Augusta I. Wilson And Owen E. Williams v. Commercial Union Assurance Company, Limited

• Decision Date: 04 February 1916
• Citation: Augusta I. Wilson And Owen E. Williams v. Commercial Union Assurance Company, Limited, 96 A. 540, 90 Vt. 105 (Vt. 1916)
• Parties: AUGUSTA I. WILSON AND OWEN E. WILLIAMS v. COMMERCIAL UNION ASSURANCE COMPANY, LIMITED
• Court: Vermont Supreme Court

96 A. 540

90 Vt. 105

AUGUSTA I. WILSON AND OWEN E. WILLIAMS v. COMMERCIAL UNION ASSURANCE COMPANY, LIMITED

Supreme Court of Vermont

February 4, 1916

November Term, 1915.

GENERAL ASSUMPSIT on a fire insurance policy. Plea, the general issue. Trial by jury at the March Term, 1915, Rutland County, Waterman, J., presiding. Verdict and judgment for the plaintiff. The defendant excepted. The opinion states the case.

Affirmed.

J W. Redmond for the defendant.

William H. Preston for the plaintiffs.

Present MUNSON, C. J., WATSON, HASELTON, POWERS, AND TAYLOR, JJ.

OPINION

POWERS

The fire insurance policy on which this action is predicated was issued by the defendant's agent at Fair Haven. It runs to Mrs. A. I. Wilson and Owen E. Williams, and covers certain buildings and personal property therein. It contains many stipulations and conditions, including the following "This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning the insurance or the subject thereof; or if the interest of the insured in the property be not truly stated herein."

"This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if * * * the hazard be increased by any means within the control or knowledge of the insured, * * * or if the interest of the insured be other than unconditional or sole ownership; or if the subject of insurance be a building on ground not owned by the insured in fee simple; or if the subject of insurance be personal property and be or become incumbered by a chattel mortgage."

"This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto; and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto; and as to such provisions and conditions, no officer, agent, or representative shall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto; nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached."

It appears that when this policy was issued, the real estate covered by it was owned by Owen E. Williams and his wife, Jennie A. Williams, in joint tenancy. The personal property belonged to Owen E. Mrs. Wilson held a valid mortgage on the real estate, which at the date of the policy amounted to $ 1,200, and she also held a valid chattel mortgage on the personal property to secure another debt, which at the time named amounted to some $ 300. No change was made in the title between the date of the policy and April 4, 1914,--the date of the fire which destroyed the property insured.

It thus appears that several of the conditions above recited were broken when the policy was issued. For the interest of the insured in the property was not truly stated in the policy; the interest of the insured was other than unconditional or sole ownership; the insurance covered buildings standing on ground not owned by the insured in fee simple. All this comes from the fact that Mrs. Williams' interest in the property is omitted from the policy. Schroedel v. Humboldt Fire Ins. Co., (Pa.) 27 A. 1077. The policy also covered personal property incumbered by a chattel mortgage. And none of these matters were covered or alluded to by any endorsement upon or attachment to the policy.

It necessarily follows that there can be no recovery here if effect is to be given to the provisions referred to; and effect must be given to them unless the case shows such special features as will prevent.

It appeared below that the Fairhaven agent of the defendant was Adelaide W. Sheldon, wife of H. K. Sheldon. That the latter was an experienced insurance man; that he solicited insurance in Mrs. Sheldon's behalf, and worked with her in the office. That he wrote the body of the policy here in question, and that Mrs. Sheldon countersigned it as agent of the company. That Mr. and Mrs. Sheldon visited the premises about two months before the policy was written, and the former examined the same with a view of insuring them. That on another occasion a few months before the policy was issued Mr. Williams called at the office of the agency and talked with Mr. Sheldon regarding the insurance on this property. That on both these occasions, the plaintiffs informed Mr. Sheldon of the true state of the title and the incumbrances thereon as hereinbefore set forth. There was, however, no direct evidence that Mrs. Sheldon knew how the title stood or that the property was mortgaged. Nor was there anything to indicate that the company itself knew the facts regarding these matters.

The first question presented, then, is as to the effect of this knowledge on the part of Mr. Sheldon. The defendant insists that evidence thereof was improperly admitted, because Mr. Sheldon was not the defendant's agent, and therefore his knowledge of the facts was immaterial. But under our holding in Mullin v. Vt. Mutual Fire Ins. Co., 58 Vt. 113, 4 A. 817, the knowledge acquired by Sheldon was, in legal effect, acquired by Mrs. Sheldon, the company's agent. In that case one Butler acted for Manley, the agent, in much the same way that Sheldon acted for Mrs. Sheldon; and it was held that his knowledge was the knowledge of Manley, and bound the company. Moreover, by No. 128, Acts of 1894, now found in P. S. 4775, it was provided that "when application for fire insurance is taken or transmitted by or through a local or traveling agent of a fire insurance company, or a person acting under the employment of an agent of such company, it shall be deemed to be the act of the company; and, in questions arising as to the facts stated in such application, such agent or sub-agent shall be deemed to be the agent of the insurers and not of the insured." The comprehensive language of this statute makes it apparent that it was intended to cover all companies, domestic and foreign, and all applications written and verbal. Accordingly, we hold that Sheldon's knowledge was the company's knowledge and is to be given effect accordingly. What standing, then, have these conditions and provisions, in view of the fact that the company knew all the facts when it issued the policy?

Warranties in contracts of insurance are of two kinds: affirmative and promissory. The former relate to matters existing at or before the issuance of the policy, and have the effect of conditions precedent. The latter relate to matters arising after the issuance of the policy, and have the effect of conditions subsequent. Those here involved are of the first-named class, and the discussion herein will have reference to that class only. Attention is called to the distinction since it is very frequently overlooked and is not taken note of in the very comprehensive brief of this defendant.

There is a decided and growing tendency on the part of the courts to treat insurance contracts as standing in a class by themselves. However illogical this tendency may be said to be, its existence will not be questioned. Courts, and among the number our own, have taken occasion to refer to some of the peculiar features of and attending these contracts; that the policy contains so many and such intricate conditions and stipulations that an ordinary mind cannot grasp their significance; that the opportunity for negotiation and discussion of terms, usual in the case of ordinary contracts, is denied an applicant for insurance, inasmuch as the terms of the policy are prepared and fixed in advance, and there is little for the property owner to do but to take the policy offered him or go without protection; that it is the general practice with the insuring public to leave it all to the agent, who is usually a competent and reliable adviser. From these and perhaps some other considerations growing out of the advantage which the company has over the applicant, the courts have very generally leaned strongly against forfeitures invoked in defence of honest claims.

As would be expected, the cases on this subject are in hopeless conflict. Indeed, those in the same jurisdiction are frequently out of harmony and sometimes positively inconsistent. See note to Gish v. Ins. Co. 13 L.R.A. (N.S.) 826. A study of them will show, however, that with some exceptions, notably Massachusetts and the Federal Supreme Court, the very generally accepted rule is that stated in Wood v. American Fire Ins. Co., 149 N.Y. 382, 44 N.E. 80, 52 Am. St. Rep. 733, as follows: "The restrictions inserted in the contract upon the power of the agent to waive any condition unless done in a particular manner cannot be deemed to apply to those conditions which relate to the inception of the contract, when it appears that the agent has delivered it and received the premiums with full knowledge of the actual situation. To take the benefit of a contract with full knowledge of all the facts, and attempt afterwards to defeat it when called upon to perform by asserting conditions relating to those facts would be to claim that no contract was made, and thus operate as a fraud upon the...