Niagapa Fire Insurance v. Jordan

Evans, P. J. (After stating the facts.) The substance of the petition is, that the plaintiff orally applied to the proper agent of the defendant for a policy of insurance on his stock of merchandise, indemnifying him against loss by fire, and the defendant’s agent orally agreed to issue to him the policy applied for, but, by the inadvertence of the agent in preparing the policy, the name of the late firm of Jordan Brothers was substituted for that of the plain [671] tiff. The merchandise oí the plaintiff was destroyed by lire during the period of time covered by the policy; and the plaintiff seeks a reformation of the policy and a judgment for the loss sustained by the lire according to the terms of the policy as reformed. It is well settled that a written contract which misstates the terms of an oral agreement on which it is founded may be reformed. The agent’s inadvertent substitution of Jordan Brothers for the insured under the circumstances alleged in the petition, and the plaintiff’s acceptance of the policy in reliance on the agent to issue it according to his engagement, make a case of mutual mistake relievable in equity. German Fire Ins. Co. v. Gueck, 130 Ill. 345 (6 L. R. A. 835, 23 N. E. 112); Cook v. Westchester Fire Ins Co., 60 Neb. 121 (82 N. W. 315); Jamison v. State Ins. CVo., 85 Iowa, 229 (52 N. W. 185); Taylor v. Glens Falls Fire Ins. Co., 44 Fla. 273 (32 So. 887). The mistake in the policy was not discovered until after the fire, which occurred a little less than three months after the policy was issued. It is contended that the plaintiff’s failure to inspect the policy which was in his possession for nearly three months amounts to Such laches and negligence on his part as to preclude any right of reformation of the policy. The trend of authority is that a mere failure of the insured to read his policy- does not amount to such laches as will debar him from having such policy reformed for mistake therein. Fitchner v. Fidelity Mutual Fire Ass’n, 103 Iowa, 276 (72 IN. W. 530); Taylor v. Glens Falls Fire Ins. Co., supra; Phœnix Ins. Co. v. Gurnee, 1 Paige, 278 (19 Am. D. 431). A policy of insurance is issued by the insurer and signed by him or his agent; it is not contemplated that the insured shall sign it. In the insurer’s promise lo deliver an accurate policy, according to his oral agreement with the insured, the insured has a just expectation that there will he no designed variance. A man should not he permitted for his pecuniary advantage to impute it to another as gross negligence that the other trusted to his fidelity to his promise. Palmer v. Hartford Fire Ins. Co., 54 Conn. 488 (9 Atl. 248). The case is quite different from those instances where a man, who has negligently signed a contract, endeavors to be relieved of its obligation by setting up his own negligence. -.The fact that the policy as actually made out was in the plaintiff’s -hands for nearly three months, and until after the fire occurred, is a cir [672] cumstance to be weighed by the jury as bearing on the truth of the allegation that the policy did not pursue the oral contract. But. as was said in Bidwell v. Aster Ins. Co., 16 N. Y. 266, “There is no rule of law which fixes the period within which a man may discover that a writing does not express the contract which he supposed it to contain, and which bars him of relief for delay in asserting his rights short of the period fixed by the statute of limitations.” We are cited to the case of Thompson v. Southern Mutual Insurance Company, 90 Ca. 78 (15 S. E. 652), as authority for the proposition that the plaintiff was guilty of such gross laches in discovering the mistake in the policy that he is not entitled to the equitable relief of reformation. In that case it appeared that a policy of insurance on a dwelling-house, with a vacancy clause in it of thirty days, had been renewed for several years from year to year under a general request made by the insured of the agent of the insurance company, each renewal having been made by the delivery of a receipt for the premium without the issuance of a new policy; and the agent, acting on the same general request, having-in the last transaction discontinued this mode of renewal, the company in the meantime having adopted a new form of policy with a vacancy clause limited to ten days, it was held that it was not a fraud against the insured, against which equity will relieve, that the agent, without giving any notice to the. insured, delivered to him a policy in the new form, without informing him of the change, this policy having been thereafter retained by the insured for Jour months without reading it, and he never having-read it until after thé destruction of the premises by lire, [n that case there was no pretense that there was any mutual mistake as to form or contents of the policy, but the holder of the policy sought to reform it into one like the company had previousty issued to him, basing his right to relief upon an inference of fraud from the pleaded facts. The court ruled that inasmuch as the means of preventing a false inference was within the hands of the holder of the policy, he ought to have used them, and that the facts alleged did not make a case of fraud relievable in equity. In all other respects the petition set forth a cause of action, and the demurrer was properly overruled. Judgment affirmed. All the Justices concur.