Clark v. Union Mutual Fire-Insurance

Nesmith, J.* The leading and important question in this ease is, whether the plaintiff has been guilty of such misrepresentation or concealment, in procuring his insurance, as will avoid his policy. “ Misrepresentation, according to the law of insurance, is the statement of something, as fact, which is untrue, and which the assured states knowing it to be untrue, and with the intent to deceive; or which he states positively as true, not knowing it to be true, and which has a tendency to mislead; such fact being in either case material to the risk.” “ Concealment is the designed and intentional withholding of any fact, material to the risk, which the assured in honesty and good faith ought to communicate; and any fact is material, the knowledge or ignorance of which would naturally influence an insurer in making the contract at all, or in estimating the degree and character of the risk, or in fixing the rate of insurance.” “All representations which enter into the essence of the contract, and which go to lay the foundation of it; whatever would cause the company to accept or reject the application, should be truly stated.” Lockes. North-American Ins. Co., 13 Mass. 97; Houghton v. Manf. Ins. Co., 8 Met. 114. The materiality of a representation made, or a fact concealed by the insured, is a question for the jury to determine. Boardman v. New-Hampshire Ins. Co., 20 N. H. 551, and cases there cited; Daniels v. Hudson River Ins. Co., 12 Cush. 416. The distinction between a warranty and a representation, as made by the insured, is well considered in this [339] last case. Whatever also tends to increase the risk, is also a question of fact for the jury. Gambell v. Merchants’ and Farmers’ Mut. Ins. Co., 12 Cush. 169. There are cases which hold that, where inquiries are not put by the company or its agents, as to the title and situation of the property insured, and nothing appears to show that fraud was designed by the insui’ed, a suppression of facts will not make void the policy. Fletcher v. Commonwealth Ins. Co., 18 Pick. 419; Green v. Merchants’ Ins. Co., 10 Pick. 402. The case'before us finds that the plaintiff applied to Lancaster, the agent of the defendants, for the insurance of his property at Manchester. The parties were then at Concord. The plaintiff informed Lancaster that his outbuilding was occupied as a shoe-shop ; that he could not particularly describe his own or the surrounding buildings ; that he agreed to pay Lancaster for going to Manchester, to make the necessary suxwey. The plaintiff signed the blank application, which afterward appeared to have been filled out by Lancaster; Lancaster procured a policy, founded upon said application so made, and forwarded it by mail to the plaintiff, and the plaintiff received it, relying upon it as correct in all particulars. In Marshall v. Columbian Ins. Co., 27 N. H. 157, it was held, that where the application was taken by the agent of the company, and he is aware of the facts material to the risk, but which are not set forth in the application, the company will be charged with knowledge, and that, under such circumstances, an unintentional concealment or misrepresentation will not make void the policy. Our statute law confirms the same principle, that applications, taken by the agents of the companies in this State, shall not be void by reason of any error, mistake or misrepresentation, unless it shall appear to have been intentionally and fraudulently made. Laws of 1855, ch. 1662, sec. 6. The evident object and intent of this statute [340] seems to have been that our insurance companies should be bound by the principles of good faith and fair dealing with their insured, and should not be permitted to repudiate the acts and contracts of their own authorized agents, but should be bound by them, except in cases of manifest fraud and imposition. Although the agent Lancaster may have received a special trust by virtue of his engagements with the plaintiff’, yet we think this did not absolve him from his responsibility to the company that employed him. In this case the directors of the company receive from his hands the application of the plaintiff, as prepared by their agent, and it is accompanied by what purports to be a survey of the buildings, in writing. They examine these, determine upon the extent and nature of the risk, assign it to its appropriate class, graduate the amount thereof, and fill up the premium note, which is assumed to have been signed by the plaintiff in blank. The policy is made out, signed by the officers, and delivered to the plaintiff by the agent. Under the circumstances disclosed here attending this case, we see no room for imputing blame, or negligence, or fraud to the plaintiff. His only fault appears in placing confidence in the ability, experience and integrity of a trusted agent of the defendants. By the permission or express authority of the defendants, Lancaster was clothed with the power to take applications of insurance for their company. He was constantly employed to do for others what he undertook to do for the plaintiff, and with the defendant’s knowledge and presumed assent. We see no reason, therefore, why those who best knew his capacity, or his want of it, should not bear the consequences of his negligent acts. Again, admitting the plaintiff and the defendants to stand on the ground of innocent persons, and one of them must suffer, through the force of the maxim of law, that, where one of two innocent persons must suffer by the fraud, negligence or [341] misconduct of a third, they who enabled that person so to act ought to be the sufferers. Although the by-laws of an insurance company make the person taking the survey in its behalf the agent of the applicant, he is still the agent of the company also, and the company are bound by his acts. Ang. & Am. on Ins., sec. 470; 20 Barb. 468; Masters v. Madison Co. Mut. Ins. Co., 11 Barb. 624. Where an application for insurance was made by the agent of the company, who neglects to incorporate in it a fact essential to the validity of the policy, and which he has promised the applicant he would so incorporate, the company are estopped to set up such omission as a defence in an action on the policy. Kelley v. Troy Fire Ins. Co., 8 Wis. 254. The case of Campbell v. Merchants’ and Farmers’ Ins. Co., 37 N. H. 35, sustains the principles of this case and the rulings of the judge who tried the same. There must, therefore, be Judgment on the verdict. Footnotes [*] Bellows, J., did not sit.