error, assigning this judgment for error.

      M. Sulzberger and B. H. Brewster, for the plaintiff in error.—
    The agreement in this case Avas but an agreement for the loan of money — not partnership articles; since the Act of 6th April 1870, it does not constitute C. A. Hart a partner.
    Even if it constituted him a partner, it was rescinded before being acted upon. An inchoate partnership must be complete before any liability can attach: Howell v. Brodie, 6 Bing. N. C. 44; Irwin v. Bidwell, 22 P. F. Smith 244; Gabriell v. Evill, 9 M. & W. 297.
    Hart was certainly not liable after the rescission.
    Even if he became a partner, there is no presumption that he adopted the existing debts of the firm: Ex parte Fry, 1 Glyn. & J. 96; Pars, on Part. 148-9.

      W. M'nst, for the defendant in error, argued upon the construction of the agreement.
   Mr. Justice Paxson

delivered the opinion of the court, January 29th 1877.

The rule of law formerly prevailing, that participation in the net profits of a business made a participant liable to third parties as a partner, has been greatly modified in England and this country. Thus, in Dean v. Harris, and Harris v. Butterfield, Law Times Reports, N. S., vol. 33, p. 639, Butterfield, who was a person .of small means, applied to Harris to advance him money for the purpose of developing certain mines. Harris consented to lend Butterfield 2000Z., upon certain terms, viz.: That B. having entered into an agreement to take a lease of the Leycett mines, that the said mines be worked under the style or firm of the Leycett Mining Co.; that said H. find capital to work the mines to an extent not exceeding 2000Z.; that the money so advanced shall be repaid with 20 per cent, interest; the said H. to be paid 3d. per ton on all coal and iron stone, by way of commission. The said B. to be paid 200i. per annum by way of salary, but not to take date until the sum or sums advanced by said H. be repaid; said B. to promote the interest of the concern and continue in receipt of salary so long as he should conduct the business to the satisfaction of II. After payment of the above, and costs of raising and preparing and delivering to market the product of said mines, said H. shall be entitled to three-fourths of the profits, and all the net proceeds of the concern to be disposed of in the like proportion; said H. to be free from all liability except in respect of the money advanced by him. The vice-chancellor held, that there was no partnership, saying: “All that H. did was consistent with his character as capitalist, assisting B. in carrying on business. All that is said to constitute a partnership. If it could, it would be most unsafe for any man to lend a tradesman any sum of money, and to look after the best means he could get for its repayment.” Mollroo, March & Co. v. The Court of Wards, Law Rep. 4 P. C. 419, is perhaps a stronger case than Dean v. Harris. To the same point is Cox v. Hickman, House of Lords Cases, vol. 8, p. 268. In this state the Act of 6th April 1870, Purdon 1121, pi. 15 (Pamph. L. 56), expressly provides that, “ it shall be lawful for any person or persons to loan money to any individual, firm, association or corporation, doing business in this Commonwealth, upon agreement to receive a share of the profits of such business as compensation for the use of the money so loaned, in lieu of interest, and such agreement, or the reception of profits under such agreement, shall not render the person or persons liable as a co-partner in such business to other creditors of such individual, firm, association, except as to the money loaned,” &c., &c. It is by the light of the law thus modified by judicial decision and legislative enactment that we must examine and construe the agreement of December 13th 1875, which was attached to the supplemental affidavit of defence, and forms a part thereof. We assume that the court below held, that this agreement, as to the parties thereto, created a partnership inter se. In any other view of the case the supplemental affidavit of defence was ample to prevent judgment. The agreement was,evidently drawn by a layman and was probably intended to come within the provisions of the Act of 1870. So far as the defendant below is concerned, it provides for two things, viz.: 1st. A loan or advance by him to Faucett and Pincus of such an amount of money as may be necessary to enable the latter to carry on the restaurant at No. 1220 Chestnut street for one year; and 2d. A division of the profits after such loan or advances are repaid. If the defendant can be held liable at all to creditors under said agreement it must be by reason of his right to a participation in the profits. It is not alleged that he held himself out to the world as a partner, and that any one was induced to give credit to Faucett and Pincus by reason of his connection with them. The advance of the money would not of itself constitute the defendant a partner. The participation in the profits might make him one, but not necessarily so. It would depend upon the intention of the parties as expressed by the terms of their agreement. There were to be no profits divided until the advances were repaid.

If, as was alleged upon the argument, no profits were ever made, and of course none divided, and the advances were not even repaid, the time never arrived when the defendant became a partner by reason of his participation in the profits. This was precisely the case in Dean v. Harris, supra, in which the vice-chancellor held that a participation in the profits might have made Harris liable as a partner, but inasmuch as the business was unprofitable and no profits were ever made, he could not be held for such reason. Here the defendant pointedly denies any participation in the profits. Such denial ought to have carried the case to a jury. Again, he swears distinctly, that he never acted under said agreement, being unable to comply and advance the money, and that as to him said agreement was rescinded immediately after its execution. If this be so, and we are bound to assume it, he would not be liable in any view we may take of the agreement, for any debt incurred after his withdrawal, at least not to a creditor who never had knowledge of said agreement, and never trusted Eaueett and Pincus on that account. Aside from all this, however, this suit is for a claim against Eaueett and Pincus, upon a contract made with them prior to the agreement of December 13th. Eor the purposes of this case we must treat said agreement as of the date of January 7th, the defendant having sworn that the date of December 13th was erroneous. A large proportion of the work was done prior to January 7th. Assuming the defendant to have become a partner, he did not assume the debts of Eaueett and Pincus. There is not a word in the agreement which binds him to pay any of their old debts. A partner who enters a firm already established, does not thereby become liable for the debts of the old firm. Nothing but an express agreement will render him so liable. If it be said that as to so much of the work as was done after January 7th, it enured to the benefit of the defendant, the answer is that the fact is not so. He acquired no title to the leasehold and fixtures by reason of the agreement. They were, and continued to be the property of Eaucett and Pincus. The clause in the agreement that “ the cost of fitting up the said premises, as well as all outlay for furnishing, &c., shall be considered as expenses to be first deducted before dividing any profits,” does not render the defendant liable for a debt which he never contracted. In the most favorable light for the jolaintiff, it is but an assumption of his claim so far as there may be profits out of which to pay it. He merely agrees that it may be paid out of profits before his own claim for advances. This imposes no personal responsibility upon him.

We think this case ought to have gone to a jury. We therefore reverse the judgment and award a procedendo.


author: Mr. Justice Mercur

text:
    Columbia Insurance Company versus Buckley et al.

    1. One of the conditions of the policy of a mutual fire insurance company declared that if the amount assessed upon the premium-note given on the policy was not paid within thirty days after demand, then the policy should be void. One assessment was made upon the premium-note of a member insured for five years, on the 10th of May 1873, and another .on the 12th of January 1874; due notice of each assessment was given and demand of payment made. Before the court below, it was contended that the non-payment of the first assessment, within thirty days after demand, avoided the policy, and the second assessment could not be lawfully made, which contention the court sustained. Held to be error.
    2. Although a condition be attached to a policy, declaring it void on a failure to pay an assessment upon a premium-note within a specified time, yet the policy does not thereby become ipso facto void. The company may, at its option, declare the policy cancelled, and notify the delinquent, or may waive its right of avoidance. In the former ease the premium-note is not liable to assessment for the payment of future losses. In the latter the contract relation is not wholly dissolved, but the protection of the policy is suspended until the default of non-payment is removed.
    January 17th 1877.
    Before Agnew, C. J., Sharswood, Mercur, Gordon, Paxson and Woodward, JJ. Williams, J., absent.
    Error to the Court of Common Pleas, No. 3, of Philadelphia county: Of July Term 1876? No. 123.
    Assumpsit, by the Columbia Insurance Company, against John Buckley, James Johnson and Charles Scott, trading- as John Buckley & Co., in which.the following case was stated for the opinion of the court:—
    The plaintiff, a mutual fire insurance company, incorporated by Act of General Assembly, approved February 27th 1860, Pamph. L. 1860, p. 81, insured the property of defendants, on the 9th day of September 1871, for $3000, for five years, receiving in consideration a cash premium and a premium-note, of which the following is a'copy:—
    “ $1350. For value received in policy No. 30,508, issued by the Columbia Insurance Company, we promise to pay said company the sum of thirteen hundred and fifty dollars and — cents, in such portions and at such times as the directors of said company may, agreeably to their act of incorporation, require.
    “wX8Tl.0il
    On the 10th day of May 1873, the directors of the company made an assessment upon the defendants, in due form and according to their act of incorporation, for the sum of $81, payable on or before July 1st 1873; for which amount immediate demand was made, and notice of the assessment given. This assessment has never been paid. Among the conditions of the policy of insurance was the following: “Whenever an assessment has been made by the directors of this company on the premium-notes of its members, if the amount assessed on the premium-note given on this policy is not paid within thirty days from the time the same is demanded by said company, then this policy shall be void. Rut the said company shall have a right to collect the amount due on said assessment.”
    On the 12th day of January 1874, the directors of the company madé another assessment of $81 on defendants, payable March 1st 1874, and made immediate demand for the same.
    If the court be of opinion that the non-payment of • the first assessment within thirty days after demand (in view of the above quoted condition of the policy) made the same absolutely void as against the plaintiff, so that the second assessment could not be lawfully made, then judgment to be entered for the plaintiff for the amount of the first assessment only, with interest from the time the same was due. If the non-payment of the first assessment did not have such effect, then judgment to be entered for the plaintiff for the amount of both assessments, with interest from the time they were respectively due. Either party to have the right to sue out a writ of error.
    The court entered judgment for the plaintiff for the amount of the first assessment only, and the defendants took this writ, assigning this entry for error.

      Sharp & Alleman (with whom was J. H. Frueauff), for plaintiffs in error.
    A member of a mutual insurance company cannot discharge himself from liability to pay subsequent assessments by his omission to pay a prior one: Huntley v. Perry, 38 Barb. 569.
    The premium-notes of the members constitute the company’s capital, on the faith of which those who afterwards insure make their contracts, and on which those who lose by fire depend for indemnity: New England Mut. Fire Ins. Co. v. Belknap, 9 Cush. 145, 146 ; Commonwealth v. Insurance Co., 112 Mass. 127.
    The condition making the poliey void for non-payment of assessments is for the exclusive benefit of the company: Hightower v. Thornton, 8 Ga. 487; Hyatt v. Wait, 37 Barb. 29, 33; Huntley v. Beecher, 30 Id. 580.
    The policy is to be “void” only at the election of the company, or, in other words, it is voidable for non-payment of the assessment: Pearsol v. Chapin, 8 Wright 9, 13, 14, 16; Atlantic Ins. Co. v. Goodall, 35 N. H. 328, 332, 335, 336; Hyatt v. Wait, 37 Barb. 29, supra; Huntley v. Beecher, 30 Id. 580, supra; Ins. Co. v. Slockbower, 2 Casey 199; Hyde v. Watts, 12 M. & W. 254, 262, 263.

      The note of defendants therefore continued in force for the purpose of enabling the company to make assessments: Huntley v. Perry, supra ; Atlantic Ins. Co. v. Goodall, 35 N. H. 328, supra; May on Insurance, p. 691.
    But conceding the policy and note to have become absolutely void by the non-payment of the first assessment, the second assessment of the company waived the forfeiture, and gave the insured the right to recover for a loss (if any there had been) occurring during the nullity of the policy: Washington Mut. Fire Ins. Co. v. Rosenberger, 3 Weekly Notes, pp. 16, 18; Insurance Co. v. Slockbower, 2 Casey 199, supra; Lycoming County Ins. Co. v. Schollenberger, 8 Wright 259.

      Andrew Zane, Jr., and David 0. Harrington, for defendants in error.
   Mr. Justice Mercur

delivered the opinion of the court, May 7th 1877.

This was a ease stated. The plaintiff is a mutual fire insurance company. The insurance was taken for five years from the 9th of September 1871. The claim was for two assessments on the premium-note. One was made on the 10th of May 1873, the other on the 12th of January 1874. Due notice of each assessment had immediately been given, and demand of payment made.

One of the conditions of the policy declared, “whenever an assessment has been made by the directors of this company, on the premium-notes of its members, if tbe amount assessed on the premium-note given on this policy is not paid within thirty days from the time the same is demanded by said company, then this policy shall be void. But the said company shall have a right to collect the amount due on said assessment.” Section second of the act of incorporation provides that, “all persons who shall hereafter insure with the said corporation, and their executors, administrators and assigns, continuing to be insured therein, shall thereby become members thereof during the period they shall remain insured by said corporation and no longer.”

The question now presented is whether the non-payment of the first assessment within thirty days after demand made the policy absolutely void as against the plaintiff, so that the second assessment could not be lawfully made on the premium-note.

In a mutual insurance company each person insured becomes a member of the body corporate. He is clothed with the rights and subject to the liabilities of a stockholder. He is both insurer and insured. The premium-notes usually constitute the principal fund or capital of the company. They are also a part of each contract of insurance. Every person who procures an insurance and gives his premium-note acquires a contingent interest in every other such note then held by the company, or which it obtains during the life of his policy. They are liable to assessment for the paym'ent of losses. To secure a more prompt payment of the assessments, most companies have inserted a clause in their policies, declaring the same shall be void unless the assessment be paid within a specified time after notice.

The word void, in a contract, has often been held to mean voidable only, and at the election of the party wronged. The cases recognising and affirming this rule of interpretation as applied to contracts generally, are very fully collected by Mr. Chief Justice Lowrie, in Pearsoll v. Chapin, 8 Wright 9.

Although a condition be attached'to the policy declaring it shall be void on a failure to pay an assessment within a specified time, yet the policy does not thereby become ipso facto void. The company may at its option declare the policy cancelled, and notify the delinquent, or may waive its right of avoidance and continue to assess the premium-note. In the former case the premium-note is not liable to assessment for the payment of future losses. In the latter case the contract relation is not wholly dissolved, but the protection of the policy is suspended until the default of non-payment is removed. On the payment of the assessments the policy revives in its full vigor. The delinquent holder of the policy cannot sustain an action for a loss sustained while he is thus in default. It; is said in May on Insurance, § 553, that the acts of policy-holders which may entitle the corporation to defend against claims for losses do not necessarily release such parties from liability to assessments as members. Although the policy may provide that the person becoming a member shall continue a member so long as he is insured and no longer, yet if it stipulates that in case of forfeiture by the act of the insured, he shall not be released from the obligations of the premium-note until he has complied with the conditions of the policy and charter, requiring the payment of his proportion of all losses and expenses that may have accrued prior to the surrender of the policy or alienation of the property, the insured will still remain liable on his deposit or premium-note, for losses occurring after, as well as before, the alienation or act working the forfeiture, until all assessments are paid and the policy surrendered. The same principle is declared in Flanders on Insurance, p. 28, § 8; p. 147, § 5; Atlantic Ins. Co. v. Goodall, 35 N. H. 328; Neely v. Onondaga County Ins. Co., 7 Hill 50, and in Hyatt, Receiver, &c., v. Wait et al., 37 Barb. 29.

Our own cases make a distinction in the effect to be given to different acts of the insured, although the policy declares that either shall make the policy void. Thus, in Wilson v. Trumbull Mutual Fire Ins. Co., 7 Harris 372, one of the by-laws provided that the alienation of any property insured should, ipso facto, make the policy void, unless notice thereof was given to the secretary and an assignment of the policy made to the purchaser within sixty days thereafter. The insured sold the property, but did not give the stipulated notice of his sale, nor did he assign the policy to the purchaser. It was held, that his premium-note ivas not liable to assessment to pay losses which accrued eight months after the sale. It was there said, he that sells his insured property excludes himself from membership and from all its liabilities thereafter accruing. He is no longer insurer or insured. He can claim no benefits nor be bound for any subsequent losses. Interest in the property insured is an essential link in the relation of insurance. The same principle is declared in' Finley et al. v. Lycoming County Mutual Ins. Co., 6 Casey 311.

In Hummel & Co.’s Appeal, 28 P. F. Smith 320, one of the con- ' ditions of the policy declared, “ whenever an assessment shall have been made on the premium-notes, and the same is not paid within thirty days after having been demanded by the company through their agents or receivers, the policy of insurance given. upon such notes shall be null and void until the said assessment be paid, and the directors shall retain such premium-notes and collect thereon such sum or sums so assessed.”

The act of incorporation declared that all persons who should insure with the company should be members while they continued insured, and no longer. It was nevertheless held, that the policy did not become “null and void” by the omission to pay the assessment for thirty days. It was said, the moment payment wras made the contract, which was still alive, became operative in its protection.

It is true the condition declared the policy should be null and void “until the said assessments be paid,” yet we do not think those words either control or change its effect. The condition there, as well as in the case we are now considering, substantially declares, that the company shall retain the premium-note and collect the amount due on the assessment.

The distinction between the effect given to alienation of the property insured and the failure to pay an assessment within the time specified has some foundation. In the former case the delinquent has no property to which the revived policy can apply. As to him, its protective power is gone past restoration. A lack of the essential element of interest in the property worked a severance of the insurance relation.

In the latter the delinquent retained the property over which the protecting care of the policy was again thrown on payment of the assessments. Time being the only material circumstance, it is waived by acceptance of performance after condition broken: 1 Strange 453. The company may, undoubtedly, waive a condition made in its favor. "When it does so the rights and obligations of the insured become restored as fully as if the condition had not existed.

In the case now before us there had been no surrender of the policy by the insured, and no cancellation thereof by the company. No demand had been made for the premium-note, no satisfaction of it had been ordered. The note then remained in full force and was subject to assessments. The learned judge therefore erred in not entering judgment for the amount of the assessment made on the 12th of January 1874, as well as for the former assessment; therefore,

Judgment reversed, and judgment in favor of plaintiff for the amount of both assessments, with interest according to the case stated.


text:
    The Columbia Insurance Co. versus John Buckley & Co.
    [This case was argued upon the same day, and by the same counsel as in the preceding one. The facts, also, were substantially the same.]
   Mr. Justice Mercur

delivered the opinion of the court, May 7th 1877.

Both assignments present one question only: that is, the effect to be given to the non-payment, within thirty days after notice, of an assessment on the premium-note of the insured. The court below thought the omission to pay made the policy absolutely void, and that no valid assessment on the note could be made to pay losses thereafter sustained. The evidence of such assessments was therefore rejected.

In an opinion just filed, in another case between these same parties, in regard to another assessment on this identical note, we have fully discussed the question which arises here. The reasons there given rule this case. It is unnecessary to repeat them. They show that the learned judge erred in rejecting the evidence, and that this judgment must be reversed.

Judgment reversed, and a venire facias de novo awarded.


text:
    Buckley et al. versus Columbia Insurance Company.
    1. In an action by a mutual insurance company to recover assessments made on a premium-note of defendants, the record of a former suit between the same parties for other assessments, where it did not disclose the particular facts for which it was oifered, was properly rejected.
    2. It was proper to reject evidence that defendants had paid a certain cash premium and the rate was tlie same as that charged to others when no premium-note was required. Being a mutual company the fact that a less sum was paid at the time of insurance would not prevent an assessment of lai’ger sums to pay subsequent losses.
    3. Notice to the agent through whom the insurance was effected, that the defendants did not wish to be longer insured in the company, could not destroy the insurance relation, nor was notice of their desire to such an agent notice to the company.
    4. Evidence was offered to show that no suits had been brought for losses during the time in which these assessments were made, and that by the terms of the policies issued there were no losses in that time for which the company could legally make an assessment. Held, that the first part of the offer was clearly inadmissible, and the latter part too vague in its terms.
    5. The defendants averred that before.the company could recover, it must prove that the losses occurred during the time when defendants’ policy was m force. By a provision of the act of incorporation, “ where an action is brought for the recovery of the assessment on a premium-note, the certificate of the secretary specifying the assessment and the amount due on such note by means thereof shall be taken and received as primá facie evidence thereof in all courts of this Commonwealth.” Held, that it was the manifest design of the statute to make the certificate primá facie evidence that the necessities of the company justified the assessment, and that it was duly and legally made, in the absence of proof to rebut this presumption.
    6. The insured was entitled to notice of the assessment before suit brought, and where it was disputed whether such notice had been given, it was error for the court to take this question from the jury and to decide upon its sufficiency.
    7. It was error in this case to peremptorily direct the jury to find for the company.
    January 17th 1877.
    Before Agnew, C. J., Sharswood, Mercur, Gordon, Paxson and Woodward, JJ. Williams, J., absent.
    Error to the Court of Common Pleas, No. 3, of Philadelphia county: Of July Term 1876, No. 138.
    Assumpsit, by the Columbia Insurance Company, against John Buckley and James Johnston, trading as John Buckley & Co., to recover assessments made upon the following premium-note of the defendant:—
    “$1350. For value received in policy No. 30,508, issued by the Columbia Insurance Company, we promise to pay said company the sum of thirteen hundred and fifty dollars — cents, in such proportions and at such times as the directors of said company may, agreeably to their act of incorporation, require.
    Dated the 9th day of September 1871.} &
    A narr. was filed, with special counts, to recover assessments made January 9th 1875, of eight, twenty and ten per cent.; total, thirty-eight per cent.; and assessments made same date for twenty-five per cent, of said note; altogether for the sum of $850.50.
    The defendants pleaded, “ Non-assumpserunt, payment with leave,” &c.
    The company was incorporated as' a mutual insurance company, by the Act of the 25th of February 1860, Pamph. L. 81. The 2d section of this act provides: “ And all persons who shall hereinafter insure with the said corporation, and their executors, administrators and assigns, continuing to be insured therein, shall thereby become members thereof during the period they shall remain insured by said corporation, and no longer.”
    The 7th section : “ That every member of said company shall be bound to pay for all losses, and the necessary expenses accruing in and to said company, in proportion to the amount of his depositenote.”
    Section 8th provides: “ That whenever an assessment is made on any premium-note given to said company in consideration for any policy of insurance issued by said company, and an action is brought for the recovery of such assessment, the certificate of the secretary specifying the amount due on such note by means thereof, shall be taken and received as primá facie evidence thereof, in ali the courts of this Commonwealth.”
    At a regular meeting of the board of directors, held at the office of the company January 9th 1875, the preamble and the following resolution were adopted:—
    “Resolved, That on all premium-notes of this company, held liable to assessment on May 8th 1870, an assessment of twenty (20) per centum be levied; and also on all premium-notes of this company held liable to assessment July 1st 1872, a further additional assessment of eight (8) per cent, be levied; and also, that on all premium-notes of this company held liable to assessment on the 31st of December 1872, a further additional assessment of twenty (20) per cent, be levied; and also, that on all premium-notes of this company held liable to assessment on the 31st of December 1873, a further additional assessment of ten (10) per cent, be levied; and that to all persons who shall pay these assessments prior to March 1st 1875, together with any back assessments, interest and costs, owing by them, a deduction of five (5) per cent.’ hereon be made; and this assessment be designated as ‘Deficiency Assessment A.’ ”
    Assessment No. 17, for twenty-five per cent, of amount of premium-notes to cover losses of 1874, was also included in the suit, but on the trial the plaintiff only claimed to recover twenty-eight per cent, under “ Deficiency Assessment A,” being amount assessed on notes held liable to assessment July 1st 1872 and December 31st 1872.
    One of the conditions of the policy issued to Buckley & Co. Avas as folloAvs:—
    “ Whenever an assessment has been made by the directors of this company on the premium-notes of its members, if the amount assessed on the premium-note given on this policy is not paid within thirty days from the time the same is demanded by the said company, then this policy shall be void. But the said company shall have the right to collect the amount due on said assessment.”
    Buckley & Co. applied for a policy of insurance of $3000, for which they paid a premium of $67.50, and gave their premium-note above. The policy was to run for five years. On the 9th of September 1872 they also paid $67.50 on the policy.
    On the 10th of May 1873 the company made an assessment upon the note of Buckley & Oo. of six per cent., and on January 12th 1874 a second assessment of six per cent. Notice was duly given of both assessments; neither were paid, and suit was brought for their recovery.
    The facts in that ease were submitted in a case stated, and the court entered judgment for the amount of the first assessment only, on the ground that, by the terms of the policy, if an assessment is made and not paid within thirty days after due notice, the policy was void, and that therefore the second assessment was not recoverable. (See the report of the case ante, page 293, wherein this judgment of the lower court is reversed.)
    On the 9th of January, the assessments in the above resolution were determined upon, and this suit was brought to recover the amount of these several assessments.
    The defendants alleged that they had not received notice of these assessments, nor had any demand been made upon them. It was in evidence that the notices of these assessments had been sent out by the officers of the company.
    On the trial, before Finletter, J., the defendants made the following offers of evidence:. 1. The record of the former suit above alluded to, for the purpose of showing suit on this same note, for assessments made May 10th 1873, and 12th January 1874, and that assessments were made on those dates, and demand made for the payment of the same; this for the purpose of showing that the assessment of May 10th 1873, for six per cent., Avas sufficient to meet the liabilities at that time, and to show that the policy was void at the time of the assessments in suit.
    2. An offer to shoAV that the property described in the policy was destroyed by fire in December 1874.
    3. An offer to show that when policy Avas obtained defendants paid $67.50, Avhich was to be the annual cash premium ; that the same Avas paid on September 9th 1872, again; that the same was the annual cash premiums required by the company, and that it was the rate charged by the company Avken no note Avas required.
    4. An offer to show that, in 1872, the Avitness gave notice to the agent through Avliom the insurance was obtained that he did not wish to be longer insured in the company; that he AYas informed by the agent that the policy should be null and void.
    5. An offer to show by a clerk of the company, that no suits have been brought on policies for losses reported to the company between September 9th 1871, and May 10th 1873; and that by the terms and conditions of the policies issued by the company there are no losses between those dates to pay, for which the company could legally make an assessment January 9th 1875.
    6. An offer of the minute-book of the company of meeting held May 10th 1873, to show,

      a. That the losses on stock policies, under the amendment to the charter, the mutual company is not liable for.

      b. To show that, at this time, an assessment of 6 per cent, was sufficient to pay all losses.
    All of which the court rejected.
    Defendants also submitted the following points:—
    1. That the verdict must be for the defendants.
    2. That if the jury find from the evidence that no notice of the assessment was given defendants before suit brought, plaintiff cannot recover.
    3. That the plaintiff having failed to prove that the losses occurred during the time when the defendants’ policy was in force, the verdict must be for the defendants.
    All of which the court refused and charged the jury, that there was no defence, and that they must find for the plaintiff the amount claimed.
    The defendants took this writ, and their assignments of error were from 1 to 6, inclusive, to the rejection of their testimony; 7, 8 and 9, to the refusal of their points, and 10, to the direction of the court to the jury to find for the plaintiff.

      Andrew Zane, Jr., and David O. Farrington, for plaintiffs in error.
    The defendants were not liable, provided an assessment had been made and remained unpaid thirty days after demand; or if the property was destroyed by fire; or if the policy was cancelled by agent.
    There was no evidence to submit to a jury that payment had ever been demanded, and without this there can be no recovery.
    The court erred in directing the jury to find for plaintiff, and in saying that there was no defence: Strohl v. Levan, 3 Wright 177.

      Sharp Alleman (with whom was J. F. Frueauff), for defendant in error.
    — When the charter of an insurance company makes every member responsible for his proportion of losses happening to the company, every such member is liable to the company for his proportion of the losses happening while he continues a member, and assessments may be made on his premium-note, on account of such losses, even after he ceases to be a member: Flanders on Fire Insurance, p. 147, citing St. Louis Mut. Fire & Marine Ins. Co. v. Boeckler, 19 Mo. 135; Marblehead Mut. Ins. Co. v. Underwood, 3 Gray 210; Fayette Mut. Fire Ins. Co. v. Fuller et al., 8 Allen 27.
    Liability on the premium-note continues after the destruction of the premises insured: Flanders on Fire Insurance, pp. 27 and 28, citing Bangs v. Scidmore, 24 Barb. 29 ; s. c. 21 N. Y. 136 ; New Hampshire Mut. Fire Ins. Co. v. Rand, 4 Fost. 428; see Swamscot Mach. Co. v. Partridge, 25 N. H. 369.
    But even if this were not so, the assessments were for losses occurring previous to the fire.
    The charter of the company makes the secretary’s certificate primá facie evidence of the assessment and the amount due,
   Mr. Justice Mercur

delivered the opinion of the court, May 7th 1877.

This action was brought to recover assessments made on the premium-note of the plaintiffs in error. Six errors are assigned to the rejection of evidence and four to the charge of the court.

1. The record of a former suit for other assessments was not admissible. It did not tend to show either of the facts.for which it was offered.

2. We cannot say there was error in rejecting evidence that the property insured was destroyed by fire in December 1874. We have not been furnished with.a copy of the policy. We know not how far, by its terms, a loss by fire may operate on the premium-note. Besides, the offer does not profess to show that the assessment of December 31st 1874 was not for the. payment of losses sustained before the fire.

3. This evidence was correctly rejected. Being a mutual insurance company, the fact that a lesser sum was paid at the time of the insurance would not prevent the assessment of larger sums to pay subsequent losses.

4. Notice to the agent through whom the insurance was obtained that they did not wish to be longer insured in the company, could not destroy the insurance relation. They could not thus relieve themselves from their obligations, nor was notice of their desire to such an agent notice to the company.

5. As a whole, this offer was clearly inadmissible. The fact that no other suits had been brought to recover losses was wholly irrelevant, and the court was not bound to separate the offer and admit a part. Whether the latter part of the offer by itself would be evidence it is difficult to determine. The offer should have been made in more clear and specific terms to show that the company did not sustain the alleged losses for the payment of which the assessments in controversy were made; or, if so sustained, that they had been paid by assessments made and collected prior to the assessments now in question. If the insured can show fraud or clear mistake in making the assessments it will constitute a defence: Jones v. Sisson, 6 Gray 288; People’s Equitable Mutual Fire Ins. Co. v. Babbitt, 7 Allen 235; Traders’ Mutual Fire Ins. Co. v. Stone, 9 Id. 483; Hummell & Co.’s Appeal, 28 P. F. Smith 320.

6. We cannot reverse for the rejection of the minute book. No copy of the portion offered is furnished for our inspection. Its relevancy is therefore not shown.

7. There was no error in refusing this instruction.

9. The eighth section of the act of incorporation declares, when an action is brought for the recovery of the assessment on a premium-note, “ the certificate of the secretary specifying the assessment and the amount due on such note by means thereof, shall be taken and received as primá facie evidence thereof in all courts Of this Commonwealth.” That is, as evidence of “ the assessment and the amount due” by reason of the assessment. The manifest design of the statute is to make the certificate of the secretary primá facie evidence; that the necessities of the company justified the assessment, and that it was duly and legally made.' No evidence having been given to rebut this presumption this assignment is not sustained.

8 and 10. The insured was entitled to notice of the assessment before suit was brought. The case of Thornton et al. v. The Western Reserve Farmers’ Ins. Co., 7 Casey 529, is cited to show that the want of notice can be plead in abatement only. There is a dictum to that effect in the opinion of Mr. Chief Justice Loavrie ; but the report of the case shows that notice of the assessment was averred in the claim filed, and proved on the trial. The question in that case appears to have arisen on the language of a statute of Ohio, Avhich prescribed the averments to be set set forth in the declaration, and that it should therein be averred that notice had been given thirty days before the commencement of the suit. The omission of that averment was interposed as a defence; but the fact of notice was not controverted. That case was ruled on the pleadings. In the present case no question Avas raised in the court below in regard to the pleadings. The company appears to have recognised the necessity of its proving notice. It gave some evidence tending to shoAV it, but not sufficient to say it Ayas conclusively proved. The witness testified, “ Notices of these assessments Avere sent out by the officers of the company.” When or Iioav sent, or to whom, is not stated. The insured plaintiffs in error deny having received any notice. It may be that the jury would have found the evidence of notice sufficient; but the question should have been submitted to it, and its sufficiency not decided by the court.

The learned judge therefore erred in not affirming the second point submitted by the plaintiffs in error; and he also erred in giving a peremptory direction to the jury to find for the corporation the amount claimed.

Judgment reversed, and a venire facias de novo ayyarded.