American Can Co. v. Agricultural Insurance

This appeal is from a judgment in favor of plaintiff upon an alleged parol contract of insurance. On April 1, 1905, the defendant executed its written contract, by the terms of which it insured plaintiff against loss by fire not to exceed $3,000 from April 18, 1905, at noon, until April 18, 1906, at noon, on certain personal property situate on certain described premises belonging to plaintiff. The property of plaintiff was not destroyed until about 10 o'clock P. M. in the great fire of April 18, 1906, and the plaintiff does not claim that defendant is liable under the terms of the written policy which expired at noon on said day. It is alleged and claimed by plaintiff, however, that the defendant orally agreed on the seventeenth day of April, 1906, to insure, and it orally insured, the said property. In plaintiff's brief it is said: "The essential and ultimate fact is that on April 17, 1906, an agreement was entered into effecting a contract of insurance." The court found in this regard: "That on April 17, 1906, the firm of Watson, Taylor Sperry, acting as agents for the plaintiff, American Can Company, notified defendant that plaintiff desired to renew its *Page 135 said policy of insurance, and served upon the defendant a written notification to that effect, and thereupon defendant agreed to said renewal, and promised to execute a new policy of insurance which would embody the contract of insurance then and there entered into." It is also found that the plaintiff, within the time required by the policy, made out and delivered to the defendant proofs of loss duly verified, and that it has "performed all the conditions upon its part required to be performed by said contract of insurance, and that prior to the commencement of this action more than sixty days elapsed since said proof of loss as required by said contract of insurance was delivered to defendant by plaintiff."

A parol contract of insurance may be made and is enforceable; but as such contracts are rarely made, and are not made in the usual and ordinary course of business, the proof of such oral contract must be clear and convincing. In fact, it is the universal custom of insurance companies to issue written policies, with full and minute specifications as to their liability and the exceptions that would make the policy void. The preliminaries, as in contracts for the sale of real estate, are usually only negotiations which are afterward merged into the written contract. Hence it is at once apparent, even to the layman, that in the somewhat unusual claim that an oral contract of insurance was entered into, the only safe and sound rule is to require the proof to be clear and convincing to the effect that the contract was actually entered into, that each party understood it in the same light, and in regard to the same subject matter. (Kerr on Insurance, 52, sec. 33; 13 Am. Eng. Ency. of Law, p. 221; Cleveland Oil Paint Mfg. Co. v.Norwich Union Fire Ins. Co., 34 Or. 228, [55 P. 435].)