Fame Insurance v. Thomas

Bailey, J. The defendant’s plea, setting up the condition of the policy, limiting the time for the commencement of an action for a loss to twelve months next after the same should occur, raises the question of the identity of the present action with the one pending prior to the substitution of David J. Thomas as plaintiff, in place of Joseph Mann and Henry Mann. It is insisted that the amendment was tantamount to a discontinuance of the action previously pending, and the commencement of a new action, and that, as more than twelve months had then elapsed since the date of the loss, the action should, be held to be barred. The amendment was allowed under the twenty-third section of the Practice Act, which provides that, at any time before the final judgment in a civil suit, amendments may be allowed on such terms as are just and reasonable, “introducing any party necessary to be joined as plaintiff or defendant, discontinuing as to any joint defendant, changing the form of the action, and in any matter, either of form or substance, "in any process, pleading or proceeding, which may enable the plaintiff to sustain the action for the claim for which it was intended to be brought, or the defendant to make a legal defense.” The “ claim” for which the suit was intended to be brought, was for the amount due by the terms of the policy for the loss to the property insured. The policy ran to David J. Tilomas, but contained a clause making the loss, if any, payable to Mann Brothers, as their interest might appear. Mann Brothers were incumbrancers, and up to the date of the trial, the amount due them exceeded the sum insured. The money payable under the policy, whether sued for in the name of Mann Brothers, or of David J. Thomas, for their use, was equitably theirs. It was in either event the same money, due by virtue of the same contract, and payable to the same parties, and whether recovered in the name of Thomas or Mann Brothers, the recovery is a bar to any further suit on the policy by either party. There is, it is true, a technical distinction between the cause of action averred in Thomas’ declaration, and the one averred in the declaration in which Mann Brothers were plaintiffs. The former necessarily averred an undertaking to pay the amount of the insurance to Thomas, while the latter averred as the cause of action, an undertaking to pay it to Mann Brothers as their interest might appear, with a further averment showing their interest and its extent. These differences, however, are mere matters of form, no way effecting the material and substantial lights of the parties to the fund sought to be recovered. The claim for which the suit was intended to be brought, is the same in either case, and the amendment was merely in furtherance of the assertion of that identical claim? and not in the nature of the discontinuance of a pending suit, and the commencment of a new one. It may be observed still further, that the same section of the statute which authorized the amendment also provides that the adjudication of the court allowing the amendment, shall be conclusive evidence of the identity of the action. We think, then, that within the meaning of the condition of the policy, the present suit must be deemed to have been commenced at the díte of the issuing of the original summons, which was within less than twelve months next after the occurrence of the loss, and that the defendant’s plea setting up that condition was not sustained. On the former appeal we considered the question of the agency of Taylor, the person who obtained from the plaintiff the application for insurance, and transmitted it to the defendant’s general agent at Chicago, and reached the conclusion that, if, in point of fact, he was the agent of neither the plaintiff nor defendant, the party who first put into his hands the means of imposing himself upon the other as such party’s agent, should be held responsible for his acts. While the evidence in the present record, bearing upon the question of Taylor’s agency, is somewhat fuller and more circumstantial than on the former trial, we are unable to see that it warrants any different conclusion. It is clearly shown that Taylor was not in fact the defendant’s agent, and that the plaintiff placed in his hands a written application for insurance, which Taylor alter ward tran.-uiitted to the defendant’s general agent, thereby obtaining from him the policy in question. The plaintiff having thus clothed Taylor with an indicium of agency, and the defendant having been thereby induced to deal with him as such, the plaintiff can not now be heard to say that Taylor was the defendant’s agent and not his. It follows that the plaintiff is bound by the statements contained in the application, whether inserted therein by himself or by Taylor. The principal controversy in the case grows out of the omission by the plaintiff to disclose the fact that a portion of the building to be insured was used and occupied for the manufacture of shingles. Other parts were used for manufacturing clothes-pins and broom-handles, and in the application, to the question, “ Name the property,” the answer “ Clothes-pin and broom-handle factory ” was given; and to the question, “ What is the precise kind of goods made, and of what material?” the answer was “ Clothes-pins and broom-handlesbut nothing was said about the shingle factory. In the instructions to the jury the court held that, before the defendant could avail himself of the plaintiff’s failure to disclose the fact thus concealed, it was incumbent on him to show that the existence and use of the shingle factory materially affected the risk, and that the plaintiff, or his agent, intentionally suppressed such fact from the application, knowing it tobe material to the risk. In marine insurance the rule is, that a concealment will avoid the policy, although not intentional or fraudulent, and whether it arises from mistake, inadvertence or ignorance of their materiality, if it is a concealment of material facts. 1 Pars, on Marine Ins. 468. It is enough that the insurer has been misled, and has thus been induced to enter into a contract which, upon correct and full information, he would have declined, or made upon different terms. True, this doctrine is not applicable in its full extent to policies of insurance against fire. There, if the insurance company sees fit to insure property without taking the trouble to inquire as to the nature and circumstances of the risk, it can not complain that the hazard is greater than it had anticipated. But where inquiries are made of the insured in relation to such matters as are deemed material to the risk, it becomes his duty to answer correctly. When thus called upon to speak, he is bound to make a true and full representation concerning all matters thus brought to his notice, and any concealment will have the same effect as in the case of a marine risk. It is enough that information material to the risk was required and withheld. Burritt v. Saratoga Co. Mut. Fire Ins. Co. 5 Hill, 188. Nor is the materiality of a fact about which specific inquiry is made, open to discussion. The rule on this subject is laid down by Mr Phillips as follows : “ A misrepresentation or concealment by one party of a fact specifically inquired about by the other, though not material, will have the same effect in exonerating the latter from the contract,-.as if the fact had been material, since by making such inquiry he implies that he considers it to be so.’ 1 Phillips on Ins. § 542. In the same connection the author further remarks that this rule is particularly applicable to written answers to written inquiries referred to in the policy. It is so because a party, in making a contract, has a right to the advantage of his own judgment of what is material, and if, by making a specific inquiry, he implies that he considers a fact to be so, the other party is bound by it as such. See also Wilson v. Conway Fire Ins. Co. 4 Rhode Island, 141; Anderson v. Fitzgerald, 24 Eng. Law and Eq. 1; Protection Ins. Co. v. Horner, 2 Ohio St. 452; Bliss on Life Ins. § 73. These rules are especially applicable where, by the terms of the policy, the application is made a part of the contract and a warranty by the assured, and where the assured undertakes, in any form, that his answers are full and correct. In such case, no question of knowledge, good faith or materiality arises, but it is simply a question as to the truth and fullness of the.answers, and the want of either is fatal. May on Ins. § 206. In this case, the policy provided that applications for insurance should be in writing, and should specify, among various other things, by whom the building to be insured was occupied, whether as a private dwelling or how otherwise, and whether any manufacturing was carried on within or about it; and it was expressly agreed that “ such survey and description” should be taken and deemed a part of the policy, and a warranty on the part of the assured. We think it clear that by these provisions the application, or at least so much of it as contained the questions and answers in relation to the occupa ncy and use of the building, and the manufacturing carried on within it, was made a part of the contract, and a warranty. Also, in the application, immediately preceding the questions and answers, was the following: “The applicant will answer particularly the following questions, and sign the same, as descriptive of the premises, and forming a part of the contract and a warranty on his part;” and in the body of the policy there was a-condition that if the assured should make a misrepresentation or concealment touching the risk to be assumed, the policy should be void. This condition, though not in terms a stipulation that the answers were full and correct, was a warranty against any misrepresentation or concealment, and, at least so far as the question of good faith and materiality is concerned, was tantamount to such stipulation. It follows, then, that the instruction which threw upon the defendant the burden of proving that the fact concealed was material to the risk, and also that it was fraudulently concealed, was- clearly erroneous. See Burritt v. Saratoga Mut. Fire Ins. Co. supra. The judgment will be reversed and the cause remanded. Judgment reversed.