Hartford Insurance v. Haas

JUDGE PRYOR, delivered the opinion oe the court. Margaret Haas and lier children were the owners of a brick building in the town of Owensboro, upon which insurance was obtained by her for the sum of two thousand dollars in the Hartford Insurance Company. The premium paid was thirty-two dollars, and the insurance against loss or damage resulting from fire. The fee was in the children of Mrs. Haas, her interest being confined to her dower and a lien for a purchase money note that had been taken up by her after the death of her husband out of her own means. The policy of insurance is issued in the name of Margaret Haas, without reference to her interest or that of her children, and contains a stipulation to the effect that “if the assured is not the absolute and unconditional owner of the property insured, or if said property be a building and the assured is not the owner of the land in fee-simple on which the building stands, and this fact is not expressed in the written portion — 535 — of the policy, * * * then, and in every snch case, the policy shall be void.” The building was destroyed by fixe, and the appellant (the insurance company) contests the right of recovery on two grounds— First. The assured was not. the owner in fee of the property insured, and failed to disclose her interest. Second. The house became vacant during the life of the policy, and was unoccupied when destroyed, the policy providing that in such a state of case the liability of the company should terminate. The appellee, Mrs. Haas, ascertaining'the character of defense relied on, filed her petition in equity, seeking to reform the policy, alleging that the contract of insurance as made with the agent was to insure not ■only her interest but that of her children, and by mistake the provision for the children was omitted, and .seeks to recover such a sum as she may be entitled to under the contract. The averment with reference to the character of the contract, as well as the mistake in its execution, was traversed by the company, and the defenses already alluded to relied on to defeat any recovery. That the appellee supposed she was insuring the interest her children had as well as her own is evident; but from the testimony it seems there was nothing said as to the nature and extent of the interest insured, and the chancellor could not well enlarge the liability of the ■company by inserting a provision in the policy for the benefit of the children, when the only reason assigned for so doing consists in the belief by the mother that ■she had insured their interest in the property as well .as her own. — 536 — The question then arises, is the policy or contract-of insurance void because of the failure of Mrs. Haas-to state the real nature of her title \ There is no pretense that the assured made any representation, false or otherwise, in regard to the property she was insuring or her interest in it. She seems to have acted in the best of faith, believing that she-had the right to insure the house at its full value, and was entitled to receive from the company its fair cash value in the event it was destroyed by fire during the-life of the policy. So we have a case where the assured, had an insurable interest, but having failed to state that she had less than a fee-simple title, it is urged that the entire contract is void. The importance of disclosing the nature of the interest of the assured in the subject-matter insured can not be overlooked, and such a stipulation in the contract will be enforced, because binding on all the parties, although the assured may have regarded it as not essential at the time of entering into the contract, or have been ignorant, in the absence of some fraud practiced upon him, that the policy contained such a stipulation. The evidence in this case shows, however, that the assured was an illiterate Herman woman, unable to-write or read the English language, and dependent, upon those with whom she contracted for the necessary information touching such a business transaction as that of insuring her property.' She did not know the difference between a title in fee and a dower interest, and was entirely ignorant of what the policy contained. In this condition, as the proof clearly shows, she relied on the general agent of this com — 537 — pany to inform her, or rather to instruct her as to the nature of her rights. She had been insuring with the same agent for ten or twelve years, and often in the same company, paying her annual insurance upon the entire cash value of the property insured. This agent was invested with a general and plenary power not only to solicit but to effect insurance without even consulting the home office. He lived in the same town with the appellee; was fully apprised of her ignorance in regard to this business matter; sought and solicited her to insure her property, and, as the testimony shows, -knew all about the nature and extent of her title. He knew this from having an actual examination made by those competent to investigate such a question; and now to hold that these parties, under such circumstances, were dealing at arm’s length, and for that reason declare the policy void, would be a mere mockery of justice, and give to this derelict company the earnings for years of this confiding German woman, when the company or its agents knew that if the property was destroyed by fire it would render the policy void. The agent ,states, and it is doubtless true, he had forgotten the fact of investigating the title, yet the facts are so conclusive on that subject as to leave no doubt on this branch of the case. Nor do 'we undertand that the agent is attempting to shield the company from liability; but his connection with the transaction must be treated as if this woman were dealing directly with the principal at the home office and not with the agent. If the principal knew the extent of appellee’s interest, and had insured the property without any fraud — 538 — or misrepresentation by her of her title, could any chancellor under the circumstances deny her relief to the extent of her insurable interest? In May on Insurance, section 143, page 161, it is said: “It has in fact been very generally held that knowledge by, or notice to, the agent of the inaccuracy of a statement in the application upon which a policy is issued after such notice or knowledge binds the company, and prevents them from availing themselves of the inaccuracy as a defense. And this is true, even though the policy provide that when the application is made through an agent of the company, the applicant shall be responsible for such agent’s representations.” In this case there was no application made in writing. The sub-agent, or the agent of the principal agent, appeared and solicited a renewal of the policy, and it was then signed or filled up at the agent’s office and delivered to the appellee. We are not disposed to adjudge that such contracts, shingled over with stipulations that are practically deceptive, if not inserted for that purpose, are binding on the ignorant and illiterate, when guilty of no fraud or misrepresentation, but have trusted alone to the superior knowledge of the agent, who undertakes to make such an application or to issue such a policy as will meet the requirements of the company he represents. The statements embodied in a policy issued under such circumstances, if false or erroneous, should be regarded as the act of the insurer. “The modern decisions,” says Mr. May, in his work on Insurance, “fully sustain this proposition, and are founded on reason and justice.” (May on Insurance, page 165; Rowley v. Empire Ins. Co., 36 New York, 550.) — 539 — It is urged by the appellant, that as the knowledge acquired by the agent of the nature of appellee’s title was derived in the prosecution or transaction of business engagements entirely disconnected with the matr ter of insurance, therefore the knowledge of the agent should not be held that of the principal. We think it immaterial in what manner the information was acquired, whether in the course of his employ as agent or otherwise ; he had personal knowledge of the fact that the fee to the property was in the children of the assured, and the appellee should not be made the victim of this neglect on the part of the agent, and the insurance company obtain the benefits of the toil and.labor of this woman for years in raising the means with which to keep up her insurance. Here the agent was the sole judge as to whether he would issue the policy. He was not required to consult his principal before, making the .contract of insurance complete, and his acts should be regarded as if he were in fact the principal. (Harriman v. Queen’s Ins. Co., 49 Wis., 71.) The interest, therefore, that the appellant had in this insured property was secured by this p.olicy. The extent of that interest is another, question involved. That as.widow she had a dower, interest will, not be controverted, and it further appears that she relieved the property from the lien of a purchase, money note out of her own means and held it against .the estate. The appellant, in order. to. defeat this claim, has relied on the statutory bar, as if the appellee were attempting by a suit in equity to enforce this lien against the'protest of her infant children.. Whether — 540 — the children could defeat a recovery by the mother, by reason of the lapse of time, we will not stop to inquire. The company is not a creditor of the estate, or interested in any manner in the property itself. It is liable to the extent of appellee’s interest in the house or building destroyed, and the plea of limitation is not in the way of a recovery. There are several issues of fact 'raised by the pleadings and proof; one as to the value of the property, and another in regard to the property having been left vacant. Tire view taken by the court below is sustained by the testimony on the several issues. It is also complained that the court below erred in refusing to transfer the case to the ordinary docket, after having adjudged that the contract could, not be reformed, and the widow could only recover to the extent of her interest. It appears that, after the equitable issues had been tried, the court, without objection, proceeded to render judgment for the. appellee for the value of her interest, which, including the lien note, amounted to one thousand three hundred and sixty-four dollars with interest. After this judgment had been rendered, the appellant for the first time moved to transfer the case. It was then too late ; nor was it necessary for the trial court, the case being in equity, to separate in his findings the law from the facts ; and if it had been, the law, as well as the facts presented, has been fully considered. The appellee, in her proof of loss and in an ordinary action that was for some reason dismissed, swore that she held the fee-simple title, and it is argued that this should estop her from a recovery in this case. — 541 — YYe llave already in effect determined this branch of the case. It is plain that no fraud, misrepresentation or bad faith is to be attributed to the appellee, and equally certain that she failed to comprehend the character of her title, and labored under the belief, until this issue was raised by the company, that she had obtained a policy that covered fully the cash value of the entire building. In this she was mistaken; but there is no reason in law, equity or justice for denying her right to recover the value of her own interest in the subject-matter of the contract. This having been adjudged to her by the chancellor, his judgment is now affirmed on the original and cross-appeal.