Nassauer v. Susquehanna Mutual Fire Ins.

Mr. Justice Paxson delivered the opinion of the court, This was an action of covenant upon' a policy of insurance. The plaintiff was insured in the defendant company upon his house and furniture as follows: $1,000 upon his house and $200 upon his furniture. The house was valued in the application at $1,400 ; the furniture at $400. On the night of August 7th, 1877, while the plaintiff and his wife were absent from home, the house and all its contents were destroyed by fire. Upon the trial below the learned judge gave the jury a binding instruction to find for the defendant. If for any reason this instruction was proper, we would not reverse even though some technical errors appeared upon the trial. It was claimed by the defendant that there was a gross over-valuation of the property insured, and that incumbrances had been placed upon the property after the date of the policy and before the fire, which reduced the real interest of the insured to an amount less than the sum insured, and that these were both breaches of the warranty contained in the policy. The application contained this provision: “and it is expressly understood and agreed that this application and survey shall be a warranty on the part of the assured and [512] constitute a part of the contract, and that the said company will not be bound by any act or statement made to or by the agent, restricting its rights or varying its written or printed contracts, unless inserted in this application in writing.” The thirteenth interrogatory in the application was as follows: “If any judgments, liens or mortgages, state particularly the amount, and whether there is any insurance by mortgagee.” To which the assured made answer: “I have $500 claim on one acre of ground against, but not on building.” The thirteenth “ condition of insurance ” provided inter alia : “ And should there during the life of this policy, an incumbrance fall, or be executed upon the property insured sufficient to reduce the real interest of the insured in the same to a sum only equal to or below the amount insured, and he neglect or fail to obtain the consent of the company thereto, then and in that case the policy shall be void.” This provision is based upon the theory, to state it mildly, that the owner of a house, incumbered to a part or the whole of its value, has not the same motive to preserve his property from fire as he would have .in case it were free from incumbrance. There is nothing in the provision itself that offends public policy or good morals. To meet the allegation of over valuation the plaintiff alleged that he was an ignorant German and did not understand the English language. He also offered to prove (see sixth assignment) “That at the time of the application for insurance, Frank Laubach, the agent of the insurance company, made all the answers in his own handwriting to the questions in the application, and stated to the witness that on the payment of his premium he would get $1,200 if a fire occurred by which his property was totally destroyed, and that Frank Laubach valued the property at $1,400 for the building and $400 for his household and kitchen furniture, making in. all $1,800, and that Frank Laubach fixed the amount of insurance, which the company would take at $1,200, and based the premium thereupon.” This offer of evidence was rejected by the court. We do not assent to the proposition that the offer was incompetent because Laubach was the agent of the assured in filling up the application and forwarding it to the company. He was not the agent of the assured. The latter had not employed him for any purpose. He was the agent of the defendant company and as such called upon the assured and solicited a policjq and having obtained his consent, proceeded to fill up the application for him to sign. As to all these preliminary matters' the person soliciting the insurance is the agent of the company. So much was said in Columbia Insu [513] ranee Company v. Cooper, 14 Wright, 331. It is true that section 15 of the by-laws of the company provides that: “ In all cases shall the person forwarding applications be deemed the agent of the applicant, and not of the company, in any preliminaries to such contract or proposal.” The policy provides that “this policy is made and accepted in reference to the by-laws of this company,” and from this it was argued that by the terms of the contract of insurance the agent of the company becomes the agent of the assured. This court, in the case above cited, characterized a somewhat similar provision, as a “cunning condition.” The court might have gone further and designated it as a dishonest condition. It was the assertion of a falsehood, and an attempt to put that falsehood into the mouth of the assured. It formed no part of the contract of insurance. That contract consists of the application and the policy issued in pursuance thereof. In point of fact the assured does not see the policy until after it is executed and delivered to him. In many instances it is laid away by him and never read, especially as to the elaborate conditions in fine print. Grant that it is his duty to read it, his neglect to do so can bind him only for what the company had a right to insert therein. Ho was not bound to suppose that the company would falsely assert, either by direct language in the policy, or by reference to a by-law, that a man was his agent who had never been his agent, but wlio was on the contrary, the agent of the company. Notwithstanding this was a mutual company, the assured did not become a member thereof until after the insurance was affected. Hence a by-law of the company of' which he liad no knowledge, and by which he was not bound could not affect him in matters occurring before the granting of the policy : Columbia Ins. Co. v. Cooper, supra. And even a by-law of a mutual company which declares that black is white does not necessarily make it so. But the difficulty here lies deeper. It was competent, under the authorities, to show that Laubach, the agent, had deceived the assured, when he came to fill up the application, either by a misrepresentation of facts, and by setting down false answers in place of those that had been given. But the offer does not go to this extent. It shows no fraud practised upon the assured. On the contrary, if the agent practised a fraud, it was a fraud upon the company, by inducing them to issue a policy upon property largely in excess of its value, for the sake of the commissions. This brings us to the question of what was the real value of the property. I give what arc the undisputed facts. The building insured was 18x22 feet, two and a half stories high. It [514] was a frame built of hemlock, painted only on the outside, and was without a cellar. Any one who has the slightest knowledge of building can see at once that $1,400 was a grossly excessive valuation. But we will not deal in generalities ; we will take the undisputed evidence. The plaintiff himself called as a witness, the carpenter who erected the building, and he puts the cost of it from $550 to 650, and it was built at a time when labor and building material were higher than at the date of the insurance. Thomas E. Osmun, a witness for the defendant, said it was not worth more than $550 when built; and that when it burned down, he estimated its value at $450. Thomas P. Bachman, called by the defendant, said he would have replaced the building after the fire for $300. This was all the evidence upon the subject. So that it appears from the plaintiff’s own showing that the building was at no time worth more than $650, and as he was the person who paid for its construction, he must have known this fact when he applied for the insurance. Granting that the assured was an ignorant German, who did not understand English, the evidence discloses the fact that he was returning his building at a valuation more than double the amount he had paid for it. There was no fraud practised upon him and under the circumstances it was not error to reject the offer. The value of the property bears closely upon the question of the incumbrances. The learned judge charged the jury (see 11th assignment), that: “Now, the undisputed evidence in this case is that after the date of the policy and before the fire, a number of judgments were entered up against the insured, which reduced the real value of the property insured below the amount of the insurance. It is not even pretended here, that the company were notified of these incumbrances, and there is no explanation or excuse given for want of notice. The 13th condition of the policy is one of the vital conditions upon which the company agreed to be bound to pay the amount of the insurance. It has not been complied with, and therefore there can be no recovery in this action upon the part of the plaintiff.” The learned judge was slightly inaccurate in this statement. One of the judgments to which he evidently referred was the Yeager judgment for $668.55, which was not entered until after the fire, and was for the same debt secured by a mortgage, which the assured refers to as a “ claim of $500 ” in his application. We throw this out of the case. In point of fact there were two claims entered against the property during the life of the policy, viz; a judgment of George Snyder for the sum of $50, and a mechanics’ lien of $62.50. There are authorities in New York and elsewhere which hold [515] that mechanics’ liens are not incumbrances within the meaning of such clauses in policies of insurances : Green v. The Ins. Co., 82 N. Y., 517 ; Baloy v. The Ins. Co., 80 Id., 21; Merrill v. The Ins. Co., 73 Id., 452. The reason appears to be that such liens are entered without the act or consent of the assured. In view of the peculiar language of this policy, the application of those eases, if no other reason existed, may well be doubted. We leave that question, however, until a case arises in which it is essential. It is not so here. The single judgment of Snyder, small as the amount is, was sufficient to avoid the policy, for tire reason that it reduced the real interest of the plaintiff below the amount insured. This is not very important in view of the admitted fact that the property was rated at more than double its value, and insured at almost double. The judgment still further reduced it by its amount. Under sucb circumstances we find no error in the instruction complained of. There was an offer to prove that the assured informed the agent at the time the application was mudo that there were incumbrances upon the property, and that the agent told him that would make no difference. This offer the court rejected. See eighth assignment. In point of fact there -were no incumbrances upon the property at that time, except the one noted in the application. In the light of this the offer was properly rejected. It had no significance. This view of the case renders a discussion of the remaining assignments unnecessary. Judgment affirmed.