Dwelling-House Ins. Co. v. Brodie

• Decision Date: 15 June 1889
• Citation: 11 S.W. 1016
• Parties: DWELLING-HOUSE INS. CO. <I>v.</I> BRODIE.
• Court: Arkansas Supreme Court

Page 1016

11 S.W. 1016

DWELLING-HOUSE INS. CO.

v. BRODIE.

Supreme Court of Arkansas.

June 15, 1889.

Appeal from circuit court, Crawford county; JOHN S. LITTLE, Judge.

Brown & Sandels, for appellant.

BATTLE, J.

This was an action upon a policy of fire insurance. One of the defenses to it was that the policy had been issued on the faith of representations made by Brodie, whose dwelling was insured, which were false, and were declared in the policy, by the express agreement of the parties, to be warranties.

Among the questions propounded to Brodie and answered in his application for insurance was the following: "Do all the stovepipes go directly into the brick chimneys?" To which was appended the answer, "Yes." None of the answers to the questions propounded were written by Brodie, but they were written by the agent of the insurance company, and signed by Brodie. To this application was appended the following words: "I warrant the answers to each of the foregoing questions to be true," which was also signed by the applicant. There was evidence adduced to prove what answer was actually made to this question, and how Brodie was induced to sign the application, the answers to the questions, and the warranty; but, inasmuch as it is not alleged or indicated in the bill of exceptions that it contains all the evidence adduced at the trial, we assume that there was evidence sufficient to warrant the instructions given by the court to the jury, if they stated the law correctly.

Among the instructions given was the following: "As to the first defense, the court instructs you — the jury are instructed — that in signing the application for insurance the plaintiff warranted all statements to be true, and that the application was a part of the policy of insurance, and that if you find that, in answering the question, `Do all stovepipes run directly into brick chimneys?' in the affirmative, the plaintiff made a false statement, and that the stovepipes ran directly through the roof, and thereby increased the risk, you are instructed that such false statements vitiated the policy, and you will find for the defendant, unless you find that the company's agent inspected the property, and informed plaintiff that the facts warranted such answer." The giving of this instruction is assigned as error.

It has been generally held that, where an agent of an insurance company, authorized to fill up blank applications for insurance, does so by writing false answers, with notice or knowledge of the inaccuracy of the answers written, and thereafter procures the signature of the applicant thereon, after he had given correct answers to the questions asked, and the company afterwards receives the premium and issues a policy, the company will, in the case of loss of the property insured, be estopped from insisting on the falsity of the answers, although warranted by the assured to be true, and, failing to avoid the policy on other grounds, will be bound to indemnify the assured for the loss to the extent of the insurance; and this is true even though the policy provides that when the application is made through an agent of the company the applicant shall be responsible for such agent's representations. Insurance Co. v. Wilkinson, 13 Wall. 231; Insurance Co. v. Mahone, 21 Wall. 152; Combs v. Insurance Co., 43 Mo. 148; Plumb v. Insurance Co., 18 N. Y. 392; Insurance Co. v. Ives, 56 Ill. 402; Insurance Co. v. Lewis, 30 Mich. 41; Insurance Co. v. McKee, 94 Ill. 494; Insurance Co. v. Fish, 71 Ill. 620; Insurance Co. v. Olmstead, 21 Mich. 246; Insurance Co. v. Eddy, 55 Ill. 213; 2 Wood, Ins. (2d Ed.) 832, 835, 846, 850; May, Ins. (2d Ed.) § 143, and cases cited; Bac. Ben. Soc. §§ 153, 221.

In Insurance Co. v. Wilkinson, 13 Wall. 222, the court said: "It is not to be denied that the application, logically considered, is the work of the assured, and, if left to himself, or to such assistance as he might select, the person so selected would be his agent, and he alone would be responsible. On the other hand, it is well known — so well that no court would be justified in shutting its eyes to it — that insurance companies organized under the laws of one state, and having in that state their principal business office, send these agents all over the land, with directions to solicit and procure applications for policies, furnishing them with printed arguments in favor of the value and necessity of life insurance, and of the special advantages of the corporation which the agent represents. They pay these agents large commissions on the premiums thus obtained, and the policies are delivered at their hands to the assured. The agents are stimulated by letters and instructions to activity in procuring contracts, and the party who is in this manner induced to take out a policy rarely sees or knows anything about the company, or its officers, by whom it is issued, but looks to and relies upon the agent who has persuaded him to effect insurance as the full and complete representative of the company in all that is said or done in making the contract. Has he not a right to so regard him?

* * * The powers of the agent are, prima facie, coextensive with the business intrusted to his care, and will not be narrowed by limitations not communicated to the person with whom he deals. An insurance company, establishing a local agency, must be held responsible to the parties with whom they transact business for the acts and declarations of the agent, within the scope of his employment, as if they proceeded from the principal.

In the fifth edition of American Leading Cases, after a full consideration of the authorities, it is said: `By the interested or officious zeal of the agents employed by the insurance companies in the wish to outbid each other and procure customers, they not unfrequently mislead the insured by a false or erroneous statement of what the application should contain, or, taking the preparation of it into their own hands, procure his signature by an assurance that it is properly drawn, and will meet the requirements of the policy. The better opinion seems to be that, when this course is pursued, the description of the risk should, though nominally proceeding from the insured, be regarded as the act of the insurers.' The modern decisions fully sustain this proposition, and they seem to us founded in reason and justice, and meet our entire approval. This principle does not admit oral testimony to vary or contradict that which is in writing, but it goes upon the idea that the writing offered in evidence was not the instrument of the party whose name is signed to it; that it was procured under such circumstances by the other side as estops that side from using it or relying on its contents, not that it may be contradicted by oral testimony, but that it may be shown by such testimony that it cannot be lawfully used against the party whose name is signed to it."

The issue of a policy by an insurance company, with a full knowledge or notice of all the facts affecting its validity, is tantamount to an assertion that the policy is valid at the time of its delivery, "and is a waiver of the known ground of invalidity." From such conduct "the insured might fairly infer that he was protected." If he does not, it is reasonable to presume that he would do so by procuring other insurance. It would not be consistent with fair dealing and honesty for the company to undertake to avoid its policy under such circumstances, when the insured has rested in the belief that he was protected until his property was destroyed, and, when that belief is the result of its conduct, it is estopped from doing so. Insurance Co. v. Weill, 28 Grat. 394; Bevin v. Insurance Co., 23 Conn. 254; Combs v. Insurance Co., 43 Mo. 148; Van Schoick v. Insurance Co., 68 N. Y. 434; Insurance Co. v. Hall, 12 Mich. 202; Bidwell v. Insurance Co., 24 N. Y. 302; Rathbone v. Insurance Co., 31 Conn. 193; Insurance Co. v. Raddin, 120 U. S. 196, 7 Sup. Ct. Rep. 500; Gans v. Insurance Co., 43 Wis. 108; Mechler v. Insurance Co., 38 Wis. 665; Insurance Co. v. Kittle, 39 Mich. 51; Smith v. Insurance Co., 49 Wis. 322, 5 N. W. Rep. 804; Insurance Co. v. Olmstead, 21 Mich. 246, 254; Insurance Co. v. Chesnut, 50 Ill. 111; Insurance Co. v. Kinnier, 28 Grat. 88.

In Van Schoick v. Insurance Co., 68 N. Y. 434, "a policy of fire insurance contained a condition that, `if a building is insured that is on leased land, the same must be specifically represented to the company, and expressed in this policy in writing, otherwise the insurance shall be void.' A building insured was on leased land, and this fact was not expressed in the policy. It was known, however, to defendant's agent, to whom application for the policy was made." It was held "that, as the knowledge of the agent was the knowledge of the defendant, his principal, when it accepted the risk, it had information that the building stood upon leased ground; that it was to be presumed that defendant had overlooked the condition, and so had forgotten to express the fact in the policy, or that it waived the condition, or held itself estopped from setting it up, as to presume otherwise would be to impute to defendant a fraudulent intent in issuing a policy known by it to be invalid." Justice FOLGER, in delivering the opinion of the court, said: "There is no doubt but that, ordinarily considered, this condition in the policy was a warranty that the building did not stand upon leased land, and that the truth of that warranty became a condition precedent to any liability on the part of the defendant. Yet,...