
    TITUS v. THE GLENS FALLS INSURANCE CO.
    
      N. Y. Court of Appeals,
    
    1880.
    Insurance.—Clause against Incumbrances.—Mortgage.—Renewal of Policy.—Other Insurance Clause.—Examination of Assured.—Proof of Loss.—Clause against Foreclosure Proceedings.—Waiver.—Evidence of Identity.—Misrepresentation.
    A statement in an application for insurance that the incumbrance on the property consists of a mortgage for $3,500 is not false because there is a mortgage for that amount on which interest has been running which is not yet due, if all the interest that is due has been paid.
    
      Where a policy, void because of the breach of a covenant against incumbrances, is renewed after the incumbrance has been paid off, the 'renewal is valid, as the representation is true at the time of renewal.
    
    A clause in a policy insuring a mortgagor, loss payable to mortgagee, providing that it shall be void if the assured procures other insurance, is not violated by the mortgagee obtaining further insurance on his own account and of his own interest.
    A mortgagor, by making out formal proofs of loss, at the mortgagee’s request, to be sent to a company in which the mortgagee has insured his separate interest, does not thereby so ratify the act of the mortgagee in taking out the insurance, as to render his own policy void under the clause prohibiting other insurance.
    A clause requiring the assured to submit to an examination under oath, binds him to answer such questions only as have a material bearing on the insurance and the loss.
    A company having received and retained the proofs of loss without objection, cannot complain that they were defective.
    A provision in a policy, payable to a mortgagee, that it should be void if foreclosure proceedings were' commenced against the property, applies to foreclosure proceedings commenced by the mortgagee for whose benefit the policy was taken.
    
    Although waiver of the breach of a condition cannot be inferred from mere silence, yet if the company, in any transactions with .the insured after knowledge of the forfeiture, recognizes the continued validity of the policy, or requires the insured by virtue thereof to do some act or incur some trouble or expense, the forfeiture is waived.
    Thus, requiring the insured to submit to examination under oath, pursuant to a provision of the policy, constitutes a waiver of forfeitures of which the company then had knowledge.
    A waiver of a breach of a condition in an insurance policy need not bo based on any new agreement or estoppel.
    
      It seems, that the doctrine of waiver is not peculiar to insurance policies, but is applicable to all cases of forfeitures.
    It having been proved that the general agent of the company was, in a specified month, at the place of the loss, making inquiries in reference thereto, evidence of a conversation which the assured had during that month with a person whom he had never seen before, who represented himself to be such agent, is competent.
    
    A provision tiiat any misrepresentation in the proofs of loss or examination shall avoid the policy, does not include an innocent misstatement.
    Appeal from a judgment of the general term of the supreme court in the second department; affirming a judgment, rendered in favor of the plaintiff upon the verdict of a jury, and denying a motion for a new trial.
    George N. Titus sued the Glens Palls Insurance Company, upon a tire policy, insuring a barn owned by Oliver Merrill. The policy was issued to Merrill, and by its terms the “loss, if any,” was “payable to George N. Titus, a mortgagee.”
    The other material clauses of the policy were as follows :
    “If the assured now has, or shall hereafter make, any other insurance on the property hereby insured, or any part thereof (whether valid or not), without the consent of the company written hereon; or
    if the property or any part thereof shall be sold, transferred, or incumbered (by mortgage, judgment or otherwise), or foreclosure proceedings commenced, or any change take place in the title, use, occupation or possession, whether by legal process, judicial decree, voluntary act or otherwise; or if all the liens (whether by mortgage, judgment or otherwise) on the property are not expressed hereon; . . . then, and in every such case, this policy shall cease and be void. This company will not be liable for loss or damage in case of failure to comply with any of the foregoing specifications.” ....
    “Persons sustaining loss or damage by fire shall forthwith give notice of said loss to the company, and within thirty days render a particular account of such loss, signed and .sworn to by them, stating the time, origin and circumstances of the fire, the title, cash value of, all incumbrances upon, and interest of claimant and all others, in the insured property, the amount of loss or damage. ....
    “No act or omission of the company, or any of its officers or agents, shall be deemed, construed, or held to be a waiver of a full and strict compliance with the foregoing provisions of the eighth section, nor an extension of time to the assured for a compliance, except it be a waiver or extension in express terms, and in writing, signed by the president or secretary of the company.
    “ The assured, his, her, and their agents and servants shall, if required, submit to an examination or examinations under oath by any person appointed by the company, and subscribe to such examination when reduced to writing.....
    “If this policy is made payable, in case of loss, to a third party, or held as collateral security, the proofs of loss shall be , made by the party originally insured, unless there has been an actual sale of the property insured ; any fraud or attempt at fraud, or any misrep ■ resentation in proofs of loss, or examination, or any false swearing, shall cause a forfeiture of all claim on this company under this policy.....
    “This insurance (the risk not being changed) may be continued for such further time as shall be agreed on, provided the premium therefor is paid and indorsed on this policy, or a receipt given for the same, and it shall be considered as continued under the original contract, and for the original amount and divisions, unless otherwise specified in writing; but in case there shall have been any change in the risk, either within itself or otherwise, not made known to the company in writing by the assured at the time of renewal, this policy and renewal shall be void.”
    The company sought to defend on the following grounds :
    1. That the incumbrances on the property were untruly stated in the application.
    
      2. That other insurance was effected, in violation of the policy.
    3. That the proofs of loss were defective.
    4. That foreclosure proceedings were commenced in violation of the policy.
    
      5. That fraudulent statements were made in the proofs of loss.
    6. That Merrill declined to answer certain questions on an examination made pursuant to the policy.
    The questions he refused to answer related to the names of his creditors, and to property other than that covered by the insurance, owned by himself and his wife.
    Further facts sufficiently appear in the opinion.
    
      The Supreme Court were of opinion that the clause as to forfeiture by foreclosure could not be construed to apply to the mortgage in aid of which the policy was issued ; and overruled the other objections.
    From judgment for plaintiff, defendant appealed.
    
      Broion & Sheldon, for defendant, appellant.
    I. Contracts of insurance are interpreted by the same rules as other written instruments. Their provisions must be taken in their ordinary sense, and their reasonableness is not for the courts to determine (Savage v. 
      Howard Ins. Co., 52 N. Y. 504; Springfield F. & M. Co. v. Allen, 43 Id. 389).
    II. The obtaining of additional insurance by the mortgagee avoided the policy whether it was valid or not as to the mortgagor (Bigler v. New York Central Ins. Co., 22 N. Y. 402). The mortgagee was authorized by the mortgage to effect insurance for the mortgagor, and the mortgagee also ratified Ms act by making out the proofs of loss.
    III. The original policy being void, the renewal did not take effect, and the company being ignorant of the facts which avoided the policy there could be no waiver (Robertson v. Cow, 3 Barb. 410; Underwood v. Farmers’, &c. Co., 57 N. Y. 500; Sherman v. Niagara Fire Ins. Co., 46 Id. 526; Pratt v. New York Central Ins. Co., 55 Id. 505; Van Schaick v. Niagara Fire Ins. Co., 68 Id. 434).
    IV. The insured is bound to disclose all the material facts, and a neglect to do so, though by inadvertence, will •vitiate the policy (Beebe v. Hartford Co., 25 Conn. 51; Bowery Fire Ins. Co. v. New York Fire Ins. Co., 17 Wend. 359; Dennisen v. Thomaston M. Ins. Co., 20 Me. 125; Curry v. Commercial Ins. Co., 10 Pick. 535; 1 Hand, 208; Gould v. York Ins. Co., 47 Me. 409; Clark v. N. C. M. Ins. Co., 6 Cush. 342; Carpenter v. American Ins. Co., 1 Story, 57).
    V. The foreclosure proceedings rendered the policy void (Colt v. Phoenix Fire Ins. Co., 54 N. Y. 595).
    VI. A waiver, to be operative, must be supported by an agreement or an estoppel (Ripley v. Ætna Ins. Co., 30 N. Y. 136, 164; Brink v. Hanover Fire Ins. Co., 70 N. Y. 593). In the present case, there are no elements of estoppel (Big. on Estoppel, 437; McMaster v. Pres., &c. of Co., 55 N. Y. 222).
    VII. Merrill was bound to answer the questions asked Mm (Johnson v. Phoenix Ins. Co., 112 Mass. 49).
    
      VIII. The insured is bound by the conditions of the policy (Pindar v. Resolute Fire Ins. Co., 47 N. Y. 114, 118; Barrett v. N. M. F. Ins. Co., 7 Cush. 180; Brown v. C. C. M. Ins. Co., 18 N. Y. 385, 390).
    IX. The charge as to misrepresentations was wrong, and a new trial should be granted therefor (Boutelle v. Westchester Fire Ins. Co.,. 51 Vt. 12; Levy v. Bailie, 7 Bing. 349; Wall v. Howard, 51 Me. 32).
    
      Tomkins Wester wit, for plaintiff, respondent.—I. The incumbrances were truly stated.
    II. The additional insurance, being made by the mortgagee without the authority of the insured, was not a violation of the policy (Tyler v. Etna Ins. Co., 12 Wend. 507; S. C., 16 Id. 385.
    III. The condition as to other insurance was waived by the company by requiring Merrill to be examined pursuant to the policy and also by giving notice of its intention to cancel the same (Shearman v. Niagara Fire Ins. Co., 46 N. Y. 526,532; Van Shaick v. Niagara Fire Ins. Co., 68 Id. 434, 439; Webster v. Phoenix Ins. Co., 36 Wis. 67; Wood on Fire Ins. § 109, notes 1, 2; Insurance Company v. Norton, 96 U. S. 234; Gans v. St. Paul Ins. Co., 43 Wis. 109).
    IV. The clause prohibiting foreclosure proceedings did not apply to proceedings under plain tiff’s mortgage, as by having insured his interest they must have been agreed to, in advance (Wood on Fire Ins. § 347; Aldrich v. Equitable, &c. Co., 1 W. & M. [ U. S.] 272; Pitney v. Glens Falls Ins. Co., 65 N. Y. 6; Farmers’ Insurance Company v. Ashton, 6 Rep. 536; Loy v. Home Ins. Co., Id. 587; Brink v. Hanover Ins. Co. [N. Y. Ct. of App., March, 1880], 9 Id. 518.
    V. The provision as to foreclosure was waived by the examination of the assured and by the notice of cancellation (Cases cited under point III.; Lasher v. N. N. Ins. Co. 55 How. Pr. 318).
    VI. The questions which the assured refused to answer were immaterial, and it was not necessary for him to answer them (Insurance Company v. Weides, 14 Wall. 375).
    VII. The refusal of the insured to answer the question being without the mortgagee’s knowledge or consent, could not deprive him of his rights (Wood on Fire Ins. % 346).
    VIII. The question as to whether the statements were fraudulent was properly submitted to the jury (Huber v. Niagara Ins. Co., 16 Wis. 523; Wood on Ins. § 429, and cases in note, p. 747).
    IX. A mistaken opinion as to the value of the property in the proofs of loss which is not false or fraudulent will not prevent a recovery (Wood on Fire Ins. § 429 and notes, pp. 745-747; Wolf v. Goodhue Fire Ins. Co., 43 Barb. 400).
    
      
       See also Woodly v. Old Dominion Ins. Co., 31 Am. R. 732; S. C., 31 Gratt. 362.
    
    
      
       Before commencing foreclosure, therefore, the attorney of a mortgagee who holds a policy as collateral, should examine the clauses of the policy, and get consent if necessary, or insure elsewhere if denied.
      Compare Loy v. Home Ins. Co., 24 Minn. 315; S. C., 31 Am. R. 346, where it was held that foreclosure by advertisement is not “ legal process,” &c.
      For another recent case of high authority, holding clauses conditions in favor of the company, to their full extent, see London Guaranty, &c. Co. v. Fearnley (House of Lords, July, 1880) 28 Weekly R. 893.
      But ambiguities are construed against the company. Baley v. Homestead Ins. Co., 21 Alb. L. J. 173, Ct. App., Jan. 27, 1880.
    
    
      
       S. P., Buchanan v. Exchange Fire Ins. Co., 61 N. Y. 26; Abb. Trial Ev. 564, n. 11; Howard v. Holbrook, 9 Bosw. 237; S. C, 23 How. Pr. 64; Hunt v. Maybee, 7 N. Y. 266.
    
   Earl, J.

This is an action upon a fire policy, insuring a barn, issued by the defendant to Oliver Merrill, loss payable to the plaintiff as mortgagee. The plaintiff recovered a verdict, and the defendant now seeks to reverse the judgment entered thereon, upon various grounds, which I will separately notice.

1. It was provided in the policy that it should be void “if all the liens (whether by mortgage, judgment or otherwise) on the property are not expressed hereon.” It was also provided that the application should form a part of the policy, and that the representations therein made should be considered warranties. In the application, to the question: “Is there any incumbrance by mortgage or otherwise, and for what amount?” Merrill answered: “ Yes, §2,500.” The date of the policy was March 6, 1876. The mortgage was for §2,500, and all the interest due had been paid ; but the interest thereon running from December 27, 1875, was unpaid. The mortgage was, therefore, a security for a little more than $2,500; and hence it is claimed that there was a breach of warranty. But the representation was substantially true. The mortgage was for $2,500, as represented, and all the interest .due had been paid. The answer to the question was as accurate as a very precise man would make it.

2. At the date of the policy there was a small judgment docketed against Merrill, which was a lien upon the insured property ; but that judgment was paid in full in the fall after the date of the policy. That judgment was not noticed in the application or in the policy, and was unknown to the defendant; and it may therefore be assumed that it avoided the policy. But the policy contained this provision: “This insurance (the risk not being changed) may be continued for such further time as shall be agreed on, provided the premium therefor is paid and indorsed on this policy, or a receipt given for the same, and it shall be considered as continued under the original contract, and for the original amount and divisions, unless otherwise specified in writing ; but in case there shall have been any change in the risk, either within itself or otherwise, not made known to the company in writing by the assured at the time of renewal, this policy and renewal shall be void.”

This clause was designed to secure the company against any increase of risk in the renewal of the policy. It is clear that it was understood that the insurance was to be continued, if at the time of any application for a renewal, the representations contained in the original application remained true. This policy expired March G, 1877, and on that day the annual premium was paid, and it was renewed for another year. The certificate of renewal contained the words “providedalways that the original policy is in full force.” The claim now is that because the original policy was avoided on account of the judgment undisclosed at the date thereof, although afterward paid, the renewal did not take effect. We think otherwise Considering the language used in the policy and in the renewal certificate, and the manifest purpose for which it was used, we do not think that it was intended to reach a case where, at the time of the renewal all the representations contained in the original application were true and no cause of forfeiture then existed. If all the facts as to the judgment had then been known to the company, it cannot be doubted that it would have made the renewal ; and a narrow, literal construction of this provision, which would work injustice and operate differently from what could have been intended, should not be adopted.

3. On March 2, 1877, four days before the renewal certificate was issued, the plaintiff procured of the Home Insurance Company a policy insuring the same barn, loss payable to him as mortgagee, and this insurance was not mentioned in the policy or renewal certificate issued by the defendant, and was unknown to it. It is claimed that this insurance violated that portion of the defendant’s policy which provides that it should become void “if the assured now has, or shall hereafter make, any other insurance on the property hereby insured, or any part thereof (whether valid or not), without the consent of the company written hereon.” The answer to this is that the insured, Merrill, did not procure the further insurance, that he did not know of it until after the loss, and that the plaintiff was not his agent in any sense to procure such insurance. It is true, that Merrill’s mortgage contained a clause providing that he should keep the mortgaged buildings insured, and assign the policy to the plaintiff, and that in case of default on his part, the plaintiff might procure such insurance at his expense and add the amount paid therefor to the mortgage. JBtit that clause could not operate until there was default on the part of Merrill, and he could be put in default only upon refusal or neglect to procure the insurance after some sort of notice or demand. Be: sides, the plaintiff, in procuring that insurance, acted for himself and in his own interest; and hence, his act in procuring it cannot be so far regarded as the act of Merrill, as to violate the clause in the policy now under consideration. It was not other insurance, within the meaning of the policy, procured by Merrill.

There was no ratification by Merrill of that insurance in such way as to make the act of procuring it his act. He did not know of it until after the loss, and thus after the rights of the parties had become fixed. All he then did was, at the request of the plaintiff, to make the formal proof which was required to procure payment from the Home Insurance Company. If the act of procuring that insurance did not at the time operate to avoid defendant’s policy, it could not after the loss have such operation by relation.

4. Defendant’s policy contained a provision that the insured should, “if required, submit to an examination or examinations under oath by any person appointed by the company, and subscribe to such examinations when reduced to writing.” It is complained that this provision was violated. Merrill did, at the request of the defendant, submit to an examination under oath; but he declined to answer some of the questions put to him. He was bound only to answer such questions as had a material bearing upon the insurance and the loss—and I cannot perceive that the questions which he declined to answer had such bearing—and hence he was justified in his refusal to answer them.

5. It is said that the proofs of loss were not as full as they should have been in some particulars. They were received by the defendant and retained without any objection, and hence it cannot complain that they were defective. If it desired more, it should have returned the proofs and pointed out the defects.

6. I now come to a more serious objection to this recovery. The policy contains a provision that it should be void if foreclosure proceedings should be commenced against the insured property; and this provision is alleged to have been violated. The plaintiff commenced a foreclosure of his mortgage by action about May 1, 1877, and he obtained a judgment of foreclosure, and under that judgment he caused the mortgaged premises to be advertised for sale a few days before the fire. ■ In reference to this objection to plaintiff’s recovery, the opinion pronounced at general term contains the following: “We do not think this condition relates to the plaintiff’s mortgage. It cannot be assumed that in a policy issued by the defendant, with the loss payable to the plaintiff as mortgagee, a condition would be inserted prohibiting him from foreclosing his mortgage. The condition has some other meaning.” The argument of plaintiff’s counsel is that when the defendant assented to this mortgage, it necessarily assented to all the necessary incidents and consequences of the mortgage interest; that having been notified of the interest of the mortgagee in the property, and having agreed to pay him the loss, if any, it cannot call in question the natural result and incident of such mortgage title, to wit: foreclosure thereof, but must be held to have agreed to it in advance. This reasoning does not carry conviction to our minds. A provision that a policy shall be void in the case of foreclosure proceedings is common in insurance policies, and we must assume that experience has shown to underwriters that such proceedings increase the risk to the insurer. The defendant might have been willing for the premium charged to insure this barn with the mortgage upon it, and yet not willing to insure it in case of proceedings to foreclose the mortgage. It did assent to the mortgage, and agree that the loss, if any, be paid to the mortgagee, but it did not assent to continue the insurance in case the risk was increased by proceedings to foreclose the mortgage. Before commencing the foreclosure the plaintiff should .have obtained the assent of the defendant. It might have examined the circumstances and granted such assent without any conditions, or it might have required an additional premium for the increased risk. It might have refused altogether; and in that case the plaintiff could have delayed his foreclosure until the end of the year, or surrendered the policy and procured insurance elsewhere. Even if the provision were found to be very inconvenient and embarrassing, there is no help for it. There it is, and we cannot take it out of the policy by construction. There are two provisions ; one, that liens without the assent of the company shall avoid the policy; and another, that foreclosure proceedings shall avoid it; and effect must be given to both. According to the construction contended for on the part of the plaintiff, the latter provision would 'be wholly useless or nullified in every case, because all liens avoid the policy unless assented to, and according to that construction, when assented to, foreclosure proceedings may be instituted without avoiding the policy. If such proceedings may be instituted as incident to the mortgage, then they may be carried to their conclusion by a sale and conveyance; and thus, by assenting to a mortgage, a company may be held to have assented to a change of title of the insured property. Such a construction is unreasonable and unwarranted (Pratt v. N. Y. Central Ins. Co., 55 N. Y. 505).

But we are of opinion that the claim of the plaintiff is well founded, that the forfeiture caused by the foreclosure proceedings was waived by the defendant. After the fire, and after the defendant had notice of the proceedings, it required the insured to appear before a person appointed by it for that purpose, to be examined under the clause in the policy herein-before mentioned, and he, was there subjected to a rigorous inquisitorial examination. It had the right to make such examination only by virtue of the policy. When it required him to be examined, it exercised a right given to it by the policy. It then recognized the validity of the policy, and subjected the insured to trouble and expense, after it knew of the forfeiture now alleged, and it cannot now, therefore, assert its invalidity on account of such forfeiture.

When there has been a breach of a condition contained in an insurance policy, the insurance company may or may not take advantage of such breach and claim a forfeiture. It may, consulting its own interests, choose to waive the forfeiture, and this it may do by express language to that effect or by acts from which an intention to waive may be inferred, or from which a waiver follows as a legal result. A waiver cannot be inferred from its mere silence. It is not obliged to do or say anything to make the forfeiture effectual. It may wait until claim is made under the policy, and then, in denial thereof or in defense of a suit commenced therefor, allege the forfeiture. But it may be asserted broadly that if, in any negotiations or transactions with the insured after knowledge of the forfeiture, it recognizes the continued validity of the policy, or does acts based thereon, or requires the insured by virtue thereof to do some act, or incur some trouble or expense, the forfeiture is, as matter of law, waived ; and it is now settled in this court, after some difference of opinion, that such a waiver need not be based upon any new agreement or an estoppel (Allen v. Vermont Mutual Fire Ins. Co., 12 Vt. 366; Webster v. Phoenix, Ins. Co., 36 Wis. 67; Gans v. St. Paul Ins. Co., 43 Id. 109; Insurance Company v. Norton, 96 U. S. 234; Goodwin v. Massachusetts Mutual Life Ins. Co., 73 N. Y. 480, 493; Prentice v. Knickerbocker Life Ins. Co., 77 Id. 483; Brink v. Hanover Fire Ins. Co., in this court, not yet reported).

Forfeitures are not favored in the law, and this doctrine of waiver is not peculiar to insurance policies, but is applicable to all cases of forfeiture. As to leases it is thus laid down in Taylor’ s Landlord and Tenant (5 ed. § 287): “ The forfeiture of a lease by breach of any other condition may, however, be waived in like manner as a forfeiture for non-payment of rent, or a notice to quit; for if the landlord does any act, with knowledge of the breach, which can be considered as an acknowledgment of a tenancy still subsisting, he waives the forfeiture” (See also Id. § 497; Smith Lead. Cas. 20 a; Lloyd v. Crispe, 5 Taunt. 249; Doe v. Miller, 2 C. & P. 348).

7. Some exceptions of minor importance remain to be examined. It was shown on the cross-examination of the defendant’s local agent, who was a witness for it, that Mr. Little, the general agent of the defendant, was at the location of the insured property in August, after the fire, and there investigated the circumstances of the loss. Afterward, the plaintiff was called as a witness on his own behalf, and he testified that in that month of August a person called upon him, representing himself as Mr. little, and as representing the company, and inquired about the foreclosure proceedings and the fire, and that they had a conversation about the foreclosure proceedings. He had never before seen Mr. Little, and all lie knew about his identity was what he then learned from him. This evidence was material to charge the defendant with knowledge at that time (which Avas before the insured Avas subjected to the examination above mentioned) of the foreclosure proceedings. Defendant’s counsel objected to the evidence as hearsay, on the ground that there was no proof of the identity of the person avIio had the conversation with the Avitness, and the objection Avas overruled. We think no error Avas committed. There was proof that Little was the general agent of the defendant, that he was in that vicinity at that time investigating this loss, and that he made inquiry of some one about the foreclosure proceedings ; and then there was this evidence, that a man representing himself as Mr. Little, the representative of the company, called upon the plaintiff and had the conversation proven. It cannot be assumed that that person was an impostor. It was at least for the jury to say whether he was the identical Little who was defendant’s general agent.

The policy contained a provision that “ any fraud or attempt at fraud, or any misrepresentation in proofs of loss,' or examination, or any false swearing’, shall cause a forfeiture of all claim ” upon the company. The claim of the defendant upon the trial was that any mis-statement, however innocently made, under this provision was a cause of forfeiture. But the judge charged the jury that under this clause in the policy a mis-statement would not avoid the policy, if is was a mere mistaken expression of opinion ; but that the misstatement must be false and fraudulent. In this there was no error. Taking all the language used, and considering the purpose for which the clause was inserted, it cannot be supposed that for any innocent mis-statement there was to be a forfeiture.

Other exceptions have not been overlooked, but they do not deserve particular notice.

The judgment must be affirmed, with costs.

All the judges concurred.  