The St. Nicholas Insurance Co. v. The Mercantile Mutual Insurance Co. 1st. If the custom or usage of an abatement was established, the rate of abatement and the manner of fixing that rate was also established as a part of that custom; and, 2d. If a custom is established, by which the amount of premium mentioned in the policy is to be affected, then the agreement as to the rate of such abatement relates to the custom or usage, and may be shown by parol testimony.. The judgment should be reversed, and a new trial ordered. E. A. Doolittle, for plaintiffs, (respondents.). I. The defendants not only failed to prove the custom alleged, but their own witnesses show that no uniform or fixed custom prevails among Insurance Companies, even in the city of New York. Custom or usage to control or affect a contract must be established, and not casual; general, and not personal or local, and known to the parties, and be constantly observed in the same manner; or, in other words, it must be uniform. (Parsons on Con., 51-69.) Evidence of custom or usage is sometimes admissible to add to or explain what is doubtful, but not to contradict or vary a written contract. (5 Hill, 437; 25 Barb., 319; Smith's Lead. Cas., marg. ref., [307,] 405–416.). In this case, the policy specifies the premium, viz.: threequarters of one per cent, and provides for a reduction upon the happening of certain events. There is nothing ambiguous or uncertain in the language used, nor is there anything from which any implication can be raised that the agreement is in itself incomplete. The President and Secretary of plaintiffs knew no such custom. II. The charter requires and provides that all contracts of insurance shall be signed by the President and countersigned by the Secretary. A corporation can act only in the mode prescribed by the act creating it, and the acts of the agent are binding only so far as done in pursuance of that law. (McCullough v. Moss, 5 Denio, 567.) III. The plaintiffs' case was fully made out by production of the note; defendants then introduced statement of Higgins, showing the amount found by Referee to be due the plaintiffs, unless The St. Nicholas Insurance Co. v. The Mercantile Mutual Insurance Co. defendants proved the agreement to deduct fifteen per cent, and this was agreed upon by both parties. The defendants failed to prove the agreement set up in the amended answer, and the Referee has so found as a question of fact, and his finding is conclusive. IV. The Referee's conclusions of law are correct. But if they were not, they would furnish no ground for a new trial, because all defendants' evidence was received; and they fail because they could not prove their defense. BY THE COURT-WOODRUFF, J. It is to be noticed that although the amended answer herein alleges that there is a usage and custom among Insurance Companies in the city of New York to make the rate of premiums in policies of reïnsurance the same as in the policies issued by the reïnsured party, and to make an abatement or deduction in favor of the reïnsured, of a per centage of the gross amount of premiums; yet it is also stated, in the answer itself, that the rate or amount of the abatement is matter of agreement. The custom is therefore not relied upon in the answer as itself operating to modify the express contract between the parties fixing the rate of premium to be paid by the defendants at three-fourths of one per cent; but the allegation of the usage and custom is alleged by way of inducement, or as preparatory to the averment that the rate of abatement was in this case fixed, by actual agreement between the parties, at fifteen per cent of the gross amount of premiums accruing under the policy. The answer, therefore, including the amendment thereto, amounts to this: (1.) The plaintiffs, when the said reïnsurance was made and the policy executed, agreed to make an abatement of fifteen per cent from the gross amount of premiums earned under the policy. (2.) There being a usage and custom among Insurance Companies in the city of New York, when they reinsure, to make an abatement from the gross amount of premiums earned under the policy, the rate of abatement to be agreed upon between the parties, the plaintiffs did, when the policy of reïnsurance was made, agree to abate fifteen per cent from the gross amount of premiums accruing to them under such policy. The St. Nicholas Insurance Co. v. The Mercantile Mutual Insurance Co. We might, therefore, since the whole defense set up in the answer depends on the question whether such an agreement was proved, dispose of the appeal by saying that the Referee has found, as matter of fact, that no such agreement was made; and that, on a careful examination of the testimony, we cannot say that his finding is so against the weight of the evidence that it should be disturbed. But the case was tried upon an assumption that a defense would be established by proof of either of two facts, viz.: That there was a parol agreement between these parties, that the plaintiffs would abate fifteen per cent from the rate of premium stipulated in the policy of reïnsurance, or that there was a usage and custom in the city of New York, among Insurance Companies, to make such abatement in favor of other Companies effecting reinsurance. Without therefore reviewing the evidence in support of the finding of the Referee, that the defendants failed to prove the agreement set up in the answer and the amendment thereto, or the evidence in reference to the custom relied upon, we think proper to observe that in our judgment the proposed defense utterly fails upon strictly legal grounds applicable to both of the supposed defenses relied upon; for unless we are prepared to hold, first, that an express agreement to pay premiums of insurance, according to certain rates stipulated in writing, can be altered by proof that there is a custom in the city of New York not to require its performance; or, second, that such an agreement can be altered by proof of a parol agreement, prior or cotemporaneous with the written policy, that the defendants should not be bound to pay so much as they in fact agreed to pay, then the defense wholly fails, whatever parol proof was offered or given in support of it. It is not necessary at this day to cite authorities to the proposition that a written instrument cannot be altered, or its legal operation or effect be impaired or modified, by evidence that the parties agreed by parol that it should not be obligatory according to the terms and effect of the writing. It is true that, on proof of a mistake by reason whereof the writing fails to express the actual agreement, the writing may be reformed; and this was doubtless the idea of the pleader in the present case, when the answer was at first prepared. The proof, however, wholly fails The St. Nicholas Insurance Co. v. The Mercantile Mutual Insurance Co. to show mistake; and the proposition, therefore, recurs, that the parties, having expressed in writing the agreement which they have made, and that in terms which are clear and unambiguous, the defendants cannot be permitted to show that there was a parol agreement, antecedent to or cotemporaneous with the writing, that the defendants should not be compelled to pay so large a rate or sum for the premium of reinsurance as, by the terms of the policy, they were bound to pay. To a rule so well settled, any work upon evidence may be consulted, if authority is desired. It is, in our judgment, no less clear that proof of a usage and custom, however uniform and universal among Insurance Companies in the city of New York, not to require a reïnsuring Company to pay the full premium which, by the policy of reïnsurance, it is stipulated shall be paid, cannot legally operate to impair the effect of an agreement to pay a fixed rate settled by the policy. A written agreement, which is in no wise of ambiguous or uncertain import, is to have effect according to its terms, and the parties are bound thereby; and the express stipulations of parties cannot be overruled or set aside by any custom not to require their performance according to their tenor. This is not a question regarding the mere incidents to the defendants' undertaking, but it is a question whether a written agreement is itself binding. If the decisions in Woodruff v. · Merchants' Bank, (25 Wend., 673,) affirmed in Error, (6 Hill, 174,) and in Brown v. Newell, (4 Seld., 190,) are law, much more is it true that a defendant cannot avoid his express promise by proof of a local custom not to require its performance. (Anth. N. P., 70; Cooper v. Kane, 19 Wend., 386; Hunton v. Locke, 5 Hill, 437; Merc. Ins. Co. v. State Ins. Co., 25 Barb., 320; Machine Co. v. Partridge, 5 Fost. N. H. R., 369; Atkins v. Howes, 18 Pick., 16; Wheeler v. Nurse, 20 N. H., 220; id., 246; Barlow v. Lambert, 28 Ala., 704; 30 id., 167, 608; Cadwell v. Meek, 17 Ill., 220; 18 id., 126; Linsley v. Lovely, 26 Vt., 123; Corwin v. Patch, 4 Cal., 204; Webb v. Plummer, 2 B. & Ald., 746; Blackett v. Assurance Co., 2 Cr. & Jer., 244; Ford v. Yates, 2 Mann. & Grang., 548; Trueman v. Loder, 11 Ad. & El., 589; 39 Eng Com. Law R., 183, notes.) Shotwell v. The Jefferson Insurance Co. We have thought it advisable to say so much upon the questions discussed on the appeal. It may, perhaps, be useful to those who have occasion to effect reïnsurance to know that they are liable to pay the rate of premium specified in their policy, notwithstanding there is a custom in New York for the reïnsuring Company to make an abatement therefrom, and also that they cannot be protected against a claim for the stipulated premium by proof of a prior or cotemporaneous parol agreement that a less sum only should be required. The judgment must be affirmed. LOUISA S. SHOTWELL, Plaintiff and Respondent, v. THE JEFFERSON INSURANCE COMPANY in the City of New York, Defendants and Appellants. 1. Where a policy of insurance upon buildings against loss or damage by fire provides, "that in case of any transfer or termination of the interest of the insured, either by sale or otherwise, without the consent of the insurers manifested in writing, the policy shall thenceforth be void and of no effect," and where the insured contracted to sell and convey the insured property to one S. for $5,500; viz.: $2,500 cash, and $1,500 in twelve and $1,500 in twenty-four months, and to keep the premises insured, and that the benefit and indemnity against loss and damage by fire should enure to the said S., who was to pay to such insured the premium she might pay for the insurance, and to convey the property by warranty deed to S. on full payment by him of the purchase money; and S. forthwith took and kept possession of said premises; and where subsequently and after the $1,500 first payable had been paid, and before the other $1,500 was paid, and while the policy was in force, the premises were damaged by fire to more than $2,000, the sum insured; and where no notice of the contract between the insured and S. had been given to the Company until after the loss; the insured is entitled to recover to the extent of the unpaid purchase money and interest due thereon, and to that extent only. 2. The contract and its partial performance do not transfer or terminate the whole interest of the assured; but it continues to the extent of the amount of the purchase money remaining unpaid. 3. It is no defense or ground for exonerating the insurers from liability, that after suit brought upon the policy and prior to the trial, S. paid the purchase money in full and received a deed of the insured premises. |