Douville v. Farmers' Mut. Fire Ins. Co.

• Decision Date: 28 May 1897
• Citation: 113 Mich. 158,71 N.W. 517
• Parties: DOUVILLE v. FARMERS' MUT. FIRE INS. CO. OF SAGINAW COUNTY.
• Court: Michigan Supreme Court

71 N.W. 517

113 Mich. 158

DOUVILLE v. FARMERS' MUT. FIRE INS. CO. OF SAGINAW COUNTY.

Supreme Court of Michigan

May 28, 1897

Error to circuit court, Saginaw county; William R. Kendrick, Judge.

Action by Henry Douville against the Farmers' Mutual Fire Insurance Company of Saginaw county on an insurance policy. From a judgment for plaintiff, defendant brings error. Reversed.

Dan. P. Foote, for appellant.

Crane &amp Crane, for appellee.

MOORE J.

On the 27th of April, 1895, the defendant company issued to the plaintiff a policy of insurance upon a house and contents and barn and contents belonging to the plaintiff. In the policy it is stated that the buildings were on section 31. The policy contained a clause reading as follows: "The said company have the right to cancel any policy whenever the board of directors shall deem there is sufficient cause therefor. In such case the secretary shall give the parties insured, and the party to whom this policy is payable in case of loss, notice in writing or otherwise of the determination of the company to exercise this right, and upon such cancellation the secretary shall pay such members an equitable proportion of the funds remaining after the payment of all losses and debts then due." A by-law of the company a copy of which was contained on the back of the policy reads as follows: "The secretary is instructed to cancel each policy whose holder has not paid his assessment for the period of thirty days after the expiration of the time stipulated for the payment; also any risk which, in his opinion, is unsafe," etc. The policy also contained a provision reading as follows: "No suit or action at law or in chancery shall be commenced or maintained against this company by reason of this policy, but all questions arising between this company and the insured, or any person claiming under him, her, or them, shall be settled by arbitration or referees, subject to the charter or by-laws, and their award shall be binding upon the parties and final." Section 23 of the charter provides: "In case of loss by fire, it shall be the duty of the board of directors or some one or more of them, with the approval of a majority of them, to visit the place of fire to ascertain by evidence under oath, the liability of the company, and the amount thereof, and in case of any disagreement between the board and the loser, either as to liability in whole or in part, said board shall select a suitable and disinterested person, not a member of said company, residing in said county of Saginaw, and in some town other than the one in which the loser shall reside, to act as referee. The loser shall choose another like situate, as above, and the two referees so chosen may select a third," etc. By-law No. 10 provides: "All applicants for insurance shall state the amount of incumbrance on the premises where the property to be insured is situated." The record discloses that the insurance was effected through Mr. Thomas, who knew the premises. Mr. Thomas filled out the application blank. The application is silent upon the question of incumbrance and the value of the property. Plaintiff says, if Mr. Thomas asked him about the incumbrance, he stated to him just what the facts were. The wife of the plaintiff says that Mr. Thomas did ask about the incumbrance, and was told the amount of it. The buildings were not on the description of land stated in the policy. The testimony is: Mr. Thomas was familiar with the premises, saw the buildings, and was furnished with the tax receipt, for the purpose of getting a description of the premises. The premises had been insured about three years before the policy sued upon was issued. On the night of July 25, 1895, a loss by fire occurred at the house covered by the policy. The fire was set under the house. The plaintiff thought it was set by a neighbor. There is testimony tending to show that when the officers of the company were adjusting this loss, the last of July or the first of August, they notified him there was an assessment due on his policy, and he would find notice of it in the post office. This assessment was made in July, and amounted to $2.74. Notice of the assessment was sent August 1st, and on the 3d of August was paid by plaintiff. The secretary of the company testified that the payment of this amount would put the plaintiff in good standing until July, 1896, though he also testified that the company had notes out that would amount to as much as the money it had on land. On the 6th of August the secretary sent notice to the plaintiff that his policy was canceled, which notice was received by plaintiff a few days thereafter. On the 16th day of August the barn and contents were burned. The plaintiff at once notified the secretary of the company of his loss. The secretary then told him that the company was not liable, as his policy had been canceled, and the officers of the company refused to send any adjusters to view the premises. August 24th, Mr. Crane, an attorney, appeared before the officers of the company, and asked them to adjust the loss. They denied that there was any liability against the company, upon the ground that the policy had been canceled. He then made a written demand upon them as follows: "Saginaw, August 24, 1895. Farmers' Mutual Fire Ins. Co., Saginaw, Mich., to Henry Douville of Hemlock, Mich., Debtor. To loss under certificate number 1,710 on account of fire which occurred on the night of August 16, 1895, by which the assured lost barn and shed; also granary; also his hay and grain in said barn and stacks; also some farm implements,-all of which the assured insists is a valid claim against the company, and asks that the same be adjusted according to the terms and conditions of said certificate. Henry Douville, by W. Crane, His Attorney." The attorney for Mr. Douville was then told that the company denied there was any liability, and if the by-law was of no force they wanted to know it, and Douville could sue as soon as he had a mind to. Later the officers...