Wilson v. Anchor Fire Insurance

Evans, C. J. On October 24, 1905, the Anchor Fire Insurance Company issued a policy of insurance to the plaintiff upon his dwelling house, in the sum of $1,000, and upon the furniture therein in the sum of $400. In September, 1906, the dwelling house, was totally destroyed by fire, including furniture to the value of $152.75. The plaintiff brought his action against the defendant company, for the sum of $1,152.75. No controversy is made as to the extent of his loss. It appears from the record that plaintiff’s application for insurance, in pursuance of which the policy in question was issued, was taken on October 19, 1905, by one Sells, who was a soliciting agent for the defendant company. It appears, also, that prior to such date, — 460 — and in the year 1902, the State Insurance Company had issued to the plaintiff its policy for $1,000 on the same dwelling house. This policy was made payable to the intervener mortgagee, and was in her possession, and was in full force and effect, on October 19, 1905. On this latter date Sell’s and another called upon the plaintiff to solicit insurance. The plaintiff himself was in ill health, and the business in his behalf was transacted by his iwife. In her conversation with Sells she told him of the previous insurance, and stated her belief that it had expired. No question is made of her good faith in this statement. Thereupon an application for insurance was signed by, or on behalf of, the husband, plaintiff herein. On the next day, Mrs. Wilson called at the office of one Tipton, who had been instrumental in procuring the first policy in 1902, and ascertained from him that such policy was still in force. She immediately sought out Sells and informed him of that 'fact. At the timé Sells received such information, he had not yet sent plaintiff’s application to the defendant company, but had the same then in his pocket, and so stated to Mrs. Wilson. Notwithstanding such information, he retained the application from her, and sent it in to the company, and the company accepted the same, and issued its policy thereon on October 24th, and later collected its premium thereon. To this extent the facts are practically undisputed. Upon this state of facts the defendant has based its defense. In its pleadings it has presented a ■ threefold defense: First, that the existence of the previous insurance rendered the policy issued by the defendant void, according to its express terms; second, that the policy was drawn to cover plaintiff’s dwelling house through mutual mistake, and in the mistaken belief of both parties that the previous insurance had expired, and that the defendant is therefore entitled to a reformation of the policy striking out such part thereof, and such reformation was prayed; third, that if reformation be refused, and defendant’s poli — 461 — cy be held valid, then under the express provisions of the policy it is liable only for its pro rata share of such loss, regardless of whether the previous policy was valid or void. The first defense is not seriously pressed in argument. The real questions presented for our consideration, are: First, is the appellant entitled to a reformation of the policy on the ground of a mutual mistake ? Second, if not, is it entitled to have its liability reduced to a prorating basis, by reason of the existence of the previous policy? The plaintiff on his part does not claim to have intended to maintain double insurance. Ilis position is .that the appellant is liable for the full amount. If, however, it should be found that the appellant is entitled to a reformation of the policy, then the plaintiff claims that he is entitled to recover from the State Insurance Company on the former policy. If it should be held that appellant is liable only for a pro rata share of the loss, then the plaintiff claims likewise that the State Insurance Company is liable for the balance. To preserve his rights in this respect the plaintiff brought an action against the State Insurance Company. In the court below the appellant asked that the State Insurance Company and the mortgagee, Amelia Spies, be made parties defendant to this suit, and that the cause be heard in equity, and it was so ordered. Later the action brought by plaintiff against the State Insurance Company was consolidated with this case, and both were tried together. The lower court adjudged the appellant to be liable for the full amount of the insurance on the dwelling house, and dismissed plaintiff’s case against the State Insurance Company. From that judgment the defendant has appealed. In order to preserve his ultimate rights the plaintiff has appealed also. He does not, however, ask a consideration of his appeal, unless relief be awarded to the Anchor Fire Insurance Company. — 462 — 1. Insurance Reformation of policy: mutual mistake. — 461 — I. Is appellant entitled to a reformation of the policy because of mutual mistake? That the parties acted on — 462 — October 19, 1905, under a mistaken belief as to the facts is undisputed. The contract sued on, however, was not consummated on that date. The plaintiff signed an application. 'It still • rested with the company to accept or reject the application. Before such application was accepted by the company, and while the application was still in the hands of its soliciting agent, the mistake was discovered by the plaintiff, and such discovery was promptly communicated to the soliciting agent. The plaintiff doubtless had a right at that point to recall his application and terminate negotiations. Surely the appellant had a right to reject the application. It did not do so. With knowledge of the material fact it chose to issue its policy in pursuance of the application, and to collect its premium therefor. In the issuance of such policy it was not acting under any mistaken belief. This ground of reformation, therefore, falls away. 2. Same: knowledge of agent. It is argued, however, that Sells did not communicate to the home office the information which he had obtained from Mrs. Wilson, and that the company proper had no knowledge of such information, and that it relied solely upon the statements in the application. If this be so, then Sells perpetrated a fraud upon his principal. He was the soliciting agent of this company. It is the settled rule in this state that the defendant company was chargeable with this knowledge on the part of its soliciting agent. It was a present condition, made known to the agent while the application was in his hands, and before the company had bound itself to its acceptance. Johnson v. Ins. Co., 126 Iowa, 565; Miller v. Ins. Co., 31 Iowa, 216; Hagan v. Ins. Co., 81 Iowa, 325; Independent School District v. Ins. Co., 113 Iowa, 65; Padrnos v. Century Ins. Co., 142 Iowa, 199; Key v. National Life Ins. Co., 107 Iowa, 446; Section 1750, Code 1897. See, also, Continental Ins. Co. — 463 — v. Chamberlain 132. U. S. 304 (10 Sup. Ct. 87, 33 L. Ed. 341). Under these holdings, it is clear that appellant can not escape liability as for an existing breach of the conditions of the policy, and equally clear that it has no grounds for reformation thereof. 3. Insurance: waiver of conditions avoiding policy. II. The next question is whether the appellant is liable for the full amount of the loss, or for a pro rata share thereof only. This question necessarily depends upon the further question whether the issuance of the Anchor policy invalidated the previous policy issued by the State Insurance Company. The earlier policy contained an express provision that it should become invalid if additional insurance was obtained upon the property without the written consent of the company indorsed upon such policy. The argument of appellant at this point is that the fact of additional insurance was made known to one Tipton, an alleged agent of the State Insurance Company, and that he made no objection thereto, and that this was in effect a waiver of such provision of the policy. Passing over the question of the authority of Tipton (who was not a recording agent) to bind the State Insurance Company by any knowledge er act of waiver on his part at such time, it is .sufficient to say that the evidence does not afford sufficient basis for this argument. The most that can be claimed under the evidence is that Mrs. Wilson ascertained from Tipton that the State Insurance Company policy had not expired, and that she informed him that she had made an application for other insurance in the belief that the first policy had expired, and that she later informed him that she had notified the other parties of the mistake. On the issue of fact here involved the finding of the lower court was against the appellant, and we agree with such finding. In the absence of consent or waiver on the part of the State Insurance Company its policy became invalid when the Anchor policy became effective: Independent School Dis — 464 — trict v. Fidelity Ins. Co., 113 Iowa, 65; Zimmerman v. Insurance Co., 77 Iowa, 685. The conclusion of the trial court was that the appellant was liable for'the full amount of the loss, and that the State Insurance Company was not liable. We think there is no escape from that conclusion. The rights of the mortgagee are involved in the case. In view of the conclusions reached as to the liability of appellant for the full amount, we have no occasion to discuss them. The judgment below is in all respects affirmed.