Clark v. Manufacturers' Insurance Company
49 U.S. 235 (1850)

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U.S. Supreme Court

Clark v. Manufacturers' Insurance Company, 49 U.S. 8 How. 235 235 (1850)

Clark v. Manufacturers' Insurance Company

49 U.S. (8 How.) 235


Where an action was brought upon a policy of insurance against fire, by the assignees of the person originally insured, and in the policy it was said that it was "made and accepted upon the representation of the said assured, contained in his application therefor, to which reference is to be had," it was proper to prove by parol testimony that the representations alleged to have been made by the party originally insured were actually made by him.

And if the assignees, by their acts, adopted these representations, when renewing the policy from time to time, the evidence was equally admissible, because the subsequent policies had reference to the one first made.

Therefore, where the representation upon which the original policy was founded was that "the picker is inside of the building, but no lamps used in the picking room," it was a correct instruction to give to the jury, that the use of lamps in the picker room rendered the policy void.

But if no representations were made or asked, it would not be the duty of the insured to make known the fact that lamps were used in the picker room, although the risk might have been thereby increased, unless the use of them in that way was unusual.

Page 49 U. S. 236

This was an action upon a policy of insurance against fire. The plaintiffs in error, who were also plaintiffs below, resided at Malone, in the County of Franklin and State of New York, and the insurance company was at Boston, in Massachusetts.

The property insured was a cotton factory in Malone, owned originally by Jonathan Stearns, who applied for insurance on 28 April, 1834.

There were fifty questions asked by the insurance company, and answered by Stearns. The thirty-fourth question and answer were as follows:

"34. Is the picker inside the building? If within, state where situated and how secured; if in a separate building, state if the passageway communicating with the factory is secured by an iron door at each end, or how otherwise secured."

"34. The picker is inside of the building, but no lamps used in the picking room; the doors are wood, and not covered."

The following was written in pencil at the close of the application by the agent at Pittsfield:

"The assured warrants that the waste shall be removed as often as once in forty-eight hours to a safe distance from the mill, and that the lamps in the carding rooms shall be enclosed in glass. (This condition is required.)"

A policy was issued to Stearns from July 1, 1834, for one year, for $3,000, on the factory building and fixtures, including waterwheel, drums, shafts and gearing; $11,000 on the movable machinery, and $1,000 on the stock in the various stages of manufacturing.

On 8 July, 1834, Stearns assigned the policy to the Ogdensburg Bank, to which the company assented.

On 17 June, 1835, the cashier wrote to Mr. Hall, the agent of the insurance company, enclosing a check for $263 and requesting a continuance of the policy for one year, and in August, 1836, a similar letter, requesting a renewal or continuance of the policy.

In August, 1837, the cashier of the bank enclosed a draft for $263, and requested a new policy. One was accordingly issued, containing the same clauses as the preceding.

On 13 August, 1838, Stearns informed Mr. Hall, the agent, that the property insured had passed out of his hands into those of the bank.

On 25 August, 1838, the cashier wrote to Mr. Hall, requesting a continuance of the policy, but omitting the $1,000 on stock, as the mill was not then in operation.

In August, 1839, and 1840, similar letters were written. In the policy issued in 1840, the following clause was inserted:

Page 49 U. S. 237

"It is understood that the factory is not in operation, and that the assured have liberty to put the same in operation, agreeably to the representation heretofore made by Jonathan Stearns."

Upon the receipt of this policy, the cashier returned the following answer:

"Ogdensburg Bank, August 27, 1840"

"PARKER L. HALL, ESQ., Agent &c."

"Dear Sir -- Will you do me the favor to send me a copy of the original survey and application, as made by Jonathan Stearns, at the time Stearns effected an insurance on the cotton factory &c., at Malone, as I observe that the first policy made out for us specifies 'agreeably to the representations heretofore made by Jonathan Stearns.' This institution does not know what those representations are, and as the factory is soon to be put in operation by Stearns, we having leased the same to him for one year, we wish you to send us a copy of the survey and application, in order to have Stearns act within those representations. We also wish you to send us your abstract of having the factory put in operation by Jonathan Stearns, under the policy that will take effect on the 30th instant, for one year from that time. If, on receipt of a copy of survey and application, it shall not be found sufficiently correct, you will be notified, and we shall expect you will consent to have the policy adapted to the corrected application &c., In the policy of 1839 you say, 'contained in their application.' I am not aware that this institution has made any specific application, and suppose you intended the one given as to details by Stearns. Yours &c.,"

"JOHN D. JUDSON, Cashier"

The reply of the agent was as follows:

"Pittsfield, 31 August, 1840"

"JOHN D. JUDSON, ESQ., Cashier"

"Dear Sir -- Herewith I enclose to you a renewed policy, No. 622, on cotton factory &c.; I have inserted the clause agreeably to your direction."

"Dear Sir -- I had deposited this letter in the post office when I received your favor of the 27th instant. The policy is made out by inserting liberty of putting it in operation, as requested. The original survey I have not in my possession. It is in the office at Boston. Perhaps Mr. Stearns may have kept a copy; if so, you will be able to obtain it of him; if not, I may procure for you a copy at Boston. You will, of course, see to it that the waste is removed according to the warranty, and that the lamps be enclosed in glass."


"P. L. HALL"

Page 49 U. S. 238

It appeared that the cashier then wrote to Stearns for a copy of his representation, but Stearns replied that he had none. No further inquiries were made about it.

In August, 1841, the cashier wrote to the agent, saying --

"Please send me a new policy or a renewal receipt for the continuance of the same policy for one year from 30th instant. The factory is now and has been in operation the last year, under a lease to Colonel Jonathan Stearns. His lease will expire soon, and whether the bank will lease it again is more than I can say at present; but still we wish the same clause in the new policy that is in the present one, viz., that we have the right to put the mill in operation &c., should we wish."

A policy was issued according to the above request, containing amongst other things the following:

"It is understood that the mill is under lease to Jonathan Stearns, and may again be leased to him or some other tenant, the assured being answerable for the warranty as above."

On 18 March, 1842, an endorsement was made upon the policy, that the assured had made a contract of sale, and given possession of the property to Eli Clark, William Green, and Hugh McGill to which the approbation of the company was requested; which was given by Mr. Hall.

On 19 August, 1842, the cashier wrote again for continuance of policy No. 704 P, and requested a new policy to be made out in the names of Clark, Green, and McGill; in case of loss, the money to be paid to the bank. The policy was issued accordingly, containing the same clauses as before, with this remark added: "This policy is issued upon the representation formerly made by Jonathan Stearns, the former owner, which representation is binding on the assured."

In August, 1843, 1844, and 1845, similar letters were written by the cashier, and similar policies issued, except that the last remark above quoted was not attached to them.

In March, 1846, the property was destroyed by fire, and soon afterwards notice thereof given to the company.

In October, 1846, the insured brought an action of assumpsit against the company, counting on the policy, and also containing the common money counts; under which a judgment was obtained for a return of premiums, to the amount of $1,200.

In October, 1847, the case came up for trial, upon a plea of nonassumpsit and issue. The plaintiffs offered in evidence the policy, the contract between the bank and Clark, Green, and McGill and the payment of part of the purchase money by the latter.

The plaintiffs also proved the loss of the property by fire, notice

Page 49 U. S. 239

of the loss, that the waste was removed, and that the lamps in the carding room were enclosed in glass, as required by the policy. Everything was proved or admitted that was necessary to make out a prima facie case for the plaintiffs.

The evidence showed likewise that the fire originated in the picking room, which was situated in the center of the building, and in which a glass lamp was frequently suspended from the ceiling, and into which room a glass lantern was carried that evening, and placed by the workman on the windowsill while the picker was in operation; around the top of this lantern he first saw the light and fire, as if the cotton dust had become ignited through the air holes, and the fire was communicated with such rapidity to the whole cotton he was unable to distinguish it. The evidence showed further, that when the picking room had been occasionally used to work in during the night time, this lantern, or one like it, had for three years been carried in, and that the globe lamp had been long used there suspended, with a reflector over the top, and was lighted when they worked at night in the picking room, as well as the lantern. This appears to have been the practice soon after 1834 or 1835, but no evidence was offered that it had been before. When the plaintiffs bought the property in 1842, they found the lamp hung and ready for use, and they continued to use it as it had been used before.

The defendants then offered in evidence the application of Stearns for insurance, his written answers to the fifty questions, and the policies and letters above mentioned.

The defendants then called Parker L. Hall, who testified that, prior to the first policy to Stearns, he was agent of the defendants in Pittsfield, and that his authority did not extend to the taking of new risks on this species of property.

It was admitted that such a use of lamps in the picker room as appeared in this case, enhanced the danger of fire, and was material to the risk.

To the admission of all this evidence the counsel for the plaintiffs then and there objected, on the ground that the policy contained no representations made by Jonathan Stearns, and had no reference whatever to any such representations, and that to admit extrinsic evidence of the representations of the said Stearns, and other extrinsic evidence to connect the plaintiffs with those representations, and thus affect their rights by such representations, was not only to vary, enlarge, or modify the contract, as contained in the policy, but was in fact to set up and show, by extrinsic evidence, a distinct and different contract from that contained in the policy, and of which the policy

Page 49 U. S. 240

is the written evidence on which the parties relied; and, as the printed clause in the policy referred only to representations of the assured, representations in form by the assured were the only representations which could legally be shown, and evidence that the parties did not mean the representations in form by the assured, or expressed in the policy, but meant representations of Stearns, was not admissible, because that would clearly be to enlarge or change the contract in the policy, or rather to set up a distinct and different contract.

But the court admitted all the evidence as proper and legal, and to this ruling and decision of the court the counsel for the plaintiffs excepted.

The plaintiffs also proved that it was customary for these defendants, and other insurance companies in Boston, to issue policies on property, with which the underwriters were acquainted, in the printed form, like that in this case, with the clause referring to the "representation of the assured, contained in their application, to which reference is to be had," where no written application has in fact been made by the assured, and where there is no written representation to which reference can be had. The counsel for the defendants objected to the admissibility of the evidence by which these facts were proved.

The counsel for the plaintiffs requested the honorable justice who presided at the trial to instruct the jury:

"1. That whether the printed clause in the policy -- 'that this policy being made and accepted upon the representation of the said assured, contained in their application therefor (to which reference is to be had)' -- was to be taken as referring to the representation of Stearns, in 1834, was matter of law to be determined by the court, the construction and application of written contracts and instruments being wholly within the province of the court."

"2. That, in the opinion of the court, the said clause was not to be taken as referring to the said representation of the said Stearns; that these representations are not to be taken as a part of the said policy, or as in any way binding on the plaintiffs, whose right to recover in this case could not be in any way affected by said representation."

"3. That the evidence introduced by the defendants was not sufficient in law to bar the plaintiffs' right to recover."

But the honorable justice declined giving these instructions to the jury, and instructed them that they would be warranted in finding that the plaintiffs had adopted the representations made by Jonathan Stearns as a part of this policy; that, if those representations were adopted by the plaintiffs, they formed

Page 49 U. S. 241

a part of the present policy in the same manner as if incorporated into it, and the use of lamps in the picker room, in the manner testified to, in violation of these representations, rendered the policy void, and the plaintiffs would not be entitled to recover, except for a return of the premiums paid for the last four years. And the jury were further instructed, that if they found the policy declared on did not refer to the said representations of Stearns, and that no representation was in fact made or adopted by the plaintiffs respecting the use of lamps in the picker room, they would then take the law to be, that, as it was agreed by the parties that the use of lamps in the picker room in the manner found was material to the risk, it was the duty of the plaintiffs to disclose the fact of such use to the defendants, or their agent, when the policy was applied for, provided such use then existed, and was known to the plaintiffs and unknown to the defendants, and was then intended by the plaintiffs to be, and in fact was, continued after the policy was issued, and occasioned the loss in question; and that each failure of the plaintiffs, even without any fraudulent intent on their part, to make this fact known to the defendants, would avoid the policy. Thereupon the jury returned a verdict for the plaintiffs, for a return of four years' premium.

To these instructions, and to the said refusal to instruct, as well as to the admission of the said evidence, the plaintiffs then and there excepted, and prayed that their exceptions might be allowed and sealed by the said justice, and the same were allowed and sealed accordingly.

Upon these exceptions the case came up to this Court.

Page 49 U. S. 245

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