Baker v. Ohio Farmers' Ins. Co.
| Citation | 38 N.W. 216,70 Mich. 199 |
| Parties | BAKER v. OHIO FARMERS' INS. CO. |
| Decision Date | 15 May 1888 |
| Court | Supreme Court of Michigan |
Error to circuit court, Saginaw county.
This was an action by Nellie P. Baker against the Ohio Farmers' Insurance Company, to recover on a policy of fire insurance. Judgment for plaintiff, and defendants appeal.
The undisputed facts in this case are these: The plaintiff lives in the city of Saginaw, where she owned a lot having a dwelling-house and barn thereon. Upon these premises was a mortgage dated December 31, 1884, and given for $900. Upon May 24, 1886, there was about $608 due upon it. Upon that day there was issued to her a policy of insurance in the defendant company, insuring the house for $1,200 and the barn for $300, against loss or damage by fire for a period of 45 days. June 20, 1886, the house was totally destroyed by fire and the barn injured to the extent of $35. The company refused to pay the loss, and she brought this suit. The policy referred to an application, describing it as an "application and survey No. 1234." The word "No." and the figures "1234" were in writing. The policy declares that the application forms part of the policy, and it states that "upon any false representation by the assured of the condition situation, or occupancy of the property, or any misrepresentation whatever," *** this "insurance shall be void." It contains the following: "It is expressly agreed that this company shall not be bound by any act or statement made to or by the agent, or other person, which is not contained in the written application or indorsed on the policy." It contains the following: "And it is hereby understood and agreed by and between this company and the assured, that this policy is made and accepted in reference in the foregoing terms, and to the conditions printed on the back of this policy, which are hereby declared to be part of this contract." On the back of the policy are certain printed conditions, of which the second is as follows: "If the premises insured herein be incumbered in any way, this policy shall be void unless the incumbrance on the premises be expressed in the application." The plaintiff never made any written application for insurance, nor authorized any one to make any for her, and did not know that any existed until the time of the trial in the court below. One W. J. Moffitt, the local agent of the defendant at East Saginaw, solicited the insurance. He talked with the plaintiff about the insurance was informed by her of the existence of the mortgage upon the premises, looked them over himself, concluded to take the insurance, received the payment of the premium on the 24th day of May, 1886, and told plaintiff that her property was insured from 12 o'clock noon of that day. He asked her whether she wanted the loss, if any, payable to her or the mortgagee. She told him to make it payable to herself. Nothing was said about any written application. A week or more after this, Moffitt, without any authority from Mrs. Baker, and without her knowledge, filled out an application in her name, and signed plaintiff's name to it. He testified that he had no authority from her to do so. It does not appear whether the application was received by the company or not before the policy was delivered to Mrs. Baker, but the policy was dated and countersigned upon the day the insurance was taken-May 24, 1886. Moffitt swears he delivered the policy May 25, 1886. Plaintiff swears that she did not receive it for 10 or 12 days. Mr. House, the state agent, testifies that he sent the application on to the company after receiving it from Mr. Moffitt. He fails to state when he received it, or when he forwarded it. Plaintiff claims that she did not read the policy after receiving it; but this is immaterial. The application contained the following printed question: "Is the property incumbered?" The written answer was, "None." No written consent to this mortgage was written upon the policy, nor was any mention of it made therein. Neither was it expressed in or on the application filled out and sent on by Moffitt. The circuit judge instructed the jury sustantially that the application, not being made by Mrs. Baker or by Moffitt with her knowledge and consent, she had a right to believe that the application made by Moffitt,-knowing that she had made none,-contained her statements as she had made them to him. And if the jury believed that she stated to Moffitt the existence and lien of this mortgage upon the premises, she was entitled to recover. She obtained judgment for the full amount of her loss and interest.
It is plain that Mrs. Baker was not bound by this application, nor do I think she was chargeable with notice of it. The learned counsel admits, as he must, that if, under the circumstances of the taking of this insurance, the company at its home office had filled out and signed this application in the name of plaintiff without her knowledge and consent, and undertook to bind her in the policy with the terms of such application it would have been a fraud upon her, which the law would not permit to prevail. He also admits, as he must, that in the filling out of this application, Moffitt was the agent of the company, and not the agent of Mrs. Baker. These things being admitted, it follows that the filling out of this application is the act of the company, and a fraud upon the plaintiff. The policy must stand as if no written application had been made, and that part of the policy referring to it treated as surplusage, and out of the case. But the learned counsel insists that it was the duty of the plaintiff when she received her policy to read it, and know what her contract was, and, when she saw an application referred to as "No. 1234," that was notice to her that a written application, made by some one, was in existence, and in the possession of the company, and that, if she did not wish to be bound by the statements contained in such application, it was her duty to find out from the company what such application contained, or return her policy. I do not think so. I think the ordinary, average person receiving such policy, and knowing that he had made no written application, and that none had been required of him, would have considered the reference to such application as mere surplusage, and having no force, as far as his insurance was concerned. To be sure, the words and figures "No. 1234" were in writing, but they followed the printed word "survey" in the following clause: "On the following property, as described in application and survey No. 1234, and forming a part of this policy." Any one would be justified, it seems to me, under the circumstances in the belief that the No. 1234 referred to the number of the survey alone, and not to the application, when there was no application made to the knowledge of the insured. Nothing is said about the application being a written one, although the word is used three or four times in the policy, until in the very last of the instrument, where this clause is found: "It is expressly agreed that this company shall not be bound by any act or statement made to or by the agent, or other person, which is not contained in the written application or indorsed on this policy." This latter clause is the one mainly relied upon for the defeat of the plaintiff's action. The testimony showing that Moffitt was informed and knew of the existence of this mortgage, at the time the policy was issued, was objected to upon the ground that, under this clause, such testimony was not admissible, as the fact of the incumbrance was not indorsed on the policy or expressed in the application. As before shown, there was no written application is this case. There was an oral application, and in that application the testimony shows the company was apprised of the incumbrance. It was expressed in the oral application, and the company is bound by such application, and must be deemed to have waived the incumbrance. It is argued that this clause in reference to acts and statements not indorsed upon the policy or contained in the written application having no binding effect upon the company is a wise provision, and one calculated to guard against the dishonesty of agents, as well as the perjuries of claimants. But this company, receiving a written application entirely in the handwriting of the agent, even to the signature of the applicant, take it without further inquiry, and issue a policy upon it, or consent to one already issued and delivered upon it. To allow them to thus blindly profit by the fraud of their agent of which the assured in entirely innocent can, however, serve no useful purpose, and would be an encouragement to the repetition of like frauds in the future, not only by this agent, but by others. This case differs materially from those where the assured has signed the application and had an opportunity to read...
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