Trustees of Brooke Academy v. George.

Conn. 128; but it is unsustained by the weight of the authorities, as the cases I have cited plainly show.

PAINE, J., in his dissenting opinion in the case of Curtis, Adm'r, v. Whipple, points out the inconsistency in Chief Justice DIXON'S views as above stated. After quoting that portion of his former opinion, which I have italicised, he says: "If such language were to be applied without qualification, it would most certainly sustain the tax in this case, and also in many other cases, in which in the opinion of the chief justice it is claimed to be very clear that a tax could not be sustained."

It remains to apply the law as above stated to the case before us. The charter of the Brooke Academy, as set forth in the statement of this case, shows clearly, that it is a private educational institution controlled exclusively by its board of trustees. The State of Virginia was not a stockholder in the corporation and had no voice in the management. The tax payers of the State, as such, were not stockholders; and the citizens of the State of Virginia had no privileges in the Brooke Academy that were not common to the people of Ohio and Pennsylvania or those of any other State. The trustees of the Brooke Academy might exclude any and all citizens of Virginia from having any control of the institution or from even sending their children to the academy. The trustees of the Brooke Academy by this act of the 20th of December, 1862, are to recover the whole of this large residuary fund of Peter Curran's estate, which was, they say, the property of the State; but the State of Virginia is in no manner secured the right to see or know that it is expended for educational purposes at all. There is no legal obligation on the trustees of Brooke Academy to have a school taught at all. The very act which makes to them this large donation of funds, claimed by them to have belonged to the State, expressly provides, that they may sell all their real estate, and that the signature of their president alone to a deed may convey away all their real estate. This provision would seem to have been intended to make clear the right of the trustees to control every thing connected with their business in any manner they chose. This right they always had; but in providing that they might sell all their real estate, the attention of the legislature was called to the fact, that the trustees of the Brooke Academy were under no obligation to have an academy kept at all. The legislature had just as much right to give this $30,000 or $40,000 claimed by the

Trustees of Brooke Academy v. George.

appellant to belong to the State to any individual teacher in the State without even requiring him to keep a school, as to make this donation to the trustees of Brooke Academy. It was not an act legislative in its character; and the power to pass such act was therefore never conferred on the legislature. This donation was made for no public purpose, but for one which was merely private. We have no doubt that the 1st and 2d section of the act of the legislature passed December 20, 1862, entitled "An act to appropriate the residuary fund under the last will and testament of Peter Curran, deceased, to Brooke Academy" is unconstitutional and void.

The decree of the Circuit Court, which we are reviewing, while it decides the only principle necessary to be decided in order to dispose of the causes, makes no order in reference to the payment of the costs in the suit; and therefore this cause must be remanded to the Circuit Court.

The decree of the Circuit Court of February 9, 1878, must therefore be approved and affirmed; the appellees must recover of the appellants their costs expended in this court and $30.00 damages; and this cause must be remanded to the Circuit Court of Brooke county to be further proceeded with according to the rules and principles governing courts of equity.

The other judges concurred.

Decree affirmed. Cause remanded.

CASES

IN THE

SUPREME COURT

OF

WISCONSIN

STACHE V. ST. PAUL FIRE AND MARINE INSURANCE COMPANY

(49 Wis. 89.)

Insurance-fire-compromise after loss.

The agreement by a fire insurance company, to pay a certain sum in compro mise of a claim for loss, when made after an opportunity to investigate, and without fraud or deception on the part of the insured, cannot be defeated by proof of a subsequently discovered breach of warranty of the policy. (Set note, p. 775.)

A

CTION on a policy of fire insurance. Defense, breach of warranty. The evidence showed that after the fire the adjuster of losses for the defendant, for the purpose of investigating and adjusting the loss, visited the location of the insured property and adjusted the loss with the plaintiffs. After visiting the locality of the insured property, he stated to the local agent of the company that he thought it was a fraud; but notwithstanding this he then made an agreement with the plaintiffs that the loss should be adjusted at $1,306.92, to be paid in sixty days; and although the plaintiffs claimed the loss to be greater, they agreed to take that sum in full and surrender the policy on payment of the same. The defendant had judgment below.

Stache v. St. Paul Fire and Marine Insurance Company.

J. C. & A. C. Neville, for appellants.

Hastings & Greene, for respondent.

TAYLOR, J. [Omitting other questions.] Upon the facts found it is settled that after the loss occurred, and after the authorized adjuster of the defendant had investigated the loss, an agreement was entered into by the defendant and the plaintiffs, that the defendant should and would pay the assured the sum of $1,306.92 at the end of sixty days, and the plaintiffs would accept such sum in full payment and satisfaction of such loss. The findings also show that the plaintiffs claimed that the loss exceeded the sum agreed to be paid, and that the final agreement to pay such sum of $1,306.92 was an amicable compromise of the differences between the parties. It is not claimed by the learned counsel for the respondents, that this agreement to pay the $1,306.92 is not binding upon the defendant, in the absence of any mistake or fraud in the settlement; but it is alleged that the defendant may avoid it upon two grounds. First, that the findings show that there was a breach of warranty of one of the conditions of the policy, in this, that the insured had falsely represented that he was the owner in fee of the lands upon which the insured buildings stood, when in fact he had only a leasehold interest in such lands, and that such breich of warranty was not known to the defendant company at the time the agreement to compromise and pay the said sum of $1,306.92 was entered into; second, that the insured made false statements in his proofs of loss for the purpose of inducing the defendant to compromise and pay the claim, or some part of it, and that such false statements did induce the defendant to make the agreement to pay the said sum of $1,306.92.

Upon the first point we think the authorities are clear that the company cannot avail itself of any breach of warranty in the policy to defeat a recovery upon an agreement to pay the loss, made after the loss has occurred, and after the company has had an opportunity to investigate the facts and circumstances affecting the fairness of the loss, without any interference, deception or fraud practiced by the insured at the time of such investigation; and that this is especially so when the agreement is a compromise of the claim at a less amount than the insured claims as his true loss. This position is fully sustained by the following authorities, cited by the learned

Stache v. St. Paul Fire and Marine Insurance Company.

counsel for the plaintiffs. Smith v. Glens Falls Ins. Co., 62 N. Y. 85; National Life Ins. Co. v. Minch, 53 id. 144; Lapeyre v. Thomp son, 7 La. Ann. 218; Metropolitan Ins. Co. v. Harper, U. S. Circ. C., W. D. Va., 5 Rep. 490; Ins. Co. v. Chestnut, 50 Ill. 111. The following authorities hold the same doctrine, Ins. Co. v. Wager, 27 Barb. 354; Bilbie v. Lumley, 2 East, 469; Ang. on Ins., § 409; May on Ins., § 575.

The case of Smith v. Ins. Co., 62 N. Y. 85, was a case similar in all respects to the case at bar, and Chief Justice CHURCH, who delivered the unanimous opinion of the court, in passing upon the question as to how far the company waives a breach of warranty contained in the policy by an agreement to pay a specified sum after the loss occurs, says: "The settlement and contract to pay a specified sum operates as a waiver of any warranty in the policy, unless the settlement and contract were procured by the fraud of the assured; and this is not found, and scarcely claimed. It is said that the company did not know of the breach of the warranty at the time of the settlement. The answer is, that when the claim was made for the loss the company was required to ascertain the facts as to any breach of warranty. If it saw fit to pay the claim, or compromise it, or to make a new contract without such examination, it must be deemed to have waived it, and in the absence of fraud it cannot afterward avail itself of such breach. It cannot urge payment or settlement by mistake on account of want of knowledge of such breach. The time for investigation as to breaches of warranty is when a claim is made of payment; and if the company elects to pay the claim, or what is equivalent, to adjust it by an independent contract, it cannot afterward, in the absence of fraud, retract or fall back upon an alleged breach of warranty."

Without attempting to enlarge upon or add to the argument of the learned chief justice, above quoted, we content ourselves with the statement that we approve the doctrine of that opinion. It is evident that the public good is promoted by the settlement and compromise, by the parties themselves, of their differences, without resort to litigation; and when such settlements are entered into without fraud practiced by either party to bring about such settlement, all questions as to the legal obligation of the party promising to pay by the terms of such settlement, growing out of the terms and conditions of the original contract upon which the one party