Carroll v. Hartford Fire Ins. Co.

• Citation: 154 P. 985,28 Idaho 466
• Parties: H. P. CARROLL and RALPH WARD, Respondents, v. HARTFORD FIRE INSURANCE COMPANY, a Corporation, Appellant
• Decision Date: 22 January 1916
• Court: United States State Supreme Court of Idaho

154 P. 985

28 Idaho 466

H. P. CARROLL and RALPH WARD, Respondents, v. HARTFORD FIRE INSURANCE COMPANY, a Corporation, Appellant

Supreme Court of Idaho

January 22, 1916

LEGAL AND EQUITABLE CAUSES OF ACTION-MOTION TO SEPARATE IN COMPLAINT-FIRE INSURANCE POLICY-MISTAKE OF AGENT IN REDUCING CONTRACT TO WRITING-ESTOPPEL-STATUTORY FORM OF POLICY-RIGHTS OF PARTIES UNDER-FALSELY SWEARING TO PROOFS OF LOSS-INSTRUCTIONS-SUBROGATION.

1. By sec. 1, art. 5, of the constitution of this state, the distinction between actions of law and suits in equity is prohibited. Both legal and equitable causes of action may be joined in the same complaint. These causes of action need not be separately set forth, provided that a concise and complete statement of them is made, and when that is done the plaintiff is entitled to any relief at law or in equity that his proof under such allegations may show him to be entitled to.

2. Where it is alleged in the complaint and shown by the proof that an insurance policy as written by the agent of the insurance company does not truly state the contract of insurance as actually made between the parties, or the facts upon which such contract was based, a court of general jurisdiction in this state may reform such contract, so as to make it express the intention of the parties, and enforce it as so reformed, in one action.

3. Sec 13 of an insurance act, passed in 1913 (Sess. L. 1913, p 593), one of the objects of which was to provide a standard form of fire insurance policy in this state in accordance with the "New York Standard," was not intended by the legislature to abridge any contractual rights which an applicant for fire insurance would have had prior to its enactment, or to confer upon insurance companies any immunity for the negligence of their agents in incorrectly reducing an insurance contract to writing.

4. Where a fire insurance policy contains a clause that it shall be void if the interest of the insured be not truly stated therein, or "if the interest of the insured be other than unconditional and sole ownership," and the insured truly stated his interest as that of chattel mortgagee to the agent when applying for the insurance, but the policy as written by the agent disclosed no interest in the insured other than sole ownership, and the company thereafter accepted the policy and the payment of premiums thereon, the knowledge of the agent was the knowledge of the company, and in case of loss and suit to recover on the policy, the insurance company will not be permitted to set up the defense that the policy was made void by the violation of said conditions.

[As to parol evidence to explain or modify fire insurance contract see note in Ann.Cas. 1914C, 59.]

5. Under our statute (Sess. L. 1913, p. 597), an essential element of the offense of falsely swearing to a proof of loss on an insurance policy is the intent to defraud, and unless such intent is shown, the fact that the insured incorrectly stated in the proof of loss his interest in the property destroyed is no defense to an action on a policy which by its conditions is to be void in case of any fraud or false swearing by the insured.

6. Where a fire insurance policy was issued on 250,000 feet of lumber in a lumber-yard, which contained a greater quantity of lumber than the amount insured, and in an action to recover on the policy the court incorrectly instructed the jury that in arriving at the amount of loss under the policy they should "determine the same by ascertaining the cash value of the lumber in the mill-yard" instead of the cash value of the actual amount destroyed, but the proof showed that in fact more than 250,000 feet was destroyed and that only 4,020 feet was left in the yard, held, that under the evidence such incorrect instruction was not reversible error, as the jury manifestly was not prejudicially misled thereby.

7. Held, that the instructions given, on the whole, fairly state the law applicable to the facts of this case, and that the court committed no error in the refusal to give instructions requested by defendant.

8. Where a chattel mortgagee insured his interest in a part of the property mortgaged, which was afterward destroyed by fire, and recovers judgment for the full amount of his policy, the insurance company cannot be subrogated to his security as such mortgagee without first paying to him the remainder of the indebtedness for which the mortgage was given.

APPEAL from the District Court of the Eighth Judicial District for Kootenai County. Hon. R. N. Dunn, Judge.

Action to recover on a fire insurance policy. Judgment for the plaintiffs. Affirmed.

Judgment affirmed, with costs in favor of respondent.

Lester P. Edge and Reed & Boughten, for Appellant.

Since the policy of insurance is a written contract, the parties having made and reduced their agreement to writing, to follow the rule permitting parol evidence to show waiver of terms would be no more or less than to permit parol evidence to vary the terms of a written instrument. (Northern Assur. Co. v. Grandview Building Assn., 183 U.S. 308, 22 S.Ct. 133, 46 L.Ed. 213.)

By sec. 13, ch. 185, Sess. Laws of 1913, the New York Standard Policy was made the standard policy of the state of Idaho, just as effectively as though it had been set out in haec verba upon the statute-books. (State v. Brian, 96 Neb. 278, 147 N.W. 689; Bibbs County Loan Assn. v. Richards, 21 Ga. 592; People v. Fire Assn. of Philadelphia, 92 N.Y. 311, 44 Am. Rep. 380; Sutherland's Statutory Construction, sec. 257; Central of Georgia Ry. Co. v. State, 104 Ga. 831, 31 S.E. 531, 42 L. R. A. 518; Dew v. Cunningham, 28 Ala. 466, 65 Am. Dec. 362.)

"The conditions of the standard policy cannot be waived except as provided therein and written or printed on the face of the policy." (13 Am. & Eng. Ency. of L., 2d ed., 223; Oatman v. Bankers' Fire Relief Assn., 66 Ore. 388, 133 P. 1183, 134 P. 1033; Finlon v. National Union Fire Ins. Co., 65 Ore. 493, 132 P. 712; Howard v. Horticultural Fire Relief (Or.), 150 P. 270; Black v. Atlantic Home Ins. Co., 148 N.C. 169, 61 S.E. 672; Kollitz v. Equitable Mutual Fire Ins. Co., 92 Minn. 234, 99 N.W. 892; Bourgeois v. Northwestern Nat. Ins. Co., 86 Wis. 606, 57 N.W. 347; Anderson v. Manchester Fire Assur. Co., 59 Minn. 182, 50 Am. St. 400, 60 N.W. 1095, 63 N.W. 241, 28 L. R. A. 609; Moore v. Hanover Fire Ins. Co., 141 N.Y. 219, 36 N.E. 191; Hamilton v. Royal Ins. Co., 156 N.Y. 327, 50 N.E. 863, 42 L. R. A. 485; Straker v. Phenix Ins. Co., 101 Wis. 413, 77 N.W. 752; 1 Cooley on Ins., pp. 528, 529; Parker v. Rochester German Ins. Co., 162 Mass. 479, 39 N.E. 179; Quinlan v. Providence etc. Ins. Co., 133 N.Y. 356, 28 Am. St. 645, 31 N.E. 31.)

"The insured is bound by the terms of the policy which he accepts, and the fact that no inquiries were made by the company or its agent, and no representations made by the insured, cannot strike out the provisions of the policy." (Crikelair v. Citizens' Ins. Co., 168 Ill. 309, 48 N.E. 167; Indiana Ins. Co. v. Pringle, 21 Ind.App. 559, 52 N.E. 821; Shaffer v. Milwaukee Mechanics' Ins. Co., 17 Ind.App. 204, 46 N.E. 557; Harding v. Norwich Union Fire Ins. Soc., 10 S.D. 64, 71 N.W. 755; Aetna Ins. Co. v. Holcomb, 89 Tex. 404, 34 S.W. 915; Sulphur Mines Co. v. Phenix Ins. Co., 94 Va. 355, 26 S.E. 856.)

The courts have unanimously held that as fraud and false swearing of itself was made by the policy a ground for forfeiture, fraudulent intent was not an element. (Willis v. Horticultural Fire Relief, 69 Ore. 293, Ann. Cas. 1916A, 449, 137 P. 761; Linscott v. Orient Ins. Co., 88 Me. 497, 51 Am. St. 435, 34 A. 405; Claflin v. Commonwealth Ins. Co., 110 U.S. 81, 3 S.Ct. 507, 28 L. ed., 76.)

"When a mortgagee, independently of the owners and mortgagor, obtains a policy upon his own interest and at his own expense, for his sole benefit, upon payment of the loss to him, the insurance company is entitled to subrogation." (Excelsior Fire Ins. Co. v. Royal Ins. Co., 55 N.Y. 343, 14 Am. Rep. 271; Carpenter v. Providence Washington Ins. Co., 16 Pet. (41 U.S.) 495, 10 L.Ed. 1044; Concord Union Mut. Fire Ins. Co. v. Woodbury, 45 Me. 447; Dunbrack v. Neall, 55 W.Va. 565, 47 S.E. 303.)

The right of subrogation does not depend upon the contract, but accrues as a matter of law. (Thomas v. Montauk Fire Ins. Co., 43 Hun (N. Y.), 218, 5 N.Y.S. 481.)

E. R. Whitla, for Respondents.

The motion to require plaintiff to separately state two causes of action and the demurrer to the complaint were both properly overruled. In those states which have adopted the reformed pleading in its entirety this form of pleading is not only good but is proper. (Aetna Ins. Co. v. Brannon, 99 Tex. 391, 89 S.W. 1057, 2 L. R. A., N. S., 548, 13 Ann. Cas. 1020; German-American Ins. Co. v. Hyman, 42 Colo. 156, 94 P. 27, 16 L. R. A., N. S., 77; Anderson v. War Eagle etc. Min. Co., 8 Idaho 789, 72 P. 671; Rauh v. Oliver, 10 Idaho 3, 77 P. 20; Bates v. Capital State Bank, 21 Idaho 141, 121 P. 561; Poncia v. Eagle (Ida.), 152 P. 208.)

Where the agent makes the mistake, the company must stand the loss and if, in this case, the title was disclosed to the agent of the company and he made a mistake in making out the policy, upon alleging the facts the plaintiff would be entitled to recover. The mistake or neglect of an insurer's agent in making out a policy must necessarily fall upon his principal, rather than upon the insured, so long as he acts within the scope of his authority. (19 Cyc. 819; Allen v. Phoenix Assur. Co., 12 Idaho 653, 88 P. 245, 10 Ann. Cas. 328, 8 L. R. A., N. S., 903; State Ins. Co. v. Du Bois, 7 Colo. App. 214, 44 P. 756; Wich v. Equitable etc. Ins. Co., 2 Colo. App. 484, 31 P. 389; National Mutual Fire Ins. Co. v. Barnes, 41 Kan. 161, 21 P....