Convis v. Citizens' Mut. Fire Ins. Co. of Calhoun County

• Decision Date: 10 July 1901
• Citation: 127 Mich. 616,86 N.W. 994
• Parties: CONVIS et al. v. CITIZENS' MUT. FIRE INS. CO. OF CALHOUN COUNTY et al.
• Court: Michigan Supreme Court

86 N.W. 994

127 Mich. 616

CONVIS et al. v. CITIZENS' MUT. FIRE INS. CO. OF CALHOUN COUNTY et al.

Supreme Court of Michigan

July 10, 1901

Appeal from circuit court, Calhoun county, in chancery; Clement Smith, Judge.

Bill by Harriet L. Convis and others against the Citizens' Mutual Fire Insurance Company of Calhoun County and Delilah Forshey. Decree for complainants, and defendants appeal. Affirmed.

Complainants are the heirs of John Forshey, deceased. The defendant Delilah Forshey is his widow. They were married in September 1894, when he was 86 years old and she was 50. He died three months afterwards. Mr. Forshey, in his lifetime, carried an insurance of $2,000 upon the house and contents, situated upon the land described in the bill, and of which he was the owner in fee. It was their homestead. Mr. Forshey made a testamentary disposition of this land by a deed, duly signed acknowledged, and delivered in escrow to one Hopkins, to be delivered to his widow after his death. The deed was delivered and recorded. By its terms the land was deeded to her for life, or while she remained his widow. Complainant William Forshey, for and in behalf of the others, for a valuable consideration, made an agreement with Mrs. Forshey by which she undertook and agreed to keep up the insurance on the house. By the terms of section 8 of the by-laws of the company, 'an insurance affected by the husband continues to his widow or other representatives until a change of title takes place.' In November, 1895, Mrs. Forshey took out a new policy in her own name. In her application for that policy was this question: 'Are you the owner of the property?' to which she answered, 'Yes.' This question was followed by this statement: 'If not, state your interest.' The application was drawn up in a drug store by an agent of the company, to whom she paid the insurance. The application was read to, but not by, her. Naturally, the following question was not asked her. The only reference in the policy to the application refers to it as 'No. 3,450, now in possession of said corporation, and to which, for greater certainty, reference is hereby, and may hereafter be, made as a part of this policy.' The application does not make it a part of the policy, and the sole agreement in it is that the value of the property at its cash value is one-third more than the amount issued on the same, and the applicant agrees to pay all the just assessments. On November 13, 1897, that policy was surrendered, and another taken out, the one now in suit. No application was made for that policy, but the policy refers to the former application, No. 3,450. In this policy the house was insured for $1,350, the full amount that the building was entitled to. Mrs. Forshey, under her agreement insured the building according to its full value. The house and its contents were destroyed by fire March 4, 1899. The loss was inspected by the company, which was satisfied that it was an honest loss, paid Mrs. Forshey for the loss of her personal property, but refused to pay the insurance on the house. No question of overvaluation is raised, and it appears that it was the duty of the agent to examine and know the value of the property for which the policy was issued. Mrs Forshey claimed the insurance money, and could have instituted a suit at law to recover it. The company denied liability, but also claimed, if liable at all, it was only liable for the value of Mrs. Forshey's interest in the policy as life tenant. Complainants, as remaindermen, claimed an interest in the insurance money, that Mrs. Forshey was only entitled to a life estate in it, and that the company was liable for the full amount. In this condition of affairs complainants filed this bill to determine the rights of the parties. After this suit was at issue, the corporation made an assessment to cover the full amount of the loss, but with a stipulation that it should not affect the rights of the parties in the controversy; the object evidently being to have the money ready when the rights of the parties were determined. Decree was rendered for complainants.

A wife, who was the owner of a life estate in premises by deed from her husband, by agreement with the reversioners insured the house on the premises, which also constituted her homestead, taking the policy in her name. In the application, in reply to the question, "Are you the owner of the property?" she answered, "Yes." A fire having occurred and the company having refused to pay the insurance, the reversioners filed a bill in equity to determine the rights of the parties and to enjoin the payment of the money to the wife. Held, that a court of equity had jurisdiction to settle the controversy.

John E. Foley (Louis C. Miller, of counsel), for appellant Citizens' Mut. Fire Ins. Co.

O. S. Clark, for appellant Delilah Forshey.

Joel C. Hopkins and Andrew W. Lockton, for appellees.

GRANT, J. (after stating the facts).

1. The defendant corporation first urges that a court of equity has no jurisdiction to determine the issues involved. Their counsel urge that no contract was made with these complainants, and that it has an absolute right to a trial in a court of law to determine the question of the validity of this insurance. This contention is without force. The complainants had an insurable interest in the house. It was a part of the realty. They were the reversioners. It was agreed that Mrs. Forshey should insure the property for the benefit of all. Complainants, therefore, had a lien upon this insurance, and were as much entitled to maintain a suit in equity as would a mortgagee where the property was insured for the benefit of the mortgagee as well as that of the mortgagor. A part of the realty has been destroyed. Mrs. Forshey and the reversioners had the right to have the house rebuilt with the insurance money, so that their interests therein should be protected. They could not accomplish this result in any other than a court of equity; otherwise, Mrs. Forshey and the corporation could settle for a small amount, and thus deprive complainants of a large share of the value of the property. When a court of equity has jurisdiction for one purpose, it may retain jurisdiction to settle all disputes relating to the same subject-matter between the parties to the suit.

2. It is next urged that the policy is void because Mrs. Forshey falsely stated in her application that she was the owner. The claim is that 'owner' means 'absolute owner,' or 'owner in fee simple of the entire land.' To this complainants first reply that no application was made when this policy was issued, and therefore there was no statement made as to ownership. We think this contention cannot prevail, and that the reference in the policy (which she accepted) to her application for the previous policy in the same company must be regarded as her application for this. This application did not state that she was the absolute owner, or the owner in fee simple, of the land. The corporation did not ask that she should. She was the absolute owner of all the property described in the application except the buildings. The application was not a warranty of title. In order to make an application, or any other paper referred to in the policy, a warranty, it must clearly appear that such was the intent of the parties. Warranties will not be created or extended by construction. 1 May, Ins. � 158; Campbell v. Insurance Co., 98 Mass. 381, 391, and authorities there cited. If the term 'owner' in these applications is to be construed as meaning that the applicant is the owner in fee simple of the property unincumbered, it will be little better than a trap to catch the ignorant and the unwary. The term 'owner' is comprehensive, and must be held to include in the application any insurable title or interest which the applicant has, and which entitles him to possession and use. The term is thus defined: 'One who owns; the rightful proprietor; one who has the legal or rightful title, whether he is the possessor or not; in a general sense, one who has or possesses. When used alone, it does not...