Malleable Iron Works v. Phœnix Insurance

Ellsworth, J. The petitioners ask, by their bill, that the superior court will reform a certain policy of insurance, and order the respondents to pay $5,000, which they say is due them, for the loss of their iron works. The error which — 472 — the court is asked to correct, consists in the answer, as it now stands, to the 16th interrogatory in the proposals. That answer says that there was a watch upon the premises until 12 o’clock, P. M., and likewise a watch-clock. This answer, or one just like it, we held in the late case of the Glendale Woolen Company, 21 Conn., 19, (being expressly made a part of the policy,) to be in the nature of a warranty, and that, if untrue, it would render the policy void. Fearing this result at law in a suit on the policy as it now reads, the petitioners seek a correction and reformation of this part of the policy. They say the policy is incorrect, inasmuch as it does not express the contract as it was made ; that the answer in question was not given as it was written and is now understood, and that such was the course pursued by the agent of the respondents, at the time, that the petitioners ought not to be injured by the mistake, and the respondents ought not to object to the correction. On the one hand, it is insisted that the insurance company have made no other contract of insurance than the one in writing, and if Houghton, their agent in Bridgeport, has made another and different one, he made it for himself, and had no authority to make it for the company. On the other hand, it is insisted that Houghton was the general agent of the company for all the purposes of insurance in Bridgeport, and could bind the company in the premises as fully as any general agent whatever; and that, at any rate, if he was clothed with only a limited authority to bind the company, such limitation can not affect third persons like themselves, who, without any knowledge of such limitation, have obtained insurance through such agent. These respective claims have led counsel to examine many cases in the books, upon the point to what extent insurance agents abroad can be held to represent the companies for which they act; when they bind their principals, and when they only bind themselves. Here is a field of wide extent for doubt and litigation, and many cases may be found illustrating the rule as it is claimed on the one side and on the other; and yet, after all, this case resolves itself into a ques — 473 — tion of fact more than of law, as is established and very well illustrated in the case of Sheldon et al v. The Hartford Insurance Company, 22 Conn., 235, and the case of Boughton v. The A. M. L. Ins. Co., tried on the present circuit at New Haven. The court do not deem it important to travel over this entire field, since a majority of us are satisfied, taking the facts as they are found, that Houghton did, in this instance, sufficiently represent the company, when he obtained proposals from the. petitioners and remitted them to his principals at Hartford, to bind them, by his agreement or explanations given at the time. Dunlop’s Paley on Agency, 11*2, 200. Sandford v. Handy, 23 Wend., 260. Nelson v. Cowing, 6 Hill, 336. Story on Agency, sec. 134 Devendorf v. Beardsley, 23 Barb., 660. It is found that, about the first day of July, 1854, the insurance company appointed Houghton to be their agent, with power, among other things, to receive and forward applications for insurance, and for that purpose they furnished him with printed blank proposals, of which the present is one, containing the proper questions to be answered by the applicant. With this list of interrogatories Houghton applied to Mr. Sturges, the petitioners’ manager and agent, to induce him to get his company’s works insured in the office of the respondents. In reading the interrogatories over to Mr. Sturges, when he came to the 16th, Mr. Sturges replied, “ No watch on the premises,” and it was so entered by Mr. Houghton. Soon after, Mr. Sturges added, “ We have a man who watches our annealing premises, and his duty requires him to be there at night from nine o’clock to twelve, but not all the time; but during these hours he must come in; he is not a watchman for the building, but will be likely to see if anything is wrong about the buildings, and when the furnaces are run, he is obliged to be there.” Upon this, Houghton observed that he should consider that this man was a watchman until twelve o’clock, and Sturges replied, “ he did not know how it would be considered, that he left the matter to Houghton,” — 474 — who thereupon erased the word “No,” and wrote “ Watchman on the premises till twelve o’clock.” We think this interpretation or conclusion, if not an agreement by Houghton, (it being an essential part of the proposals and the very ground-work of the insurance to be obtained,) was within the authority given to him as the respondents’ agent, when he was intrusted with those printed blanks, in order to perfect applications for insurance. He was expected to make use of just this list of questions, and to give to the applicant for insurance any necessary information or explanation touching the meaning of the proposals. The questions on this paper are very numerous and somewhat indefinite, and to answer them intelligently and fairly must often require some information and preliminary understanding. We think there must be an incidental power in the agent, adequate to the explanation of the description of property which is to be insured, or the meaning of words and phrases, and the application of answers to the subject matter. We do not say that an insurance agent is of course a general agent with no limitation, but only that he is, in certain cases, clothed with an incidental power to perfect that which is committed to his care’. The agent was to obtain and forward a perfect application. It was within the sphere of his duty to explain the questions and decide for himself and the bona fide applicant, what was a satisfactory answer, and how the answer should be applied to the subject. In such a case, the agent can not be said to make the insurance himself, but his principals do it at the home office, obtaining only through him the necessary information. Suppose the secretary of the company had visited Bridgeport to solicit insurance, and among others had called on Mr. Sturges, and handed him these questions to be answered, and having made himself familiar with the premises of the petitioners, had agreed that the man who watches the annealing shop should be considered and held a watch on the premises until twelve o’clock, and had himself explained and filled out the proposals as Houghton did, — would not the company be concluded ? We think they would. — 475 — Let us examine and see, if in all fairness and justice, a local agent is not clothed with such incidental power. The 14th question is, “ How are the several stories occupied ? ” A full and exact answer to this question might require a lengthy and complex recital of facts. Can not the agent agree to an abridged answer, which shall be held to be sufficient? In answering some of the interrogatories in the paper, it may not be easy to state exactly what the facts are, and how they would be understood if answered. In order to get the risk, may not the agent explain, and agree how the thing shall be considered to be, keeping always within the limits of the power which he is to exercise ? The 17th question is, “ Are there casks in each loft?” may not the agent explain this as equivalent to tubs and cisterns ? The 18th question is, “ Is smoking or drinking of spiritous liquors allowed on the premises?” Now what are the premises exactly? Can not the agent agree how it shall be considered, or must this be left an open question, or no insurance be had, without the hazard of a law-suit, ? The 19th question is, Are the buildings and machinery both owned by the applicant, and is there any other person interested in the property?” These questions are, sometimes, not so easily answered of a certainty. May not the agent agree what, on the whole, is a satisfactory answer to them ? The same may be said of several other questions. If agents, who are furnished with exact and printed blanks, are not to be allowed to say a word by way of information or explanation, when fairly and honestly attending to their appropriate business, which shall attach to the contract of insurance and bind the company, there is great danger that injustice will be done to the honest and confiding applicant; and the sooner it is known that the agent only is bound in such instances, the better for the community. Here, the question was, what was to be understood by the answer, “ a watch on the premises.” The facts were truly stated to the agent, who was appealed to to say how these facts should be considered, and he decided that they amounted to a watch, or should be held to be so ; and — 476 — now in fairness and justice the company should be bound by that conclusion of Mr. Houghton. As to the watch-clock, it is found, strange as it may seem, that when Mr. Houghton read to Mr. Sturges the 16th question, he did not read anything about the clock, but that Mr. Houghton put that answer in himself, because he saw a clock of that character, as he thought, standing in the room. Assuming this, then, we pass over this part of the answer as comparatively unimportant, for we do not perceive that it was made a part of the proposal for insurance, except by sheer mistake, and at best is not material if the matter of the watch itself is to be held as we have stated. We are persuaded that not unfrequently insurance companies are sufferers from carelessness, unfairness and craft on the part of the insured, and there may well be jealousy and distrust, when it is asked to reform the contract after the loss has taken place. Were we investigating the alleged mistake ourselves, we should proceed with much caution, and require clear and ample evidence before we should yield assent in such a case. But a case may be made out. We know mistakes do occur which are not discovered until there is an occasion to seek redress on the policy. A majority of the court feel constrained to decide, upon the facts established in the case before us, that there was a clear and palpable mistake or misunderstanding, and that the policy must be reformed. We take this occasion, however, to say, that there are but few institutions more conducive to the safety and prosperity of the people, than insurance companies when well conducted, as we believe the) are in this community. They should be fostered and sustained by an equal and impartial administration of justice, when brought in conflict with persons who claim indemnity upon contracts of insurance. There should be no prejudice against them, as is sometimes the case, for protecting and defending themselves against what they believe are unfounded and fraudulent claims; and so, on the other hand, they should know that there is danger from the multiplication and rivalry of agents in every city, — 477 — town and village throughout the land, some of whom are inexperienced, and not always as careful and exact as they should be. Agents should never obtain insurances for the company without authority, nor be allowed to hold themselves out by advertisements, notices, or a course of conduct, as possessing general powers, when their powers are only limited and special. Herein is great danger that injustice will be done to persons obtaining insurance, who are inexperienced in the business, and place full confidence in the word of an insurance agent, accredited as he is by his public appointment. For the reasons herein assigned, we are of opinion that the plaintiffs are entitled to the relief for which they ask, and so we ad vise the superior court that the policy be reformed, and a decree be passed that the plaintiffs recover the five thousand dollars and interest. In this opinion Hinman, J., concurred. Stokes, C. J., dissented. Decree for petitioners.