Lemuel Smith And Emily A. Smith, His Wife v. the Niagara Fire Insurance Co.
| Citation | 15 A. 353,60 Vt. 682 |
| Parties | LEMUEL SMITH AND EMILY A. SMITH, HIS WIFE v. THE NIAGARA FIRE INSURANCE COMPANY |
| Decision Date | 01 February 1888 |
| Court | United States State Supreme Court of Vermont |
FEBRUARY TERM, 1888
ASSUMPSIT upon an insurance policy. Plea, general issue. Trial by jury, September Term, 1887, ROSS, J., presiding. Verdict for the plaintiffs.
Judgment reversed, and cause remanded.
Haskins & Stoddard, for the defendant.
I. The defendant objected to an inquiry of a witness upon the subject of damages. Conceding the question to have been improper, the exceptions do not show that it was answered. To avail the defendant, it must so appear, and that the answer was prejudicial to it. Carpenter v. Corinth, 58 Vt 214.
II. The assured warranted that there was no incumbrance upon the property. There was then upon record, an undischarged mortgage for eight hundred dollars, with accrued annual interest for sixteen years. The plaintiffs claimed that the presumption of payment applied, fifteen years having then elapsed since the date of the note and mortgage. The note matured in July, 1875, and it was at the latter date that the fifteen years began to run, so as to afford a presumption of payment from lapse of time. The fifteen years have not yet expired, the presumption, therefore, did not arise.
III. Was the undischarged mortgage an incumbrance within the meaning of an insurance contract? It has sometimes been so held, Warner v. Middlesex Mut. Ass. co., 21 Conn. 444; Muma v. Niagara, etc., Ins. Co. 22 U Can. (Q. B.) 214, but we think the doctrine generally prevails, that if the mortgage debt has been paid, the undischarged mortgage is not an incumbrance, Merrill v. Agri'l Ins. Co., 73 N.Y. 452; Hawkes v. Dodge Co. M. Ins. Co., 11 Wis. 188, as cited in Bates Dig. Fire Ins. Dec. 256, and we so hold.
IV. The assured warranted that they, at the time of the contract, had "not omitted to state to the company any information material to the risk." The undischarged mortgage was held by Mrs. Eames, and she had prior to that time, secretly and voluntarily destroyed the note, but the assured had not been informed of that fact, so that they must have believed that the mortgage debt was then a valid subsisting lien upon the property. No payment had been made on either the principal or interest. The more important question in respect to the mortgage is, whether the failure to state to the company that they believed the property was mortgaged was not an omission to state information material to the risk. Statements as to incumbrances are material; they are made so by the policy; they have regard to the risk. The object of inquiry in respect thereto, is to ascertain the interest of the applicant in the property, so that the insurer can take into consideration the interest the applicant has in its preservation. He may have none, so that fire may occur from his neglect, or his active participation in its origin. The value of the property burned as found by the jury was eight hundred and thirty-seven dollars; it was insured for thirteen hundred and fifty, nine hundred upon the buildings, the remainder upon their contents. The real estate was mortgaged for more than sixteen hundred dollars, as the plaintiffs then believed. Had the mortgage debt still existed, the statute barred any recovery upon the notes, and the policy was not payable to the mortgagee in case of loss. If the buildings did not burn, the property would be held by the mortgagee; if they did, the assured would receive their value as the avails of the policy would belong to them. The moral hazard was exactly the same if they believed the property mortgaged, as it would have been, had the mortgage in fact existed. We think that when they failed to state the fact that they believed the property was mortgaged, they omitted to state information material to the risk, at least their failure was evidence from which that fact might have been found. We have no occasion to pass upon the point of whether this was a question for the court or jury. If it was a question of law, the court should have complied with the second request; if of fact, it should have submitted it to the jury with proper instructions. The question under the claim of the defendant and the evidence, was in the case, should have been disposed of either as one of law or fact, and was saved by the exception to the charge raised by the second request.
V. By paragraph three of the sixth condition of the policy it was the duty of the assured in case of loss, to furnish the defendant, within thirty days, a statement of the loss, signed and sworn to. It is conceded that no statement was furnished. It was a condition precedent to a recovery, as it was so provided by the terms of the policy. Donahue v. Ins. Co., 56 Vt. 374. That the proofs of loss may be waived by the company is unquestioned. Findeisen v. Metropole Ins. Co., 57 Vt. 520. The plaintiffs claimed upon trial that the proofs of loss were waived; the jury so found. The evidence upon which this finding was based was the testimony of the plaintiffs, as to the declarations of Turner and Cudworth, who, as the plaintiffs claim, were acting as the agents of the defendant. Turner was the general agent of the defendant, having supervision of all its affairs, and its adjuster of losses; and unless restricted in his authority, the plaintiffs having notice thereof, we think had all the power of the company, in the settlement of a loss, to waive any of the conditions of the policy.
VI. Cudworth was the local agent of the company with power to receive proposals for insurance, fix rates of premiums, and issue policies. It does not appear that he was ever held out by the defendant as possessing any other authority or ever acted in the settlement of losses. We think he had no authority to waive that condition of the policy requiring a sworn statement in the settlement of a loss, although he might unless restricted, waive conditions concerning the issuance of a policy, or anything apparently within the scope of his authority, in the business committed to him. We recognize the full force of the rule as to the liability of the principal for the acts of an agent, as stated in Ins. Co. v. Wilkinson, 13 Wall. 222, "that the powers of an agent are prima facie, co-extensive with the business intrusted to his care, and will not be narrowed by limitations not communicated to the person with whom he deals." The settlement of losses was no part of the business of Cudworth; he was not for that purpose the defendant's agent. Bowlin v. Hekla Fire Ins. Co. (Minn.) 16 Ins. L. J. 305; Kyte v. Commercial Un. Ass. Co. (Mass.) 16 Ins. L. J. 330. The jury were at liberty under the charge, to find a waiver from the declarations of either Turner or Cudworth. If they found it from those of the latter, it...
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