deceased him, and that this defeated the re To this the plaintiff replied in writing: "As to the material used or supplied the lab-mainder to the church; but a glance at the oratory since February I asked for a list of it about a month ago. I was informed by Mr. Weber, Mr. Heebner's assistant, that he would furnish me with one, but to date I have not received it." Mr. Heebner was the new superintendent of the factory, and the evidence indicated that the records of the materials issued from the factory to the laboratory were under his exclusive charge. It therefore was clearly a question of fact, under the circumstances disclosed by the evidence, whether the plaintiff had or had not been afforded proper opportunity to comply with this direction, and this question the learned trial judge very properly left to the jury. If the plaintiff did all that he was bound to do in performance of his contract, the action of the defendant in excluding him from the premises, not once, but daily, for a long period of time until he stopped coming, and forcibly preventing him from going to the place where he had to perform his work, and cutting off his salary, was tantamount to a discharge, and the learned trial judge was right in so holding. language of the will makes it perfectly plain that the issue would take only in case of surviving the parent, and that the death of both life tenants of the income (the principal being committed to trustees), without issue them surviving, vested the right to the principal in the church. On the appeal of the West heirs the decree should be affirmed. The Vice Chancellor allowed them costs and a counsel fee of $500 out of the fund; and this provision of the decree is the basis of a cross-appeal by the church. We do not think that the case was a proper one for the allowance to the West heirs of costs and counsel fees out of this fund They were not necessary nor proper parties to the original suit, nor was it strictly a suit for the construction of a will. It was a bill by the trustee of an existing fund established for a charitable purpose, against the Attorney General, setting up that the specific intent of the donor could not be carried out, and asking that the general intent be ascertained and the fund disposed of pursuant to We find no error in the record and the that intent and in conformity with the docjudgment is affirmed. (83 N. J. Eq. 324) WEST et al. v. RECTOR, ETC., OF ST. JAMES' EPISCOPAL CHURCH OF LONG BRANCH. (No. 50.) (Court of Errors and Appeals of New Jersey. (Court of Errors and Appeals of New Jersey. June 15, 1914.) COSTS FUND. (Syllabus by the Court.) trine of cy pres. In that suit the heirs were permitted without objection to intervene by petition, and thereupon they made the various claims that have been disposed of adversely to their contentions. If they had brought an independent fund, they would in all probability have been suit against the trustee, claiming title to the mulcted in costs. That they were permitted to come into this suit gives them no better Standing as to the expense of their litigation. The ordinary rule is that costs will be allowed to executors or trustees under a will and to the other proper parties in a suit by such executors or trustees to clear up some obscurity or doubt in the will. But costs should not be awarded to an unsuccessful claimant who has brought suit to recover part of the estate. (§ 103*)-ALLOWANCE FROM TRUST The allowance of costs and counsel fees outed of a trust fund is, as a rule, limited to suits instituted by executors or trustees for the construction of a will, and suits by claimants to such fund in which the claims are successful. [Ed. Note. For other cases, see Costs, Cent. Dig. 398; Dec. Dig. § 103.*] Appeal from Court of Chancery. Bill by the Rector, etc., of St. James' Episcopal Church of Long Branch and Maggie J. West and others. Decree for complainants (89 Atl. 519), and defendants appeal. Reversed, with directions. William J. Leonard, of Atlantic Highlands, for appellants. Gilbert Collins, of Jersey City (Charles B. Bradley, of Jersey City, on the brief), for appellees. PARKER, J. So far as relates to the principal question in the cause, whether the case is one for the application of the principle of cy pres, we think the decree should be affirmed for the reasons given in the opinion of the Vice Chancellor. "If a person claims as legatee, and his bill is dismissed, he will not be entitled to his costs out of the estate, notwithstanding there is an ambiguity in the will which renders it necessary to apply to the court for its construction." Dan. Ch. Prac. c. 30, § 3, p. 1502. A similar rule should apply to heirs claiming intestacy, as in this case. So, also, in Larkin v. Wikoff, 79 N. J. Eq. 209, 81 Atl. 365, this court refused costs and counsel fees out of the fund to complainants asking enforcement of the trust. The award has been almost invariably confined to suits by the administrators of a fund for the construction of a will, and not applied to such suits brought by interested parties. And the reason is obvious that to The point is now made that the fund in award costs and counsel fees to unsuccessquestion never vested in St. James' Church, ful complainants in such cases would be to because Rufus T. West had a child who pre- encourage unnecessary and frivolous litiga *For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes tion. In Halsted v. Meeker, 18 N. J. Eq. 136, | ing by the insured touching any matter rethe complainant was a cestui que trust and sought a construction of a will in her favor. The Chancellor allowed her costs out of the estate on a decree adverse to her claim, but refused a counsel fee. In the case at bar the interveners for reasons already given are not entitled to their costs. ICY. Where a policy of fire insurance is written in a standard form approved by governmental authority, the maxim, "Verba chartarum fortius accipiuntur contra proferentem," has no special applicability. [Ed. Note. For other cases, see Insurance, Cent. Dig. §§ 292, 294-298; Dec. Dig. § 146.*] 2. PRINCIPAL AND AGENT (§ 158*)-FRAUD OF AGENT-LIABILITY OF PRINCIPAL. A principal is liable for the fraud of his agent acting within the scope of his authority, whether or not the principal would benefit by the success of the fraud. [Ed. Note. For other cases, see Principal and Agent, Cent. Dig. §§ 589-598; Dec. Dig. 8 158.*] 3. INSURANCE (§ 111*)-AGENCY FOR INSURED -FRAUD OF AGENT LIABILITY OF PRINCI PAL. lating to this insurance or the subject thereof, whether before or after a loss," is under any circumstances available to the company after a loss, when there is fraud in the claim committed by an agent of the insured without specific knowledge thereof or assent thereto by the insured himself, and, if so, whether the circumstances of this case are such as to make the forfeiture applicable. Stripped of disputed questions of fact which the jury resolved at the trial in favor of the plaintiff, the case presents these facts which were conceded or fully proved without substantial contradiction: In 1911 Jacob Mick, of whom the plaintiff is trustee in bankruptcy, was the owner of a blacksmithing and wagon repairing shop, which he conducted himself, and which required practically all of his own time. He also owned the property that was the subject of the fire loss, consisting of a hardware store and a small lumber yard adjoining thereto, which were conducted by his son Wilbert H. Mick, a young man of 19 or 20. Wilbert was not a partner but an employé; still, he had entire control of the store and lumber yard, even to signing checks on the bank accounts in connection therewith. He consulted his father with respect to increases of stock, and so on, but he ran the business, and his father ran the blacksmith shop, occasionally walking through the store and lumber yard, but not interfering beyond asking some general questions and looking generally over the stock at inventory time. An inventory of the store and yard was made up in May or June, 1911; the work being done entirely by Wilbert with the assistance of a clerk. Shortly after this, in June, the insurance was greatly increased. A fire on June 28th destroyed the lumber yard and store with most of the stock. Jacob Mick then employ Where an insurance policy provided that it should become void in case of any fraud or false swearing by the insured touching any matter relating to the insurance or the subject thereof, whether before or after a loss, and the insured delegated to agents the duty of doing everything required to make complete proofed a professional adjuster named Dawson, of loss, without question or supervision, held, to whom, in conjunction with the son Wilthat the act of such agents in presenting false bert, was intrusted the entire responsibility and fraudulent vouchers to the company pur- of dealing with the companies in collecting suant to demand was imputable to the insured, the insurance. The proofs of loss bear Dawand that the policy was vitiated. son's imprint and were doubtless prepared by him; they were sworn to by plaintiff before a local notary. [Ed. Note. For other cases, see Insurance, Dec. Dig. § 111.*] Garrison, Kalisch, and White, JJ., dissenting. Appeal from Supreme Court. The crucial situation in the case was created by what follows. On September 11th Action by Jacob Mick, for whom Lewis the companies in the exercise of rights reStarr, trustee in bankruptcy, was substi- served in the policies sent to the plaintiff tuted, against the Royal Exchange Assur-letters identical in tenor, of one of which the ance. Judgment for plaintiff, and defendant following is a copy: appeals. Reversed. French & Richards, of Camden, for appellant. Wilson & Carr. of Camden, for respondent. PARKER, J. The question to be determined is whether the forfeiture clause in a standardized fire insurance policy, making it void "in case of any fraud or false swear "September 11, 1911. "Mr. Jacob Mick, Laurel Springs, N. J.Dear Sir: This company is in receipt of a document purporting to be a proof of loss under policy No. 2943468, issued by the Laurel Springs, N. J., agency for damage by fire of June 28, 1911. You are hereby notified that said document is not accepted as a satisfactory proof of loss as required by said policy. You are hereby required to file with this company a statement of your purchases (lumber and merchandise) and sales between October 1, 1910, For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes and June 28, 1911, together with duplicate bills | N. E. 421. The provisions pertinent to the showing such purchases and sworn statement of case in hand are these: your entire sales between these dates; also statements from the banks in which you did business of the money deposited therein during the same period and copy of inventory of June 1st, 1911, referred to in said document. "Yours very truly, "Royal Exchange Assurance, To which, under date of November 6, 1911, ance * "The insured, as often as required, shall exhibit to any person designated by this company all that remains of any property herein described, and submit to examinations under oath by any person named by this company, and subscribe the same; and as often as required, shall produce for examination all books of account, bills, invoices, and other vouchers, or certified copies thereof if originals be lost, at such reasonable place as may be designated by this company or its representative, and shall permit extracts and copies thereof to be made." "This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning this insurance or the subject thereof; or if the interest of the insured in the property be not truly stated herein; or in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss." "Nov. 6, 1911. "Mr. Wm. E. Miller, 434 Walnut St., Phila., Representing * Royal Exchange AssurCo.-* * * Dear Sir: Sir: Replying to your letter of Sept. 11, 1911, addressed to Mr. Jacob Mick, of Laurel Springs, N. J., I would state that he is unable to comply with your request of an exact copy of his purchases and sales from Oct. 1, 1910, to June 28, 1911, from the fact that he has no books of account to show same. However, I send you herewith duplicate copies of bills of purchases so far as he has been able to obtain, also statement from banks of deposits and copy of inventory of June 1, 1911, which you also requested. "Hoping this information will prove satisfac-pers, etc., constituted a condition precedent tory, I am, to recovery, and that, failing its bona fide performance in full, plaintiff could not re "Very truly yours. Louis Dawson, "Adjuster for Jacob Mick." It appeared conclusively on the trial that among these inclosed bills or invoices were several, amounting in all to nearly $6,000, which to the extent of over $5,000 were false and fraudulent in that they specified alleged purchases which had never been made by plaintiff and were purely fictitious. It was a fair, if not a necessary, inference that Wilbert Mick, or Dawson, or both, had intentionally procured and put in these false bills to augment the amount of recovery. Jacob Mick denied all knowledge of them, and took refuge behind the general agency of his son, who was not present at the trial, and whose whereabouts did not appear. Jacob testified that he received this demand from the insurance companies but did not give any bills to Dawson and did not know where Dawson got them; that he took the registered letter and passed it over to the adjuster to comply with the request contained therein and thought his son got the bills and gave them to Dawson; that he did the same with the other letters of like purport; that Dawson was employed to do everything that was necessary to adjust the loss. Again he testified that he gave the insurance company letter to the "boy" to pass over to Dawson and that this was done; that the son had practically unlimited power as far as plaintiff was concerned, to conduct the lumber and hardware business. [1] With these facts in mind, we turn to the policy itself. It is apparently of the standard form, approved by the Commissioner of Banking and Insurance of this state pursuant to legislative authority (C. S. 2862, § 77; P. L. 1902, pp. 407, 436, 437), and consequently there is no special applicability of the maxim, "Verba chartarum fortius accipiuntur contra proferentem." Nelson v. Traders' Insurance Co., 181 N. Y. 472, 74 It was argued at the trial, first, that the requirement for the production of books, pa cover. This breach, however, was not specified in the pleadings as required by the statute (Practice Act of 1903 [P. L. p. 570] § 118) and hence it was not error to overrule the particular defense. It is suggested that the pleas should be now amended to let in this defense; but on the trial counsel after deliberation concluded not to apply for leave to amend, and appellate courts do not ordinarily, if ever, permit amendments of the record for the purpose of reversal. Secondly, it was argued that under the clause secondly quoted the fraud of the agent was imputable to the principal, and hence that as a result of the presentation by Wilbert Mick and Dawson as plaintiff's agents, of false and fraudulent invoices, the policy became forfeited. This was likewise overruled, and the court instructed the jury that: In oth "In order to hold Mick answerable to the extent of defeating his claim by reason of the introduction of false vouchers, Mick himself must in some wise have been a party to it. er words, he must have been guilty of fraud. If they came into the case and were sent to the insurance company from a totally irresponsible source, why, of course, he would not be responsible for it. If they came in as a result of fraud on the part of his agent, my view is he would not then be responsible for it, and that that would not defeat a recovery. Now, gentlethe question of the vouchers that were put in. men, do not misunderstand me; that applies to When it comes to the question of the valuation which Mick swore to, if you were to find that he did overstate his valuations and overstated them in a way indicating to you false swearing, then of course that would defeat his recovery as well. "I take it that the important question for you to determine is Mick's relation to these bills on the question of the effect of the bills as defeating his claim. If he was a party in any wise to them, he cannot recover here, nor can his If he was trustee in bankruptcy recover here. innocent of any wrongdoing in that respect, then I say to you that the presence of those bills does not defeat his recovery." Defendant submitted, among others, these, requests to charge, which were refused: "(18) If from the evidence you find that Jacob Mick delegated to any one as his agent the duty of complying with the company's demand for copies of bills, and such agent, with or without the knowledge of Jacob Mick, designed, invented, or procured and filed fraudulent bills for goods never purchased or owned by Jacob Mick, such action would be connected with the service and within the scope of the employment, and the verdict should be for the defendant. "(19) If you find from the evidence that his son was the general agent of Jacob Mick for the purpose of carrying on his business and was well acquainted with such business, and that the duties of such agent included that of complying with the company's demand for bills of purchases, and that said agent in pretended compliance with such demand furnished to or caused to be filed with the defendant company bills for goods never purchased or owned by Jacob Mick, the verdict should be for the defendant." [2] The responsibility of an innocent principal for the fraud of an agent has been one of the vexed questions of the law. That an innocent principal cannot, as a general proposition, be permitted to benefit by the fraud of his agent, has been settled in this court. Marsh v. Buchan, 46 N. J. Eq. 595, 22 Atl. 128; Reitman v. Fiorillo, 76 N. J. Law, 815, 72 Atl. 74. It seems to be settled that a principal is not liable in tort for deceit, upon fraudulent representations made by his agent without his knowledge or consent (Kennedy v. McKay, 43 N. J. Law, 288, 39 Am. Rep. 581; Decker v. Fredericks, 47 N. J. Law, 469, 1 Atl. 470; White v. N. Y. S. & W. R. R. Co., 68 N. J. Law, 123, 52 Atl. 216); the remedy in such case resting on a rescission of the contract. But this seems to relate mainly to the form of the remedy. In many cases the controlling factor was the extent of the agent's authority; and such authority was held to have been exceeded in such cases as National Iron Armor Co. v. Bruner, 19 N. J. Eq. 331; Kennedy v. Parke, 17 N. J. Eq. 415. And it was held nonexistent in Belcher v. Manchester, B. & L. Ass'n, 74 N. J. Law, 833, 67 Atl. 399; Ayle v. Same, 74 N. J. Law, 840, 67 Atl. 87. While in others, the scope of the authority was held to cover the fraudulent acts and the principal had to suffer. Putnam v. Clark, 29 N. J. Eq. 412, affirmed on another ground in 33 N. J. Eq. 338; Campbell v. Nichols, 33 N. J. Law, 81; Chetwood v. Berrian, 39 N. J. Eq. 203. Naturally, when an agent intrusted with powers to deal with a particular subjectmatter misuses those powers so as to deal unlawfully, and the principal is sought to be held responsible, the plea is that the powers are exceeded, and the unlawful acts are not within the scope of the agency. But, as was said by Mr. Justice Willes in the leading case of Barwick v. English Joint Stock Bank, L. R. 2 Exch. 259; 36 L. J. Exch. 147, 12 E. R. C. 298: "In all these cases it may be said, as it was said here, that the master had not authorized the particular act, but he has placed the agent in his place to do that class of acts, and he must be answerable for the manner in which that agent has conducted himself in doing the business which it was the act of his master to place him in." That case was quite generally considered to limit the responsibility of the principal for fraudulent acts of the agent to those committed for the benefit of the principal; but this misapprehension is set right by the House of Lords in the recent case of Lloyd v. Grace, Smith & Co., 1912 A. C. 716, where a solicitor was held accountable for the fraudulent procurement of a transfer of property from a client by the solicitor's managing clerk, though the solicitor in no way benefited or could benefit thereby, knowing nothing of the transaction. The rule is laid down that, irrespective of the question of benefit, the principal is liable for the fraud of the agent acting within the scope of his authority. These, and other English cases, are cited with approval, and the general question discussed by Mr. Justice Kalisch, speaking for this court, in Corona Kid Co. v. Lichtman, 84 N. J. Law, 363, 86 Atl. 371. In this state we have decided, it is true, that in such case an action of deceit will not lie against the innocent principal; but those decisions go to the form of the remedy and not to the denial of relief. That fraud of an agent within the scope of his employment will invalidate a contract so procured by him for his principal, may be considered settled and is not disputed here. Thus, if Wilbert Mick under general authority to procure insurance on the lumber yard obtained the policies by fraudulent misstatements, the companies of course could not be held on them. But it is said that this rule does not extend to cases where the contract was bona fide entered into, and a forfeiture is claimed by reason of some subsequent act of the agent, fraudulent in its character, though this, if done by the principal himself, would render the policy void because of the operation of the forfeiture clause; and a number of cases are cited in support of this doctrine. An examination of this array of authorities will demonstrate that they are very far from possessing the weight that is claimed for them. The decision principally relied on is Metzger v. Manchester Fire Assurance Co., 102 Mich. 334, 63 N. W. 650, in which the property belonged to a wife, and the husband had the general management of the business, kept the books, and in proving loss swore to the books as true, while in fact they were largely fictitious. The court held, it is true, that the plaintiff, if innocent, should not be prejudiced under the forfeiture clause because of the husband's fraud, and that that clause, guarding against fraud or false swearing by the insured, should not be extended by construction to include fraud or false swearing by her agent. But the value of the decision as authority is somewhat impaired, first by the fact that, although this doctrine should have led to an affirmance of the judgment for the plaintiff, that judgment was reversed | no such partnership agency because the claim on another ground, and the deliverance by had been assigned to plaintiff before the suit the court is saved from being purely obiter was begun. only by its effect in saving to the plaintiff a second trial; and, secondly, by a vigorous dissenting opinion, reading in part thus: "Did the facts in this case make the plaintiff a party to the deceit? This, of course, depends upon the determination of the question whether the acts of her agent were in fact her acts. It will be conceded that, if she made false and fraudulent representations, the policy would have been rendered void. I cannot assent to the rule that, where one trusts the entire management of his business to an agent, the principal is not responsible for the fraudulent acts and representations of the agent in connection with the business. It is manifest from this record that the plaintiff knew nothing about the business. It was carried on in her name. Grant that it was carried on for her benefit, still she constituted her husband her sole agent to buy and sell, attend to the insurance, and exercise exclusive control and management of the entire business. When the adjusters came to adjust the loss, he appeared as her sole representative. The defendant desired that he should obtain from the plaintiff a written authority to act for her. She voluntarily executed a power of attorney giving him full authority in the premises. She should be held responsible for his acts and conduct. Seldom do the records of insurance litigation exhibit a more deliberate and glaring attempt to defraud an insurance company. Such attempts should not be made successful, under the guise of agency, especially where there exists the intimate relation of husband and wife; the one claiming to be an innocent principal, and the other a confessedly dishonest agent. The judgment should be reversed, and no new trial ordered." The next case relied on is Boston Marine Insurance Co. v. Scales, 101 Tenn. 628, 49 S. W. 743. While the doctrine of the Metzger Case is adopted generally in the opinion, the court seems to rest its affirmance of a judgment for plaintiff on the failure of appellant to point out the evidence of fraud relied on, and its own failure to find it in the printed book. In Evans v. Crawford County Insurance Co., 130 Wis. 189, 109 N. W. 952, 9 L. R. A. (N. S.) 485, 118 Am. St. Rep. 1009, the husband, who was owner and insured under the policy, was away at the time of the loss, and the wife as his agent ex necessitate made the proofs. The court was evidently unwilling to accept fully the doctrine in the Metzger Case, and said: case * * * "We go no further than the facts of this case in adopting that view. *In the instant there was neither an express turning over * * to the wife as agent," of the mailing of proofs, "nor a careless omission to verify" them; but merely an agency ex necessitate, the husband being away. In Fields v. German American Insurance Co., 140 Mo. App. 158, 120 S. W. 697, the defendant company relied on false swearing by one of the parties in the trial of the very action and requested an instruction of a verdict for defendant if such partner had sworn falsely. A refusal so to instruct was upheld, and properly so; for this request evidently assumed the fact of agency because the partner was a witness. But there was In Virginia Fire & Marine Insurance Co. v. Hogue, 105 Va. 355, 54 S. E. 8, the property was owned by a wife and managed by the husband, who made proof of loss. The court relied largely on the proposition that a refusal to charge a request that the wife was responsible for a false statement by the husband was justified on the ground that it failed to distinguish an untrue statement and a fraudulent one. The Metzger doctrine appears in the syllabus, but it is not at all plain in the text, and apparently not relied on for a decision of the case. The case of Mullin v. Vermont Mutual Fire Insurance Co., 58 Vt. 113, 4 Atl. 817, is to the contrary. The inventory of household goods was made up for the insured by his wife, and sworn to by the husband without examination into its truthfulness. It turned out to be grossly incorrect and false. The trial court was requested to charge that if the plaintiff adopted any false statement of the wife respecting a loss, or the value of goods lost, without investigating the facts, he thereby became guilty of a fraud himself; and if he made representations assuming to know the facts, when he had no knowledge, and such statements turned out to be false, it was a fraud within the meaning of the policy. A refusal of these requests was held error leading to a reversal; the court saying: "The company was entitled to a truthful induty, under the policy, was to supply it; his ventory of the property lost. The plaintiff's representations must be true in fact. He cannot even be honest by turning the matter over to his wife, and omit to inspect her inventory to see if it be correct. If he had looked it over, and wished to be honest, he would have discovered many false statements which were calculated, and probably were intended, to work a rested this intended fraud, if he had done his fraud upon the defendant. He could have arduty. On the contrary, he recklessly indorsed it without examination, and by so doing made it his own fraud, within the meaning of the policy." The case is one of first impression in this state, and we are therefore at liberty to declare the rule that seems best to accord with reason and justice. In our view the Vermont rule is the better one. We consider that it is unreasonable and illogical to say that the owner of insured property who is under the obligations by the terms of his policy to make sworn proofs of loss and to furnish on demand full details of his books, papers, invoices, and vouchers, or copies thereof when lost or destroyed, may, when such demand is made, voluntarily turn over the entire responsibility of complying therewith to an agent, dismiss the matter from his mind, reap the benefit of what the agent does that makes in his favor and is in genuine compliance with the demand, and at the same time evade the penalty that is laid by the policy upon fraud and false swearing. He |
