Massachusetts Bonding & Insurance v. Chapman

Hart, C. J., (after stating the facts). According to the. evidence for the defendant, the soliciting agent of the insurance company had full knowledge of the fact that he was working part of the time as a freight brakeman and part of the time as a passenger brakeman at the time the policy was applied for by him and issued by the company. It was his duty to explain fully his occupation, and the notice to the soliciting agent, became the knowledge of the company. American National Ins. Co. v. Hale, 172 Ark. 958, 291 S. W. 82, and cases cited; Bankers’ Reserve Life Co. v. Crowley, 171 Ark. 135, 284 S. W. 4; and Old Colony Life Ins. Co. v. Julian, 175 Ark. 359, 299 S. W. 366. Chapman testified that he told the soliciting agent of the plaintiff that he was working both as a passenger and as a freight brakeman at the time he applied for the insurance. He is corroborated in this testimony by another witness who was present, land no denial thereof is made by the soliciting agent. Chapman then had a right to assume that, when the company issued the policy and delivered it to him, he was properly classified as a passenger brakeman under its terms. It is true he was injured while starting out on a freight run, but this was only a temporary change, and he was still in the service of the railroad company as a passenger brakeman just as he was when the policy was issued. He stated in his proof of loss that he was injured while working on a freight train. This put the company upon notice of that fact, and, notwithstanding this, it paid him under his classification as a passenger hrakeman. Under these circumstances it can-' not be said that the payment was made under a mutual mistake. Chapman thought that he was entitled to be paid as for an injury to a passenger brakeman, and that he had been properly classified as such when the policy was issued. Neither can it be said that the payment was made under mistake on the part of the company, coupled with fraudulent conduct on the part of Chapman. It is not claimed that he was guilty of any fraudulent conduct. At least there is no proof whatever tending to show such to be the fact. So far as the record discloses, Chapman acted in the utmost good faith throughout the whole transaction. 'The contention of the plaintiff is that the payment was made because of a mistake on its part due to its ignorance of the facts, entitling it to avoid the policy. In discussing a question of this sort in National Life Insurance Co. v. Minch, 53 N. Y. 144, the court said: “A policy of insurance is an. executory contract. The time for insisting upon the breach of any warranty contained in the original application was when the claim was made for the execution of the contract. Mere ignorance of a fact which might have enabled the company to defend an action upon the policy on 'account of such breach is not such a mistake of fact as will enable it to recover back the money. It will be presumed that the company either knew the fact or intended to waive any such defense, and voluntarily paid the money. Otherwise there would be no end to controversy and litigation, and the party receiving the money would hold it subject to a lawsuit until the statute of limitations intervened. ’ ’ This rule has been applied according to varying facts in other cases. Smith v. Glen’s Falls Ins. Co., 62 N. Y. 85; Stache v. St. Paul Fire & Marine Ins. Co., 49 Wis. 89, 5 N. W. 36, 35 Am. Rep. 772; and Kansas City Life Ins. Co. v. Blackstones (Court of Civil Appeals of Texas), 143 S. W. 702. The plaintiff was. not induced to issue the policy because of any fraud practiced upon it, and it does not claim it was induced to make the payment to the defendant because of any misconduct on his part. It had notice of facts which, if pursued with ordinary diligence, would have led to a full discovery of everything connected with the issuance of the policy. Hence it cannot urge that it made the payment by mistake on account of lack of knowledge. It follows that the judgment of the circuit court was 'correct, and it will therefore be affirmed.