First National Bank v. Hartford Fire Insurance

OPINION OF THE COURT. HANNA, J. The appellant has made numerous assignments of error, but having relied upon two in the -argument, we will consider these in the order presented. The first being “the evidence offered and received to show that the company agreed to insure a mortgage inter■est was incompetent.” This assignment of error is .based upon the well known rule that parol contemporaneous evidence is inadmissible to contradict or vary the terms of -a valid written instrument. The case of Woodbury Savings Bank v. Charter Oak Ins. Co., 29 Conn. 374, largely relied upon by appellant 'to sustain this assignment, was an action in assumpsit, and the opinion of the learned court, in that case, upon this subject was as follows: “Two contracts, the one in writing and the other in parol, made between the same parties, at the same time, in regard to the same subject matter., and for the same purposes, but variant in their respective stipulations, cannot stand and be enforced together in the same suit, in a ■court of law. In such a case the law wisely determines to rely upon the written instrument alone, as the true and only safe expositor of the intention and final understanding and agreement of the contracting parties.” The same cause of action again came before the Supreme Court of Errors, 31 Conn. 517, by bill in-equity to correct the policy of insurance and the court in the later ••case says: “The case then is one where there was an agreement on the part of the company to insure the petitioners on their interest as mortgagees in the property in question. “There was a mutual mistake as to the proper mode •of filling out the papers on both sides. The application was made out in the wrong name and the policy was made to the wrong person. But there was no fraud or misrepresentation. The papers would have been made out right if they had known how to do it, and it is immaterial whether the mistake was one of fact or of law.” 1 It is a -well settled principle, not in conflict with, the-rule as to' admission of parol evidence, that the reformation of written contracts for fraud or mistake-is an ordinary head .of equity jurisdiction. Hearne v. Marine Ins. Co., 20 Wall 488. We fully agree with the opinion of Mr. Justice Swaynein the last ease cited, that the party alleging the mistake must show exactly in what is consists, and the corrections-that should be made. The evidence must be such as to leave no reasonable doubt 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. It is laid down in Cyc. vol. 19,. p. 653, that “Parol evidence is admissible to prove the fraud or mistake but the courts exercise their power with extreme caution, and require the clearest proof before granting relief.” This court has held, in the case of Dearborn v. The Niagara Fire Ins. Co., 125 Pac. Rep. 606, in an opinion by Mr. Justice Roberts, that “if the contracting parties to the policy of insurance made a mistake in the description of the premises, or in the names of the insured, a court of equity, upon proper .proof, has jurisdiction to reform the contract and correct the mistake.” For the reasons stated this assignment of error is not well taken. The other point' remaining for our consideration is that “the evidence failed to show that there was a mutual mistake between the defendants agent and the representative of the bank.” 2 While fully agreeing that the mistake must be mu~ tual we are of the opinion that the evidence did disclose that the mistake here sought to be corrected was a mutual one. There can be no question, after a careful examination of the record, that a mistake was originally made and the policy rejected, upon delivery, for that reason, with the agent of the appellant company then attempting to correct the error but quite apparently failing-to do so, as there was no substantial difference between the two loss payable clauses, attached to the policy. The-evidence as to what ivas desired by appellee is equally plain and was fully explained to the agent, 'who apparently attempted, in good faith, to carry out the desires of the applicant for insurance, but failing in his purpose for reasons which do not appear. The owner of the property, John Hamlctt, left Elida several months before the insurance was applied for by the bank, and efforts to ascertain his -whereabouts had proven unavailing. Can it be assumed, therefore, that equity would construe an intention on the part of both mortgagee and company to enter into an insurance contract by the terms of which the missing Hamlett must, of necessity, bo produced to make proofs of loss, should loss occur? This would appear to be a case where the mistake may be fairly implied from the nature of the transaction without requiring positive proof thereof. Brugger v. State Inv. Ins. Co., 4 Fed. Cas. No. 2051. We are of the opinion that there is sufficient evidence in the record to support the finding of the learned trial judge and that this assignment of error is not one that should be sustained by this court. We find no merit in the contention of appellant, referred to under the second point argued, that the company did not consent to the mortgage in favor of the Farmers; Savings Bank. This mortgage, with the note secured by it, had been purchased by the appellant before the insurance was applied for. Upon examination of the record we do -not find that there was any abuse of discretion on the part of the trial court in permitting the cause to go to trial without the presence of counsel for appellant. We therefore hold that the lower court did not err in reforming the contract of insurance, and in rendering judgment for the appellee. The judgment is therefore affirmed.