Shoemaker v. Glen Falls Insurance

By the Court, E. Darwin Smith, J. The policy upon which this action is based refers to the application for a more full and particular description, and forming a part of the policy; and it declares that the said policy is made and accepted in reference to the terms and conditions therein contained and thereto annexed, which are thereby declared to be a part of the contract, and are to be used and resorted to to determine the rights of the parties in all cases not otherwise specifically provided for. The conditions annexed require that applications for insurance shall be in writing, and that any misrepresentations, concealment, suppression or omission of facts or circumstances, known to him, increasing the hazard of the property, whether inquiry shall be made in respect to it in the application, or not, shall avoid the policy. In the application, among other inquiries, is the following: “Have you the title to the premises? Are they incumbered by mortgage, or otherwise ? If so, for what sum, to whom, and what is the value of the property thus incumbered ?” The answer is “yes.” “ETo incumbrance.” “ Estimated value $4000.” At the foot of the application is the following: “And the said applicant hereby covenants and agrees to and with the said company, that the foregoing statement is a just, full and true- exposition of all the facts and circumstances in regard to the condition, situation, value and risk of the property to be insured, so far as the same are known to the applicant and are material to the risk.” The proofs show that there was, at the time of issuing the said policy, a mortgage on the premises for the sum of $550. The application is dated January 26, 1867, and the policy is countersigned February 4, [101] 1867. The mortgage proved is dated, and was acknowledged, April 17th, and recorded" the 19th, 1862. It was also proved on the trial, that this mortgage was unpaid, up to the time of the fire. This proof established a clear breach of the said covenant embraced in the application. The language used in the policy, in reference to the application, is precisely the same used in the policy of the Mutual Insurance Company of the City and County of Albany, as stated in Eager v. solid company, (5 Denio, 326.) In that case it was held that the application was part of the contract, by force of such reference. (See also Burritt v. Saratoga Ins. Co., 5 Hill, 188; Trench v. Chen. Co. Ins. Co., 7 id. 122; Jennings v. Same, 2 Denio, 75; 2 N. Y. 210; 10 Barb. 285; Ripley v. Ætna Ins. Co., 3 N. Y. 136.) It follows from these eases, I think, that the covenant contained in this application is a warranty. Whatever is expressly embraced in the policy, or in any condition or collateral instrument annexed thereto and made expressly a part of the contract, is a warranty in respect to the facts specified therein or clearly referred to. This rule applies to all substantial statements which relate to the risk, and not to matters merely stated incidentally. (1 Phillips on Insurance, 418. Wood v. Hartford Ins. Co., 13 Conn. 533. 'O’Niel v. Buffalo Fire Ins. Co., 3 N. Y. 122.) ■ The question remains: What is the contract, as stated or contained in said application ? The covenant is that said statement is a just, full and true exposition of all the facts and circumstances in regard to the condition, value and risk of the property, so far as the same are known to the applicant, and are material to the risk. The existence of this mortgage must have been known to the applicant. It was his own act and deed, and he could not be allowed to allege or pretend ignorance in respect to its existence. Was it material to the risk ? The covenant has that qualification. It "asserts that the statement is true, so far as it relates to all matters inquired about and answered therein [102] material to the risk. Whether the existence of this mortgage upon the premises was material to the risk, is the question that remains on this' branch of the case. If this question arose upon a representation unconnected with a warranty, the materiality of the statement would present a question of fact to' be submitted to the jury. (Angell on Ins. § 152. 1 Phillips, 105. 2 id. 504. Wells v. Howard Ins. Co., 14 Barb. 383.) But when, as in this case, there is a specific inquiry in regard to incumbrances by mortgage, and the answer is positive, denying the existence of any mortgage upon the premises, the question of the materiality of the statement in respect to the risk is settled by the parties as matter of contract. The inquiry itself makes the answer material to the risk, or in effect suggests that the insurers so regard it, in fixing their rates of premium and accepting the risk and issuing the policy. The question then is not an open one, as one of fact, whether the existence of the. mortgage- in this case was or was not material to the risk. In the case of Draper v. Charter Oak Ins. Co., (2 Allen, 569,) where the application was made part of the policy, as in this case, and the same contained a-covenant 'at the end, in the precise language used in the application in this case, the court held that the inquiry made as in this case, whether the premises were incumbered by mortgage, or otherwise, and answered “ no,” made the existence of a mortgage on the premises at the time material to the risk, by force of the contract. The same decision upon the question, upon similar policies of insurance, was made-in Patten v. Merch. and Farmers' Ins. Co., (38 N. H. 338;) Davenport v. New Eng. Fire Ins. Co., (6 Gush. 340;) Strong v. Manuf. Ins. Co., (10 Pick. 40 ;) Ripley v. Ætna Ins. Co., (30 N. Y. 136 ;) and Le Roy v. Market Fire Ins. Co., (39 id. 90.) IJpon this view of the law of the case, arising upon the face of the policy and the application referred to therein, the defendant’s motion for a nonsuit should have [103] been granted, unless the plaintiff was entitled to recover, notwithstanding, on some other ground. The nonsuit was moved for", at the end of the trial, ón the express ground that the contract showed a warranty that there was no incumbrance on the premises^ and the motion was denied, I should think, from what is stated in the charge of the judge, expressly on the ground “that the application and answer did not constitute a warranty.” Where a nonsuit is thus moved upon the whole case and evidence, and the right judgment or decision is rendered, it will not be Set aside, as a general rule, upon exceptions to such decision, because an erroneous reason was given for denying the motion. (Beal v. Home. Ins. Co., 36 Barb. 614,)' But if the point presented for the motion beDa sound one, it must be clearly avoided or overreached by other clear facts or points in the case, or else an exception to the erroneous ruling must prevail. In this view I think if the question had been distinctly submitted to the jury upon the single issue whether Price, the defendant’s agent in procuring this insurance, was at thé time fully informed by the plaintiff, of the existence of the mortgage in question, and himself made the mistake of causing the plaintiff apparently to make a false answer to the inquiries respecting incumbrances, I should think- the erroneous decision upon the question of the warranty, on the' motion for a new trial, might be held immaterial, and the verdict, notwithstanding, be sustained,'within the cases of Rowley v. Empire Ins. Co., (36 N. Y. 550;) Plumb v. Cattaraugus Mu. Ins. Co., (18 id. 392;) Bidwell v. North W. Ins. Co., (24 id. 302;) Robie v. Hartford Ins. Co., (25 Conn. 51;) People’s Ins. Co. v. Spencer, (53 Penn. 353.) But there was a conflict in the testimony on that point and other issues, and I do not see by the charge that that issue was distinctly presented to the jury as a controlling one in the case. The case was tried and submitted to .the jury upon the theory that this statement was a mere representation, [104] and that the plaintiff was entitled to recover, unless he had been guilty of making a ■ fraudulent representation as to this incumbrance, or as to the value of the insured-property, or the fire which caused it was a dishonest and fraudulent one. But even if this were so in respect to this motion for a nonsuit, I do not see how the exception taken at the close of the charge, to that part of it which stated that the application in relation to the incumbrances was not a warranty, can be overcome. [Monroe General Term, September 6, 1869. The case having been submitted to the jury upon the whole evidence, the defendant was entitled to have a correct charge and ruling in respect to that, proposition. I do not see, therefore, how we can refuse to grant a new tijal. In respect" to the other exceptions taken during the progress of the trial, or at the close of the charge, I do not see any substantial error; but will refrain "from discussing them particularly, as upon a new trial the case will necessarily assume a, new aspect, and the same questions may not arise. I think the judgment must be reversed, and a new trial granted, with costs to abide the event. Hew trial granted. E. D. Smith, Johnson and Dwight, Justices.]