Peninsula Lum. Co. v. Royal Indemnity Co.

BURNETT, J. 1. In effect, the plaintiff alleges a mutual mistake in the writing and the defendant denies this. As this is the issue, it is incumbent upon the plaintiff to prove the affirmative of the same by a preponderance of the evidence. Without dispute, it clearly appears that a former policy of the same nature, issued to the plaintiff by another company on the same risk, had been canceled, all within the knowledge of the plaintiff, and that nothing was said by its representatives to those of the defendant about this during the negotiations for the policy in suit. The instrument was written by a stenographer in the office of the agents of the defendant, under the direction of and from memoranda written by the man having charge of that particular kind of insurance. He testifies to the effect that he took the ordinary printed blank policy customarily used by the defendant in such business and designedly and purposely caused to be put into the blank after the thirteenth statement the words' “no exceptions”; that he wrote them in the memoranda furnished to the stenographer and that the latter followed them according to his directions. The substance of the testimony of the witnesses for the plaintiff is that nothing was said about previously canceled insurance. The then secretary of the plaintiff, who appears to have conducted the negotiations in the main on behalf of the company, testifies thus: “ Q. As a matter of fact, this policy involved in this action was issued to you because you wanted it, was it not? “A. Oh, yes, we wanted the policy. “Q. And you made application to the proper person to get it, did you not? “A. We gave them a chance to figure on the business; yes, sir. [688] “Q. And at the time of the issuance of the policy I suppose you told them what you wanted was employers’ liability insurance? “A. I think I did; yes. “Q'l And the nature of the property that you had? “A. I don’t think I went into details. They were familiar with it themselves. “Q. You didn’t go into any of the details at all as to any of the conditions that should be placed in the policy? “A. I did not. “Q. You knew that the company to whom this application was made was a company that was issuing policies of that kind? “A. Yes, sir. ‘ * Q. And you simply made application that a policy —an employer’s liability policy — be issued to you covering your plant, without going into any details at all as to any of the conditions or statements provided in the policy? “A. I did.” In connection with this testimony, it is thus laid down as a rule in Cleveland Oil Co. v. Norwich Insurance Society, 34 Or. 228 (55 Pac. 435), in an opinion by Mr. Justice Moore : “So, too, the law will presume that the minds of the parties met upon an agreement containing the terms and conditions of a policy such as is usually issued by the contracting insurance company covering like risks: 1 May on Insurance (3 ed.), §23; Barre v. Council Bluffs Ins. Co., 76 Iowa, 609 (41 N. W. 373); Smith v. State Ins. Co., 64 Iowa, 716 (21 N. W. 145); Hubbard v. Hartford Ins. Co., 33 Iowa, 325 (11 Am. Rep. 125); De Grove v. Metropolitan Ins. Co., 61 N. Y. 594 (19 Am. Rep. 305); Eureka Ins. Co. v. Robinson, 56 Pa. St. 256 (94 Am. Dec. 65); Fuller v. Insurance Co., 36 Wis. 599; Salisbury v. Hekla Ins. Co., 32 Minn. 458 (21 N. W. 552).” [689] 2. In this state the precept is thoroughly established and of long standing that in suits to reform a written instrument on the ground of mistake the complaint must clearly state what the original agreement of the parties was, and point out with precision wherein there was a misunderstanding; that the mistake was mutual and did not arise from the gross negligence of the plaintiff, or that the misconception originated in the fraud of the defendant: Boardman v. Insurance Company of Pennsylvania, 84 Or. 60 (164 Pac. 558); Evarts v. Steger, 5 Or. 147; Lewis v. Lewis, 5 Or. 169; Stephens v. Murton, 6 Or. 193; McCoy v. Bayley, 8 Or. 196; Foster v. Schmeer, 15 Or. 363 (15 Pac. 626); Hyland v. Hyland, 19 Or. 51 (23 Pac. 811); Meier v. Kelly, 20 Or. 86 (25 Pac. 73); Epstein v. State Ins. Co., 21 Or. 179 (27 Pac. 1045); Kleinsorge v. Rohse, 25 Or. 51 (34 Pac. 874); Osborn v. Ketchum, 25 Or. 352 (35 Pac. 972); Thornton v. Krimbel, 28 Or. 271 (42 Pac. 995); Mitchell v. Holman, 30 Or. 280 (47 Pac. 616); Sellwood v. Henneman, 36 Or. 575 (60 Pac. 12); Stein v. Phillips, 47 Or. 545 (84 Pac. 793); Bower v. Bowser, 49 Or. 182 (88 Pac. 1104); Smith v. Interior Warehouse Co., 53 Or. 578 (94 Pac. 508, 95 Pac. 499); Howard v. Tettelbaum, 61 Or. 144 (120 Pac. 373); Suksdorf v. Spokane, P. & S. Ry. Co., 72 Or. 398 (143 Pac. 1104); Hyde v. Kirkpatrick, 78 Or. 466 (153 Pac. 41, 488). 3, 4. In a sense, stating an account of the evidence, we have for the plaintiff the statement that nothing was said about the existence or cancellation of previous insurance of the kind in contemplation. On behalf of the defendant there is the testimony of its agent that he designedly inserted the words “no exceptions,” which the plaintiff would elide, and that the policy was [690] the one in ordinary nse by the defendant company for such risks. Added to this on behalf of the defendant is the testimony of the plaintiff’s secretary, already quoted, giving rise to the presumption as a piece of evidence in favor of the defendant, that the ordinary form of policy was to be used. In our judgment, the positive testimony on behalf of the defendant, coupled with the presumption already quoted, constitutes a preponderance of the testimony against the mutuality of the mistake so necessary to be shown if any correction should be made in the document. 5. We note also that the only change the plaintiff seeks is to strike out the typewritten words, “no exceptions. ’ ’ By the terms of the policy these numbered statements are imputed to the applicant for insurance, for at the outset in the instrument it is said to have been issued in consideration of the money premium and of the statements contained in the schedule which the insured warrants to be true. The statement as printed was that: “No insurance of the kinds specified in Statement 12 proposed by or on behalf of the Insured has been declined, nor has any such insurance been canceled or the renewal thereof refused, except as follows.” If no exception followed, this statement must be taken to be absolute and, being a warranty, must be strictly true as stated: Buford v. New York Life Ins. Co., 5 Or. 334. If the party making this absolute statement would qualify it by an exception, it is incumbent upon him to state the exception, because it is presumably within his knowledge. In this instance the testimony .shows that the exception was within the knowledge of the assured but was unknown to the insurer. Consequently, it is immaterial whether or not [691] the words “no exceptions” be stricken from the policy, because the legal effect of the clause is the same whether the two words in question be retained or discarded. But aside from this possibly technical ground, the weight of the testimony is in favor of the proposition that the alleged mistake was not mutual, and that the most which can be said of the situation is that the plaintiff did not notice that provision in the policy while the defendant designedly inserted the words complained of and purposely used the form of policy employed. To reform the policy so as to make its legal effect different from what it appears on its face under the circumstances would be to make a new contract for the parties contrary to the understanding of at least one of them. The testimony on behalf of the plaintiff falls short of pointing out with clearness what the original agreement of the parties was. It only ■states in substance that the words “no exceptions” were not to be put into the contract and that nothing was said abóut previous insurance. What, if anything, in the main, was to be affirmatively stated as the binding agreement between the parties is left to conjecture. But, above all, the preponderance reveals that the mistake, if any, was not mutual. The result is that the decree of the Circuit Court must be affirmed. Affirmed. McBeide, C. J., and Benson and Habéis, JJ., concur.