Ring v. Windsor County Mutual Fire Insurance

The opinion of the court was delivered by Powers, J. The exceptions show that on the trial in the County Court the plaintiffs made proofs entitling them, prima facie, to recover. The plaintiffs’ counsel thereupon made an opening statement to the jury, setting.forth certain facts relating to an erroneous representation in the application, which he would offer in evidence, and the defendant insisted that these facts could not ■be shown, inasmuch as the proposed evidence tended to vary the language of the application. A colloquy arose between court and counsel in relation to the proposed evidence, but the question raised was treated on all sides as properly before the court, and the proposed evidence was held inadmissible. [568] The proposed evidence tended to show that the plaintiffs, by the solicitation of the defendant’s agent, Hall, effected an insurance with the defendant upon their saw-mill and machinery in Hines-burgh. At the same time and through the same agency, they took out a policy upon their dwelling-house, and certain personal property therein. Hall was the defendant’s agent to solicit, take, and forward to the company applications for insurance. At the time these applications for insurance were made, there was a valid outstanding mortgage in favor of one Nash, resting upon the dwelling-house and upon the saw-mill, amounting to $2,000. Among the questions in the written application, which applicants are called on to answer, is this : “ Is the property incumbered ?” In order to answer this question, the plaintiffs stated to Hall, truthfully, the existence and amount of the Nash mortgage, and that it rested upon both buildings proposed to be insured. Hall, in behalf of the company, asking this question, received this answer. Hall thereupon at his own suggestion apportioned this mortgage, inserting one half in the application as resting upon the mill, and the other half in the other application as resting upon the house, and the policies when issued embodied the same erroneous statement as to the incumbrance. Representations made by applicants for insurance respecting their title or incumbrances upon it, are material to the risk, and if falsely made, vitiate the contract. The defendant insists that if the facts be as the evidence proposed tended to show, the only remedy available to the plaintiffs to avoid the consequences of the misrepresentation embodied in the application, is a bill in equity to reform the contract, and. that in a suit at law upon the contract the proposed evidence is obnoxious to the rule which forbids the contradiction or alteration of a written instrument by parol evidence. Equity in proper cases will reform written instruments that falsely speak the intention and agreement of parties. If the parties have made one agreement and the written evidence of it embodies another, the writing may be reformed, and made to express the true agreement. But here the application and policy express [569] precisely the intention of both parties in respect to the amount of the Nash mortgage. Both intended that the answer to the question should be that the property was encumbered by a mortgage to Nash for $1,000, and hence the writing is precisely correct. The mistake is not in what the writing expresses, but in the legal effect of it as made. There is then no ground on which to invoke the aid of equity. We do not think the proposed evidence inadmissible in a suit at law on the policy. The plaintiffs make their case, so far as the policy is concerned, by proving its execution. If misrepresentations were made in the application, they are to be shown by the defendant by way of defence to the action. The representation that the Nash mortgage resting upon the premises was $1,000 in amount, was well enough for the plaintiffs’ case until the defendant showed its falsity. The defendant proposed to prove the falsity of this representation, and the proposed evidence was offered for the purpose of showing such a state of facts as would estop the defendant from contradicting the false representation. The plaintiffs’ evidence was not offered to contradict their written answer to the question. The defendant’s evidence contradicted this answer. The plaintiffs did not propose to explain their answer by parol evidence, but proposed to show that however false the answer, yet the company, through its agent, was fully informed as to the facts, and of its own motion incorporated a false statement of the facts in the application. Hall was the agent of the defendant, authorized to propound the question and receive this answer, and information given him is as binding upon the defendant as it would be had the applicant gone to the office of the company, and given the officers the same information, and they had incorporated the same false statements in his application. Gen. Sts. c. 87, s. 1; May on Insurance, s. 140; Insurance Co. v. Wilkinson, 13 Wall. 222. If the fact be as the proposed evidence tended to show, the defendant could not set up the misrepresentation as to the amount of the Nash mortgage as a defence to this action. Judgment reversed, and new trial granted.