author: Christiancy J.

text:
    Edward Williams et al. v. The Albany City Insurance Company.

      Insurance'. Condition in the policy: Non-payment of premium note: Loss occurring during default. The premium upon a policy of insurance having been paid by an endorsed note, the policy containing a clause that if the note should not be paid at maturity, the premium should be considered as earned, and the policy to become void while the note remains overdue and unpaid; and a loss occurring after the maturity of the note and before it was paid: Helds That the condition in the policy was valid; and that the non-performance of it did not extinguish the policy. The effect of the default was merely to defeat the right to recover for any loss occurring during its continuance; — the subsequent payment of the note would revive the policy for the remainder of the term; but, for a loss occurring during the default, notwithstanding the subsequent payment of the note, the insured could not recover.

      Heard October 22.

      Decided January 5.

    Case made from Wayne Circuit.
    This is an action of assumpsit upon a policy of insurance, issued by The Albany City Insurance Co. on the twenty-seventh day of April, in the year one thousand eight hundred and sixty-eight, upon the schooner Stanley L. Noble, to run from said date to the thirtieth day of November, then next, in the sum of two thousand dollars. The plaintiffs 'aver a total loss within the period for which the vessel was insured.
    To this were added the common counts. The defendant pleaded the general issue.
    On the trial the parties by stipulation, agreed to the following statement of facts :
    1. The Albany City Insurance Company is a corporation, etc.
    2. Prior to the date of said policy said Henry Howard, at Port Huron, Michigan, sold and delivered the schooner Stanley L. Noble to Edward Williams and Hazard M. Wentworth, of Kacine, Wisconsin, for the sum of $5,500, and on the day of purchase the buyers aforesaid made and delivered to the seller a mortgage on said vessel to secure the payment of said purchase money, which mortgage was duly recorded, and that $4,400 of said purchase money is still unpaid, and said mortgage valid, and that said buyers owned and had possession of said schooner from the day of said purchase till the day of the loss, hereinafter mentioned, subject to the said mortgage.
    3. That said plaintiffs applied to I. H. White & Co., insurance brokers at Port Huron, to obtain insurance on said schooner, and said White & Co. applied to A. G. Lindsay at Detroit, who was the general agent of defendant in that city, and who sent the application to the defendant at Albany.
    4. That on the 27th day of April, A. D. 1868, said defendant at Albany, New York, made and entered into a certain contract or policy of insurance with said plaintiffs, of which Exhibit A., hereto annexed, is a true copy.
    5. That said defendant transmitted said policy by mail to Detroit to A. G. Lindsay, and said Lindsay transmitted it by mail to I. H. White & Co., at Port Huron, in whose possession said plaintiffs first saw said policy.
    6. That upon the 27th day of April A. D. 1868, at the time the plaintiff's applied to I. H. White & Co., the said plaintiffs, to secure the payment of the premium named in said policy, executed and deliyered to the said I. H. White & Oo., their promissory note, to the order of Howard & Son, of which Exhibit B., hereto annexed, is a true copy, one-half of which note was for a premium for a similar amount in the Republic Insurance Company, — the course of business having been that the plaintiff applied to White & Co., for $4,000 insurance, on the 27th April, 1868, and then executed said note for the premium on that sum which White & Go. subsequently obtained insurance for in said two companies, the application in this case passing from White & Oo. through Lindsay to the company at Albany.
    7. That said Howard & Son, who endorsed said note were and are pecuniarily responsible.
    8. That said White & Go., after receiving said endorsed note, and upon the 12th day of May, delivered said policy to said plaintiffs, and sent said note to said Lindsay who endorsed it for collection and_ deposited said note in the bank at Port Hui’on, where it was made payable.
    9. That on the 12th day of November, 1868, and while the said schooner was seaworthy and was employed on the waters of Lake Michigan, and there was no other insurance made xxpon said schooner, which, together with that made by said policy, exceeded four thousand dollars; and while taking on a cai’go of cordwood, railroad ties and cedar posts, at Brown’s Pier, being an oxxtside pier ixx Lake Michigan, and while said schooner was on Lake Michigan, in said policy mentioned, the said schooner, with her body, tackle, appax’el and other furniture, was totally lost, by being wrecked by a peril of the sea; and that the amount of the said loss was $5,500.
    10. That on the clay and at the time of said loss, tlxe said endorsed note, which fell due px-ior to said loss on the 30th day of October and was payable at Port Huron, was not paid, and was protested in due form 'of law, so that said endorsers were legally bound. That on the 10th of November said Lindsay addressed a note to said endorsers, of which Exhibit D. is a copy, and by due course of mail received the reply subjoined to said copy.
    11. That on the 19th day of November the said endorsers paid the amount of said note with interest and expenses, to I. H. White & Co., who, as well as said endorsers had seen a notice of the loss in the newspapers, and that said White & Go, received said amount and delivered up said note to said endorsers. That said White & Co. paid the said amount to said Lindsay, who received the same, also with the same knowledge of said loss. That said Lindsay transmitted said amount of money so received to the defendant at Albany, who received and kept the same.
    12. That at the time and place of said loss, the said ’schooner, her tackle, etc., was worth the sum of $5,500.
    13. That afterwards and on the 4th day of December, 1868, and more than sixty days prior to the commencement of this suit, due and sufficient proof of the aforesaid loss and of the damage to the extent of the whole nature of the property insured and ‘ of the interest of the said plaintiffs and beneficiary owners and mortgagee, as aforesaid, was made as provided in and by said policy, and transmitted to the office of said defendant in Albany.
    14. That said defendant has paid no part of the two thousand dollars insurance money named in said policy, or the interest, and hath hitherto refused to pay, and- upon the 27th day of November addressed a letter to the plaintiffs’ agent in reference to his demand for payment,-a true copy of which is hereto attached and marked C.
    The policy referred to in the statement as “ exhibit A” contained the following condition:
    “And in case the notes or obligations given for the premium therefor, or any part thereof, be not paid at maturity, the full amount of premium shall be considered as earned, and this policy becomes void, while said past due notes or obligations, or any part thereof, remain overdue and unpaid.”
    “ Exhibit B. — Six months after date we promise to pay to the order of Howard & Son three hundred and sixty dollars at Jno. Miller’s Bank, city of Port Huron, Michigan, for value received; being for premium of insurance ($360.) on schooner S. L. Noble. (Signed) Edward Williams. Hazard M. Wentworth, Thos: A. Ellery. Policy No. —. And in case this note be not paid at maturity, the full amount of premium shall be considered as earned, and the said policy becomes void, while this note remains overdue and unpaid.”
    “Exhibit 0. — Albany City Insurance Company, office cor., State and James sts., Albany, N. Y., Nov. 27, 1868. Alfred Russell, Esq., Detroil, Mich. Dear Sir —We have just received your favor of the 25th instant, and in answer beg to say that this Company is under no liability for schr. S. L. Noble, the policy being by its terms void at time of disaster, by reason of non-payment of premium note at maturity. Very respectfully yours,
    (Signed) W. A. Young, Secretary.”
    “ Exhibit D. — A. G-. Lindsay’s General Insurance Office, No. 77 Griswold street, Bank Building, Detroit, Nov. 10, 1868. Messrs. Howard & Son, Port Huron, Mich. Gents: The premium note, $360, for insurance on schr. S. L. Noble, loss, if any, payable to H. Howard, and endorsed by you, was protested at the banking house of John Miller <fc Son, at maturity, for non-paymfent. We now look to you for payment of this note. You are probably aware that in case of a premium note being unpaid at maturity, as in this case, the vessel remains uninsured until it is paid. I respectfully beg your immediate attention to this fact.
    “ Truly yours, (Signed) A. G. Lindsay.
    “We expect the amount daily from the owner.
    (Signed) Howard & Son.”

      A judgment having been rendered for the defendants, a case is settled and signed under the statute and brought into this Court.

      Alfred Russell, for plaintiffs in error.
    The defense in this case arises upon two clauses inserted by the defendants in their policy.
    The defendants insured plaintiffs’ schooner and took a negotiable note for the premium, which was secured to be paid by a perfectly good endorser, by whom it was paid 19 days after maturity.
    Defendants inserted in their policy a statement that in case the note was not paid at maturity, the policy should become void while the note remained unpaid, the full amount of premium to be considered earned nevertheless.
    The insurance was for $2,000, and the premium was $180. The note fell due October 30th, 1868, and was paid by the endorser 19th of November 1868. In the interim a total loss occurred, November 12th.
    I. The forfeiture, was intended merely to secure promptitude of payment. This is sufficiently evident from the fact that the enforcement of the forfeiture would not produce the money. The Company then take another and a perfect security for payment itself.

      a. We say then that the Company will be held to have elected to rely upon the security given for payment, and not upon the penal provision directed merely towards promptitude.—4 Kent, 57. Taking the note of a known agent is an election not to look to the principal.—Patapsco Ins. Co., v. Smith, 6 Har. & J., 166; Paterson v. Gandasequi, 15 East, 62. Where a corporation may either sue for a subscription or forfeit stock without sale it must make its election.—Small v. Man’f. Co., 2 Comst., 330; Carson v. Mining Co., 5 Mich., 288. Taking other security will discharge a lien, even the party’s own negotiable note on time.—3 Pars. Cont. 5th ed., 246, cas. cit.

    The provision in question is a forfeiture of that portion of the premium covering the interval from the maturity of the note to the end of the period of insurance. —Kemble v. Parren, 6 Bing. 141.

      b. Again : The act of the Company in asking security for payment is inconsistent with an intention to enforce this forfeiture. The plaintiffs clearly would not have given such security if they had supposed such a forfeiture reconcilable with the reception of such security — consequently an estoppel in pais arises.

      c. The Company rely upon Wall v. Insurance Co., 36 N. Y., 157. But in that case the only questions litigated were whether the Company’s agent was authorized to waive or modify a similar clause, and whether he had done so. The point we make was not raised or decided. In the case at bar that fact is expressly stipulated, and it also appears that the endorser actually paid. In that case the Court cite —Beadle v. Chenango Ins. Co., 3 Hill. 161; Smith v. Saratoga Ins. Co., same vol. 507, and Neely v. Onondaga Ins. Co., 7 Hill. 50.

      d. It does not appear that the defendants were clothed by the Legislature with express power to make and enforce such a forfeiture.—Angell & Ames Corp. §§ 323-4, seq; Ins. Co., v. Spore, 23 Mo. 26.

      e. The Court must pass upon the reasonableness of such a provision as in case of a by-law.—A. & A. on Corp. §§347-8. Here the company did not receive the interest on $180 for 19 days, $0.67, and claim that we must consequently lose $2,000. -A provision working such results is unreasonable.

      f. This was an impossible condition. The policy is to become void on non-payment, and the whole premium is to be considered earned.

      g. This stipulation is inserted by the insurers in an instrument signed by them alone, and is not a contract, assent to which by the insured can be implied from their reception of the policy; because any presumption of assent from such reception is rebutted by the fact of security being- furnished. The writing of the same upon the note by the company is no part of the note signed by plaintiffs. See R. R. Co. v. Hale, 6 Mich. 243.

    II. The acceptance of the money due on the premium note, with interest and expenses, was a waiver of the forfeiture under consideration.

      a. Many of the cases upon the subject of waiver, which are very numerous, are undoubtedly cases like Tayloe v. Ins. Co., 9 How., touching the furnishing of proof of loss, where by a failure to object, on the part of the company, the assured has lost the opportunity to get up the proofs.
    Take the case of an acceptance of rent after the right of re-entry has accrued. There the rent is not merely considered as earned, but it actually is earned. And yet there is no doubt that acceptance of the rent in such a case is a waiver of the forfeiture.—Viall v. Genesee Ins. Co., 19 Barb. 440; Frost v. Saratoga Ins. Co., 5 Denio, 154; Hale v. Ins. Co., 32 N. H. 295; Chalker v. Chalker, 1 Conn. 79; Lycoming Ins. Co. v. Schollenlerg, 44 Penn. State; Hall v. Ins. Co., 6 Gray, 185; Asso. v. Ins. Co., 7 Gray, 261.

    In the case relied upon by the defendant, Wall v. Ins. Co., 36 N. Y., the defendants refused to accept the premium when offered, although they had made a stipulation, precisely like that undergoing examination in this case. It is evident that the company in that case did not dare to assume the risk of the effect of the act of taking the money. See also, Canfield v. Westcolt, 5 Cowen, 270.

    The principle is that any party may waive provisions inserted for his own benefit by any act inconsistent with
      enforcement.—Lycoming v. Ins. Co., 44 Pa. State, 259, 263; Peachey v. Duke of Somersett, 1 Strange, 483.

      b. This forfeiture is to be construed with absolute strictness against the company.
    The acceptance of full legal compensation for delay in the payment, and of their expenses in realizing from the endorser, then clearly debars the company from this defense.
    In Reed v. Ins. Co., 37 N. Y., (not yet out), there was a precisely similar clause, with the exception that “note or obligation” stood in place of notes or obligations. Two notes were given for the premium, one of which was unpaid at maturity. Judgment- against the company, reversing decision below. The decision below by Masten J., in the S. C. of Buffalo, was against waiver by payment on the ground that the stipulation did not work a forfeiture. Denio, C. J., in the Court of Appeals, held that it was a forfeiture; but that payment of premium was not a waiver. But the printed case did not show the payment of interest, or expenses of protest, nor in fact was there any endorser, Nor do either of the opinions make any ruling upon this point.

      ITewberry, Pond & Brown, for defendants in error.
    It is a conclusive answer to plaintiffs’ claim that their premium note was not paid at maturity.
    The policy provides that “in case the notes and obligations given for the premium herefor, or any part thereof, be not paid at maturity, the full amount of premium shall be considered as earned, and this policy becomes void while said past-due notes or obligations, or any part thereof, remain over-due and unpaid.” There is no doubt that parties may insert such stipulations in policies as they choose, and they will be held binding, if not in violation of public policy. —Beadle v. Chenango Ins. Co., 3 Hill, 161; Smith v. Saratoga Mutual Ins. Co., do 508; McMillan v. M. S.

      & N. I. R. R Co., 16 Mich. 109, 114; Neely v. Onondaga Mutual Ins. Co., 7 Hill, 49

    We deny, however, that this condition savors in the least of injustice or oppression. Insurance companies, as a general rule, require payment of the premium at the commencement of the risk, but in marine cases a custom has arisen of extending the time and giving the insured an opportunity of paying from the earnings of the vessel — a custom wholly for the accommodation of the insured. This is virtually assuming two risks instead of one, as the liability of the underwriter would undoubtedly continue notwithstanding the insolvency of the insured happening before (the maturity of the note. With this concession to his convenience, — justice, as well as the condition of the policy, demands a prompt fulfillment of his obligation, and he cannot complain that the policy is suspended so long as his own contract remains unperformed. The condition being appended to the note as well as inserted in the policy, the insured cannot plead the usual defense of secrecy or want of notice.
    The exact question in this case was decided in favor of the defendant in the case of Wall v. Home Ins. Co., 86 N. Y., 157, where this provision was upheld.
    In the unreported case of Reed v. Ætna Insurance Company, the Superior Court of Buffalo makes use of the following language:
    “The stipulation in the policy ‘in case the note or obligation given for the premium herefor, be not paid at maturity, the full amount of the premium shall be considered as earned, and this policy becomes void while said note or obligation remains overdue and unpaid/” too plainly expresses the intent and agreement of the parties to it to be misunderstood.
    By the payment of the dishonored or over due note the policy, if the subject insured was in existence, would, from that time, again become operative, but it would not cover losses which, happened after default and before payment. Any other construction A^ould defeat the object of the clause and the plain intent of the parties.
    In the case before us, the loss occurred during the time the premium note was overdue and unpaid, and the loss was total. At the time of the payment of the notes there was nothing to which the policy could attach.
    It is claimed that by accepting payment of the notes, the defendant “waived the forfeiture and gave the policy its original validity.”
    This assumes that there was in this case a forfeiture. But this is not so. It is a case of a contract suspended by force of its terms and the act or default of the assured, and which the assured could by their own act at any time make operative again. There was no absolute unrecoverable loss of a right, and consequently no forfeiture.
    Nor was there any waiver. No such fact is stated in the case nor legally inferable from the facts stated. If there had been a forfeiture and the subsequent acceptance of payment of the notes had been inconsistent with the forfeiture, then we might, as matter of law, say that the forfeiture was waived.
    In the Reed case, the policy contemplated but a single note, when, in fact, the plaintiff had given two notes, but one of which was overdue at the time of the loss. The Court held that the words “ note or obligation ” could not be extended to the plural number. Even if the circumstances of the case at bar had been the same the defendant would not have been liable, as the policy provides that it shall be void if the “notes and obligations, or any part thereof,” be unpaid at maturity.
    In the case of Carson v. The Arctic Mining Co., 5 Mich., 288, the right to a double remedy of forfeiture and suit upon the note is expressly recognized.—See also Davis v. Rider, 5 Mich. 423.

    Nor is the receipt of the money a waiver of the forfeiture, since by the express terms of the policy, upon the failure to pay the note at maturity the whole of the premium is to be considered as earned.
    The cases-where a landlord is held to waive a right of re-entry after accepting payment of rent, are applicable only so far as to show that the policy was revived after payment of the note.
    There is a distinction too between the cases where the landlord may put an end to the lease by an entry for the wrong done, and those where the wrong terminates the lease and renders it absolutely void without any act on the part of the landlord.—Smith v. Saratoga Mutual Ins. Co., 3 Hill, 508.

    We insist, in this case, not 'that the failure to pay avoided the policy in toto, but that it suspended the liability óf the defendant so long as it remained unpaid. The loss having occui-red in this interval the defendant cannot be held.
   Christiancy J.

This is a case made after judgment in favor of the defendant, in the Circuit Court for the County of Wayne.

The action was assumpsit upon a policy of insurance upon the schooner Stanley L. Noble, dated April 27th 1868, insuring the vessel from that date until the 30th day of November in the same year; the declaration alleging a total loss within that period.

The premium was not paid in cash, but an endorsed note was given for it at six months.

The policy contained an express stipulation that “in case the notes or obligations given for the premium or any part thereof, be not paid at maturity, the full amount of premium shall be considered as earned, and this policy becomes void, while said past due notes or obligations or any part thereof, remain overdue and unpaid,” and a memorandum to the same effect was contained on the face, but at the foot of the note.

The note given was not paid at maturity and was duly protested for non-payment, so that the endorsers, who are shown to have been good, were legally bound to pay the note.

On the 12th day of November, after the note had become due and while it remained over due and unpaid, the vessel was totally lost, the loss exceeding the amount insured, and the plaintiffs’ interest being undisputed.

On the 19th day of November — after the loss and after the defendants’ agent had notice of it through the newspapers, the endorsers paid the note with interest and expenses to said agent who received it and delivered up the note to the endorsers. The agent transmitted the money to the defendants who received and kept it.

The defendants refused to pay the loss, and in this suit defend on the ground that, by the express provision of the policy, they were exempt from liability for any loss occurring while said note was overdue and unpaid.

Upon this statement of facts, three questions arise : 1st. What is the true interpretation of this provision of the policy ? 2nd. When properly interpreted, is it valid in law; and, if so ? 3d. What was the effect of the defendants’ receiving payment of the note, after default and after the loss ?

First, As to the interpretation — Was it the intention that the policy should become utterly and finally extinguished on failure to pay the note at maturity P If the provision had stopped with the clause “ and this policy becomes void,” such would have been the true interpretation. But the whole instrument, and especially the whole provision upon the same identical subject must be construed together to ascertain the intent; and the clause last cited is but a part of one entire provision, but one branch or member of the same compound sentence, and is immediately followed by the qualifying clause, showing just how long the policy is to be void by reason of the default; “ while said past due notes or obligations or any part thereof shall remain overdue and unpaid.” This shows just as clearly the intent to limit the period during which the policy shall be void, as the previous words do to make it void at all or for any period or purpose. In other words, it shows that, notwithstanding the use of the term, “ void, ” the intention clearly was only to suspend its operation as a policy, while the note or obligation should remain overdue and unpaid, and that upon payment, after default, the policy should again take effect from the time of the payment and continue for the remainder of the period originally fixed; and that, by reason of such default it should only become wholly void, or cease to be capable of revival as a policy, in case that default should continue to the end of the period first fixed for the insurance. The provision, therefore, is but a stipulation in another form of words, that the company shall not be liable for any loss which may occur during the continuance of the default.

In connection with this and as a necessary part of the provision, without which it could not have full effect, it was also stipulated that, in case of such default, the full amount of premium should be considered as earned. But this, it is quite evident, does not mean that the premium should in all cases be considered as fully earned at the date of the default, but was intended to have this full effect, only in case the policy should not be restored, and the risk revived for the future by payment after default, and within the period originally fixed.

And when the policy should be thus restored and the risk revived, the premium would cover this latter period of risk also; and this period would constitute • a part of the time during which the premium was being earned. The premium was, I think, evidently intended to be earned by the risk, and the period within which it should be earned was intended to be exactly commensurate with the period or periods during which the risk should be covered by the policy. This renders the whole provision on the subject of default and its consequences, sensible and harmonious. Any other construction would be repugnant to that portion of the provision limiting the time within which* the policy should be void, of which it forms an essential part.

Such being the true interpretation of this provision of the contract, the next question is upon its validity. And I confess my entire inability to discover any ground upon which its validity can be questioned. It was certainly competent for the parties to' make their own contract and to fix for themselves all its terms and conditions, unleáfe there was something illegal or opposed to public policy either in the consideration or in what was agreed to .be done. Where is the law and wbat is the principle of public policy which this provision tends in any way to violate or impair ? I am aware of none.

The competency of the parties to have agreed upon a higher rate of premium, or for the same amount of premium for a shorter period of time, cannot be doubted. And upon the same principle, it must have been equally competent to agree that the period of time to be covered by the insurance, and for which the stipulated amount of premium should be paid, might be made shorter upon any contingency the parties saw fit to agree upon, without altering the amount of.the premium — especially upon any contingency, which the insured had it in their own power to prevent, and which it was t their moral and legal duty to prevent. If, therefore, the provision had been that in case of default in payment of the premium at the end of the six months, the policy should from that moment become utterly extinguished, or, what is the same thing, that the period of the risk should absolutely end then, and yet the whole amount of premium should be paid, I am inclined to think the provision would have been entirely valid. But here the provision is not that the period of insurance shall finally terminate on the default; but that the default shall only suspend the policy and the risk, during the continuance of the default,' and that upon payment after default and within the period for insurance originally contemplated, the policy and the risk should revive and the period of the insurance again proceed for the balance of the time remaining after such payment. And, so far from seeing any reason to doubt the validity of the provision, I am unable to see anything unfair or unreasonable in it. It seems to me no more than fair and reciprocal that while the insured continues in his violation of the contract to pay, the insurer should not be bound by his, to sustain the risk, when the parties have so deliberately agreed, and when 'the insured has it in his power at any moment, by simply performing his own duty, to make the insurer resume the risk for the future; and when it must be presumed that the amount of premium was fixed with reference to these provisions. If the contingency provided for, which should operate as a suspension of the risk, was one over which the insured had no control, there might be more reason to say the insurer should return the amount of the premium applicable to the period of suspension. But any claim for the return of this portion of the premium, applicable to the period of suspension, must rest upon the default of the insured, — their violation of their clear legal duty. Could they sustain such a claim upon such a ground?

Perhaps the nature of the provision and of the principle involved may be more easily understood by illustration. A, the owner of a vessel, applies to B, an insurer, for insurance upon his vessel for seven months. He is not prepared to pay the premium in cash, but offers to give his note with an endorser at six months. B replies, “I would be willing to insure your vessel for the seven months, at nine per cent, and give six months credit for the premium, if I could rely with entire certainty upon the payment of the proposed note at maturity. But experience has shown that notes, even of responsible parties, are not always paid at maturity and much embarrassment often arises from the delay. I must rely upon my premiums to pay my losses; and it is very essential that I should be able to calculate with some certainty, the amount I can rely upon at any particular time. The contract of insurance is one which relates to, and is based upon, a calculation of risks; and when I give credit for the premium, I must not only calculate the hazards of the property insured, but the risk of the non-payment of the premium, not only of its final payment, but of its prompt payment at the time agreed upon, and of the embarrassment which may arise from delay. I would not take the note you propose at all, if I did not believe it would be promptly paid. But it may not be. I will take your endorsed note for the nine per cent, premium and insure your vessel for six months; that is till the maturity of the note; and, if promptly paid, the period of insurance shall be seven months, in other words I will insure the vessel for six months at my own risk of being able to obtain payment upon the note, with the option on your part of having the period of insurance extended for another month, that option to be manifested by prompt payment of the note at maturity.” To this A replies: I intend to pay my note when.'due. It is possible I may fail to meet it exactly at the day, but if you will allow me, in case I should fail at the day, to pay as soon as I may choose, and thereby to restore the insurance after such payment, for the balance of the period then remaining— thus only suspending the policy and throwing on me the risk only of such losses as may occur during my default; this will be more reasonable, and will leave it in my own power and make it my interest to increase the period of insurance, and thus, in effect, make the rate less. I will, therefore, consent to your proposition thus modified. B thereupon accepts the modification, and the policy is drawn and issued with the proposition thus modified inserted as a part of its terms, and the note given and received accordingly.

This supposed contract is identical in principle with that before us. And unless insurers, because they are in that business, are under some legal obligation to insure upon terms which may be desired by others, though not satisfactory to themselves, I can see nothing unfair or unreasonable in such a contract, nor any reason why it should be forbidden by the law. And I am aware of no law or any principle of public policy, which it tends to violate. Contracts identical in principle with that before us have been treated as valid by the highest Court in the State of New York and I think them unobjectionable.—See Wall v. Ins. Co., 36 N. Y., 157; and Reed v. Ins. Co.,—not yet reported, but a copy of which was read upon the argument.

If I am right in the views I have already taken of the nature and validity of the contract, the acceptance of payment of the note in no way affects the right of the parties in this suit. It was no waiver of any of the rights of the defendants, as they were entitled to its full payment in any event and in any aspect of the case.

As this disposes of the case and shows that the plaintiffs were not entitled to recover, upon the facts stated, it becomes unnecessary to consider the other points discussed upon the argument.

The judgment of the Circuit Court in favor of the defendant must be affirmed with costs.

The other Justices concurred.


source: Caselaw Access Project

license: Public Domain

text:
    Edward Williams et al. v. The Republic Insurance Co.

      Heard October 22.

      Decided January 5.

    Case made from "Wayne Circuit.
    The facts in this case, — so far as they were considered by the Court as essential to its determination, differ from the preceding — (Williams v. The Albany Gity Ins. Go.), only in this: that the note given for the premium, being unpaid at maturity, and having been protested for non-payment and the endorsers duly notified, was paid by the endorsers, after the loss, to a local agent of the insurers; that the money so received was transmitted -to the defendants, who refused to accept it.

      Alfred Bussell, for plaintiffs.

      Newberry, Pond é Brown, for defendants,
    Cite to the point, that the action of the local agent, in taking the premium was no waiver, after it was repudiated by the Company.—Wall v. Home Ins. Co., 8 Bos. 597; Bunten v. Orient Mut. Ins. Co., 4 Ib. 254.

   Christiancy J.

This case is decided by that of the same plaintiffs against the Albany City Insurance Company.

The judgment of the Circuit Court for the County of "Wayne must be affirmed.

The other Justices concurred.


author: Cooley J. Campbell Ch. J.

text:
    The People ex rel. John S. Estabrook v. Benjamin D. Pritchard, Commissioner of the State Land Office.

      Practice in the Supreme Court: Hearing in mandamus cases: Effect of return. An applicant for a mandamus, bringing the case to argument upon the respondent’s return to the order to show cause, is entitled to the benefit of all the admissions it contains; but he cannot insist upon facts alleged in the petition or the accompanying affidavits, which are not admitted.

      State Land Office: Yerbal negotiations for the purchase of land: Payments by drafts received as money by the Commissioner: Who may object. A person applying at the office of the Commissioner of the State Land Office to purchase primary school land, the price of which was four dollars an acre; on account of which, at the time of such application, he paid two dollars an acre; but was told that he could not have a certificate or patent until the full price was paid; has no right to rely on the verbal assurance of the clerk with whom he transacted the business, that his payment would secure to him the lands, if, on notice, he should secure or pay the balance.
    When two persons are contending for priority as applicants for the purchase of primary school lands at the office of the Commissioner, one has no right to object that the payment made by the other was in a draft on New York, it having been received by the Commissioner as money, and it not appearing that it was of less value than currency.

      Heard October 26.

      Decided January 5.

    Application for Mandamus:

      Longyear & Seager, for relator.

      John Moore, for respondent.
   Cooley J.

This is an application for a writ of mandamus to compel the Commissioner of the State Land Office to issue to the relator a patent for certain school lands in the County of Midland.

The relator in this petition states that on the third day of July 1867 he applied at the State Land Office to purchase all of a certain section of school lands, except one forty acre lot, being in all six hundred acres ; that he was informed by one Nash, chief clerk and bookkeeper in the office that the said lands would be secured to him on the payment of two dollars per- acre ; that he paid into said office the sum of two dollars per acre, being twelve hundred dollars; that his name was written upon the plat of the said lands in the tract books of said office in his presence, and that he was informed by-Nash that this entry secured the lands to him, but that he could not procure a certificate or patent until the full amount of the purchase money was paid, as the lands were chiefly valuable for timber, and under a recent ruling of the State Board no certificates or patents were issued on lands of this character until after full payment of the purchase money; that he then stated he would pay the balance remaining due whenever he should be called on, upon the shortest possible notice, but that he had not at that time sufficient funds with him to make full payment; that he was informed that if anything further was required of him he would be notified of the fact by the Commissioner, and that the lands could not be sold to any other person.

The petition further states that at the time of said application, the Commissioner and his deputy were both absent from Lansing; that no communication was received by him from the office until in February 1868, when he went to the office to pay interest and taxes on said lauds, or to pay for the same in full if necessary; that the deputy commissioner informed him that neither interest or taxes was due ; that he then told the deputy that he was ready to pay in full for the lands, but as he did not intend to lumber on them for one or two years, he should prefer to let the balance of the purchase money remain until then, but that he would on notice, either by mail or telegraph, pay the balance immediately, if the State should require additional security; that the deputy told him it was unnecessary to pay the balance then, and that he would notify him whenever additional security .was required; that the land was marked on the office books to him, and-that no party could get a claim adverse to his. He further says that relying upon the assurances of Nash and the deputy, he did not insist upon receiving a certificate or patent, and paying the balance of the purchase money, and that he received no communication relative to said lands, after his last mentioned visit to said office, until the 13 th or 14th day of October 1868, when he received a letter from the deputy informing him that other parties had filed an application for a portion of said lands, and that relator was only entitled to three hundred acres; whereupon he immediately went to Lansing, and on October 15th 1868 tendered to the deputy commissioner the balance of the purchase money together with interest, which the deputy received, not admitting his right, but refused to issue a certificate on the ground of a conflicting application, but the Commissioner allowed the relator to select the east half of said section and to receive a certificate therefor, without waiving his right to insist upon a certificate for the balance also.

The petitioner further says that the whole of said lands, as he is advised and believes, were returned by the Commissioner to the County Treasurer of Midland County, prior to said conflicting application, as the lands of the relator, and that the same were assessed to him for the taxes of 1868, and that he is now liable therefor, and upon these facts he prays for the relief before mentioned. Some corroborative affidavits were presented in support of the petition, but they need not be specially mentioned.

The answer of the Commissioner sets forth that it is a rule of his office, established in the winter of 1867, that none of the primary school or other trust fund lands which were principally valuable for the timber thereon, and not for agricultural purposes, should be sold, unless full payment of the purchase money ' was made at the time, and that his deputies and all his employees have been thoroughly instructed to enforce said ruling strictly; that in the disposition of cases which have arisen under said rule, where parties have attempted to purchase lands on part payment, he has adopted the practice of allowing such party the privilege of selecting sufficient of the lands applied for to meet the full amount of the money deposited, at the minimum price, full payment; that sometime in the month of October 1868 his attention was called to an application of Arthur Hill, which was as follows:

To the State Deputy Land Commissioner: Whereas a certain J. S. Estabrook, in July, 1867, did apply for all the primary school land situated in Section 16, Town 16 N, R. 2 E., except the n. w. ¿ of n. w.

And whereas, the said Estabrook deposited money only sufficient to coyer one-half of the said land applied for by the said Estabrook, at the legal rate of four dollars per acre.

And whereas, the State Land Commissioner ruled that in such cases the party for whom land is reserved is entitled to only so much of the original reservation as his deposit will cover at the rate of four dollars per acre.

Now, therefore, I, Arthur Hill, do hereby apply for all of said land which shall remain after said Estabrook shall have selected the amount to which he is entitled under the ruling of the Commissioner, except the s. e. £ of s. e. J, and hereby deposit draft on New York for twelve hundred and eighty dollars, to purchase same.

(Signed) ARTHUR HILL.”

That on examination he found the land mentioned in said application was marked in pencil upon the tract books of the office to said Estabrook, and that he had deposited one-half payment against the same, and had given no additional security; that on learning the condition of the lands he directed his deputy to notify Estabrook at once that he must make a selection of the amount of land he was entitled to under the ruling above mentioned; that on receiving said notice, Estabrook refused to make sucb selection, and made verbal application to pay for the whole, but did afterwards in January, 1869, announce that the east half of said section was his choice if he could not have the whole, and that the east half was patented to him without prejudice to his supposed rights: that Hül, at different times, applied for a patent of the other half, but though the Commissioner considered him entitled to it, he declined to issue one until the conflicting claims were judicially determined.

To the return of the Commissioner was attached the affidavit of his deputy which is not specially important, except that it states that the twelve hundred dollars deposited by Estabrook was not paid into the treasury but remained in the laud office subject to his order ; that he denies that any primary school land is considered as sold or secured to any purchaser until the issue of the certificate or patent therefor, and that he does not admit that lie made any such assurances to Estabrook, as the latter states, or that the lands were officially reported for taxation as sold to Estabrook.

The relator has seen fit to bring the case to argument upon the Commissioner’s return, and he is of course entitled to the benefit of all the admissions it contains, but cannot insist upon facts alleged in his petition or the accompanying affidavits which are not admitted. We must therefore regard the return of the lands by the Commissioner for taxation, and the assurances by the deputy to Estabrook that they should be kept for him, and that no one could acquire an adverse claim, as facts not established, and which we cannot consider in forming our conclusions.

The disputed facts, however, are not numerous, though they unfortunately present a case upon which it is not very easy to form an opinion which is entirely satisfactory to our own minds. We have no doubt Mr. Estabrook relied fully upon assurances made him by Nash that the lands would all be retained for him, and that if he loses any part of them now, he will be to some extent a sufferer. Nevertheless we cannot resist the conclusion that he did not understand he had completed a purchase of the land; but rather that he had done sufficient to keep off other purchasers until it should be convenient for him to make payment. He says he was informed the lands “ would be secured to him ;” that he was informed the entry of his name on the tract book “ secured the lands to him, but that he could not procure a certificate or patent for said lands until the full amount of the purchase money was paid,” and that “ the lands could not be sold to any other person.” Now all this reads to us very much as if Estabro.ok was aware of the Commissioner’s rule, but thought he might rely on the chief clerk so managing matters as to stand between him and any other purchaser, and as if he knew all the while that the transaction was somewhat irregular, and that he only stood on grounds of favor, and not of strict right. It is remarkable, if he had any different view, that he could suppose himself not entitled to some written evidence of his purchase, or that he could believe that sale to be a legitimate one, upon which the State was allowing him indefinite credit without interest. This is not the mode in which public business is properly conducted, and when a clerk in a public office suffers it to be so done, any man of sound judgment with a proper appreciation of what is correct and legitimate in the dealings between the State and individuals, must be considered as notified that the clerk is exceeding his authority, and undertaking for what he cannot perform. And we do not think the public officer or the State can be held bound by the action of the clerk in such a case.

It is argued, however, that the State by receiving the money from Estabrook in part payment, became bound by the contract of sale, inasmuch as he was bound by his payment, and all contracts must be mutual. But the affidavit of the Deputy Commissioner goes to show that Estabrook’s money was always at his disposal, and certainly if he had such an understanding with the clerk as we have supposed, a contract morally binding upon the State was never effected. If he suffers because the clerk could not protect him as he expected, it is not because he is deprived of a valid purchase, but because he never made one.

Some formal objections are made by the relator to Hill’s application. Of these one is that he paid in draft on New-York] but if the Commissioner and the State Treasurer saw fit to receive this, and there is no pretense that it was less in value than the legal currency, we do not think other parties can question their right to do so. Another is that his payment was insufficient to cover the whole purchase he applied for, but this we think is a mistake of fact. Estabrook applied for the whole section except one forty-acre lot on the west half. The Commissioner awards him the east half of the section. Hill applies for all that is not set off to Estabrook, except one forty-acre lot on the east half. As Estabrook took the east half, Hill must take the west half. If he takes the whole there will be 320 acres, which is the amount he paid for. If he excludes the forty-acre lot Estabrook excluded from his application, his payment is more than is needful.

We think the application should be denied, but under the circumstances we will give no costs.

Christiancy and Graves JJ. concurred.

Campbell Ch. J.

I think the relator has shown a complete compliance with the statute, and that the rules and the action of the Commissioner were in direct violation of law. The admitted facts show that Hill made his application referring in writing, on the face of it, to the fact that Estabrook had applied for the land, and had paid down half the price, and that the Commissioner had ' ruled that in such case the ■party for whom the land was reserved, was only entitled to so much of the Original reservation as the money would cover, at four dollars an acre. The return shows inferentially that the Commissioner knew nothing of this particular case till his attention was called to Hill’s application, and states that he then wrote to Estabrook requiring him to make his selection of so much land'. The application, the payment and the reservation are admitted, and it is not pretended that any opportunity was ever given Estabrook to give security and take the whole, but on the contrary the Commissioner shows he refused either to allow this or to receive full payment, which was made by Estabrook immediately after he received the notice to elect, but which the Commissioner would not admit as lawful payment.

We have then, this state of facts. A party applies to buy school lands and pays half the price. He is informed he cannot receive a certificate or patent until they are paid for, but that the payment will secure the lands, and that if any more is required he will be notified. He deals with the person lawfully in charge of the office, and not only is not informed of any other regulation, but is distinctly informed in effect that he has done all that will be required.

The law under which the case comes up is in these words. “ The said Commissioner shall, whenever it satisfactorily appears, that the chief value of any parcel of land consists of pine or any other timber, and that in his opinion the interest of the State will not be secured by a compliance with the terms of payment prescribed in the second section of this act, require of the purchaser fifty per centum of the purchase money to be paid at the time of the purchase, and such security for the payment of the balance of the principal, at any time thereafter, as in his judgment will secure the respective funds against loss, or he may, in his discretion, require full payment for the same.” Laws of 1863 p. 165.

Every purchaser is bound to know what this law permits and what it requires. He knows that the rule laid down is a payment of fifty per cent, and that it depends on the judgment of the Commissioner whether more shall be demanded. He knows also that the Commissioner may or may not require further security according to his own judgment of its importance, and he knows further that the nature and extent of the security are also purely discretionary.

But he is not bound to know that any rule exists which is not brought home to him. No man can be held subject to the caprices of a public officer, and when he deals with him or with his substitute, he has a right to assume that any act not forbidden by the law itself is valid.

In this case he was given to understand that the payment of the money which he made was all that was then required, and he was also informed that the certificate would not be issued until the land was fully paid for. The effect of this was that the State retained in its own hands the entire title to secure half the purchase money— a security which was beyond question adequate — but, whether adequate or not, one which he was thereby given to understand was considered adequate, and which was entirely within the official discretion, Avhich might have dispensed with any security whatever beyond the cash payment.

Moreover the State cordd not possibly be damnified until the certificate should issue, and enable him to exercise acts of ownership. The law does not require the security to be given at once, nor require the Commissioner to fix it at once; and so long as the cash payment is made, the security must be left to the discretion of the Oommissionei, and until he informs the purchaser what he will require, and gi\'es him reasonable time to comply, there can be no default. Here the only notice ever given to relator Avas a denial of his rights altogether.

This is justified, however, under two alleged rules, one of which is, that cash in full is to be required in every case, and the other, that persons who have made their payment of fifty per cent, shall be confined to an election of so much land as that will pay for in full. Even if made known at the time of purchase, (which was not done here, and which does not seem to be regarded in the office as required) these rules are, both of them, serious violations of law. The second, if made known at the purchase, would be equivalent to the first, and a very absurd variation of it, as every one knows he can buy at any time for cash, and no one would be foolish enough to suppose he gained any rights under such a regulation. But, when not made known at the day of purchase, it is a palpable fraud; and not only a violation of an agreement, but one whereby a party’s selection, which may have been 'the result of expensive exploration, is secured in favor of any one to whom the persons in the office may see fit, from friendship or otherwise, to divulge it.

A practice which furnishes facilities to enable advantage to be taken in this way, is so evidently calculated to encouraged dishonest combinations, at the expense of purchasers who have been actually misled by public agents, to whom they ought to be able to confide in safely, that nothing can possibly justify it. When a public officer has acted within his discretion, he can no more withdraw his action than if it were private dealing. Estabrook gave all that was required of him, and the law authorized a bargain to be made on those terms.

But under this statute, no general rules were admissible. The law will not permit an officer who is bound to act in each case upon its own circumstances, and govern his action by his honest view of it, to declare in advance that he will be of opinion in all cases that the public interest requires full payment, when the law contemplates it may not, and when in fact there may be no reason for it whatever. Credit is given on public lands in order that the poor as well as the rich may buy them, and it is contrary to the general policy of the statutes to require this credit to be refused unless there is good reason for it. The rule is unlawful on its face, and if it had been permissible to lay it down, it was not binding on the office, but was not only revocable in its nature, but revoked by any contrary action. And no one dealing with the office can know any thing about the secret arrangements with the clerks. It is as necessary in public as in private business to hold the dealings of the person lawfully in charge binding on the government unless they deviate from the law. It is the Commissioner’s duty to see that no one is misled by himself or his subordinates, and he is legally as well as honorably bound to guard and not to destroy the rights of those who rely in good faith on their dealings. If he was not satisfied with the security, he should have notified Estabrook to pay or to make it good. The law compels this only when the Commissioner requires it. And Estabrook was not in fault in any way for not doing what he had no reason to suppose was expected of him.

I am also of opinion that under the rule of law repeatedly settled in this State, Estabrook’s last payment would have entitled him to the land without reference to the previous transactions. Hill did not pay money, but simply deposited a draft on New York, the case not showing whether it was his own or some one else’s. If the Commissioner had a right to keep the application open until there was time to see whether it would be paid, then of course the payment at maturity would remove all difficulty, and, if this question were not settled, I should have no hesitation in regarding this as a reasonable exercise of discretion. But it was held by a majority of the Court in People ex rel. Parlclmrst v. Pritchard, Commissioner, 17 Mich. B., 888, that this officer had no right to retain lands not actually paid for, from any one who should apply for them with ready money. It may be that an officer accepting anything but money can be held liable for money. But that does not make the payment to him equivalent to money, and therefore does not protect a party who is bound to know a public officer cannot' lawfully sell lands except for money. If his responsibility to the State would answer in one case, it would in another, and then it would make no difference that he received nothing whatever. The State has never authorized him to sell lands and charge them to his account. In Woodbury v. Lewis, Walter’s Oh. B., 256; Heald v. Bennett, 1 Doug. B., 518, and Welch v. Frost, 1 Mich. B., 80, it was laid down distinctly that an officer had no right to receive anything but money. The same principle was recognized and applied in Mumford v. Armstrong, Goiven, 558, where a Sheriff took a draft and allowed a defendant to go at large before it was paid, and the transaction was held to have been an escape and a new execution was awarded. In Bank of Orange Oounty v. Wakeman, 1 Gowen B., Jfi, the same rule had been applied, the party not being required to look to the Sheriff who had exceeded his powers. And we held in Elliott v. Miller, 8 Mich. B., 182, that a tax collector could not lawfully receive a draft on himself for moneys due the public. A private person may be very glad to get a draft from a responsible house, and receive it as money; but nevertheless it is not money, and a public officer,, who has no occasion to use exchange in his official capacity, has no right to give the credit or take the risk until its payment. And if any one may lawfully require the Commissioner to sell him lands which have not been paid for, as this Court has held, then there can be no doubt that Estabrook paid for all of these lands before any one else had obtained a legal claim upon them. Upon these facts there is no dispute. The return states expressly that Mr. Estabrook made the full tender and |>ayment at tbe time and in the manner averred.

Eor these reasons I think he should have the relief prayed.