Salomon v. North British & Mercantile Insurance

Collin, J. The action is to have a policy of fire insurance, issued by the defendant, reformed in a certain respect and as reformed to recover thereupon a judgment for the loss sustained. The reformation sought is that the policy shall provide that the loss, if any, shall be payable to the plaintiff as mortgagee instead of providing, as in form it does, that the interest in the policy is vested in the plaintiff as owner and that the loss, if any, should be payable to Mayer Malbin and Israel Hammerman as mortgagees. Thus far the plaintiff has been successful. In August, 1907, Malbin and Hammerman assigned to the plaintiff the mortgage upon the insured premises and thereafter delivered to him the policy of insurance. The policy then insured Morris Weintraub and Abraham Penn as the owners of the premises and Malbin and Hammerman as mortgagees. The plaintiff gave the policy to his brokers or agents with instructions that they have the defendant make the loss, if any, payable to him *217 as mortgagee. They wrote on the back of the policy that it should be changed so as to provide “ interest vested in Morris Salomon, loss payable as heretofore,” and took the policy with such notation to and left it with the agents of the defendant for the purpose, which was carried out by the defendant, of having it changed. The defendant’s agents were given no instructions other than that of the notation. An indorsement was made on the inside of it, which read that the interest in the policy was vested in Morris Salomon, as owner, the loss, if any, payable as before, that is, to Malbin and Kammerman. The policy was thereafter returned to and placed in his safe by the plaintiff, who about one year later and after the loss had occurred saw or comprehended, for the first time, ■ the error. A finding of fact of the trial court was “ by an error it was noted on said policy by this defendant that the interest in the policy is vested in Morris Salomon as owner, and that the loss, if any, should be payable as before to Mayer Malbin and Israel Kammerman. ” The defendant asserts that such finding (in connection with the other findings) does not sustain the conclusion of law on which the judgment for the plaintiff went. The assertion is well founded. In Hearne v. Marine Ins. Co. (20 Wall. 488, 490) the court said: “The reformation of written contracts for fraud or mistake is an ordinary head of equity jurisdiction. The rules which govern the exercise of this power are founded in good sense and are well settled. Where the agreement as reduced to writing omits or contains terms or stipulations contrary to the commdn intention of the parties, the instrument will be corrected so as to make it conform to then* real intent. The parties will be placed as they would have stood if the mistake had not occurred. The party alleging .the mistake must show exactly in what it consists, and the correction that should be made. The gyidence must be such as to leave no reasonable doubt *218 upon the mind of the court as to either of these points. The mistake must be mutual and common to both parties to the instrument. It must appear that both have done what neither intended. A mistake on one side may be a ground for rescinding, but not for. reforming, a contract. Where the minds of the parties have not met there is no contract, and hence none to be rectified. ” It is not found or claimed that there was' any fraud in the transaction between the parties. The evidence proves affirmatively and indisputably that there was not. The judgment must, therefore, if it is to remain, have as the basis that through a mistake mutual to the parties the policy insured Salomon as' the owner of the premises instead of the holder of the mortgage lien upon them in the place of Malbin and Kammerman. The basis does not exist. The defendant did precisely what it intended and was instructed to do. It did not make any mistake. It understood and apprehended accurately and fully the instruction and direction given it and acted in strict conformity with them. It did not agree or intend to agree otherwise, and the policy, when re-delivered to the plaintiff, expressed precisely and completely the effect and obligations it understood and intended it should express. It cannot be changed as adjudged, or in any way, and express the understanding or contract or obligations which were in the mind of the defendant in changing the policy. It did not intend to insure an unnamed mortgagee or any one who acquired the mortgage lien. The plaintiff so asserts, in effect, in asking- that the policy should be changed and be now reformed. The fact that it intended to and'did insure Malbin and Kammerman as mortgagees is not identical with or the equivalent .of the intention to insure and the insurance of the ■ plaintiff as mortgagee.. The simple and clear truth is that the defendant intended to insure the plaintiff as owner and Malbin and Kammerman as mortgagees, and the plaintiff intended that it should insure Weintraub and Penn (or *219 Penn) as owners and himself as mortgagee—intentions substantially and radically unlike. The plaintiff was hound to prove that it was the intention of the defendant as well as of himself to have the policy read and stipulate as he seeks to have it. To warrant the reformation, the minds of the parties must have met in a contract and in the mistake through which it failed of expression. There being no fraud, the policy cannot be reformed if it expressed the intentions of the defendant only. The mistake which will permit a court of equity to reform a contract in writing in the absence of fraud must he one made by both parties to the agreement so that the intentions of neither are expressed in it. The mistake or each mistake must be shared in by both parties. The courts cannot compel the defendant, or any party, to enter into or he bound by a contract which it never made. (Bryce v. Lorillard Fire Ins. Co., 55 N. Y. 240; Doniol v. Commercial Fire Ins. Co., 34 N. J. Eq. 30; Bishop v. Clay F. & M. Ins. Co., 49 Conn. 167; Curtis v. Albee, 167 N. Y. 360; Potter v. Frank, 106 Me. 165; C. H. Young Co. v. Springer, 113 Minn. 382; Green v. Stone, 54 N. J. Eq. 387; Lake View Brewing Co. v. Commerce Ins. Co., 143 App. Div. 665; affirmed, 207 N. Y. 746; Schmid v. Virginia Fire & Marine Ins. Co., Court of Chancery Appeals of Tennessee, April 30, 1896 [37 S. W. Rep. 1013].) Under the facts as found and as proven and the established legal principles, the judgment should be reversed and a new trial granted, with costs to abide the event.