Bobbitt v. the Liverpool
| Decision Date | 31 January 1872 |
| Citation | 8 Am.Rep. 494,66 N.C. 70 |
| Court | North Carolina Supreme Court |
| Parties | RUFUS BOBBITT v. THE LIVERPOOL AND LONDON AND GLOBE INSURANCE COMPANY. |
1. The application for a policy of insurance, forms a part of the contract of insurance where the policy refers to it as such.
2. And in an action by the insured on such a policy, the burden of proof is upon the plaintiff.
3. The application must be set out in the complaint, and, being in the nature of a condition precedent, the truth of its representations must be proved by him.
4. A representation as to the value of property insured, is material, even though the policy contains a stipulation to pay two-thirds of the real value or less if the loss were not so much; but the doctrine of immeteriality does not apply in such a case, the representation forming a part of the contract, and, being made in response to a direct question.
5. A charge in such a case, that the application was not a part of the contract, that the declaration as to value by the insured was a mere representation, and that the only question for the consideration of the jury was the value of the property burnt, is erroneous, and the error is not cured by the remark afterwards made to the jury that unless such statements were fraudulent and false, they would not bar the plaintiff's right to recover.
6. Even treating the statement as to the value as a representation; it is not a correct principle, that to prevent a recovery, it is necessary to show that the statement was fraudulent as well as false, and herein lies the difference between a representation as an opinion and a representation of a fact.
7. It is sufficient to avoid the policy that the representations were false however honestly made--if material they must be perfectly true.
8. One whose property is insured at his own request in the name of another, being his agent, has an insurable interest.
This was a civil action, tried before His Honor, Judge Watts, at July Special Term 1871, of Granville Superior Court.
The action was brought upon a policy of insurance issued by the defendant at the instance of plaintiff, to and in the name of one Newnan, against the loss of certain tobacco, &c. by fire.
The policy was based upon the application. The application is in the usual form, and contains a series of questions propounded to Newnan, and his answers thereto, amongst others, the following:
Q. What is the present cash value of the property on which insurance is wanted?
A. The present cash value of the tobacco on hand is $30,000 and it will be increased to $50,000. The average value on hand, say $30,000.
There were printed on the back of the policy, not signed, a number of statements under the heading, “the conditions and stipulations referred to in this policy,” amongst which is this:
The policy reads thus:
“This policy of insurance witnesseth, that Dennis P. Newnan having paid to the London and Liverpool and Globe Insurance Company, the sum of five hundred dollars, for insurance for loss or damage by fire, (subject to the conditions and stipulations endorsed hereon, which constitute the basis of this insurance,)
do hereby agree that from ________ until _______ the funds and property of said company shall (subject to the conditions and stipulations endorsed hereon, which constitute the basis of this insurance) be subject and liable to pay, reinstate or make good to the said assured, their heirs, executors or administrators such loss or damage as shall be occasioned by fire to the property above mentioned, and hereby insured, not exceeding in each case respectively the sum or sums hereinbefore severally specified,” &c., &c.
The answer alleged that the representations of Newnan were in several respects false and fraudulent, and insisted that Newnan, who was plaintiff's bailee, had no insurable interest. On the trial it appeared that the policy was obtained in the name of Newnan, but for plaintiff's benefit though plaintiff's name does not appear in the policy and that Newnan had assigned this policy to plaintiff. There was also evidence tending to show that the representations contained in the application as to the value of the tobacco were false and also fraudulent. The defendant insisted that the application and the endorsed memoranda, headed ““creditors &c.,” formed a part of the contract of insurance and warranty and if false the plaintiff could not recover, and applying that principle to the evidence, that if the jury believed from the evidence that the cash value of the tobacco in the plaintiff's factory at the time of making the application was greatly less than thirty thousand dollars, the plaintiff would not be entitled to recover.
His Honor declined these instructions and charged the jury: “That if they believed from the euidence that the plaintiff had twentya1 thousand dollars worth of tobacco in the factory at the time of the fire, and he sustained loss to that amount by reason of the fire, that he is entitled to recover twenty thousand dollars.
That the application was a representation and forms no part of the contract.
That the application was not embodied in the policy and is no part of the same.
That the only question for the jury to consider is the amount of the tobacco in the factory at the time of the burning.
That Newnan did have an insurable interest.
That the statements in the application were merely representations, and unless they were fraudulent and false they would bar the plaintiff's right of recovery.”
Many other interesting questions are presented by the voluminous transcript, but as the decision is based upon the two points developed by this report, it is deemed best not to anticipate, as from all appearances our case will again appear in this Court in a new garb.
There was a verdict and judgment for the plaintiff for $20,000, and the defendant appealed.
Lanier for the appellant.
1. The defendant was entitled to the instruction prayed, to the effect that the application was a part of the contract.
Parson's Laws of business, 364, 402, 410, 411, 412.
Am. Com. Law, 359, 360, 361, 362.
As to the difference between mere statements and representations forming part of the contract see Parson's L. B. 410, 411.
2. The Court ought to have given the other instructions, because, the affirmative statement of the owner, in the application, as to the cash value of the stock of tobacco is a warranty, and operates as a condition precedent.
Parson's L. B., 372, 402, 410, 411, 412.
Parson's Merc. Law, 499, note 1.
3 Kent, 282, 283, 288.
Whitehurst v. N. C. M. Co., 7 Jones, 433.
Boyle v. Ins. Co., ib. 373, (note by the terms of the policy any misrepresentation or concealment avoids the policy.) If a warranty, then being broken, though innocently, it avoids the policy whether material or not.
3 Kent, 382, 383, 388.
Parson's Mer. Law, 519 to 521 inclusive.
Hazzard v. N. E. Ins. Co., 8 Peters, 579.
Marshall on Insurance, 341, 451.
Ellis on Insurance, 81, 82.
If not a warranty strictly at all events, it was a part of the contract, and if material in the mind of the underwriter and false, it avoids the policy.
3 Kent, 283.
That it is part of the contract, appears from the fact, that the application is referred to, in the policy as the basis of it, and is signed by the party, and that the terms of the policy make a misrepresentation avoid it.
That it was material in the mind of the underwriter, is shown by the question being asked in the application.
Am. Com. Law, 364.
Parson's Mer. Law, 534.
3. The Court erred in every instruction that was given, not only because they were contrary to law, but also becausee they substantially expressed to the jury an opinion as to the facts, namely, that the plaintiff had established by proof everything necessary to entitle him to recover something, and the only thing left for the jury to determine, was the measure of damages!
As to the last instruction, even if it were law, it was wrong, because in the other instructions, the Court had already intimated an opinion in substance, that the statements in the application were not fraudulent and false, or not material if they were; and because from the whole charge, the jury must have understood the Court to mean, that they must have been fraudulent in intention to bar a recovery.
Phillips & Merrimon for the appellee:
I. “Application” contains representations, and not warranties. Campbell v. Ins. Co., 98 Mars., 381: “ basis.”
II. Burden of proving them false, devolves upon defendants.
III. All matters showing contract void for fraud, must be specially pleaded. Price v. Ins. Co., 19 La. An., 214.
IV. Pleading must show that a representation relied on as false, was also material; i. e., materiality is matter of fact for jury. Ins. Co. v. Southard, 8 B., Mon., 634.
V. Presumption always that a statement is a representation, and not a warranty. Ibid. Fland., 223, and Wall v. Howard Ins. Co. 14 Bard. 383.
VI. By the first condition, which is part of the contract, the description of the property must be true. It is described as in the factory. There was evidence that the agent of the defendant, knew that the greater part was in a barn, and was to be removed into the factory shortly afterwards. In such case the misdiscription does not hurt. Steph. N. P., 3 d, 2082. Franklin v. Ins. Co., 42 Mo., 456. Anson v. do., 23 Iowa, 84. Lee v. Addit, 37 N. Y., 78, Combs v. do., 43 do, 148, Bartholomew v. do., 25 Iowa, 507, Rowley v. Ins. Co., 36 N. Y., 450. Ayers v. do., 21 Iowa, 185. Flanders 180, &c., and 100. See Plumb v. Ins. Co., 18 N. Y., 392, and see Tibbetts v. Ins. Co., 3 Allen, 559.
VII. That plaintiff had no insurable interest must be alleged in answer...
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