National Bank v. Insurance Company

• Decision Date: 01 October 1877
• Citation: 24 L.Ed. 563,95 U.S. 673
• Parties: NATIONAL BANK v. INSURANCE COMPANY
• Court: U.S. Supreme Court

95 U.S. 673

24 L.Ed. 563

NATIONAL BANK v. INSURANCE COMPANY.

October Term, 1877

ERROR to the Circuit Court of the United States for the Western District of Missouri.

This is an action on a policy of insurance issued by the Hartford Fire Insurance Company to W. D. Oldham, on certain mill property, building, and machinery, and by him transferred and assigned to the First National Bank of Kansas City, Mo. The parties, by written stipulation, waived a jury; and, upon a special finding of facts, the Circuit Court gave judgment for the company. The bank thereupon sued out this writ of error.

It appears from the special finding, that, by the terms of the application, the assured was required to state separately 'the estimated value of personal property and of each building to be insured, and the sum to be insured on each; . . . the value of the property being estimated by the applicant.' The applicant was also directed to answer certain questions, and sign the same 'as a description of the premises on which the insurance will be predicated.' Among the questions to be answered were 'What is the cash value of the buildings, aside from hand and water power? What is the cash value of the machinery?' The answer was: '$15,000, building; $15,000, machinery.'

The application concludes with these words:——

'And the said applicant hereby covenants and agrees to and with said company, that the foregoing is a just, full, and true exposition of all the facts and circumstances in regard to the condition, situation, value, and risk of the property to be insured, so far as the same are known to the applicant, and are material to the risk.'

The policy refers to the application in these words:——

'Special reference being had to assured's application and survey, No. 1462, on file, which is his warranty, and a part hereof.'

The policy further recites:——

'If an application, survey, plan, or description of the property herein insured is referred to in this policy, such application, survey, plan, or description shall be considered a part of this policy, and a warranty by the assured; and if the assured, in a written or verbal application, makes any erroneous representation, or omits to make known any fact material to the risk, . . . then, and in any such case, this policy shall be void. . . . Any fraud or attempt at fraud, or any false swearing on the part of the assured, shall cause a forfeiture of all claim under this policy.'

The policy also declares that it is made and accepted upon the above, among other, express conditions.

It is found by the court that when the policy was issued, as well as at the date of the destruction of the property by fire, the cash value of the building, aside from hand and water power, was $8,000, and no more; and the cash value of the machinery, at the same dates, was $12,000, and no more.

The court also found that 'the answers made by the assured to the questions contained in the application were made by him in good faith, without any intention on his part to commit any fraud on the defendant.'

It is further declared in the special finding, that, 'under the provisions of the policy and application, made part thereof, the court finds, as a conclusion of law, that the answers of the assured as to the value of the property insured defeat the right to recover on the policy.'- Mr. John K. Cravens for the plaintiff in error cited May on Ins., sects. 156, 160, 164, 168, 169; Elliot v Hamilton Mutual Insurance Co., 13 Gray (Mass.), 139; Fitch v. American Popular Life Insurance Co., 59 N. Y. 557; Germania Fire Insurance Co. v. Casteel, 9 Chicago Legal News, 374; Franklin Insurance Co. v. Vaughan, 92 U. S. 516; Yeaton v. Fry, 5 Cranch, 342.

Mr. John C. Gage, contra, cited Owens v. Holland Purchase Insurance Co., 56 N. Y. 565; First National Bank of Ballston Spa v. Insurance Company of North America, 50 id. 45; Ripley v. The AEtna Insurance Co., 30 id. 136; AEtna Life Insurance Co. v. France et al., 91 U. S. 110; Jeffries v. Life Insurance Co., 22 Wall. 47; Leroy v. The Market Fire Insurance Co., 39 N. Y. 90; Conover v. The Massachusetts Insurance Co., 3 Dill. 217; Miles et al. v. Connecticut Mutual Life Insurance Co., 3 Gray (Mass.), 580; Campbell v. New England Mutual Life Insurance Co., 98 Mass. 381; Cooper v. Farmers' Mutual Fire Insurance Co., 50 Pa. St. 305

MR. JUSTICE HARLAN delivered the opinion of the court

On behalf of the company, it is contended that, under any proper construction of the contract, the assured warranted, absolutely and without limitation, the truth of the several statements in the application, including the statement as to the value of the property. If this view be sound, the judgment of the Circuit Court must be affirmed; otherwise, it must be reversed.

Our conclusion is that the plaintiff in error, who is the beneficiary of the policy, is entitled to a judgment, notwithstanding the overvaluation of the property by the assured.

The entire application having been made, by express words, a part of the policy, it is entitled to the same consideration as if it had been inserted at large in that instrument. The policy and application together, therefore, constitute the written agreement of insurance; and, in ascertaining the intention of the parties, full effect must be given to the conditions, clauses, and stipulations contained in both instruments.

Looking first into the application, we find no language which, by fair construction, was notice to the assured that, in answering questions, he was assuming, or was expected to assume, the strict obligations which the law attaches to a warranty. There is no intimation anywhere in that instrument that the exact truth of the answers was a condition precedent, either to the consideration of the application or to the issuing of a policy. On the contrary, the application contains the covenant of the assured that he had in that instrument made a just, full, and true exposition of all material facts and circumstances in regard to the condition, situation, value, and risk of the property, so far as known to him. The taking of that...