Day v. Fireman's Fund Ins. Co.
| Decision Date | 03 November 1933 |
| Docket Number | No. 6843.,6843. |
| Parties | DAY et al. v. FIREMAN'S FUND INS. CO. |
| Court | U.S. Court of Appeals — Fifth Circuit |
W. W. Dykes, of Americus, Ga., for appellants.
Alex W. Smith, Jr., of Atlanta, Ga., for appellee.
Before BRYAN, FOSTER, and HUTCHESON, Circuit Judges.
In defense of a lawsuit appellants had brought on a fire policy, appellee set up breach of the warranty of sole and unconditional ownership, in that the property, when insured, was incumbered, and the policy was without a mortgage clause. Appellants then brought this suit to reform the policy to make it read as the parties had agreed it should, and as, but for mutual mistake, it would have done. They alleged that the defense was unjust in the light of the real agreement they had had, and prayed specifically that the policy be reformed to carry a mortgage clause to Collier, and, in the alternative, for "such other and further relief in the premises as the facts and circumstances may warrant and require." It was alleged, and plaintiff's proof, if believed, established, that it was understood and agreed that the property was incumbered with a mortgage in favor of Collier, and that the policy would carry a standard mortgage clause in his favor. Appellee's witness, the agent who wrote the policy, admitted that there had been talk of a mortgage and of a mortgage clause. He said that Day, the owner, had told him he would want one; that he had a deal up in South Georgia, and would want to put such a clause on it to some one, but that he did not know who to make it to; that he told Day, Day said, "I don't know either; I think it is to an insurance company in Atlanta." He denied that he knew, or had been told by Day or Collier, that the property was incumbered in Collier's favor, and particularly denied that he had been asked or agreed to attach a standard mortgage clause in Collier's favor.
The District Judge found: "The evidence fails to establish with the requisite degree of definiteness and certainty that the parties ever agreed or intended that there should be attached to the insurance policy sought to be reformed, as a rider, a New York standard mortgage clause in favor of Collier." So finding, he denied relief.
Appellants, complaining of the finding and decree, assert that both were wrong; that, viewed reasonably and fairly in the light of all the circumstances, the evidence made out a case for relief. They say that the undisputed evidence established that the defendant knew there was a mortgage on the property in favor of some one, had agreed that the policy would carry a standard mortgage clause in favor of the mortgagee, and that in a clear and convincing way it showed that this mortgagee was Collier.
We agree with plaintiffs. We think the District Judge took too narrow a view of the evidence, held plaintiffs to too strict a burden. In effect, he refused relief in the face of the admitted fact that it was understood there was to be a mortgage clause on the policy; that the policy was intended to be valid, and would have been valid if the agent had attached the mortgage clause as agreed, merely because the agent denied that he had been furnished with the name of the mortgagee. The rule that relief by way of reformation will not be granted unless mutual mistake be proven by clear and convincing evidence, and not by a mere preponderance, Restatement, Contracts, § 511, Philippine Sugar Co. v. Philippine Islands, 247 U. S. 386, 38 S. Ct. 513, 62 L. Ed. 1177, is a salutary one, operating to prevent the substitution of parol for written contracts upon loose and unsupported claims that the agreement was other than it appears as written. As a corollary to the parol evidence rule, it serves to maintain the integrity of written agreements, and to prevent their being loosely sworn away. Its wise and salutary purpose to keep down unfounded claims is not advanced by giving it such stringent application as to prevent proof of well founded ones.
We think the proof in this case fully satisfies the rule. When the whole evidence is considered in the light of the fact that the plaintiff intended to obtain, and the defendant to write, a valid policy of insurance,...
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