Phœnix Fire Insurance v. Gurnee

The Chancellor :—It is well settled that a court of equity has jurisdiction to correct mistakes in policies of insurance, as well as in all other written instruments. (Phil, on Ins. 14.) But the evidence of such mistake, and that both parties understood the contract in the manner in which it is sought to be reformed, should be clear and satisfactory. In policies of insurance, the label or written memorandum from which the policy was filled up, is always considered of great importance in determining the nature of the risk, and the intention of the parties. Thus, in Motteaux v. The London Insurance Company, (1 Atk. 547,) Lord Hardwicke held that a policy ought to be rectified agreeably to the label; and in the issues which he directed in that case, the label was treated as the real contract between the parties. In this case, there is a substantial difference between the policy and the written memorandum on which it was founded. The one is an insurance 280 upon a grist mill, and the other is only upon the mill-house, or the mere covering of the substantial parts of the mill. It is to be presumed that insurers are acquainted with the nature of the property which they undertake to insure. If so, the defendants must have known that no owner of a grist mill would ever think of insuring the mill house only, leaving all the substantial parts of the mill exposed to certain destruction, if the mill-house or covering was destroyed. The difference of the description from the * written memorandum must, therefore, have been clearly a mistake of the clerk in filling up the policy, or an intentional fraud upon the insured; and the latter is certainly not to he presumed. Although the complainant read over the policy before he left the office, it is hardly to be presumed that a plain countryman, unacquainted with the law of insurance, would have noticed or understood the difference which was produced by the change of phraseology in the policy from the plain and intelligible language of the memorandum, which was probably taken down from the bps of the assured. I think the decree of the circuit court was correct, and the same must be affirmed with costs.