American Central Ins. v. McLanathan

The opinion of the court was delivered by Brewer, J.: Statement of case. On the 23d of October, 1871, plaintiff in error insured McLanathan against loss or damage by fire to the amount of $2,000, on property described in a policy then issued to him as “his two-story frame dwelling, occupied by him, situate southwest corner Second and Nine streets, Leavenworth, Kansas, and $300 on frame barn in rear of same.” On the 24th of April,' 1872, McLanathan commenced an action in the district court of Leavenworth county against said company, and in his petition in substance claimed that on ^e ^9th of January, 1872, the dwelling-house specified in said policy was damaged $2,500 by fire — and that the company had immediate notice thereof, as required by the policy — and that immediately thereafter, and upon full knowledge of the facts above mentioned, the company gave notice of intention to repair the property, and proceeded, with his consent^ to make preparations to do so, and undertook to do so, and that relying thereon he refrained from proceeding to repair, but that the company refused to repair, and that by reason of the damaged condition of the dwelling, caused by the fire, said building by delay became additionally damaged $1,000 — and that he performed on his [544] part every act required by the terms of the contract of insurance, and asked judgment for $3,000 and interest. After answer and reply,* the case was tried by a jury, which returned • the following special verdict: •“We, the jury, find as follows: 1st.-That the dwelling-house described in the policy of insurance, was built by the plaintiff in the year 1859, on lots which had before that time been conveyed to Lucy B. McLanathan, wife of plaintiff, and the fee-simple title to which lots was then in the said Lucy B. McLanathan, also continued up to and including the date of the fire hereinafter mentioned. Said dwelling-house rested upon a stone foundation, built with mortar, and entering the ground at least a foot and-a-half. “2d. — That at the time the said policy of insurance was made, the plaintiff applied to Daniel R. Anthony, who was the duly authorized agent of the defendant to issue policies of insurance, for a policy of insurance on said house, and that the said agent having made out this policy, the plaintiff informed him that the lots on which the house was situated were deeded to the wife of the plaintiff, but that he (the plaintiff) had built the house; and the said Anthony then stated to plaintiff that it would make no difference whether the policy was made to him or his wife, whereupon the plaintiff paid his insurance-money and took the policy. “ 3d.-That the plaintiff with his family had occupied said house from the time it was built till the time of the fire herein referred to, and the said Anthony, the agent of the defendant, knew the facts as to the title to said property at the time he made said contract of insurance. “4th.-That as to all interest, legal or equitable, in said house, owned by the said Lucy B. McLanathan, the said plaintiff, in making said contract of insurance, made the same for, and in behalf of him and wife, and took said policy of insurance to himself for the benefit of himself and wife, the said McLanathan then acting in the procuring of said policy for himself, and as the agent of his said wife. “5th.-That on the 29th of January 1872, said house accidentally took fire, and a part thereof was destroyed by fire, and the building greatly damaged both by fire, and. the efforts to extinguish the same, without fault of the plaintiff. “ 6th.-The plaintiff immediately notified the agent of said loss, and the agent of the defendant (Mr. Mosier) told the [545] plaintiff that it was unnecessary to furnish proofs of the loss, because the defendant had elected to repair the building. On the 28th of February 1872, the defendant served on the plaintiff another notice, of which the following is a copy: ‘Leavenworth, Kansas, Feb. 28, 1872. H. L. S. McLanathan, Esq,., Leavenworth, Kansas: Sir: You are hereby notified of the determination of the American Central Insurance Company, of St. Louis, Mo., to repair your late residence, situated in the southwest corner of Second and Elm streets, Leavenworth, Kansas, which was on or about the 29th of January, 1872, damaged by fire and water, and that the said company will commence the said repairs immediately on the receipt of proper proofs of loss, as per your policy of insurance in said company, on said building. Yours very truly, Dave Korick, Special Agent Am. Gen. Ins. Go., St. Louis’ “ 7th. — That on the 7th of March 1872, the plaintiff delivered to defendant the notice and proof of loss, of which copies are inserted in the answer of defendant, to which proofs no objection was made by the defendant at any time. “ 8th. — That after the expiration of one month from the date of delivery of said proofs of loss, said defendant, having failed to make any objections thereto, or to repair said building, informed the plaintiff that said defendant would not repair said loss; and thereupon said plaintiff made a portion of the necessary repairs and took possession of said house. “ 9th.-That the plaintiff in making his proof of loss did not intend to defraud defendant. “ 10th. — That the foundation of the kitchen attached to said house was moved by plaintiff onto the west side of said house on the 4th of March 1872, the defendant agreeing thereto on plaintiff’s paying the cost of said removal and whatever additional sum it might cost to make the repairs by reason of the location of said kitchen on the west side of said house. “ 11th. — That the agent of defendant, in making the policy made a mistake in describing the location of the building, as at the southwest corner of Vine and Second streets, instead of at the southwest corner of Elm and Second streets. “12th.-That there was at the date of said insurance policy a street in said city called Vine street, and a street called Second street, and the street called Elm street, and that the agent of the defendant, at the time of the execution of the policy knew that the dwelling-house aforesaid was located on the southwest corner of Elm and Second streets, said Vine street being one street north of Elm. “ 13th. — That at the time of the execution of the said policy [546] there was erected on the southwest corner of Second and Vine streets a frame dwelling-house, the north part of which was two stories in height, the upper story being a half-story, but the south part of same was one story, and that there was also then, in the rear of said dwelling-house, a barn or stable, and that neither of which last-named dwelling or barn was injured by fire. “ 14th.-That the dwelling described in said policy is and was the same which is now, and was occupied by the plaintiff and his family, and was then and now, situated on the southwest corner of Second and Elm streets. “ 15th.-That the injury to said dwelling-house by said fire, and the amount it then would have cost to repair the same was $1,600. “16th .-That at the time said defendant informed said plaintiff that said defendant would not repair said house, the injury to the same, by reason of the action of the weather thereon, and the additional amount it would cost to repair the same, in consequence of such exposure to the weather, was $400. “On the above facts, we the jury assess the plaintiff’s damages at two thousand dollars, as follows: By fire, $1,600 damages; by exposure to weather, $400 damages. Total amount, $2,000. Jas. Bauserman, Foreman.” Upon this special verdict judgment was entered in favor of McLanathan for $2,000, and the insurance company now brings the case here on error. A lengthy and elaborate brief has been filed by the learned counsel for plaintiff in error, and many questions presented and discussed in it. We shall not be able to notice many of these in detail, nor will it be necessary, as the determination'of two or three will decide the ease, the principles involved in those controlling the remainder. 1. Error in description; effect of. The first question we shall notice is as to the description of the property insured. It is described in the policy as “his two-story frame dwelling, occupied by him, , , J \ , Tr, situate southwest corner becond and Vine streets, Leavenworth, Kansas, and frame barn in rear of same.” As a matter of fact the dwelling occupied by McLanathan and which had been occupied by him for a dozen years, as [547] was well known to the agent of the company at the time -he drew up the policy, was on the southwest corner of Second and Elm streets. The jury found that the agent knew the location of McLanathan’s residence, and simply made a mistake in writing “Vine” instead of “Elm” street. This is not a case of an entire misdescription, but simply one of repugnant calls. The dwelling occupied by McLanathan was not on the corner of Second and Vine streets; and vice versa, the building on the corner of Second and Vine streets yvas not and had never been occupied by McLanathan. In such a case the contract is not void, for uncertainty, nor is there any need of applying for a reformation of the contract, provided it appear either from the face of the instrument or extrinsic facts which is the true and which the false description. Falsa demonstratio non nocet, cwm de eorpore constat. “The rule is clearly settled that where there is a sufficient description set forth of premises, by giving the particular name of a close or otherwise, we may reject a false demonstration.” Doe, d. Smith, v. Galloway, 5 Brad., 43, 51. In 1 Greenleaf on Ev., §301, it is said: “If there be a repugnant call, which by the other calls in the patent clearly appears to have been made through mistake, that does not make void the patent. * * * So if lands are described by the number or name of the lot or parcel, and also by metes and bounds, and the grantor owns lands answering to the one description, and not to the other, the description of the lands which he owned will be taken to be the true one, and the other rejected as falsa demonstratio.” Now upon the face of this policy no repugnancy is apparent, and it is only in attempting to apply the description to the property that the repugnancy appears, and in the very application is disclosed that which clearly determines which is the true and which the false description. For that McLanathan should insure his homestead, is reasonable ; that he should insure property in respect to which he had neither possession, claim, nor title, is improbable. According to the last citation from Greenleaf, if McLanathan and wife conveyed “their dwelling occupied by them on the [548] corner of Second and Vine streets,” and it appeared that they owned and occupied the dwelling on the corner of Second and Elm streets, and did not own that on the corner of Second and Vine, the conveyance would be good of that which they did own; a fortiori, when the instrument is not a conveyance of title, but only a contract fdr indemnity, will the repugnancy be resolved in favor of that property which alone it-was the interest and therefore the evident purpose of the parties to secure. We think therefore that there is nothing in the description to prevent the defendant in error from recovering on this policy. Loomis v. Jackson, 19 Johns., 449; 1 Greenleaf on Ev., §§300, 301, 302, and notes; 2 Hill, on Real Prop., 358, 368. 2. Contract of insurance. Interest of assured. Waiver by company's agent. [549] Insurance companies and agents. Powers of agents. Agent may waive conditions, and bind company. [548] We come now to a question or questions far more difficult than the preceding, and which are of vital importance. It appears from the first finding that the fee of the lots upon which was the building insured was conveyed to the wife of the defendant in error prior to the erection of any building, and has so remained ever since. The questions then arise, Had MeLanathan any interest in the building that he could insure, or such as would enable him to maintain an action on this policy for injury? If he had, did the failure to state the exact nature and extent of that interest avoid the policy? How far may the company raise these,questions, and how far is it estopped, and how much has it waived, by its own acts or the acts of its agents? The policy in this case was not issued upon the strength of a written application, or based upon representations therein. It, in and of itself, states and embodies the entire contract between the parties. It is provided in it that “if the interest of the assured is not one of absolute ownership, and the nature of the interest is not clearly defined in writing hereon, * * * then this policy shall be void.” The interest of defendant in error was not one of absolute ownership, and the nature of that interest was not stated in the policy.' As against this, the jury find, (and the findings are well supported both by the testimony of the assured and [549] the agent,) that the true nature of the-interest of defendant in error, and the exact condition of the title, were stated by the assured to the agent, and known by him at the time of the issue of the policy, and that the agent told the assured that it made no difference, and that thereupon the assured paid his premium and took the policy. Was the act of the agent a waiver of the stipulation in the policy, and could the agent bind the company by such waiver? The bulk of the fire insurance business of this state is done by eastern com-Panies> who are represented here by agents, These agents are authorized to issue policies of ;nsurancej an(j the entire consummation of the contract is intrusted to them. Blank policies, signed by the home officers of the company, to be filled up and issued, and to be binding when countersigned by the agent, are placed in their hands. It is a matter of no small moment therefore that the exact measure and limit of the powers of these agents be understood. All the assured knows about the company, is generally through the agent. All the information as to the powers of and limitations upon the agent, is received from him. Practically the agent is the principal in the making of the contract. It seems to us therefore , . , , ■, , , that the rule may be properly thus laid down: That an agent authorized to issue policies of insurance, and consummate the contract, binds his principal by any act, agreement, representation or waiver, within the ordinary scope and limit of insurance business, which is not known by the assured to be beyond the authority granted to the agent. See as sustaining these views the following late cases: Miner v. Phenix Ins. Co., 27 Wis., 693; McBride v. Republic Fire Ins. Co., 30 Wis., 562; Anson v. Winnesheik Ins. Co., 23 Iowa, 84; Viele v. Germania Insurance Co., 26 Iowa, 9, and notes; Miller v. Mutual Benefit Life Ins. Co., 31 Iowa, 216; Franklin v. Atlantic Fire Ins. Co., 42 Mo., 456; Columbia Ins. Co. v. Cooper, 50 Penn. St., 331; Manhattan Ins. Co. v. Webster, 59 Penn. St., 227; Insurance Co. v. Wilkinson, 13 Wall., 222. [550] 3. Interest of assured; purpose of stating. 4. Statement may be waived by agent. [551] 6. Offer to repair, a waiver by company. [550] The stipulation in the policy that the nature of the assured’s interest if less than an absolute ownership must be stated, is one exclusively for the benefit of the insurer. It makes no difference to the.assured whether his interest be limited or absolute, partial or total, providing the insurer will insure that interest. It is important for the insurer to know the nature and extent of that interest that he may judge of the safety and expediency of the risk. Being a stipulation for the insurer’s benefit, he may waive it. But it may be said that all prior talk and negotiation is merged in the written contract, and that this represents the entire agreement between the parties. The testimony shows that the policy was all prepared, signed, and . ready for delivery at the time of this conversation between the agent and McLanathan. It is not therefore prior but contemporaneous. It is part of the agreement. A case almost exactly in point is that of Franklin v. Atlantic Fire Ins. Co., 42 Mo., 456. In that case the policy was issued without any written application. The exact state of the assured’s title and interest was made known to the agent. He made no note of it on the policy, and told the assured it would make no difference. The policy contained a stipulation similar to that in this. Mr. Justice Holmes, in giving the opinion of the court, says: “The actual state of the case then is, that the agent receives a verbal application for insurance, and before the policy takes effect by delivery the interest of the assured in the property is truly stated to his satisfaction, by which his attention is called-to the circumstance that the specific character and extent of the interest ought to be expressed in the written instrument, and he answers, ‘it will make no difference — it is all right,’ re-' ceives the premium, and' delivers the policy. The policy is accepted, and the premium paid, on the faith of this assurance. The party insured goes away relying upon its validity to protect him against loss during the time specified. He acts upon a state of things represented to him by the agent to be sufficient, and it would work a fraud upon him if the company [551] should now be allowed to avail itself of this defense.” Language more appropriate to the facts of this case could hardly be found elsewhere, and it meets our entire approbation. See also the case of Anson v. Winnesheik Ins. Co., 23 Iowa, 84, where both the application and the policy were made out, at the instance of the agent who had full knowledge of the facts, in the name of Jane Anson, the former owner, but then deceased, and the heirs were held entitled to recover. More than this, the company after. the loss, and with full knowledge of the facts elected to repair the loss, and served notice upon defendant in errorj 0f gncli election. This it would seem ought to be a waiver of any such omission in the policy as that claimed in this case. Bersche v. Globe Mutual Ins. Co., 31 Mo., 546. 6. Interest of husband in wife's property. Had McLanathan any insurable interest? He built the house on his wife’s lots, and with her occupied it as their ioint homestead for many years. He acted as his .~ ~ _ wiie s agent, so iar as she had any interest, legal or equitable, in making this contract, and took the policy for the benefit of himself and wife. The company had full knowledge of the condition and title at the time of the policy and the notice of election to repair. No one has as yet succeeded in giving an entirely satisfactory definition of the term “insurable interest.” Angelí in his work on Eire and Life Insurance, § 56, says, “that it would be extremely difficult to afford any accurate definition of ‘insurable interest;’” and in the same section: “Accordingly it is recognized in this department of the law, that almost any qualified property in the thing insured, or even any reasonable expectation of profit or advantage to be derived from it, may be the subject of this species of contract; certainly if it be founded in some legal or equitable title.” And again: “ It is very clear that, the term interest, as used in applications to the right to insure, does not necessarily imply property.” It is also well settled that a trustee or agent, having no personal pecuniary interest in the property, may yet effect an insurance on it. [552] Lacena v. Crawford, 3 Bos. & Pull., 95, and 5 id., 289; Angell on Insurance, §73; Ins. Co. v. Chase, 5 Wall., 512; Goodall v. N. E. Fire Ins. Co., 25 N. H., 169; 2 Grreenl. on Ev., § 379; Multenberger v. Beacon, 9 Penn. St., 198; Siter v. Morris, 13 Penn. St., 218. It has also been decided that a husband has an insurable interest in buildings situate on his wife’s realty: Franklin Ins. Co. v. Drake, 2 B. Mon., 47; Angell on Ins., § 64; Mutual Ins. Co. v. Hale, 18 Ind., 27; Harris v. York Mutual Ins. Co., 50 Penn. St., 341. In this last case Woodward, C. J., speaking for the court, says, “ If there were more doubt than there is about the insurableness of the husband’s interest, we think his purchase of the policy could be supported on the ground of agency for his wife.” And again: “When he has effected an insurance on houses on their joint possession, but which belong to her, the law will presume her ratification of his act, if not her precedent authority to perform it, and will support the insurance for her benefit.” While perhaps it may be doubted whether these authorities are entirely applicable in this state, owing to the statutory changes in the relations of husband and wife to the separate property of each, yet we think they fully justify us in holding that where a husband erects a dwelling on his wife’s lots, and with her occupies it as a mutual homestead, and as her agent effects an insurance for their mutual benefit, though in his own name, and the insurer, aware of these facts, issues the policy and receives the premium, he may recover on the policy in case of a loss. 7. Pleading: reply. Departure from petition. Substance of answer and reply. One or two more questions remain for consideration. It is earnestly insisted that the reply is bad for departure, and several motions were made to strike out portions of it. These motions were overruled and exceptions x duly taken. The substance of the petition has been already stated. The defendant answered setting up among other defenses that the property insured belonged to Mrs. McLanathan, and not to defendaDt ;n errorj an(j that the policy was void because the nature of his interest was not stated. For reply McLan [553] athan admitted that the fee of the lots was in his wife, and then alleged substantially the facts found in the verdict. The facts, as we have seen, entitle him to recover; and in the manner of pleading those facts we see no error. In his petition he sets out the contract, alleges performance by him, and a loss by fire, and asks judgment for the amount of his damage. The defendant answers that the plaintiff cannot recover on this contract because the property was not his, and because the contract was void. The reply sets up facts which destroy these defenses, and leave the plaintiff to recover upon the contract. The reply does not set up a different basis of recovery from that.presented in the petition. The petition does not allege an absolute ownership, and the reply a limited interest and an agency, for the petition is silent as to the nature and extent of McLanathan’s title and interest. All the facts as claimed by either party were fully presented in the pleadings. There was no surprise, and no concealment. The case was fairly though hotly contested, and we should be slow to disturb a verdict, which seems to fairly respond to. the testimony, upon what is at best a mere technicality. 3. Damages subsequent to fire, by delays. It will be seen that the jury find that the damage done by the fire directly was $1600, and that the damage done by exposure to the weather through the delay of the company to repair was $400. It is claimed that this item x 0f j$400 is not covered by the. policy, nor sustained by the evidence. Neither of thesé objections are well taken. The policy stipulated that the company might repair, giving notice of its intention so to do. It gave such notice on the 28th of February, and then after more than a month' had elapsed it declined to do anything about it. During all this time the plaintiff in error waited on the company, and the property remained exposed to the weather. If finally the company had repaired it would have been compelled to restore the building to as good condition as it was before the fire, and could not have asked McLanathan to pay for the extra expense caused by its delay to immediately repair. So, refusing finally to repair, it must pay what it would cost to [554] make the repairs at the time of its refusal. The witnesses fixed the amount of this damage at different figures, some above and some below $400. Many objections were made during the trial to the admission of evidence, and the rulings thereon are now assigned for error. Complaint is made of the manner of preparing the special verdict, of the remarks of the court to the jury, and of the refusal to give certain instructions. It is enough to say in reference to these various matters that we see no error working substantial injury to the rights of the plaintiff in error. The judgment of the district court will therefore be-affirmed. All the Justices concurring. Footnotes [*] [*Substance-of “answer,” and “reply,”post. p. 552.]