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    U.S. Supreme Court


    183 U.S. 308

    No. 60.

    Argued October 28, 1901.
    Decided January 6, 1902.

    [183 U.S. 308, 309]   In September, 1898, the Grand View Building Association, a corporation organized under the laws of Nebraska, in the district court of Lancaster county of that state, brought an action against the Northern Assurance Company of London, incorporated under the laws of the Kingdom of Great Britain and Ireland, seeking to recover the sum of $2,500 as due under the terms of a policy of insurance that had been issued by the assurance company to the plaintiff company on December 31, 1896, on certain property situated in said Lancaster county, and which, on June 1, 1898, had been destroyed by fire.

    Thereupon the defendant company filed in the said county court a petition and bond, in due form, and prayed for an order removing the cause to the circuit court of the United States for the district of Nebraska; and on September 29, 1898, the county court approved the bond, and entered an order granting the prayer of the petition for removal.

    Subsequently the case was put at issue on the petition, answer, and reply in the circuit court of the United States, and was so proceeded in that, on October 20, 1898, a special verdict was found by the jury empaneled in the case, and on January 14, 1899, a final judgment was entered for the plaintiff and against the defendant company in the sum of $ 2,500, with interest and costs. The cause was then taken to the United States circuit [183 U.S. 308, 310]   court of appeals for the eighth circuit, and that court, on March 26, 1900, affirmed the judgment of the circuit court. 41 C. C. A. 207, 101 Fed. 77. Thereafter, on petition of the defendant company, a writ of certiorari was allowed, in response to which the record and proceedings in the cause were brought to this court.

    Messrs. Ralph W. Breckenridge and Charles J. Greene for petitioner.

    Messrs. Halleck F. Rose and Joseph R. Webster for respondent.

    Mr. Justice Shiras delivered the opinion of the court:

    In order that the questions discussed in this case and the grounds of our judgment therein may sufficiently appear, it seems proper to set out, with substantial fulness, the pleadings of the parties and the special verdict of the jury.

    The plaintiff's petition, having alleged the making of the policy of insurance and the destruction of the property insured, then proceeded to allege in its fourth paragraph, apparently by way of meeting an expected defense, that 'plaintiff, shortly prior to issuance of aforesaid policy by the defendant, had procured a policy of insurance from the Firemen's Fund Insurance Company, incorporated under the laws of California, insuring it against loss by fire of the same property in the sum of $1,500 for a term of two years, which insurance was then subsisting and remained in force to and including the date of said fire; that the fact of said subsisting insurance in said company was, by H. J. Walsh, plaintiff's president, disclosed to defendant at and prior to the execution and delivery of said policy, and prior to payment by plaintiff of said premium therefor, and was so by him orally disclosed and communicated to defendant's recording agent at Lincoln, Nebraska, A. D. Borgelt, who then had full authority from defendant to countersign and issue its policies and accept fire insurance risks in its behalf and accept and receive the premium therefor, and who in fact accepted said [183 U.S. 308, 311]   risk and issued said policy, and accepted and received said premium as such agent in behalf of defendant with knowledge beforehand of said concurrent insurance, and with the intent knowingly to waive the condition of said policy that 'it shall be void if the insured now has or shall hereafter make or procure any other contract of insurance' on the property covered thereby. And by the aforesaid several acts and by procuring, receiving, accepting, and retaining of said insurance premium with knowledge of said subsisting concurrent insurance the defendant has waived the said condition and is estopped to claim benefit thereof, and is bound by its said policy notwithstanding said condition; that plaintiff had no insurance on said property except as before stated.'

    Having stated that plaintiff had rendered and delivered a statement of loss, in compliance with the terms of the policy, the petition further alleged that 'on the 26th day of July, 1898, the plaintiff demanded of defendant the payment of said insurance; and defendant, disregarding its undertaking in that behalf, denies liability on the sole ground that said policy has been void from the date of its issue by reason of the said provision in regard to other insurance, the same provision which as aforesaid it had waived at the time of issuing its said policy.'

    The answer of defendant admitted the making of the policy, the destruction of the insured property by fire, and proof of loss, but denied specifically the allegations of the fourth paragraph of said petition, as follows:

    The plaintiff company replied to the answer, denying that [183 U.S. 308, 313]   it procured a policy of insurance in the Firemen's Fund Insurance Company upon the property insured by defendant in violation of the terms of the policy issued by defendant and without the knowledge of defendant, and made the following allegations:

    In support of its side of the issues thus presented, the plai- [183 U.S. 308, 314]   ntiff company called as witnesses H. J. Walsh, its president, and Bert Richards, the agent of the Firemen's Fund Insurance Company, who testified that Borgelt was informed by them and had knowledge of the subsisting insurance at and before the delivery of the policy in suit. The plaintiff likewise put in evidence the original policy sued on, and a letter from G. H. Lermit, manager of the defendant company at Chicago, Illinois, and who had signed the policy in suit as such agent, in the terms following:

    Chicago, Aug. 2, 1898

    To Grand View Building Association, H. J. Walsh, President, Lincoln, Nebraska.

    Dear Sirs:--

    We have your favor of the 26th ult., inclosing to us what purports to be proof of loss, making claim under our policy No. 310,024, of Lincoln, Nebraska, agency, and issued to you for $2,500 on household furniture, etc ., while contained in the three-story brick and stone building on lot F in Grand View Residence Park addition, on account of a fire which occurred on the 1st day of June, 1898, and beg to say in reply that your sworn statement therein advises us that you had other insurance on this same property to the amount of $1,500. This additional insurance held by you was without the knowledge or consent of this company, and was not permitted by agreement as provided for in lines Nos. 11, 12, and 13 of the printed conditions of our policy, to which we beg to refer you. We therefore regret to have to advise you, and do hereby say to you, that the Northern Assurance Company specifically and absolutely denies any and all liability under said policy No. 310,024 held by you, holding that said policy has been void from the date of its issuance by reason of the said provision in regard to other insurance above referred to.

    Our agents at Lincoln have been instructed to return to you the full premium paid them by you, namely, $33.75 at once.

    The plaintiff further offered the original policy in evidence, containing, among other things, the following provisions:

    The defendant, to maintain the issues on its part, called as a witness A. D. Borgelt, who testified that he was a member of the firm of Borgelt & Beasley, insurance agents at Lincoln, Nebraska, which firm wrote the policy in the Northern Assurance Company on the Grand View Building Association; that at the time he wrote the policy he had no notice or knowledge that there was other insurance upon the property covered by the policy in suit, and the first time be knew of any other insurance was after the fire; that while Walsh might have mentioned that there was an existing policy, he, the witness, had no recollection of having known anything about the other insurance until after the fire. He further testified that on August 4, 1898, the premium paid for the policy in suit was tendered to the plaintiff company, which declined to take it. The defendant thereupon moved the court to instruct the jury to return a verdict for the defendant, which motion was overruled, and defendant excepted.

    The jury, under the instructions of the court, found that the defendant company issued to the plaintiff company the policy described in the plaintiff's petition; that the property covered by said policy of insurance was burned on or about June 1, [183 U.S. 308, 316]   1898; that the plaintiff, on or about July 26, 1898, furnished the defendant with proofs of the loss of said property by fire; that the policy contained the provision hereinbefore mentioned, providing that the policy should be void if the insured had or should thereafter make or procure any other contract of insurance on the property covered by the policy in suit, and that the policy was made subject to such condition, and that no officer, agent, or other representative of the company should have power to waive any provision or condition of the policy except such as by the terms of the policy had been indorsed thereon or added thereto, and that no officer, agent, or representative of the company should have power or be deemed or held to have waived such provision or condition unless such waiver was written upon or attached to the policy, and that no privilege or provision affecting the insurance under the policy should exist or be claimed by the insured, unless so written or attached; that there was at the time of the issuance of the policy in suit other insurance upon the insured property in the sum of $1,500, in the Firemen's Fund Insurance Company; that Borgelt was recording agent of the Northern Assurance Company, at Lincoln, Nebraska, with authority from the defendant company to countersign and issue its policies and accept fire insurance risks in its behalf, and to collect and receive premiums therefor, and that he had issued the policy sued on as such agent; that Borgelt knew, when the policy in the defendant company was issued and delivered to the plaintiff company, that there was then $1,500 subsisting insurance in the Firemen's Fund Insurance Company upon the insured property, issued prior to the date of the policy of the defendant company, and that such knowledge was communicated to said Borgelt by and on behalf of the assured; that the actual cash value of the property covered by the policy in suit and destroyed by fire June 1, 1898, was $4,140; that no consent to concurrent insurance of $1,500 was indorsed on the policy in suit; and that, on August 4, 1898, the amount of the premium paid for the policy was tendered to and refused by the plaintiff.

    Thereafter motions were respectively made by the plaintiff and defendant for judgment upon the findings and special ver- [183 U.S. 308, 317]   dict of the jury, and on January 14, 1899, the motion of the defendant was overruled, and exception was taken by the defendant, and the motion of the plaintiff was sustained, and judgment was entered in favor of the plaintiff and exception was taken by the defendant. A writ of error was prayed for by the defendant and allowed, and the cause was taken to the United States circuit court of appeals for the eighth circuit, where the judgment of the circuit court was affirmed, and the cause was then brought to this court by a writ of certiorari.

    Over insurance by concurrent policies on the same property tends to cause carelessness and fraud, and hence a clause in the policies rendering them void in case other insurance had been or should be made upon the property and not consented to in writing by the company, is customary and reasonable.

    In the present case, such a provision was expressly and in unambiguous terms contained in the policy sued on, and it was shown in the proofs of loss furnished by the insured, and it was found by the jury, that there was a policy in another company outstanding when the present one was issued.

    It also was made to appear that no consent to such other insurance was ever indorsed on the policy or added thereto.

    Accordingly it is a necessary conclusion that by reason of the breach of the condition the policy became void and of no effect, and no recovery could be had thereon by the insured unless the company waived the condition. The question before us is therefore reduced to one of waiver. The policy itself provides the method whereby such a waiver should be made: 'This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto, and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy, except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto, and as to such provisions or conditions no officer, agent, or representative shall have such power or be deemed or held to have waived such provisions or conditions, unless such waiver, if any, shall be written upon or attached hereto, nor shall any provision or [183 U.S. 308, 318]   permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached.'

    Before proceeding to a direct consideration of the question before us, it may be well to inquire into the principles established by the authorities as applicable to such cases.

    It is a fundamental rule, in courts both of law and equity, that parol contemporaneous evidence is inadmissible to contradict or vary the terms of a valid written instrument. This rule is thus expressed in Greenleaf on Evidence, 12th ed. 275.

    The rule is thus expressed by Starkie, Ev. 9th Am. ed. 587:

    This rule has always been followed and applied by the English courts in the case of policies of insurance in writing.

    Thus in Weston v. Emes, 1 Taunt. 115, it was held that parol evidence of what passed at the time of effecting a policy is not [183 U.S. 308, 319]   admissible to restrain the effect of the policy, Mansfield, Ch. J., observing that such 'evidence could not be admitted, without abandoning in the case of policies, the rule of evidence which prevails in all other cases; and that it would be of the worst effect if a broker could be permitted to alter a policy by parol accounts of what passed when it was effected.'

    In Robertson v. French, 4 East, 130, it was held, per Lord Ellenborough, in a suit on a marine policy of insurance, that a parol agreement that the risk should begin at a place different from that inserted in the policy, cannot be received in evidence.

    These cases are cited as establishing the rule in cases of insurance in Marshall on Marine Insurance, 278, and in 1 Arnould on Insurance, p. 277.

    In Flinn v. Tobin, 1 Moody & M. 367, Lord Tenterden, Ch. J., said that 'the contract between the parties is the policy which is in writing, and cannot be varied by parol. No defense, therefore, which turns on showing that the contract was different from that contained in the policy, can be admitted; and this is the effect of any defense turning on the mere fact of misrepresentation without fraud.'

    So, where, in assumpsit for use and occupation, upon a written memorandum of lease, at a certain rent, parol evidence was offered by the plaintiff of an agreement at the same time to pay a further sum, being the ground rent of the premises, to the ground landlord, it was rejected. Preston v. Merceau, 2 W. Bl. 1249.

    And where, in a written contract of sale of a ship, the ship was particularly described, it were held that parol evidence of a further descriptive representation, made prior to the time of sale, was not admissible to charge the vendor without proof of actual fraud; all previous conversations being merged in the written contract. Pickering v. Dowson, 4 Taunt. 779. See also Powell v. Edmunds, 12 East, 6; Smith v. Jeffryes, 15 Mees. & W. 561; Gale v. Lewis, 9 Q. B. 730; Acey v. Fernie, 7 Mees. & W. 151.

    The case of Western Assur. Co. v. Doull, 12 Can. S. C. 446, was one where a policy of insurance against loss by fire contained the following condition: 'In case of subsequent [183 U.S. 308, 320]   assurance, . . . notice thereof must also be given in writing at once, and such subsequent assurance indorsed on the policy granted by this company, or otherwise acknowledged in writing; in default whereof such policy shall thenceforth cease and be of no effect.'

    The insured effected subsequent insurance and verbally notified the agent, but there was no indorsement made on the policy, nor any acknowledgment in writing by the company. A loss having occurred, the damage was adjusted by the inspector of the company, and neither he nor the agent made any objection to the loss on the ground of noncompliance with the above condition. In a suit to recover the amount of the policy the company pleaded breach of the condition, in reply to which the plaintiff set up a waiver of the condition and contended that by the act of the agent and inspector the company was estopped from setting it up. It was held by the supreme court of Canada that the insured not having complied with the condition, the policy ceased and became of no effect on the subsequent insurance being effected, and that neither the agent nor the inspector had power to waive a compliance with its terms.

    In discussing the question of the power of the agent to waive the condition, the court said: 'It is not shown that it was within the scope of Greer's authority as a local agent to waive such a condition. The condition itself does not, either by express words or by implication, recognize such an authority, but the reason for requiring the notice obviously points to a directly contrary construction. Moreover, the English case already quoted [Gale v. Lewis, 9 Q. B. 730], which determines that the required notice is to be given to the company itself and not to the local agent, shows, a fortiori, that such an agent has, in the absence of express authority, no power to waive the condition. Direct authority is, however, not wanting. In the case of Shannon v. Gore Dist. Mut. F. Ins. Co. 2 Ont. App. Rep. 396, the facts were the same as in the present case, the subsequent assurance having been effected through the agent who also acted for the defendants in taking the original risk. It was contended that the successive insurances having been thus effected with the same person as the agent of the two companies, the company which granted the first policy had knowledge of the sub- [183 U.S. 308, 321]   sequent insurance, and were therefore estopped from setting up a condition vitiating the policy for want of a written notice. But the court of appeal held otherwise, and determined that in such a case notice to the agent was not notice to the company, and that the agent neither had authority to waive the condition nor could by his conduct estop his principals, the first insurers. As regards any direct action of the appellants [insurance company] through their immediate agents, the directors or principal officers of the company conducting its affairs at the head office, there is no pretense for saying that there is in the present case the slightest evidence of conduct upon which either a defense of waiver of the condition, or by way of estoppel against insisting upon it, can be based, and this for the very plain reason that these directors and officers never had the fact of a subsequent assurance brought to their knowledge, and without proof of such knowledge neither waiver nor estoppel can be made out.' 'The condition in the policy is one which must be complied with or waived. The company, by signing a condition of that kind, reserves to itself the right to withdraw the policy in case of further insurance. That question is one which cannot be decided by a mere local agent. He may receive the notice for transmission, but he cannot act on it; it must be brought to the notice of some person authorized by the company to continue the insurance after notice has been given them. It has been decided in a number of cases in England that a local agent has not such authority, and a mere notice to him, even in a case where he is acting for another company taking the further risk, has been held to be no notice to the company.'

    Coming to the decisions of our state courts, we find that, while there is some contrariety of decisions, the decided weight of authority is to the effect that a policy of insurance in writing cannot be changed or altered by parol evidence of what was said prior or at the time the insurance was effected; that a condition contained in the policy cannot be waived by an agent, unless he has express authority so to do; and then only in the mode prescribed in the policy; and that mere knowledge by the agent of an existing policy of insurance will not affect the [183 U.S. 308, 322]   company unless it is affirmatively shown that such knowledge was communicated to the company.

    In Worcester Bank v. Hartford F. Ins. Co. 11 Cush. 265, 59 Am. Dec. 145, which was a case of additional insurance, and where one Smith testified that he was agent for the defendant company to issue policies, and was in the habit of receiving notices of additional insurance, which he indorsed on the policies, it was held by the supreme judicial court of Massachusetts that as it is provided in the policy on which this action is brought that if the assured or his assigns shall thereafter make any other insurance on the same property, and shall not with all reasonable diligence give notice thereof to this company, and have same indorsed on this instrument or otherwise acknowledged by them in writing, this policy shall cease and be of no further effect, and as, after the making of this policy, the assured obtained other insurance on the same property, but did not have the same indorsed on the policy or otherwise acknowledged by the defendants in writing, the policy was void, notwithstanding there was parol evidence tending to show that notice had been given to Smith, the company's agent.

    The same court held, in Hale v. Mechanics' Mut. F. Ins. Co. 6 Gray, 169, 66 Am. Dec. 410, that a policy issued by a mutual fire insurance company, whose by-laws provided that any insurance subsequently obtained without the consent in writing of their president should avoid the policy, and that the by-laws should in no case be altered except by a vote of two thirds of the stockholders or directors, was avoided by a subsequent insurance obtained with the mere verbal consent of the president. It was said by Bigelow, J., giving the unanimous opinion of the court:

    In Smith v. Niagara F. Ins. Co. 60 Vt. 682, 1 L. R. A. 216, 15 Atl. 353, the supreme court of Vermont, in an elaborate opinion; in Wilson v. Conway F. Ins. Co. 4 R. I. 141, the supreme court of Rhode Island, and in Cleaver v. Traders' Ins. Co. 65 Mich. 527, 32 N. W. 660, and same case in 71 Mich. 414, 39 N. W. 571, the supreme court of Michigan,-held, held, that the fact that the company's agent had authority, in a certain way or manner, to consent to the taking of additional insurance, does not aid the plaintiff; that the agent did not consent, in the cases cited, within the line of his authority or [183 U.S. 308, 324]   in the manner prescribed by the policy, wherein the agent is expressly prohibited from waiving or modifying the written contract.

    The same view of the law prevails in Connecticut. In Sheldon v. Hartford F. Ins. Co. 22 Conn. 235, 58 Am. Dec. 420, it was held that where the policy and survey constituted a contract between the parties, and there was no imperfection or ambiguity in the contract, evidence of parol representations made to the agent prior to the issuing of the policy could not be received to explain or qualify the contract. See also Glendale Woolen Mfg. Co. v. Protection Ins. Co. 21 Conn. 19, 37, 54 Am. Dec. 309; Hough v. City F. Ins. Co. 29 Conn. 10, 76 Am. Dec. 581.

    New York Ins. Co. v. Thomas, 3 Johns. Cas. 1, was an action upon a policy of insurance. and where parol evidence was offered to vary the terms of the instrument. The question was thus disposed of by Kent, J.:

    Jennings v. Chenango County Mut. Ins. Co. 2 Denio, 75, has long been a leading case. There it was held that conditions of insurance containing statements of the purpose for which the property insured is to be occupied, and of its situation as to other buildings, are warranties, and if untrue the policy is void [183 U.S. 308, 325]   though the variance be not material to the risk; and that parol evidence that the insured truly informed the agent of the insurer who prepared the application as to these particulars is not admissible. In the opinion, the language of Parker, Ch. J., in Higginson v. Dall, 13 Mass. 96, is quoted, that policies, though not under seal, 'have nevertheless ever been deemed instruments of a solemn nature and subject to most of the rules of evidence which govern in the case of specialties. The policy itself is considered to be the contract between the parties, and whatever proposals are made or conversations had between the parties prior to the subscription, they are to be considered as waived if not inserted in the policy, or contained in a memorandum annexed to it.'

    In Fowler v. Metropolitan L. Ins. Co. 116 N. Y. 389, 5 L. R. A. 805, 22 N. E. 567, it was said:

    In Baumgartel v. Providence Washington Ins. Co. 136 N. Y. 547, 32 N. E. 990, where defendant had issued to plaintiff a policy of fire insurance which contained a clause to the effect that, unless otherwise provided by agreement indorsed thereon, it should be void in case of other insurance on the property insured; and it also provided that no agent of the company should have power to waive any provision or condition of the policy except such as by its terms might be the subject of agreement indorsed thereon or added thereto, and, as to those, that he should have no such power nor be deemed to have waived them unless in writing so indorsed or attached; and where, in an action upon the policy, it appeared that, during its life, the plaintiff, without notice to the defendant and without its knowledge or consent, obtained other insurance upon the property, and that thereafter he informed the agent, who had issued the policy, of this fact, and that the agent had replied, 'All right; I will attend to it;' but it did not appear that the plaintiff then had the policy in suit with him, or afterwards applied to said agent for written consent to the other insurance; it was held that knowledge of the agent of the subsequent insurance did not satisfy the condition of the policy, and that plaintiff having failed to comply [183 U.S. 308, 327]   therewith, the policy was forfeited and void; and also held that the statements of defendant's agent did not amount to a waiver of the conditions or authorize the application of the doctrine of estoppel. It was said in the opinion:

    It is doubtless true that in several later cases the New York court of appeals seems to have departed from the principles of the previous cases, and to have held that the restrictions inserted in the contract upon the power of an agent to waive any condition, unless done in a particular manner, cannot be deemed to apply to those conditions which relate to the inception of the contract when it appears that the agent has delivered it and received the premiums with full knowledge of the actual situation. To take the benefit of a contract with full knowledge of all the facts, and attempt afterwards to defeat it, when called upon to perform, by asserting conditions relating to those facts, would be to claim that no contract was made, and thus operate as a fraud upon the other party. Robbins v. Springfield F. & M. Ins. Co. 149 N. Y. 484, 44 N. E. 159; Wood v. American F. Ins. Co. 149 N. Y. 385, 44 N. E. 80. But see Rohrback v. Germania F. Ins. Co. 62 [183 U.S. 308, 328]   N. Y. 63, 20 Am. Rep. 451, and Owens v. Holland Purchase Ins. Co. 56 N. Y. 565-570, which are irreconcilable.

    The fallacy of this view is disclosed in the phrases we have italicized. It was thereby assumed that the agent had full knowledge of all the facts, that such knowledge must be deemed to have been disclosed by the agent to his principal, and, that, consequently, it would operate as a fraud upon the assured to plead a breach of the conditions. This mode of reasoning overlooks both the general principle that a written contract cannot be varied or defeated by parol evidence, and the express provision that no waiver shall be made by the agent except in writing indorsed on the policy. As we shall hereafter show when we come to consider the meaning and legal purport of the contract in suit, such express provision was intended to protect both parties from the dangers involved in disregarding the rule of evidence. The mischief is the same whether the condition turned upon facts existing at and before the time when the contract was made, or upon facts subsequenty taking place.

    In Franklin F. Ins. Co. v. Martin, 40 N. J. L. 568, 29 Am. Rep. 271, the facts were as follows: A policy described the property insured as 'occupied as a dwelling and boarding house;' in fact, it was occupied as a country tavern, and there was kept for use a billiard table in a room back of the bar room. The property continued to be so used until the fire occurred. In the conditions of insurance, taverns were classified as extra hazardous, and billiard rooms were named as specially hazardous, each being subject to higher premiums than ordinarily hazardous rights. It was held by the New Jersey court of errors and appeals that evidence that the application for insurance was prepared by the agent of the insurer, and that he knew, at the time of the application, that the property was occupied as a tavern, and that a billiard table was kept in it for use, could not be received for the purpose of showing that, under the description of a dwelling and boarding house, the parties intended to insure the premises as they were then, in fact, being used; that a written contract of insurance cannot be altered or varied by parol evidence of what occurred between the insured and the agent of the insurer at the time of effecting the insurance; [183 U.S. 308, 329]   and that such evidence will not be received to raise an estoppel in pais, which shall conclude the insurer from setting up the defense that the policy was forfeited by a breach of the conditions of insurance.

    In the opinion of the court, given by Judge Depue, there was a full examination of cases on the subject of the admissibility of parol evidence in actions on policies of insurance, and some of his observations are so weighty, and so applicable to the case before us, we shall quote from them at some length:

    Dewces v. Manhattan Ins. Co. 35 N. J. L. 366, referred to in the case just cited, reports an opinion by Chief Justice Beasley, and from which we shall quote, as it contains, as we think, an able and sound statement of the law on this important subject:

    After citing a number of cases, the Chief Justice took notice of the case of Plumb v. Cattaraugus County Mut. Ins. Co. 18 N. Y. 392, 72 Am. Dec. 52, in the following terms:

    In Pennsylvania, it has always been held that courts of law will not permit the terms of written contracts to be varied or altered by parol evidence of what took place at or before the time the contracts were made, and that policies of insurance are within the protection of the rule.

    Thus, when it was stipulated in the conditions of insurance that a false description of the property insured should avoid the policy, it was held that a misdescription defeated the plaintiff's right to recover under it, though the statements were known to be false by the insurer's agent, who prepared the description, [183 U.S. 308, 338]   and informed the plaintiff that in that respect the description was immaterial. Smith v. Cash Mut. F. Ins. Co. 24 Pa. 320; Columbia Ins. Co. v. Cooper, 50 Pa. 331.

    In Com. Mut. F. Ins. Co. v. Huntzinger, 98 Pa. 41, the subject was examined at length and the previous cases considered, and it was held that mere mutual knowledge by the assured and the agent of the falsity of a fact warranted is entirely inadequate to induce a reformation of the policy so as to make it conform with the truth; that it is rather evidence of guilty collusion between the agent and the assured, from which the latter can derive no advantage. 'The conditions of insurance,' said the court, 'provide that notice of additional insurance, or of any change in existing insurance, shall be given to the company by the insured in writing, and shall be acknowledged in writing by the secretary; and no other notice shall be binding or have any force against the company. In absence of evidence of waiver of the notice required in this stipulation, we do not think 'the jury would be justified in inferring that the knowledge of the agent will bind the principal of notice of subsequent insurance or surrender of previous insurance.' The parties agreed that written notice should be given, and in like manner acknowledged by the secretary; mere knowledge of an agent is not the equivalent of that.'

    That the law enunciated in these and numerous other cases in Pennsylvania was not overturned by the case of Kalmutz v. Northern Mut. Ins. Co. 186 Pa. 571, 40 Atl. 816, as claimed in the brief of defendant in error, will appear on examining the facts of that case and the reasoning of the court.

    The opinion shows that the court refused to hold that what was alleged to have taken place at the time the contract was entered into might be received to change the legal effect of the policy, Sterrett, Ch. J., saying:

    The court then cited Elliott v. Lycoming County Mut. Ins. Co. 66 Pa. 26, 5 Am. Rep. 325, where Justice Sharswood said:

    As, therefore, there was no limitation put in the policy upon the powers of the company's secretary, and as the company, after having received notice of the existence of other insurance, declined to avail itself of the right to rescind the contract, but, on the contrary, elected to enforce payments under the terms of the policy as a subsisting contract, and these facts having been made to appear by undisputed evidence, the court would seem to have been justified in applying the doctrine of estoppel.

    It must be conceded that it is shown, in the able brief of the defendant in error, that, in several of the states, the courts appear to have departed from well-settled doctrines, in respect both to the incompetency of parol evidence to alter written contracts, and to the binding effect of stipulations in policies restricting the authority of the company's agents. The nature of the reasoning on which such courts have proceeded will receive our consideration when we come to discuss the particular terms of the contract before us.

    Leaving, then, the state courts, let us inquire what is the voice of the Federal authorities.

    We do not consider it necessary or profitable to examine in detail the decisions of the circuit courts or of the circuit courts of appeals. It is sufficient, for our present purpose, to say that the circuit court of appeals for the seventh circuit has held consistently to the doctrines on this subject laid down by the English and American courts generally ( United Firemen's Ins. Co. v. Thomas, 47 L. R. A. 450, 27 C. C. A. 42, 53 U. S. App. 517, 82 Fed. 406), and that the court of appeals for the eighth circuit, in the present case, has, by a majority of its members, adopted and applied the view that a written contract may, in an action at law, be changed by parol evidence, and that such clauses as restrict the power of agents of insurance companies to contract otherwise than by some writing should be given effect, if at all, as they respect such modifications of a policy as are made or attempted to be made after it has been delivered and taken effect as a valid instrument, and should not be considered as having relation to acts done by the company or its agents at the inception of the contract. 41 C. C. A. 207, 101 Fed. 77. [183 U.S. 308, 341]   In such divergence of decisions, we have deemed it proper to have the present case brought before us by a writ of certiorari.

    As to the fundamental rule, that written contracts cannot be modified or changed by parol evidence, unless in cases where the contracts are vitiated by fraud or mutual mistake, we deem it sufficient to say that it has been treated by this court as invariable and salutary. The rule itself and the reasons on which it is based are adequately stated in the citations already given from the standard works of Starkie and Greenleaf.

    Policies of fire insurance in writing have always been held by this court to be within the protection of this rule.

    The first case to be examined is Carpenter v. Providence Washington Ins. Co. 16 Pet. 495, 10 L. ed. 1044. The importance of this case is great, because, if the conclusion there reached was sound when expressed, and if it has not been overruled by our subsequent decisions, it is decisive of the case before us.

    And first, as to the facts of that case, in so far as they resemble those with which we have now to deal. They were thus stated by Mr. Justice Story, who delivered the unanimous opinion of the court:

    After disposing of the first instruction, which does not relate to our present inquiries, the court said:

    After discussing the question, the court added the following observations:

    Two propositions, then, are clearly established by this decision: (1) That where a policy provides that notice shall be given of any prior or subsequent insurance, otherwise the policy to be void, such a provision is reasonable and constitutes a condition, the breach of which will avoid the policy; (2) that where the policy provides that notice of prior or subsequent insurance must be given by indorsement upon the policy or by other writing, such provision is reasonable and one competent for the parties to agree upon, and constitutes a condition, the breach of which will avoid the policy.

    We are next to inquire whether this decision has been overruled, or whether it remains as an authoritative declaration of the law.

    Shortly after the case was decided at law, it appears that an effort was made by said Carpenter to invoke the aid of a court of equity to enable him to avoid the effect of his own disregard of the conditions contained in the policy. Carpenter v. Providence Washington Ins. Co. 4 How. 185, 11 L. ed. 931.

    This court held, affirming the circuit court of the United States for the district of Rhode Island, sitting in equity, that, under the facts disclosed by the pleadings and evidence, the complainant was not entitled to equitable relief.

    Corpenter v. Providence Washington Ins. Co. 16 Pet. 495, 10 L. ed. 1044, has been frequently referred to as an authority in subsequent cases on points collateral to the one we are now considering. Taylor v. Benham, 5 How. 260, 12 L. ed. 143; Russell v. Southard, 12 How. 145, 13 L. ed. 929; Oates v. First Nat. Bank, 100 U.S. 246 , 25 L. ed. 583; Burgess v. Seligman, 107 U.S. 34 , 27 L. ed. 365, 2 Sup. Ct. Rep. 10.

    In Phoenix Mut. L. Ins. Co. v. Raddin, 120 U.S. 183, 189 , 30 S. L. ed. 644, 646, 7 Sup. Ct. Rep. 500, 502, we find Carpenter v. Providence Washington Ins. Co. cited, per Mr. Justice Gray, as an authority for the proposition that 'the parties may be their contract make material a fact that would otherwise be immaterial, or make immaterial a fact that would otherwise be material. Whether there is other insurance on the same subject, and whether such insurance has been applied for and refused, are material facts, at least when statements regarding them are required by the insurers as part of the basis of the contract.'

    It is not pretended in the opinion of the majority in the circuit court of appeals in the present case that the case of Carpenter v. Providence Washington Ins. Co. has been [183 U.S. 308, 349]   modified or overruled by this court, but the cases relied on by that court are wholly decisions of several state courts and of some of the circuit courts. Nor is it claimed by the learned counsel for the defendant in error that the Carpenter Case has been formally overruled or modified by this court. He, however, does cite three decisions of this court which, as he views them, should be regarded as abandoning the doctrines of that case, viz., Union Mut. L. Ins. Co. v. Wilkinson, 13 Wall. 232, 20 L. ed. 622; Eames v. Home Ins. Co. 94 U.S. 621 , 24 L. ed. 298, and Knickerbocker L. Ins. Co. v. Norton, 96 U.S. 234 , 24 L. ed. 689.

    These cases must, therefore, receive our attention. What, then, was the case of Union Mut. L. Ins. Co. v. Wikinson? That was a case where the agent of a life insurance company had inserted in the application a representation of the age of the mother of the assured at the time of her death, which was untrue, but which the agent himself obtained from a third person and inserted without the assent of the assured. It was held that this untrue statement contained in the application did not invalidate the policy; that permitting verbal testimony to show how this untrue statement found its way into the application did not contradict the written contract sued on, but proceeded on the ground that this statement was not that of the assured. The trial court said to the jury that if the applicant did not know at what age her mother died, and did not state it, and declined to state it, and that her age was inserted by the agent upon statements made to him by others in answer to inquiries he made of them, and upon the strength of his own judgment, based upon data thus obtained, it was no defense to the action to show that the agent was mistaken. The case, as reported, does not disclose that the plaintiff's testimony as to the way in which the untrue statement was put in the application was contradicted or denied by the company. It may therefore be presumed that the plaintiff's case, in that respect, was made out by undisputed evidence. And it would seem, such being the state of facts, that this court had reason to hold that the untrue statement was not made by the assured, and that it would operate as a fraud on the plaintiff if he were not permitted to show this fact, which was not a fact or statement contained in [183 U.S. 308, 350]   the policy sued on, but an extrinsic fact or statement contained in the application. The defense made upon that statement was, in legal effect a denial of the execution of the statement-a defense that can always be sustained by parol evidence.

    However this may have been, we are unwilling to have the case regarded as one overthrowing a general rule of evidence. Some of the remarks contained in the opinion might seem to bear that interpretation, but not necessarily so.

    That Mr. Justice Miller did not intend, in the case of Union Mut. L. Ins. Co. v. Wilkinson, to lay down a new rule of evidence in insurance cases, is clearly shown in the subsequent case of Merchants' Mut. Ins. Co. v. Lyman, 15 Wall. 664, 21 L. ed. 246, where the opinion was delivered by the same learned justice, and who used the following language:

    Eames v. Home Ins. Co. 94 U.S. 621 , 24 L. ed. 298, is another case relied on as showing that the general rule of evidence was not applicable in insurance cases. But that was the case of a bill in equity filed against an insurance company of New York to require said company to issue to the complainants a policy of insurance against loss or damage by fire, in pursuance of a contract for that purpose alleged to have been made with their agents in Illinois. It was made to appear that the terms of a contract for insurance upon property which was destroyed by fire before the policy was received had been agreed upon. This agreement was manifested by an application signed by the [183 U.S. 308, 352]   complainant, and in several letters which had passed between the local agent and the general agent of the company, and between the complainant and the local agent. The report of the case states that there was an agreement as to certain facts by the attorneys in the cause, but what those facts were does not distinctly appear in the report. However, all that can be claimed for the case is that this court considered, from the agreement as to facts between the attorneys, and from the application and the several letters between the agents and the complainant, that a case was made out justifying a court of equity to decree that complainant was entitled to a policy of insurance to be issued for the amount and at the premium shown by the proofs. What was the scope of the authority of the agents who prepared the application and conducted the correspondence does not appear, but the court seems to have assumed that it sufficiently appeared that the agents had authority to act as they did. It is not perceived that this case has any valid application to the case now before us, beyond apparently holding, with Union Mut. L. Ins. Co. v. Wilkinson, in 13 Wall. 232, 20 L. ed. 622, that it may be shown by parol that a statement which purports to have been made by an applicant for insurance was not, in point of fact, his statement, but was really that of the agent.

    The next case relied on is Knickerbocker L. Ins. Co. v. Norton, 96 U.S. 234 , 24 L. ed. 689, and in which it was held by a majority of this court that an insurance company may waive any condition of a policy inserted therein for its benefit. As to this proposition there was, and could have been, no disagreement among the judges, but the difference arose over the sufficiency of the evidence to show the waiver. The question really was whether the company's agent had authority to extend the payment of a premium note, notwithstanding a provision in the policy that a failure to pay the note at maturity would incur a failure of the policy, and a declaration that the agents of the company were not authorized to make, alter, or abrogate contracts or waive forfeitures. It was held by the majority that a waiver by the company of both these conditions might be shown by admitting evidence as to the practice of the company in allowing its agents to extend the [183 U.S. 308, 353]   time for payment of premiums and of notes given for premiums, as indicative of the power given to those agents, and that error was not committed by submitting to the jury, upon such evidence, to find whether the defendants had or had not authorized its agent to make an extension in this case. In speaking for the majority, Mr. Justice Bradley said:

    Mr. Justice Strong, speaking for the dissenting parties, said:

    Whatever may be thought of these divergent views, it is clear that the facts of that case are widely different from those here under consideration, where there is no evidence whatever of a waiver by the company, or of authority to the agent, express or implied, from a course of practice by the company. Here, the company 'has chosen,' in the language of Mr. Justice Bradley, 'to insist upon the terms of the written contract.'

    The subject of waiver by agents was further considered in the case of Globe Mut. L. Ins. Co. v. Wolff, 95 U.S. 326 , 24 L. ed. 387, when the unanimous opinion of the court was delivered by Mr. Justice Field:

    New York L. Ins. Co. v. Fletcher, 117 U.S. 519 , 29 L. ed. 934, 6 Sup. Ct. Rep. 837, is [183 U.S. 308, 358]   an instructive case on the points in controversy here. The facts of the case, as stated in the syllabus, were as follows:

    The unanimous opinion of the court was delivered by Mr. Justice Field, the principal portions of which were as follows:

    What, then, are the principles sustained by the authorities, and applicable to the case in hand?

    They may be briefly stated thus: That contracts in writing, if in unambiguous terms, must be permitted to speak for themselves, and cannot by the courts, at the instance of one of the parties, be altered or contradicted by parol evidence, unless in case of fraud or mutual mistake of facts; that this principle is applicable to cases of insurance contracts as fully as to contracts on other subjects; that provisions contained in fire insurance policies, that such a policy shall be void and of no effect if other insurance is placed on the property in other companies, without the knowledge and consent of the company, are usual and reasonable; that it is reasonable and competent for the parties to agree that such knowledge and consent shall be manifested in writing, either by indorsement upon the policy or by other writing; that it is competent and reasonable for insurance companies to make it matter of condition in their policies that their agents shall not be deemed to have authority to alter or contradict the express terms of the policies as executed and delivered; that where fire insurance policies contain provisions whereby agents may, by writing indorsed upon the policy or by writing attached thereto, express the company's assent to other insurance, such limited grant of authority is the measure of the agent's power in the matter, and where such limitation is expressed in the policy, executed and accepted, the insured is presumed, as matter of law, to be aware of such limitation; that insurance companies may waive forfeiture caused by nonobservance of such conditions; that, where waiver is relied on, the plaintiff must show that the company, with knowledge of the facts that occasioned the forfeiture, dispensed with the observance of the condition; that where the waiver relied on is an act of an agent, it must be shown, either that the agent had express authority from the company to make the waiver, or that the company subsequently, with knowledge of the facts, ratified the action of the agent. [183 U.S. 308, 362]   In the light of these principles, let us examine the contract that was made between the parties to the controversy before us. The contract was in writing, and in clear and unambiguous terms; that contract provided that 'this entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure, any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy,' and that 'no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy, except such as by the terms of the policy may be the subject of agreement indorsed hereon or added hereto, and, as to such provisions or conditions, no officer, agent, or representative shall have power or be deemed or held to have waived such provisions or conditions, unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached.'

    Such being the contract, and the property insured having been destroyed by fire on June 1, 1898, and the insurance company having denied liability because informed that other insurance was held by the insured on the same property, without the knowledge or consent of the company, this action was brought.

    It is not pretended, as we understand the plaintiff's position, that by any language or declaration of the agent, at the time the policy was delivered and the premium paid, he claimed to have power to waive any provision or condition of the policy, nor that the plaintiff was induced to accept the policy by any promise of the agent to procure the assent of the company to permit the outstanding insurance and to waive the condition. The plaintiff's case stands solely on the proposition that because it is alleged, and the jury have found, that the agent had notice or knowledge of the existence of insurance existing in another company at the time the policy in suit was executed and accepted, and received the premium called for in the contract, thereby the insurance company is estopped from availing itself of the protection of the conditions contained in the policy. In [183 U.S. 308, 363]   other words, the contention is that an agent with no authority to dispense with or alter the conditions of the policy could confer such power upon himself by disregarding the limitations expressed in the contract, those limitations being according to all the authorities presumably known to be insured. It was not shown that the company, when it received the premium, knew of the outstanding insurance, nor that, when made aware of such insurance, it elected to ratify the act of its agent in accepting the premium. On the contrary, all the record discloses is that the jury found that the agent knew, when the policy in the defendant company was issued and delivered to the plaintiff, that there was then subsisting fire insurance to the amount of $1,500 in another fire insurance company, and that such knowledge had been communicated to the agent by or on behalf of the assured. There is no finding that the agent communicated to the company or to its general agent at Chicago, at the time he accounted for the premium, the fact that there was existing insurance on the property, and that he had undertaken to waive the applicable condition. Indeed, it appears from the letter of defendant's manager at Chicago, to whom the proofs of loss had been sent, which letter was put in evidence by the plaintiff and is set forth in the bill of exceptions, that the additional insurance held by the plaintiff was without the knowledge or consent of the company; and it further appears, and was found by the jury, that immediately on the company's being informed of the fact, the amount of the premium was tendered by the agents of the company to the insured. So that there is not the slightest ground for claiming that the insurance company, with knowledge of the facts, either accepted or retained the premium. The plaintiff's case, at its best, is based on the alleged fact that the agent had been informed, at the time he delivered the policy and received the premium, that there was other insurance. The only way to avoid the defense and escape from the operation of the condition, is to hold that it is not competent for fire insurance companies to protect themselves by conditions of the kind contained in this policy. So to hold would, as we have seen, entirely subvert well-settled principles declared in the leading English and American cases, and particularly in those of this court. [183 U.S. 308, 364]   This case is an illustration of the confusion and uncertainty which would be occasioned by permitting the introduction of parol evidence to modify written contracts, and by approving the conduct of agents and persons applying for insurance in disregarding the express limitations put upon the agents by the principal to be affected.

    It should not escape observation that preserving written contracts from change or alteration by verbal testimony of what took place prior to and at the time the parties put their agreements into that form, is for the benefit of both parties. In the present case, if the witnesses on whom the plaintiff relied to prove notice to the agent had died, or had forgotten the circumstances, he would thus, if he had depended to prove his contract by evidence extrinsic to the written instrument, have found himself unable to do so. So, on the other side, if the agent had died, or his memory had failed, the defendant company might have been at the mercy of unscrupulous and interested witnesses. It is not an answer to say that such difficulties attend other transactions and negotiations, for it is the knowledge of the inconveniences that attend oral evidence that has led to the custom of putting important agreements in writing and to the legal doctrine that protects them when so expressed, and when no fraud or mutual mistake exists, from being changed or modified by the testimony of witnesses as to conversations and negotiations that mey never have taken place, or the real nature and meaning of which may have faded from recollection.

    Besides the importance of such considerations to the parties immediately concerned in business transactions, the community at large have a deep interest in the welfare and prosperity of such beneficial institutions as fire insurance companies. It would be very unfortunate if prudent men should be deterred from investing capital in such companies by having reason to fear that conditions which have been found reasonable and necessary to put into policies to protect the companies from faithless agents and from dishonest insurers, are liable to be nullified by verdicts based on verbal testimony. Increased importance should be given to the rules involved in this discussion [183 U.S. 308, 365]   by that fact that, in latter times and in most, if not all, of the states, statutory changes have opened the courts to the testimony of the very parties who have signed the written instrument in controversy.

    The judgment of the Circuit Court of Appeals is reversed. The judgment of the Circuit Court is likewise reversed, and the cause remitted to that court with directions to proceed in conformity with this opinion.

    The CHIEF JUSTICE, Mr. Justice Harlan and Mr. Justice Peckham dissent.

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