Stensgaard v. St. Paul Real Estate Title Insurance

Gilfillan, G. J. This is an action upon a policy issued to plaintiff, insuring the title to real estate. The policy refers to a written application, and provides that “any untrue statement or suppression of a mateidal fact affecting the title, or any untrue answer to questions contained in said above application, by the insured or his agent, shall avoid this policy, excepting as against a mortgagee not privy thereto.” The application contains this provision: “It is agreed that the following statements are correct and true, to the best of the applicant’s knowledge and belief, and that any false statement or any suppression of material information shall avoid the policy.” Then follow questions by the company and answers by the insured, among which was: Question. “Last price paid for the property?” Answer. “$11,000.” The application was signed by the insured. The breach in the policy consisted in this. The land belonged to one Uihlein, and immediately prior to the issuance of the policy the plaintiff purchased and received a conveyance from a person whom he supposed to be Uihlein, who, however, was not Uihlein, but falsely personated him and forged the deed, wherefore the plaintiff got no title. The defense was based on the alleged falsity of the above answer, to the knowledge of plaintiff. There is also a counterclaim based on allegations that after the policy issued the plaintiff issued to a bona fide mortgagee, not privy to the false answer,' a note for $4,500, and a mortgage on the land to secure it, and as further security assigned the policy to such mortgagee, and that on discovering that plaintiff’s deed was forged the defendant paid the note and mortgage, and the same were assigned by the holder to it. The court below determined, in effect, as matter of law, that the above answer was material, and that, if plaintiff knew it to be false, it avoided the policy. The plaintiff insists that it was not material, and that at any rate-its materiality was a question of fact to be determined by the jury. In the first place the answer to the question, “Last price paid ?” was a statement of fact, and not the expression of an opinion, as a statement of value generally is. In the second place the effect of falsity in the statements on the validity of the contract is not made to depend on the intent with which the statement [435] is made, as that the intent shall be fraudulent, but on whether true or false, to the best of the applicant’s knowledge and belief. Where the contract itself does not stipulate the effect that a particular false statement or representation shall have on the contract, or where it stipulates merely that the misrepresentation or suppression of a material fact shall avoid it, the fact misrepresented or suppressed must have been material, as an inducement to enter into the contract; and as the materiality must be shown by matters outside the terms of the contract, it is a question of fact. But the parties may by their contract determine the materiality for themselves, as where they stipulate that if a statement of fact made by one of them, and set forth in the contract, be false, it shall avoid the contract. In such case the statement is in effect a warranty. Whether they have, made the statement material, and in effect a warranty, is a question for the court, to be determined by an interpretation of the contract. The court below correctly decided the question in this case. The “last price” referred to in the application, question and answer, was the price paid by plaintiff to the person who executed the deed to him. The question called for a statement of the actual, and not merely a nominal, price, — of the price in money or money’s worth; and from the answer the defendant could understand nothing else but that the sum stated was the actual money price. The evidence of the plaintiff showed beyond dispute that in the deal with the person who personated Uihlein, and which resulted in the deed to plaintiff, no money price was agreed on; that it was not a sale for money or money’s value, but that the plaintiff holding stock in a mining corporation to the amount, par value, of $15,000, but which, as the jury find, was of very little value in- the market in St. Paul, where the transaction whs had, and find also that plaintiff knew it was of little value, he transferred the stock and paid $3,000 in cash for the conveyance. The consideration stated in the deed was $11,-000, — at. whose suggestion inserted, does not appear. The actual consideration was the stock, of little value, as plaintiff knew, and the $3,000. It is not a case, as plaintiff contends, of a price agreed on for the land, and a subsequent tender on the one part and accept436 anee on the other of property in lieu of money, in satisfaction off such price. It was a trade of the stock and the $3,000 for the land. The charge of the court that if the $3,000 and the'fair market value of the stock in the St. Paul market aggregated $11,000 the-jury must find the answer in the applicaiion true, and that if, from the evidence, they believed that plaintiff did not know the stock to be of little value, and that he honestly believed he was paying $11,000 in full cash value, and that the other party accepted said cash and stock ás and for $11,000 in money, they should find the said answer true, was certainly sufficiently favorable to the plaintiff. If there was any error, in view of the evidence in the ease, it was not against him. After the’jury retired, they returned into court, and the court reiterated the instructions, of which the substance is above stated;, and neither party excepted. Both sides appear to have accepted such instructions as a correct statement of the law on the point. The instructions requested by plaintiff were, so far as they stated the law correctly, and were applicable to the case, and not likely tO' mislead, given by the court in its general charge. It is unnecessary to go over them in detail, further than to say this: that if in any case the receipt in the deed for $11,000 could be prima facie evidence,, as against one not a party to the deed, of the payment of that sum as the actual price of the land, yet such prima facie effect was so-completely overthrown by the plaintiff’s own testimony that it would have been idle, and probably misleading, to give the instructions requested. There is no such presumption as that the stock of a corporation is-worth its par or face value. The certificate of stock is not an obligation to pay money, which is presumed to be worth its face, because every one is presumed to be solvent; that isj. to have sufficient property to pay all his debts. It is only evidence that the holder has an interest in the corporation, and its franchises and property, in the proportion that the stock held by him bears to the whole amount of stock; but it is no evidence of the financial standing of the corporation, nor of the value of its franchises and property. The plaintiff having admitted in his reply that he signed the application, and not having alleged that when signing he did not know, [437] or that he had been deceived as to, its contents, it was, though the answers were written by defendant’s secretary, as much his act as though he had written the answers himself. The evidence offered of the conversation at the time between him and the secretary was therefore, if offered to vary the effect of the application, incompetent ; if offered for any other purpose, it was immaterial. The application for leave to amend his reply so as to make the evidence offered admissible was addressed to the discretion of the court, and allowing him the benefit of an exception to the ruling of the court on the application,. (and all that he can claim upon what was said at the time is that by reason thereof he failed to take an exception,) and it will be of no avail; for we see no reason to think the discretion was not judiciously exercised. To submit any question of fact for a specific finding upon it was wholly in the discretion of the trial court, so it was not error for it to decline to submit the questions prepared by plaintiff. • The note of plaintiff, set up in the answer by defendant as a counterclaim, and upon which a recovery for the full amount thereof and interest is demanded by the answer, was not due, by its terms, till June 22, 18J2, — long after the trial. There was no demurrer to the counterclaim. The reply expressly admits the making of the note and mortgage. The note, mortgage, and the assignment to defendant were introduced in eyidence by defendant, without objection. The court instructed the jury that, if they found for the plaintiff, they should assess the damages upon the policy and interest, and deduct therefrom the amount of the note and mortgage and interest, and, if they found for defendant, they should render a verdict for the amount of the note and interest. No exception was taken to these instructions. From first to last of the record there is nothing to suggest that the point was ever made in the court' below that the counterclaim could not be allowed because the note was not yet due. We think that, on the contrary, it was assumed, and the cause tried and submitted to the. jury, without objection by anybody, on the theory that the counterclaim might be allowed. That being so, the plaintiff waived the objection that the claim to recover on the note was premature. (Opinion published 53 N. W. Rep. 910.) There are several minor assignments of error, none of them well taken, and none of which need be specifically mentioned. Judgment affirmed.