Bowlus v. The Phenix Insurance Company

• Decision Date: 27 October 1892
• Docket Number: 16,041
• Parties: Bowlus v. The Phenix Insurance Company
• Court: Indiana Supreme Court

32 N.E. 319

133 Ind. 106

Bowlus v. The Phenix Insurance Company

16,041

Supreme Court of Indiana

October 27, 1892

Motion for a Rehearing Overruled December 30, 1892.

From the Tippecanoe Circuit Court.

The judgment is reversed.

W. L Rabourn, A. Rice and W. S. Potter, for appellant.

J McCabe and E. F. McCabe, for appellee.

OPINION

Elliott, J.

The complaint of the appellant is based on a policy of insurance issued to him by the appellee. The policy is incorporated into the complaint by reference, and the usual allegations of loss, proof of loss, and the like, are made in a general averment of performance. In addition to such allegations, the complaint contains, in substance, the following averments: that William P. Ermy, the agent of the defendant proposed to write a policy upon the plaintiff's property; that he presented a printed application, furnished to him by his principal, which contained many questions; these questions the agent requested the plaintiff to answer, but the plaintiff, being unable to do so because of pressing business, the agent undertook to write the answers in the application; that the plaintiff gave the agent truthful answers to all questions; that one of the questions required the plaintiff to state whether the property was incumbered in any way, and the plaintiff truthfully answered the question by saying; "Yes, by a mortgage to Messmer for about seven hundred and fifty dollars, past due, with four or five years' interest unpaid;" that the agent did not correctly write the plaintiff's answer, but falsely wrote the answer "No" to the question. It is also averred that the mortgage incumbrance did exist against the property, as the defendant knew; that the mortgage was executed to Samuel F. Messmer, since deceased; that, after the mortgagee's death, the mortgage was distributed to his daughter, Elizabeth Messmer; that, after its distribution to her, the mortgage was renewed, but no new or additional incumbrance was created; that, before the renewal, the plaintiff employed a reputable attorney to cast up the interest due on the debt and, especially, to see that no greater sum than that actually due should enter into the new mortgage; that the mistake was made which caused the renewal mortgage to be given for one hundred and forty-one dollars more than the sum actually due; that this mistake was not discovered until suit to foreclose was brought by the mortgagee, and that, on foreclosure, the mistake was corrected. The defendant's answer to the complaint contains many paragraphs. The first paragraph of the answer avers the execution of the mortgage to Samuel F. Messmer, and that it was a violation of the contract of insurance. The second paragraph also alleges the execution of the mortgage to Messmer; avers that, after his death, it was assigned to his daughter Elizabeth, and that she and the plaintiff entered into a contract for a renewal of the original debt; that this contract was carried into effect by the execution of new notes and a new mortgage, which covered and embraced the principal of the debt with compound interest. To each of these paragraphs of answer, the plaintiff unsuccessfully demurred.

If it were not for the allegations of the complaint, which show that the defendant had notice of the mortgage to Messmer, and that the failure to state, in the application, the existence of the incumbrance was due solely to the wrong of the appellee's agent, there would be no doubt as to the sufficiency of the first paragraph of the answer. Where there is a provision clearly avoiding a policy, if the property is represented to be unincumbered, the existence of an incumbrance is fatal to a recovery. Continental Ins. Co. v. Vanlue, 126 Ind. 410, 26 N.E. 119, and cases cited. But this rule can not govern where the assured correctly states to the insurer that there is an incumbrance, and the latter undertakes to embody the statement in the application. According to the allegations of the complaint, the assured truthfully stated to the agent of the insurer the facts, and these the agent agreed to embody in the application, which forms part of the contract of insurance. What the agent did was, in legal contemplation, the act of the principal. Rogers v. Phenix Ins. Co., 121 Ind. 570, 23 N.E. 498, and authorities cited; Pickel v. Phoenix Ins. Co., 119 Ind. 291, 21 N.E. 898; Phoenix Ins. Co. v. Allen, 109 Ind. 273, 10 N.E. 85, and cases cited. These allegations are admitted; for the answer, under immediate mention, professes to be a plea in confession and avoidance, and so it must be in substance and effect, or else it is wholly bad, inasmuch as a single paragraph of an answer can not be both a denial and a valid plea in confession and avoidance. Coble v. Eltzroth, 125 Ind. 429, 25 N.E. 544; Nysewander v. Lowman, 124 Ind. 584, 24 N.E. 355; Petty v. Trustees, etc., 95 Ind. 278; State, ex rel., v. Foulkes, 94 Ind. 493, (498); Richardson v. Snider, 72 Ind. 425; Neiderfer v. Chastain, 71 Ind. 363; Cronk v. Cole, 10 Ind. 485. As the answer confesses the allegations concerning the filling up of the application, and the statements of the applicant to the appellee's agent, it is bad, unless it effectively avoids them. This it does not do. It does no more than affirm that there was an incumbrance, and this the complaint averred, but stated facts, showing the existence of the incumbrance, and that the failure to state it in the application was attributable solely to the fault of the agent of the insurer. There is, indeed, no attempt to avoid the statements of the complaint upon this point; there is a naked admission of their truth, and nothing more. These statements were material, since they related to a vital point. They were proper. In the case of Phenix Ins. Co. v. Allen, supra, it was expressly adjudged that such allegations were properly embodied in the complaint, and that ruling is right. It is well settled that while a party is not always bound to anticipate a defense, it is often proper for him to do so. A plaintiff may, in many instances, elect to set forth all the facts, and submit the entire case upon questions of law. Our code system is closely akin to the equity practice, and, as is well known, it was proper, under that practice, to anticipate and avoid a defense. The decided cases recognize the rule that defenses may, in the proper cases, be anticipated, but they declare that where the pleader attempts to anticipate a defense he must effectively avoid it, or his complaint will be bad. Western Union Tel. Co. v. Yopst, 118 Ind. 248, 20 N.E. 222; Knopf v. Morel, 111 Ind. 570, 13 N.E. 51, (572); Behrley v. Behrley, 93 Ind. 255; Latta v. Miller, 109 Ind. 302, 10 N.E. 100; Calvo v. Davies, 73 N.Y. 211; Bracket v. Wilkenson, 13 How. Pr. 102; Hopkins v. Ward, 67 Barb. 452; People ex rel. v. Knox, 38 Hun 236, (240); Wyrick v. Weck, 68 Cal. 8, 8 P. 522, S. C. 8 P. 522; Winsted Bank v. Webb, 39 N.Y. 325. The case before us is one in which the plaintiff could not, with safety, avoid showing the reason why the application did not correctly state the facts respecting the incumbrance, since the nature of his cause of action and the provisions of his contract made such a statement necessary, and not merely proper. The statements under immediate consideration, being material and proper, were confessed, and, as they were not avoided, the first paragraph of the answer is bad. Harris v. Knickerbacker, 5 Wend. 638; Kane v. Bloodgood, 7 Johns. Ch. 90; Albany City Bank v. Dore, Walker's Ch. (Mich.) 318; Stafford v. Brown, 4 Paige 88; Hawley v. Wolverton, 5 Paige, 522; Somerville v. Stewart, 48 N.J.L. 116, 3 A. 77. It may, with propriety, be added that the answer assumes to respond to the entire complaint, and that if it be conceded--and even so much as that is doubtful--that it effectively answers part only, it is, nevertheless, bad, since it is established law that an answer which assumes to respond to an entire complaint is bad if it answers it only in part.

It is argued by the appellee's counsel that even if it be conceded that there was error in overruling the demurrer to the first paragraph of the answer, it is a harmless one, for the reason that the special verdict entitles the appellee to judgment; and in support of this contention we are referred to the cases of Martin v. Cauble, 72 Ind 67; Butt v. Butt, 118 Ind. 31, 20 N.E. 538; State, ex rel., v. Vogel, 117 Ind. 188, 19 N.E. 773. The first of the cases cited is not in point, for in that case the special finding was held to cure the error, because it showed that the judgment rested on a good paragraph of the complaint. It is possibly true that the cases last cited would require us to hold that if the facts appearing in the record proper clearly entitled the appellee to a judgment, the error in overruling the demurrer might be regarded as harmless; but even this is doubtful, for the question comes to us as one of pleading purely, and probably falls within the rule asserted in Replogle v. American Ins. Co., 132 Ind. 360, 31 N.E. 947. Here, however, we have a case where the court overruled a demurrer to an answer which is clearly bad, and we can not say, from the record proper, that the error was harmless. Where a demurrer is overruled to an answer which is plainly bad, there is unquestionably error, and the error must reverse the judgment, unless it clearly appears, from the record proper, that no harm was done the plaintiff. The presumption in such cases is that the court acted throughout the case upon the erroneous theory asserted by the ruling on demurrer, and nothing but a clear and decisive affirmative showing to the contrary--and that by the record proper--will rebut this presumption. This doctrine has been often declared. Replogle v. American Ins. Co., su...