Chismore v. Anchor Fire Ins. Co.

• Citation: 108 N.W. 230,131 Iowa 180
• Parties: C. B. CHISMORE v. ANCHOR FIRE INSURANCE COMPANY, Appellant
• Decision Date: 10 July 1906
• Court: United States State Supreme Court of Iowa

108 N.W. 230

131 Iowa 180

C. B. CHISMORE v. ANCHOR FIRE INSURANCE COMPANY, Appellant

Supreme Court of Iowa, Des Moines

July 10, 1906

Appeal from Linn District Court.--HON. J. H. PRESTON, Judge.

ACTION on an insurance policy. Verdict was directed for plaintiff and judgment entered thereon. The defendant appeals.

Reversed.

Edmund H. McVey and Cooper, Clemans & Lamb, for appellant.

Jamison & Smyth, for appellee.

OPINION

LADD J.

The policy of insurance sued on was issued to the plaintiff upon an application in which he was asked: "What is your title to the land on which the above-described property to be insured is situated?" and answered: "Sheriff's certificate. I will get a sheriff's deed on June 5 1904." Notwithstanding a condition declaring the contract void if the assured had less than a title in fee simple, no question is raised as to its validity on that ground. The reason for not doing so will appear later. One Baker was owner of the premises which had been sold on execution to plaintiff, and a sheriff's certificate of sale issued accordingly. The house burned down April 26 1904, and plaintiff acquired a sheriff's deed June 13th following. Evidence was offered tending to show that Baker had abandoned the house about 10 days before the fire, and that it was vacant at that time; also that the hazard was increased by such vacancy. An objection to the effect that issuing a policy on an interest such as evidenced by the sheriff's certificate of sale operated as a waiver of the clause of the policy, providing that if the premises insured are or become vacant or unoccupied it shall be void, and that it shall be suspended during such vacancy, and the company not be liable for any loss or damages accruing in the meantime, was sustained. This ruling only, save that the verdict was excessive, is questioned. In the absence of any evidence tending to show that there was no increase of hazard owing to the vacancy of the property, these provisions must be given effect, unless the company is estopped from insisting upon their enforcement. Stoltenberg v. Continental Ins. Co., 106 Iowa 565, 76 N.W. 835; Krell v. Chickasaw Mut. Fire Ins. Co., 127 Iowa 748, 104 N.W. 364. And, if estopped from setting up the forfeiture or suspension of the policy, it cannot be said that independent of these provisions the hazard was necessarily increased by the vacancy of the house. Insurance Company v. Baldwin, 62 Ohio St. 368 (57 N.E. 57): Luce v. Dorchester Ins. Co., 105 Mass. 297 (7 Am. Rep. 522); Gilliat v. Pawtucket Mut. Fire Ins. Co., 8 R.I. 282 (91 Am. Dec. 229). The theory of an estoppel in such a case is that the company, after accepting the premium and issuing the policy, cannot be heard to urge its invalidity because of the existence of conditions of which it was then aware and which, by the terms of the contract, rendered the policy void from its inception; that is, the issuance of the policy under these circumstances is regarded as an assurance to the insured by the company that the conditions are such as to meet the requirements of the contract, or, at least, will be so considered, and if the insured, in reliance thereon, receives the policy, the insurer is estopped from interposing the defense that because of the existence of such conditions the policy was void when issued. Fitchner v. Insurance Co., 103 Iowa 276; Erb v. Insurance Co., 99 Iowa 727, 69 N.W. 261; Ind. School Dist. v. Insurance Co., 113 Iowa 65, 84 N.W. 956; Welch v. Fire Ass'n of Philadelphia, 120 Wis. 456 (98 N.W. 227); In re Millers & Manufacturers' Ins. Co. (Minn.) (106 N.W. 485).

The doctrine is peculiar to the law of insurance and is founded on the laudable design of preventing the perpetration of a fraud through obtaining a premium by the insurance of a policy known to be void ab initio. As an original proposition it would be difficult to defend this exception to the general rule that he who becomes a party to a contract is presumed to have knowledge of its contents and is bound thereby, unless prevented from ascertaining them by some artifice or deception. But such contracts are so common and of such universal use in the business world that they are ordinarily spoken of as commodities rather than individual agreements. Insurance is bought and sold, according to the speech of the people. To omit reading the application before signing it or the policy upon its receipt is not deemed negligence as a matter of law, as...