Delaware Ins. Co. v. Hill

• Decision Date: 23 March 1910
• Citation: 127 S.W. 283
• Parties: DELAWARE INS. CO. OF PHILADELPHIA v. HILL et al.<SMALL><SUP>†</SUP></SMALL>
• Court: Texas Court of Appeals

127 S.W. 283

DELAWARE INS. CO. OF PHILADELPHIA v. HILL et al.^†

Court of Civil Appeals of Texas.

March 23, 1910.

On Motion for Rehearing, April 20, 1910.

COPYRIGHT MATERIAL OMITTED

Error from District Court, El Paso County; A. M. Walthall, Judge.

Action by Frank E. Hill and W. B. Holmes against the Delaware Insurance Company of Philadelphia. Judgment for plaintiffs, and defendant brings error. Affirmed.

T. A. Falvey, Wm. Thompson, and Geo. S. Wright, for plaintiff in error. M. W. Stanton and Jones & Jones, for defendants in error.

NEILL, J.

This is a suit brought by Frank Hill and W. B. Holmes, defendants in error, hereinafter called "plaintiffs," against Delaware Insurance Company of Philadelphia, plaintiff in error, hereinafter called "defendant," upon a fire insurance policy issued by said company on January 3, 1908, to the El Paso Turkish Bath Company, a partnership then composed of F. L. Saunders and W. B. Holmes, and doing business under that name, insuring them for the term of one year from its date against all direct loss or damage by fire, except as provided by the policy, to an amount not exceeding $1,500, to certain personal property located as described therein. The loss sued for resulted from two fires, one occurring June 26 and the other on July 6, 1908. That on the first was claimed by plaintiffs to be $280, and that on the second $4,321.05. But as there was other concurrent insurance by other companies on the same property, defendant's pro rata share of the loss was alleged on the first to be $84 and on the second $1,296.35. The judgment was on a verdict in favor of plaintiffs for $890. Such parts of the pleadings and so much of the evidence, and our conclusions of fact deduced from it, will be stated under the several assignments of error to which such matters are pertinent.

The issues presented by the pleadings and evidence involved by the assignments of error are:

First. Whether, in addition to the property expressly mentioned in the policy, other property of the assured was agreed by them, and the insurance company to be insured and embraced in the policy sued on; and, if yea, whether it was omitted by the underwriter through fraud, or by mutual mistake of the defendant, or its agent, and the assured?

Second. Was the policy, in view of the facts and circumstances, rendered void under its terms, by reason of changes in the title to the property not consented to by the insurance company?

Third. Was the policy vitiated by reason of a certain mortgage executed by the plaintiff Frank E. Hill, to his coplaintiff, W. B. Holmes, given by the former, who had purchased the interest of the latter in the property assured, to secure a part of the purchase money due in such transaction?

Fourth. Were the assured, or the plaintiffs, guilty of fraud, either before or after the issuance of the policy, within the meaning of the terms of the policy, in presenting to the company, or its agent or agents, a fictitious and fraudulent inventory of the property, as to the items insured, its value or the amount of damages done by the fires?

Fifth. Were the plaintiffs, or either of them, guilty of fraud in causing or procuring the destruction of or damage to the property insured?

It will be observed that all these questions involve matters of law and fact, and are such as in legal terminology are termed "mixed questions of law and fact"; the matters of law involved to be decided by the court, and those of fact by the jury. Each question will be considered in the order presented.

1. The first question involves and requires consideration of several assignments of error which will be disposed of by its answer. In its discussion it will be assumed pro hac vice that the changes in the title to property were assented to by the defendant or its agent, and that the plaintiffs occupy the same attitude and are entitled to the same rights under the policy as though it were issued to them.

The plaintiffs' first amended original petition, upon which the case was tried, contains these allegations: "That the policy was issued to W. B. Holmes and F. L. Saunders on the 3d day of January, 1908, covering certain described property set forth therein, and that at the time said policy was issued it was understood and agreed between plaintiff and the agents of the defendants thereunto duly authorized to write and issue policies of insurance that the said policy should by apt words be so written that the same should cover and include the following described property, to wit: Desks, chairs, tables, bookcases, medical books and other books, linoleum, carpets, rugs, bath tubs, furnace, medicine chest, surgical instruments, electrical chair, vibrator, sterilizer, batteries, operating chairs, partitions, stoves, electric wiring, communicators, bells, burglar alarms, plumbing, bath robes, bedding, mattresses, curtains, and bathhouse supplies. That said agents wrote the form, which was intended to cover the said property in the following description: `El Paso Turkish Bath Company. $1,500.00 on their desks, chairs, tables, bookcases, medical books and other books, linoleums, carpets, rugs, bath tubs, furnace, medicine chest, surgical instruments, electric chair, batteries, sterilizer, vibrator, operating chairs, partitions and stoves. All while contained in the first floor and basement thereunder of the two-story and basement brick, composition roof, building known as No. 412 No. Oregon street, situated on lot 10 in block 2, Mills' map, shown on sheet No. 9 of Sanborn's fire map as No. 414 No. Oregon street in the city of El Paso, Texas. Occupied first floor by assured and plumber's shop, second floor for furnished rooms. It is hereby understood and agreed that in case of loss no book is to be valued at exceeding cost. $4,650.00 total concurrent insurance permitted.' That said description was intended to cover said property before described. That said description was not as it should have been written and was not written as the agents had agreed to write the same, but either purposely, or by mistake, shared in by all the parties, wrote the form aforesaid, which does not properly describe all the property it was intended to cover, and which it was agreed it should cover."

It is undisputed that Loomis Bros., a firm composed of Roxy and Ralph Loomis, were the agents of the defendant company, and of the others who issued the concurrent insurance, who effected the insurance and were authorized to write and issue the policy, and that Ralph acted for his firm in the matter. The policy as written covered the following property: "Their desks, chairs, tables, bookcases, medical books and other books, linoleum, carpets, rugs, bath tubs, furnace, medicine chest, surgical instruments, electric chair, batteries, sterilizer, vibrator, operating chairs, partitions and stoves"— from which it is seen that it did not cover all the property plaintiffs claim was intended by the parties thereto to be insured.

We may at once dismiss from consideration any question as to fraud regarding the omission from the policy of any property, if any there were, intended and contracted for by the parties to be insured; for the evidence does not in the least tend to prove fraud on the part of the defendant or its agent in writing the policy. We will, therefore, go at once to the question of mutual mistake involved in the first issue stated. In order that the question may be viewed in a clear light, before considering the assignments pertaining to it, we will state the law and facts applicable to such issue.

A policy which does not, by reason of a mutual mistake of the parties thereto, embody the real intention of the insurer and the assured, may be reformed in equity; or where, as in this state, a court exercises the functions of one of law and equity at the same time, it may, upon proper pleadings, be reformed upon the trial of a case in which such mistake is shown. The real intention of the parties, at the time the policy was made, will control, and, as it is prima facie presumed to embody the real understanding of the parties, the evidence to overcome it must be clear and convincing. The reason of the rule is the same as in other cases of contract, which is: The court cannot make a new contract for the parties, but only compel such a change in the writing made to embody it as to make the instrument express the contract actually made by the parties and conform to their actual intention, so as to make it speak and set forth their real agreement and contract. If the writing embodies the contract actually made, the fact that the parties acted under a mistaken idea either of law, equity, or facts will not entitle a party to such relief; for no court has jurisdiction to change the contract actually made. The contract actually made can only be changed by the parties themselves. If it appear that the policy does not embody or express the contract of the parties, and the party seeking the relief has not understandingly accepted it as written, it may be reformed so as to speak the real intention of the parties; and in order to arrive at such intention parol evidence is admissible of all that was said and done by them during the progress of the negotiations.

If the assured accept a policy without dissent, it is a presumption of fact that he knew its contents, and the burden is upon him to overcome such presumption by proving that he did not know its contents when it was accepted, as by showing that when he received it he put it away without examination, or that he relied upon the knowledge of the insurer and supposed he had correctly drawn it. And a policy may be reformed after loss, as well as before, if the insured has not been guilty of laches. See Wood on Fire Ins. (2d Ed.) § 507; 4 Joyce, Ins. §§ 3510, 3511.

Upon the trial the witness F. L. Saunders testified, over defendant's objections: "That some weeks prior to the issuance of the policy he had a conversation...