Emery v. Clark

• Decision Date: 25 November 1942
• Docket Number: No. 18.,18.
• Citation: 6 N.W.2d 746,303 Mich. 461
• Parties: EMERY v. CLARK et al.
• Court: Michigan Supreme Court

303 Mich. 461

6 N.W.2d 746

EMERY

v.CLARK et al.

No. 18.

Supreme Court of Michigan.

Nov. 25, 1942.

Suit by John G. Emery, receiver for the Lapeer Farmers Mutual Fire Insurance Association, against Ward B. Clark and Mattie L. Clark to reform an application for insurance and the policy issued thereon so as to include defendant Mattie L. Clark as a member of the association, and render both defendants subject to the receiver's assessment on the policy. From a decree dismissing the bill of complaint, the plaintiff appeals.

Affirmed.

Appeal from Circuit Court, Lapeer County, in Chancery; Herman Dehnke, judge.

Before the Entire Bench.

Walter S. Foster, of Lansing, for plaintiff-appellant.

Atkinson & Donnelly, of Detroit (Frank W. Atkinson, of Detroit, of counsel), for defendants and appellees.

BOYLES, Justice.

This is a proceeding by bill in chancery filed by the receiver for the Lapeer Farmers Mutual Fire Insurance Association seeking to reform an application for insurance and the policy issued thereon. Plaintiff avers that a mutual mistake was made by the association and the defendants whereby the policy was issued to defendant Ward B. Clark alone, although intended to cover property owned by Ward B. Clark and his wife, Mattie L. Clark, as tenants by the entireties. The bill seeks to reform the application and policy so as to include Mattie L. Clark as a member of the association and render both defendants subject to the receiver's assessment on the policy.

The Lapeer Farmers Mutual Fire Insurance Association was organized in 1871 for mutual fire insurance. For some years prior to 1926 defendant Ward B. Clark, as the individual owner of considerable real estate in Lapeer county, was a member of the Lapeer Farmers Mutual and had his buildings insured therein. In October, 1926, Ward B. Clark effectuated conveyances whereby the title to his real estate was placed in tenancy by the entireties with his wife. The deeds, however, were not recorded until 1932. On May 24, 1927, some seven months after the real estate was thus conveyed, Ward B. Clark surrendered his then-existing policy and made written application for a new policy. In this application, Ward B. Clark stated that the property to be insured was ‘my own lawful property.’ The association had no knowledge that the real estate had been placed in a tenancy by the entireties, and issued a new policy insuring Ward B. Clark against loss by fire on the property described in the application. The bylaws of the association printed on the back of the application stated: ‘Property owned in joint title, whether real or personal, must be so expressed in the application.’

In September, 1935, the association was placed in receivership. On July 27, 1940, the receiver, plaintiff herein, pursuant to an order of the circuit court in the receivership, levied an assessment against the persons, including Ward B. Clark, who were members of the association between January 1, 1927, and the date of the receivership.

The receiver had learned that the insured property was held by Ward B. and Mattie L. Clark as tenants by the entireties and that therefore the assessment could not be collected by enforcing a lien on the property. Previous efforts to collect a judgment against Ward B. Clark individually on an earlier assessment, later held to be invalid, had been unsuccessful. The receiver thereupon filed the instant bill in chancery in October, 1940, alleging that the recitals in the application and policy of May 24, 1927, to the effect that Ward B. Clark was the owner of the property insured were the result of a mutual mistake by said association and by Ward B. Clark individually and as agent for Mattie L. Clark, that it was the intention of the association and said Ward B. Clark and Mattie L. Clark to have the application and policy show the ownership as tenants by the entireties. The amount of the assessment was $423.14 and the plaintiff asked that the application and policy be reformed accordingly and be declared to render Ward B. Clark and Mattie L. Clark subject to the assessment.

Ward B. Clark and Mattie L. Clark filed separate answers. Each denied any mutual mistake in the matter, denied that there was an intention to insure Mattie L. Clark, and averred that the policy was issued for the purpose of protecting Ward B. Clark's insurable interest in the property. Mattie L. Clark specifically averred that she had no interest of any kind in the insurance provided by the policy, and denied that Ward B. Clark acted as her agent in making the application.

To establish his claim of mutual mistake, the plaintiff called both Ward B. Clark and Mattie L. Clark for cross-examination under the statute. Mrs. Clark admitted that the title had been placed in tenancy by the entireties and denied having any recollectionof the circumstances under which the policy was procured by Mr. Clark. She testified:

‘Q. Anything said between you and Mr. Clark regarding insurance at that time? A. No; Mr. Clark has always taken care of those affairs.

‘Q. You remember, do you, that nothing was said about insurance? A. I say Mr. Clark has taken care of these affairs, I haven't.

‘Q. You remember, do you, definitely, nothing was said about insurance? A. No.

‘Q. You don't remember that? A. No.

* * *

‘Q. Now, did you take an active part in the business affairs of the farm and other property owned by Mr. Clark? A. Not very much.

‘Q. Did you know about the insurance in the Lapeer Farmers Mutual Fire Insurance Company? A. Well, I knew about it in a way, but Mr. Clark always looked after those things.

‘Q. But you did know it was insured and that he paid periodical assessments? A. Yes.

‘Q. And I presume you owned yourself considerable personal property that you had in the house that you lived in? A. Some.

‘Q. And took it for granted that your clothing and your particular property, that personal property that you had was insured as well as Mr. Clark's? A. Yes.’

This, the only testimony claimed to show that Ward B. Clark was acting as agent for his wife, falls far short of proving agency in fact or in law. The record is barren of any other testimony tending to indicate that Mrs. Clark had any connection with the making of the application or the procuring of the insurance. Whatever may be the situation as between Mr. Clark and the association, it is not possible to glean from the record adequate proof that any mistake of fact may be charged to Mrs. Clark.

Ward B. Clark, likewise called for cross-examination under the statute, testified that he made the application for the insurance, that he knew the property was held jointly with his wife, and that the intention was to have the real estate pass to the survivor. As to the insurance, he testified:

‘Q. And in the event of a fire at the home in which you lost your life, Mrs. Clark would be possessed of all the interests which either of you might have pertaining to the property? A. In case of my death she would.

‘Q. Without probate proceedings, I mean? A. Yes.

‘Q. Mrs. Clark's testimony stated that you generally looked after the business matters pertaining to the farm and such matters? A. Yes, sir.

‘Q. And I assume that would include the payments of taxes and arranging the insurance and hiring of help and most all business matters? A. Yes.

‘Q. Is that a fair statement, a sort of partnership where you were the managing partner in business matters? A. Well, I wouldn't say any partnership.

* * *

‘Q. So the occasion, the reason for your making out the 1927 application was to obtain the increased insurance in the items that you listed? A. Sure.

‘Q. Well, at that time, May 24, 1927, the title of the property stood in the name of Ward B. Clark and Mattie Clark, did it not? A. Yes, sir.

‘Q. Although the deed had not been recorded? A. Yes, sir.

‘Q. Why then was the policy, was the application, why then did you sign an application, exhibit E, stating that the property was ‘my lawful property’? A. Why, it didn't make any difference about that as far as that part was concerned. I was insured and I was paying assessments.

‘Q. Is this a fair statement of it, it didn't occur to you that needed to be changed, there needed to be any change? A. No.

* * *

‘The Court: Now, Mr. Clark, suppose you had a loss while that policy was in force and asked the company to pay the loss, and the company has said we don't have to pay you because you misrepresented the title in your application, what would have been your answer to that? A. Well, then I would have lost the insurance. It wouldn't been no good, if it turned out that way.

‘The Court: Don't you think you would have said in that case, just a mistake, something that was overlooked? A. No; I don't think I would. I just said I carried it along just as I always had; took out the insurance in my own name. It didn't make any difference whether there was a loss or wasn't, the way I looked at it.

* * *

‘Q. When you-let me put this one, when you made this application to, in 1927, May the 24th there was no intention on your part to do anything which would prevent Mrs. Clark from receiving all possible benefits from jointly owned property? * * * A. I don't know. I expected Mrs. Clark would get whatever did belong to her in case of death.

* * *

‘Mr. Foster: I want to make it perfectly plain.

‘Q. In exhibit E you applied for insurance on all this property in your own name, reciting you were the lawful owner, whereas in fact, Mrs. Clark was joint owner with you in deeds which had never been recorded. I am asking you, whether in the making the application, exhibit E, you had any intention of depriving Mrs. Clark of any of her rights? A. No.

‘Q. And when you made out this application, in 1927, you gave no thought to whether her name should appear in the application or the policy? A. No, sir.

‘Q. But it was your intention that she and you should both be protected? A. Why, sure.

* * *

‘Q. In reference to the farm insurance in which you are an interested par...