
    MILLER v. INSURANCE COMPANY OF NORTH AMERICA.
    
      N. Y. Supreme Court, Second Department; General Term,
    
    
      June, 1876.
    Testimony of Parties.—Usage to vary Contract.
    The testimony of the plaintiff alone, though contradicted by two disinterested witnesses, is sufficient to sustain a finding of fact in his favor.
    
    In an action on a promise to pay commissions to an insurance agent, evidence of a usage or custom of the trade to pay commissions only on premiums actually collected is admissible.
    
    
      Under a general denial in an action on a contract, evidence of a cus- ■ tom or usage known to both parties is competent, by way of showing that the contract made was not that alleged.
    
    
      Appeal by plaintiffs from the report of a referee, and a judgment dismissing the complaint.
    The action was brought by Robert Miller and William Scott, to recover $39.81 gold, which the plaintiffs claimed to b.e due from defendant, as commissions on the amount of premiums charged on five policies of marine insurance, issued by defendant. Gatlin & Satherwait were defendant’s agents in New York city.
    The answer was a general denial of all except specified allegations. The case was referred, and the referee found as matters of fact that the defendant had agreed to allow the plaintiffs a commission of five per cent, in gold, on all premiums of insurance effected through their agency ; that there is a custom by which marine insurance brokers are not entitled to their commissions until the premiums, upon which they are chargeable, are paid to the insurer; and that the plaintiffs effected the insurances upon the premiums, of which they claimed commissions, but that the premiums had not been paid to the defendant. Wherefore he found, as conclusions of law, that the plaintiffs, by reason of said custom, were not entitled to the commissions.
    At plaintiffs’ request, he also found as a fact, that it was not their duty to collect the premiums or deliver the policies, but that the premiums were due and payable by the plaintiffs to the defendant directly, and that the policies were delivered to the plaintiffs.
    He refused to find that they were delivered to them directly by the defendant, after the negotiation of the same by the defendant.
    The report was confirmed, and judgment entered in accordance therewith.
    The plaintiff appealed therefrom.
    Other facts are sufficiently stated in the opinion.
    
      Adolphus D. Pape (T. M. Morgan, attorney), for the appellant.
    I. Evidence of the custom, being new matter, should have been specially pleaded (Code, § 149 ; Smith v. Holmes, 19 N. Y. 271; McKyring v. Bull, 16 Id. 297; Travis v. Barger, 24 Barb. 614; Beaty v. Swarthout, 32 Id. 293 ; 1 Broom's Com. 67, 68; Taylor n. Richards, 9 Bosw. 679; Carter v. Koezley, 14 Abb. Pr. 147).
    II. It was incompetent (Stebbins v. Brown, 65 Barb. 274; Beals v. Terry, 2 Band/. 127; Main v. Eagle, 1 E. D. Smith, 619 ; Stillman v. Mitchell, 2 Robt. 523 ; Lyon v. Mitchell, 36 N. Y. 235 ; Van Lien v. Burns, 1 Hilt. 133 ; Holly v. Gosling, 3 E. D. Smith, 262 ; Glentworth v. Luther, 21 Barb. 145 ; Barnard v. Mon-not, 33 How. Pr. 440; Smith v. Smith, 1 Sween. 552; Doty v. Miller, 43 Barb. 529 ; Knapp v. Wallace, 41 N. Y. 477; Corning v. Calvert, 2 Hill. 56).
    III. The evidence of one witness, and he an interested party, is insufficient to establish the fact of a general usage (Higgins v. Moore, 34 N. Y. 417; Bissel v. Campbell, 54 Id. 353 ; Minnesota Centr. R. R. v. 
      Morgan, 52 Barb. 217; affi’d, 6 Albany L. J. 173 ; Wood v. Hickok, 2 Wend. 501).
    IY. Evidence of general usage insufficient to charge a party, if unknown to him (Southwestern Freight Co. v. Stanurd, 44 Mb. 71; Walsh v. Mississippi Co., 52 Id. 434 ; Sipperly v. Stewart, 50 Barb. 62 ; Duguid v. Edwards, Id. 288 ; Boardman v. Gaillard, 1 Hun, 217; Smith v. Tyler, 2 Sup’m. Ct. (T. & C.) 669).
    
      N. A. Prentiss, for respondent.
    I. Plaintiffs’ exception to admission or exclusion of testimony was not well' taken (Fountain v. Pettee, 38 N. Y. 186; Leffler v. Field, 33 How. Pr. 391).
    II. The broker, in negotiating policies, is the agent and broker of the assured, and not of the insurer (2 Pars. Marit. L. 465-6 ; Mellen v. Hamilton Fire Ins. Co., 17 N. Y. 609-10, 616, 617).
    
      
       See Hodge v. City of Buffalo, page 356 of this volume, and note there o. One witness may prove a usage. Robinson v. United States, 13 Wall, 363.
    
    
      
       In a life insurance agent’s action to" establish his right to future premiums to accrue after his discharge, he put in evidence a letter from.the company telling him that “you are working up a business for yourself, and are paid the highest commissions,” &c.—Held, that, parol evidence was not admissible on his behalf to show that by usage these words meant that he was to have the right to collect and take commissions on policies, issued through him, for their whole life, without reference to his discharge. Partridge v. Insurance Co., 15 Wall. 573,578.
      
        Custom or usage of the trade to allow an insurance agent commissions on all renewal premiums on insurance originally effected through him, is inadmissible to vary the written terms of the circular to agents under which he acted, which entitled him to such premiums so long as he should continue agent. Stagg v. Insurance Co., 10 Wall. 589.
      Custom or usage is competent to ascertain and explain the meaning and intention of the parties to a contract, whether written or parol, the meaning of which could not be ascertained without the aid of such extringic evidence. Robinson v. United States, 13 Wall. 363. Thus a contract for sale of 1,000,000 bushels of grain having been partly performed by delivery in bags, and delivery of the residue being refused, because not in bags, evidence of usage to deliver in bags is competent to show that the breach was in the seller, not the buyer. Mr. Justice Miller, in Partridge v. Insurance Co., 15 Wall. 573, says :
      “The tendency to establish local and limited usages and customs in the contracts of parties, who had no reference to them when the transactions took place, has gone quite as far as sound policy can justify. It places in the hands of corporations, such as banks, insurance companies, and others,—by compelling individuals to comply with rules established for the interests alone of the former,—a power of establishing those rules as usage or custom with the force of law. When this is confined to establishing an implied contract, and the knowledge of the usage is brought home to the other party, the evil is not so great. But when it is sought to extend the doctrine beyond this, and incorporate the custom into an express contract, whose terms are reduced to writing, and are expressed in language neither technical nor ambiguous, and therefore needing no such aid in its construction, it amounts to establishing the principle that a custom may add to, or vary, or contradict the well-expressed intention of the parties made in writing. No such extension of the doctrine is consistent either with authority or with the principles which govern the law of contracts.”
      One cannot prove a usage or custom, in dealing, which in his own interest, contravenes the established commercial law. Vermilye v. Adams Exp. Co., 21 Wall. 146. Thus a banker neglecting to keep record of notices warning against stolen paper, cannot rely on omission to recognize the paper if purchased when over-due.
      Usage cannot be proved for the purpose of nullifying rules of law, nor for the purpose of establishing, presumptively, a stipulation which would be valid if expressly made, but which the commercial law refuses to consider implied,—e. g., a warranty in a sale of”chattels by one not the maker or grower, and not guilty of fraud, and to a buyer having opportunity to examine. Barnard v. Kellogg, 10 Wall. 388. And see 11 Allen, 426.
      Nor, for example, a usage not to allow days of grace on certain kinds of paper. Woodruff v. Merchants’ Bank, 25 Wend. 673. And see 16 N. Y. 395.
      Nor a usage of carriers not to be liable in certain cases. Simmons v. Law, 4 Abb. Ct. App. Dec. 241.
      Evidence of usage is not admissible to show that deposits made during depreciation of currency, and marked in the pass book respectively “coin” or “currency,” were always repaid in kind. Without special agreement, a bank deposit creates a debt, and whatever is legal tender will discharge it. Usage cannot alter the law. Thompson v. Riggs, 5 Wall. 680.
      Defendant may prove that, under a contract to build such a drawbridge as specified in the contract, it is the common understanding that it should be so constructed as to be easily turned in two or three minutes, by one man. R. R. Co. v. Smith, 21 Wall. 262.
      See also as to admitting usage to explain a contract, Groat v. Gile, 51 S. Y. 431 ; Lawrence v. Maxwell, 53 Id. 19 ; aff’g 6 Lans. 469 ; Holmes v. Pettengill, 1 Sun, 316 ; Baker v. Squier, Id. 448 ; Dutch v. Harrison, 37 Super. Ct. (J. & S.) 306.
      If a person of a particular occupation in a certain place makes an agreement by virtue of which something is to be done in that place, and this is uniformly done in a certain way by persons of the same occupation in the same place, it is but reasonable to assume that the parties contracting about it, and specifying no mariner of doing it different from the ordinary one, meant that the ordinary one and no other should be followed. Robinson v. United States, 13 Wall. 363.
      It is not necessary to show that a usage of trade relied on to explain an insurance policy should be shown to have been known to the insurers. Underwriters ought to inform themselves of the usage of the trade they insure. Noble v. Kennoway, 2 Dougl. 513. See also 20 Wall. 492; and Walls v. Bailey, 49 S. Y. 464, and cases there cited ; Willis v. Tibbals, 33 Super. Ct. (J. & S.) 220.
    
    
      
       See also Manning v. Winter, 7 Hun, 482; Weaver v. Barden, 49 N. Y. 286 ; Peck v. Winne, 51 Id. 641 ; Booth v. Powers, 56 Id. 22 ; Dubois v. Hermanee, Id. 673 ; aff’g 1 Supm. Ct. (T. & C.) 293; Merritt v. Griggs, 57 N. Y. 651; O’Brien v. McCann, 58 Id. 373; Russell v. Burton, 66 Barb. 539; Schreyer v. Mayor, &c., 39 Super. Ct. (J. & S.) 1.
      
        In an action on negotiable paper made by an apparent agent, a denial of every allegation but the execution of the instrument, puts in issue the authority of the agent, and also the good faith and want of notice of defects, on the part of plaintiff. Chambers County v. Clews, 21 Wall. 322.
      In an action for the recovery of personal property, a denial of plaintiff’s allegation of property and right of possession, will admit of evidence showing title in another. Schulenberg v. Harriman, 21 Wall. 59. Compare Ontario Bank v. Steamboat Co., 59 N. 7. 510.
      A denial of the existence of the judgment sued on, is not available to admit evidence in contradiction of the record. A defense requiring evidence to contradict the record, must necessarily admit that the record exists as a matter of fact, and seek relief by avoiding its effect. The defect must, therefore, be formally pleaded, under any system of pleading. It is only the non-existence of a record, or defects appearing on its face, that can be taken advantage of on the plea of nul tiel record, or any equivalent answer. Hill v. Mendenhall, 21 Wall. 455. Compare Briggs v. Bowen, 60 W. 7. 454,—where it was held that reversal of an order was available under general denial,—with Carpenter v. Goodwin, 4 Daly, 89,—where it was held that vacatur of a judgment was not.
    
   Gilbert, J.

The finding of the referee, that there was an agreement to pay the commissions, rests upon the testimony of the plaintiff Miller. He stated that the conversation out of which the agreement arose, was had with one or the other of the defendant’s agents, who were Mr. Gatlin and Mr. Satterwaith. These agents were called as witnesses for the defense. Satterwaith denied having made the agreement with Miller, and Catlin denied any agreement to pay commissions before the premiums were paid. Upon this evidence, the referee was justified in finding that the agreement as stated by Miller was made, namely, to pay a commission on all policies effected through the agency of the plaintiffs.

That agreement designated no time for the payment of the commissions. Parol evidence for the purpose of supplying this omission was therefore admissible. The defendants proved by Satterwaith, a custom among marine insurance brokers, that the commission is not due until the premium is paid, and by the plaintiff Scott, that the custom was to collect commissions after the premiums were paid. Evidence of a custom of that kind is admissible. It is not repugnant to, or inconsistent with, the contract, nor does it add any new terms thereto, but is merely explanatory thereof. Where there is an established custom relating to the subject-matter of a contract, which is known to both the -parties to it, it may well be presumed that they made the contract with reference to such custom, and we think the evidence in this case warranted that presumption (1 Greenl. Ev. § 294).

The contract itself was informal. One of the plaintiffs asked what commissions the defendant allowed. The answer was five per cent. No other particulars were mentioned. The inquiry relates to a course of business, and the answer ought to be taken with all the qualifications attending the same.

We think, also, that evidence of the custom was admissible under the general denial contained in the answer. When proved, it became one of the constituents of the contract, and the statement thereof in the complaint, therefore, varied from the one actually made. The provision of the Code (§ 149), which requires new matter to be specially pleaded, applies only to matters of defense arising after the contract was made (Boomer v. Koon, 6 Hun, 645-649).

The judgment should be affirmed.

Judgment affirmed..

Barnard, J., and Dykman, J., present.  