O'Brien v. Ohio Ins. Co.

• Decision Date: 20 December 1883
• Parties: O'BRIEN v. OHIO INS. CO.
• Court: Michigan Supreme Court

17 N.W. 726

52 Mich. 131

O'BRIEN v. OHIO INS. CO.

Supreme Court of Michigan

December 20, 1883

Where insurance is applied for orally, and the applicant is unaware of any provision in the policy regarding incumbrances, and is not guilty of any misleading conduct, his bare silence cannot be deemed a misrepresentation; and if the agent in such a case did not read the policy to the applicant, or call his attention to the clause relating to incumbrances, the existence of a mortgage would be no impediment to a recovery from the insurance company.

Where an insurance policy contains clauses requiring notice to be given, preliminary proof of loss to be furnished, and submission to an examination, in order to sue upon the policy, the insured party does not lose his right to sue where, upon such examination being made, and the statement being reduced to writing, he refuses to sign because of other statements added by the agent, and the company afterwards refuse to allow him to sign, though he offers to sign the whole statement prepared by the agent.

Error to Muskegon.

Campbell & Allen, for plaintiff.

Morris & Uhl, for defendant and appellant.

GRAVES, C.J.

The plaintiff recovered on one of defendant's policies, and error is alleged.

First. We think the declaration was sufficient under the rule of court, and that the contract of insurance was properly admitted. The objection of variance was not tenable.

Second. At the date of the policy, and down to the occurrence of the fire, an incumbrance by mortgage of from three to five hundred dollars rested on the property. The argument by the plaintiff that there was a lack of evidence on this subject is not warranted. Among other items of proof the record contains an offer by the plaintiff to swear to the fact himself. Moreover, it appears by the charge that it was not disputed. The property was in Muskegon, and the policy was there issued and delivered through Haines and Chamberlain, the defendant's local agents. The transaction of the business was confined to Haines and O'Brien. There was no written application. O'Brien called on Haines to effect an insurance, and told him where the property was; and Haines observed that he knew the property, and at once filled out the policy and delivered it. The plaintiff swears that it was not read to him, and that his attention was not called to any of its conditions or provisions, and that no questions were asked about mortgages or anything said on the subject, and that he did not disclose the existence of the mortgage. Mr. Haines testifies that O'Brien was silent in regard to incumbrance, although it is his recollection that he asked him about a mortgage. The policy contained this stipulation "If any application, survey, plan, or description of the property herein specified is referred to in this policy, such application, survey, plan, or description shall be considered a part of this policy and the basis of this insurance provided, however, that this company will not be liable, under and by virtue of this policy, if there be any omission or false representation by the assured of the title, incumbrance, condition, location, or occupancy of the property, or any overvaluation, or any misrepresentation whatever, either in a written application or otherwise."

The defendant contended in the circuit court, as he contends here, that the plaintiff's failure to inform the agent of the mortgage was a violation of the foregoing provision of the policy, and a complete answer to the action. The circuit judge differed, and first observing that there was no written application, and no provision for a preliminary examination of the applicant by the agent, proceeded to charge the jury, in substance, that if they found that the policy was not read to the plaintiff before it was delivered to him, and that the agent gave it to him on his oral application without directing his attention to the conditions respecting incumbrance, and that the plaintiff on receiving the policy was ignorant of them, and that nothing was said either by the agent or the plaintiff, before or after the emanation of the policy, in regard to incumbrance, that they might then consider the existence of the mortgage as no impediment to recovery. The defendant can sustain no exception to this charge. The provision in the policy is not applicable. The first paragraph relates to cases where applications, plans, surveys, or descriptions are made and are by necessity in writing, and the last clause, though not very clear, most obviously does not intend a case of mere silence in regard to the existence of incumbrance where no inquiry is made, and where no explanation is asked for, and the applicant is utterly unaware that any is required. If an insurer is apparently indifferent whether a property is unincumbered, and is content to insure without in any way suggesting an interest in the question, the bare silence of the applicant upon it cannot be deemed a misrepresentation. If the applicant is guilty of no misleading conduct, the insurer in such a case must be taken to assume the risk incident to the undisclosed incumbrance. It must not be intended that the principal would hold in regard to incidents obviously implying unusual risk, and not likely to be discerned or contemplated by the insurer. The case requires no observations on that subject. It is sufficient to suggest the distinction.

Third. By clause 10 of the policy the plaintiff was required to render, as soon after the fire as possible, a particular account of the loss, signed and sworn to, and containing certain particulars there enumerated. And it was further provided, by clause 13, that in case of being required, by any person appointed by the company, either before or after the rendition of the preliminary proof, the plaintiff should submit to examination under oath, and subscribe thereto, etc. And it was declared by the ninth clause that "the use of general terms, or anything less than a distinct specific agreement, clearly expressed and indorsed on the policy should not be construed as a waiver of any printed or written condition or restriction therein;" and the local agent Haines, who filled out and delivered the policy, testified that his firm, as local agents, had no authority to waive any conditions, and never undertook to do so. The fire occurred on the tenth or eleventh of April, 1882, and the plaintiff notified Haines, the local agent, the next day, and he undertook to convey information to the home office, and did so. The defendant directed Mr. Garnsey, of Grand Rapids, its adjusting agent for the district, to examine into the loss, and he repaired to Muskegon for that purpose on the nineteenth of the same month, or in about a week after the fire. He called on the plaintiff for an account of the loss and for a statement of facts, and after interrogating the plaintiff as fully as he wished, he wrote out an elaborate detail, and containing everything from the plaintiff he saw fit to require. He then asked the plaintiff to sign this statement and swear to it. But the latter requested that before doing so it might be shown to his legal advisers, Messrs. Campbell & Allen, and he went with Garnsey to their office. Mr. Campbell objected that a few of the details were neither relevant or proper, and that the plaintiff ought not to sign the paper and swear to it unless they were stricken out. Some discussion followed, and these passages were at length marked out, and the plaintiff offered to subscribe and swear to the statement as thus altered. But, after some hesitation, Mr. Garnsey decided to insist on the statement as originally drawn, and he shortly after went away and took the paper with him. The failure of a technical consummation of a full exhibit at this time was caused by the difference referred to in regard to the fitness of the particular passages objected to. The parties to...