House v. Security Fire Insurance

Deemer, J. Plaintiff owned a half section of land in Iowa County, valued at something like $22,000, and, wishing to make a loan thereon, he applied to one Cranshaw, who lived at Marengo, and who was a local agent at that point of the Northwestern Mutual Life Insurance Company of Milwaukee and also the agent at the same place of the defendant insurance company. _ On behalf of the Northwestern Insurance Company Cranshaw offered to make a loan for his company upon the land to the amount of $5,000. At that time plaintiff’s improvements upon the land were insured in a local mutual insurance company, and Cranshaw represented that the Northwestern Company required insurance in a stock company upon the improvements as additional security for the loan. Plaintiff thereupon directed Cranshaw to draw up an application to defendant for an insurance policy of $1,800 upon the dwelling house which was on the land and paid to Cranshaw $36, the amount of the premium thereon. It was also agreed that the mutual policy upon the house should be canceled. The ajiplication was drawn up by Cranshaw and signed by plaintiff. It described the location of the property, asked for insurance in the sum of $1,800, gave a valuation and description of the dwelling house, and stated that it was occupied as a private dwelling. The applicant stated that he was the sole owner, that the property was not incumbered, gave the valúe of the land and a general description of the chimneys, stovepipes, number of rooms, etc., cand stated that there was no other insurance. The application also stated that: “The applicant agrees that each of the foregoing answers, statements, and valuations are true and a warranty on his part, and that the accepting of this risk and the issuing of a policy of insurance thereon by the company is to be based solely upon this application.”- The application also contained this, “Shall we send policy to applicant or agent?” and the answer was, “Agent.” From the application it — 465 — appears that it was received by defendant at Davenport, Iowa, March 13, 1897, and was approved by its secretary on the same day. The policy when issued was returned to Cranshaw and by him sent to the Northwestern Company as part security for the loan. Plaintiff was notified of this delivery to the life insurance company and made no objections thereto. He never, so far as shown, saw the policy. The policy became effective at least from the time of the acceptance of the plaintiff’s application by the, defendant company. Something like eleven months thereafter, and in February of the year 1898, plaintiff made another loan of *$1,900 upon his land from a neighbor and executed a mortgage securing the same upon the entire property. No consent to this loan was evér in fact given by the defendant. On September 27, 1901, the dwelling house was destroyed by fire. Notice was given the defendant, and its adjuster visited the scene of the loss and then informed plaintiff that his policy was void because of the execution of the second mortgage and by reason of the fact that plaintiff had entered into a contract for. the sale of his property. i. insurance: forfeiture change of title. With reference to this last matter, the record shows that plaintiff made a contract with one Perry to sell him his land upon which the building was located; deed to be drawn and delivered in March of the following year. $1,000 was paid upon the contract, which was to be forfeited if the deal was not closed. The contract was in the nature of an option, and nothing had been done thereunder at the time of’the fire. On the 1st day of March, when the option was to become effective, the option was abandoned, and the title never passed from plaintiff. We may as well say in this connection that under no theory of the case did this option contract constitute a breach of any of the conditions of the policy of insurance. Ark. Ins. Co. v. Wilson, 67 Ark. 553 (55 S. W. 933, 48 L. R. A. 510, 77 Am. St. Eep. 129); — 466 — Pringle v. Insurance Co., 107 Iowa, 742; Erb v. German Ins. Co., 98 Iowa, 606. II. This action was brought on two theories: Hirst, that a policy was issued to plaintiff which would entitle him to recover; and, second, ’that no policy was issued, and that plaintiff had an oral contract of insurance under which he was entitled to recover. In either event, he pleaded that, if there were any conditions of the policy not embodied in plaintiff’s application for insurance, they should be stricken out, and the policy issued reformed accordingly, or, if no policy was issued, the court should establish an oral one which would entitle him to recover. Defendant pleaded the execution of its policy pursuant to plaintiff’s application, and that it was sent to the life insurance company according to an arrangement between plaintiff and Cranshaw whereby it should be delivered to said insurance company as 'part security for plaintiff’s loan. It further pleaded that the policy contained a provision to the effect that, if the “property insured should thereafter become mortgaged or incumbered without consent indorsed upon the policy, then the policy should become null and void.” As a breach of this condition, defendant set forth the execution by plaintiff of the Harrington mortgage, and as a conclusion it averred that by reason thereof the policy became and was null and void. In reply to this plaintiff, among other things, pleaded the following: That said half section of land was of the value of more than $22,000. That the mortgage to Harrington for $1,900 incumbered the entire half section of land, and that either quarter section of said land was ample security for all of the incumbrance evidenced by the mortgages to the Northwestern Life Insurance Company and to said Harrington, and said mortgage to Harrington in said answer complained of does not affect or increase the hazard or risk of the insurance placed on said house by the defendant. Hurther replying, plaintiff states: That said mortgage to Harrington was of record in Iowa County about three years — 467 — before the loss or destruction of said insured building. That the defendant during all of said time had an agency and agent at the city of Marengo, the' county seat of Iowa County, and that said agent or agents did or should have known of the making of said mortgage, and, if the making of the same did affect plaintiff’s right under said insurance policy, it was the duty of the defendant to have notified plaintiff that the giving of said mortgage affected the insurance under said policy. Heplying further, plaintiff states that the defendant is estopped from claiming that the giving of said- mortgage to Harrington avoided the insurance on his house for the reason that the defendant, by attaching to the acceptance of his proposal for insurance the condition set out in said answer, the giving of a mortgage without the consent of the company would void the payment of any loss, and defendant, knowing that plaintiff had no opportunity to know or any information in regard to such condition of said policy of insurance, led plaintiff,- relying upon the acceptance of his proposal for insurance being accepted unconditionally in making said mortgage, to have it cover and include a description of the lands on which said insured building was situated or to fail to except such lands from the provisions of said mortgage, because, if he had known that the inclusion of said land would affect the insurance on his house, he could just as easily have placed the mortgage on the northwest quarter alone, or have obtained the consent of the defendant thereto. These were the issues on which the case was tried, although the arguments of counsel cover a wider field. The record shows the following stipulation: “It is agreed between the parties to this action that a certain instrument purporting to be a copy of policy No. 14654, issued to George C. House, marked Hit’s Ex. No. 2/ shall be received in evidence and agreed to be a true and correct copy of the original policy and application indorsed thereon, issued by the company upon plaintiff’s application, and that this copy may be used in evidence the same as the original might be used if produced.” Following., this is the form of a policy issued by defendant, which one of defendant’s — 468 — witnesses said contained the conditions always found in policies issued by it, one of which was to the effect that, if the property should thereafter be mortgaged or incumbered without consent indorsed upon the policy, it should be null and void. 2. Insurance of policy We do not, in view of this record, regard it as very material whether a policy was actually issued and returned to Cranshaw and by him sent to the life insurance company, or whether no polidy was in fact issued, for the rule of this court is that, if no policy is in fact issued, the case will be treated and considered as if a policy in the usual form issued by the company had in fact been issued. Barre v. Insurance Co., 76 Iowa, 609; Smith v. Insurance Co., 64 Iowa, 716; Hubbard v. Insurance Co., 33 Iowa, 325; Moore v. State Ins. Co., 72 Iowa, 414; Goodwin v. Ass’n, 97 Iowa, 226. We are constrained to hold, however, that a policy did issue upon the application, that this was returned to Cranshaw and by Cranshaw forwarded to the life insurance company as additional security to said company either upon plaintiff’s express direction or with his subsequent approval and consent. As a policy was so issued which contained the condition already referred to that policy became void be>cause of the execution of the Harrington mortgage, unless plaintiff has shown a waiver by the defendant company or an estoppel on its part from setting up this breach of’ condition. 3 Same- waiver of forfeiture authority of agent Returning again to plaintiff’s plea of waiver and estoppel, it will be noted that it does not plead that the agent, Cranshaw, knew when he took plaintiff’s application that it was ^en contemplated by him (plaintiff) that -^e would presently make an additional loan' upon his real property. That is the proposition argued by plaintiff’s counsel, but this seems to be beside the mark. We may, however, for the purposes of the case, assume that the issue is tendered, and still it — 469 — does not in any manner aid the plaintiff. It is true that plaintiff said to Cranshaw that he wanted a $7,000 loan; but he (Cranshaw) said he could not place to exceed $5,000. Plaintiff then said that he could get $2,000 at home by putting a mortgage upon the land, to which Cranshaw responded that he did not object to that at all. There was talk between them as to what the land would .carry, but Cranshaw did not want more than $5,000 for his company. Plaintiff, however, told Cranshaw that he would get an additional loan from some home company or home people. The policy in suit was taken out solely with reference to the life insurance company loan at Cranshaw’s solicitation and request, and the policy was forwarded to the life insurance company. The Harrington mortgage was not issued until about eleven months after the delivery of the policy. Oranshaw did not attempt to procure more than a $5,000 loan, and he undertook to procure an $1,800 policy of insurance as security for that loan. He may have known that it was plaintiff’s intention to thereafter make another loan of $2,000; but he (Crknshaw) did not undertake to get it for him, nor did he know when, if ever, such a loan would be made. Surely there was nothing to indicate that this additional loan was to be presently secured, and in fact it was not. The placing of the subsequent mortgage upon the property was a clear violation of the terms of the policy, and Cranshaw had no authority to promise in advance that this subsequent breach of condition would be waived. The case in this respect is clearly ruled by Wensel v. Insurance Co., 129 Iowa, 295, where it is said: “After much controversy and doubt regarding the rule for such cases, we have settled these two propositions in some o'f our recent opinions: The first is that, if an agent of an insurance company has knowledge of past conditions or existing facts avoiding a policy which is secured by him, by reason of such facts being within certain prohibitions which presently avoid the policy, the company issuing the policy with — 470 — this knowledge on the part of its agent can not insist upon these facts for the purpose of avoiding liability. • Second, knowledge of a soliciting agent of the future intentions of the insured as to violating some of the conditions of a policy as written is not binding upon the insured and can not be relied upon, for the purpose of avoiding the terms and conditions of the policy as issued.” See, also, Cornelius v. Insurance Co., 113 Iowa, 183. These cases very clearly distinguish those relied upon by appellant, such as Independent School Dist. v. Insurance Co., 113 Iowa, 65; Erb v. Insurance Co., 99 Iowa, 728, and Fitchner v. Ass’n, 103 Iowa, 276. In each case the assured was to presently take out additional and concurrent insurance to the knowledge of the agent. In the instant case plaintiff disclosed no such intent to Cranshaw, and in fact did not have it, or, if he did, it was conditional, for he did not make the additional loan until nearly a year after the issuance of the policy. Cranshaw would not loan more than $5,000 for his company, and he did not promise nor attempt to procure any more from any one. This was plaintiff’s thought, and he did not indicate an intent to presently make such loan. Indeed, for that matter, he might never have placed an additional loan, at least he indicated no purpose of doing so presently. Whatever plaintiff’s intentions, they related solely to the future, and Cranshaw who, as we believe, was nothing more than ¿ soliciting agent, had no authority to waive any of the conditions of the policy. That the exact matter pleaded by plaintiff in reply constituted no waiver of a 'breach of the condition of the policy is plain. Indeed, plaintiff’s counsel do not claim in argument that it did. 4. Appeal: objections not raised below. 'They rely to. some extent upon the thought that defendant did not introduce the policy issued by it or any form of policy usually issued. This is an extremely technical point and to our minds . _ without merit. It is true they did not produce the policy issued, for that was not in their possession. — 471 — They did produce a copy of their usual form of policy, and this was identified and used hy counsel as if properly introduced, and the case was tried on the theory that it was so introduced. .It was treated as introduced on the trial before the lower court, and upon this appeal it should he so considered. The judgment seems to be right, and. it is affirmed. Evans, C. J., taking no part.