Standard Auto Insurance v. Russell

[471] Opinion op the Court by Chiep Justice Sampson — ■ Affirming. Appellant, Standard Auto Association, is defending this action against appellee Russell on a policy of fire insurance issued by it to him on his Saxon automobile in 1920, for $700.00. He recovered a verdict for $700.00 upon which judgment was entered in the lower court, The association appeals. It is the contention of the association that the statements in the written application of appellee Russell to the association for a policy of insurance are: (1) warranties, and (2) false and fraudulent. The material part of the application for the policy of insurance reads as follows: “Amount op Fire and Thept Insurance Recommended by Agent, $700.00. “What is your name? A. Ewing Russell. Do you want fire insurance Yes. Theft insurance? Yes. Damage? No. Do you want public liability? No. Do you want property damage? No. Manufacturer or make? Saxon. Type of body? Touring. No. of cylinder? Six. Year of model? 1919. Motor No.? X32601. Horse power? Thirty. Date purchased? May, 1920. From whom? Maxwell Agency, Evansville. Price paid? $800.00. Was oar second-hand? Yes. Is car mortgaged? No. If iso, to whom, and for how much? List price of car when new? $1,135.00. Usual storage place? Yont’s garage, 1st street, Henderson. Policy to be dated, Nov. 24, 1920. Date of application, Nov. 24, 1920. Premium payable? Annually. * ’ The insurer insists that there are at least three false and fraudulent statements in said application, made and signed by the insured: (1) The motor number given is incorrect, (2) purchase of car was not from Maxwell agency in Evansville, and (3) appellee did not pay $800.00 for the- car. All these matters are set up and relied upon in the answer of appellant association to defeat a recovery oh the policy. In reply to these averments in the answer the plaintiff alleges that on or about November 27th, 1920, S. C. Gilmore, as agent for the defendant, solicited plaintiff to purchase the policy of insurance sued on, and that the said Gilmore prepared and filled out the answers to the questions on the application for said insurance; that when the said Gilmore, in filling out said [472] application, came to the question as to the number of the motor of said automobile, plaintiff told him he did not know what was the motor number, and the said Gilmore said he would obtain the same by examining’ the number stamped on the motor, and would insert it in said application; and that the number 'so inserted therein was inserted by the said Gilmore, without the knowledge of or any representation as to its correctness by the plaintiff; that the said Gilmore, when he came to the question in the application from whom the automobile was purchased, was told by this plaintiff that he did not know the name of the firm from whom he had bought it, but it was a garage located at Eighth and Walnut streets, in the city of Evansville, Ind., and he thought the name of the garage was the Maxwell ¿gency, but if the said Gilmore would wait until this, plaintiff could look at his bill of sale he could tell him the name of the seller; that the said Gilmore said never mind, that the name of the seller was not material, and he would put it down as the Maxwell agency, and that he did insert the name of the Maxwell agency, without any representation on the part of this plaintiff that the Maxwell agency was the one from whom plaintiff bought said automobile. That when, the said Gilmore, in filling out said application, came to the question as to the amount of the purchase price, this plaintiff stated to him that the car had cost him in the neighborhood of $800.00, which represented the cost of the automobile and the new tires and other parts which he had bought and put on the car; that the said Gilmore stated that as the car stood this plaintiff about $800.00, he would put the purchase price as $800.00 ; and that said sum of $800.00 was inserted by the said Gilmore, without any representation on the part • of this plaintiff that the same was. the amount paid by him for the car. After the issues were joined a jury trial was had, resulting in a verdict in favor of appellee Russell for $700.00. The instructions submitted each of the foregoing questions. The evidence on behalf of appellee Russell, plaintiff below, sustains each of the averments of the reply. The agent Gilmore did not testify. Our rule regards an insurance solicitor as the agent of the company and not of the insured; and if such agent writes false answers to questions propounded to the ap [473] plicant, or by misleading statements induces the applicant to make false answers, when the applicant is acting in good faitb and without any intention to deceive, the company will be estopped to rely upon the answers to defeat the policy. That rule exactly fits this case. According to the weight of the evidence the insured was acting in absolutely good faith. When asked by the agent of the insurance company who solicited the insurance, the motor number of his car, he answered he did not know but that it could be had from the motor in the car which was in the Yont’s garage. Whereupon the agent said he would go by the garage and get the number, and the number was written in the application by the agent some time thereafter and without the knowledge or assistance of the insured. The statement that the insured bought the car from the Maxwell agency in Evansville, Indiana, came about in much the same way. He could not recall the garage from which he purchased the car but told the agent that it was at the corner of certain streets in Evansville, and that if the agent would wait a short time insured would get his bill of sale and show the agent the name of the garage from which the car was purchased; but the agent told insured that it made no difference and that he would put it down Maxwell agency. When the question came up as to how much the insured had paid for the automobile, he told the agent that it had cost him somewhere between $700.00 and $800.00, counting the equipments- and tires which he had placed on the car after he had bought it, and this is proven to be true. When the agent heard the story of the insured concerning the cost of the car he suggested he write it down as $800.00 and did so. According to this evidence the insured was not guilty of any bad faith.’ If there were bad faith it was on the part of the agent of the company and the company cannot complain of this. “It is. the general rule,” says 14 R. C. L., p. 1174, “that an insurance agent in making out an application for insurance acts as the agent of the insurer and not of the insured, and if the insured makes proper answers to the questions propounded, the insurer cannot take' advantage of -a false answer inserted by its agent contrary to the facts as stated by the applicant. Nor can the insurer avoid the force of this rule by stating in the policy that the agent or the physician acts as the agent of the [474] insured in taking the application or in making the medical examination, as suck a statement in the policy is, generally speaking, in direct variance witli the actual facts; and the same is true of a provision that it shall not be responsible for the agent’s acts.” Masonic Life Assn. of N. Y. v. Robinson, 149 Ky. 80; Same v. Same, 156 Ky. 371; Maccabees of the World v. Shields, 156 Ky. 277. We can see no reason why the general laws of Kentucky should not apply to the appellant association, although it is argued in brief of appellant that they do not. As all the facts concerning how the alleged false statements were embraced in the written application for insurance were set forth in the pleading's, it was unnecessary to aver that the mistakes came about through fraud, oversight or mistake in reducing the contract to writing. We have held that the insertion of false statements by the agent of the company would estop the company to deny its liability on the policy, if the insured was acting in good faith. No reason being shown why the judgment should be reversed it is affirmed.