Farber v. American Automobile Insurance Co.
| Decision Date | 06 April 1915 |
| Parties | ALICE FARBER, Respondent, v. AMERICAN AUTOMOBILE INSURANCE COMPANY, Appellant |
| Court | Missouri Court of Appeals |
Appeal from St. Louis City Circuit Court.--Hon. J. Hugo Grimm Judge.
REVERSED AND REMANDED.
Judgment reversed and cause remanded.
Stewart Bryan & Williams for appellant.
(1) In case of total loss bye fire of a second-hand automobile, the valued policy law (Sec. 7030, R. S. 1909) does not preclude the defenses of breach of warranty and fraud in the inducement based upon misstatements as to its cost made by the assured at the time the policy was written. Sec. 6009, R S. 1879; Sec. 7020, R. S. 1909; Holloway v. Dwelling House Insurance Co., 48 Mo.App. 1; Lama v. Dwelling House Insurance Co., 51 Mo.App. 447; Maddox v. Dwelling House Insurance Co., 56 Mo.App. 343; School District v. State Ins. Co., 61 Mo.App. 597; Walker v. Phoenix Ins. Co., 62 Mo.App. 209; Baxter v. State Ins. Co., 65 Mo.App. 255; Daggs v. Orient Ins. Co., 136 Mo. 382; Orient Ins. Co. v. Daggs, 172 U.S. 557; Aetna Ins. Co. v. Simmons, 49 Nebr. 811; Craddock v. Connecticut Fire Ins. Co. (Ky.), 169 S.W. 1015; Johnson v. Reliance Ins. Co., 181 Mo.App. 443, 168 S.W. 914; 39 Cyc. 1118; Kansas City v. Bacon, 147 Mo. 259; State v. Doepke, 68 Mo. 208. (2) In an action on a fire insurance policy for the total loss of a second-hand automobile, the plaintiff must both plead and prove its value at the time of the loss, as the valued policy law (Sec. 7030, R. S. 1909) only relates to the value of the property at the time the policy is issued. Green v. Lancashire Ins. Co., 69 Mo.App. 429; Gibson v. Missouri Town Mutual Ins. Co., 82 Mo.App. 515; Gustin v. Concordia Fire Ins. Co., 90 Mo.App. 373; Gustin v. Concordia Fire Ins. Co., 164 Mo. 172; City of De Soto v. American Guaranty, Etc., Ins. Co., 102 Mo.App. 1; Howerton v. Iowa State Insurance Co., 105 Mo.App. 575; Stevens v. Norwich Union Fire Ins. Co., 120 Mo.App. 88; Sharp v. Niagara Fire Ins. Co., 164 Mo.App. 473.
James M. Rollins and E. A. Halter for respondent.
(1) The value of the car was fixed by the policy. Gibson v. Ins. Co., 82 Mo.App. 515; Crosson v. Ins. Co., 133 Mo.App. 537; Hilburn v. Ins. Co., 140 Mo.App. 368; Stevens v. Ins. Co., 120 Mo.App. 88; Ritchey v. Ins. Co., 104 Mo.App. 146; Sec. 7030, R. S. 1909; Daggs v. Ins. Co., 136 Mo. 395. (2) The question of fraud and false warranty cannot be raised, the value of the car being fixed by the policy, because of the valued policy law. Secs. 7020, 7030, R. S. 1909; Daggs v. Orient Ins. Co., 136 Mo. 382; Orient Ins. Co. v. Daggs, 172 U.S. 557; Gibson v. Mo. Town Mutual Ins. Co., 82 Mo.App. 515; Siegle v. Phoenix Ins. Co., 107 Mo.App. 456; Hanna v. Ins. Co., 109 Mo.App. 152; Stevens v. Fire Ins. Co., 120 Mo.App. 11; Crossan v. Fire Ins. Co., 133 Mo.App. 537; Hilburn v. Ins. Co., 140 Mo.App. 355; Surface v. Ins. Co., 157 Mo.App. 570; Burge Bros. v. Ins. Co., 106 Mo.App. 244; Williams v. Merchant's etc., Ins. Co., 73 Mo.App. 511. Spickard v. Ins. Co., 164 Mo.App. 1.
OPINION
--This is a suit on a policy of fire insurance. Plaintiff recovered and defendant prosecutes the appeal.
The subject-matter, an automobile, was destroyed by fire about three months after it was insured. The policy was issued and delivered to plaintiff on the seventh day of March, 1912, and by its provisions defendant insured her in the amount of $ 1,750 against the loss of the automobile by fire. About three months thereafter, while plaintiff and a party of her friends were riding in the automobile on a country road near St. Louis, it suddenly became enveloped in flame and was totally destroyed. Defendant declined to pay the loss, because, it is said, plaintiff made a false and fraudulent representation material to the risk with respect to the cost of the automobile which induced the issuance of the policy in the first instance, and also because the policy stipulates a warranty in respect of the matter of its actual cost. No written application was executed by plaintiff prior to the issuance of the policy, but a schedule of statements endorsed thereon is invoked and as parcel of this a statement appears therein as follows: "Actual cost to assured, including equipment--$ 2,000." It is said that this statement was fraudulently made on the part of plaintiff with a view of inducing the issuance of the policy in the first instance, as a deception practiced to that end, and, moreover, that it constitutes a warranty with respect to a fact material to the risk, in that it appears in the schedule of statements endorsed on the policy, for the policy recites that it was issued in consideration of the premium mentioned and the statements set forth thereon which the assured makes and warrants to be true by accepting the policy.
In its answer defendant sets forth two affirmative defenses, as above stated. The first defense pleaded and relied upon is, that plaintiff made a false and fraudulent representation to defendant, to the effect that the actual cost of the automobile to her was $ 2,000, with a view of inducing the issuance of the insurance policy thereon by which indemnity against fire is vouchsafed in the amount of $ 1,750, when, in fact and in truth, the actual cost of the automobile was less than $ 1500; also that the fact so misrepresented was material to the risk insured against and that defendant believed and relied upon such statement and issued the policy accordingly. It is, therefore, averred that the policy was void in the first instance because of such fraud in the inducement. In connection with this defense the premium paid is tendered to and deposited in court for plaintiff. The second affirmative defense pleads the same matter as a warranty in respect of a fact material to the risk and avers that defendant is discharged of liability on the policy because of its breach.
The trial court declined to reckon with either of the defenses thus stated and peremptorily directed a verdict in favor of plaintiff for the full amount of the insurance vouchsafed in the policy, in the view that any statement made by the assured concerning the actual cost of the subject of the insurance was unavailing as a matter of defense because of our valued policy statute which becomes parcel of the policy. In other words, the court entertained and expressed the view that, under our valued policy statute, a representation as to the cost of the automobile could be regarded as material to the risk only as a criterion for the fixing of the amount of the insurance to be vouchsafed in the policy and that as the amount of the insurance stipulated is conclusively established, perforce of the statute, as not exceeding three-fourths of the value of the property insured, no representation in respect of that matter may be regarded as material to the risk.
Generally speaking, we believe this view to be sound, in so far as it pertains to a policy issued as a result of fair dealing between the parties and not contaminated in the first instance by fraud, as through deceit practiced by means of misrepresentations relative to the value of the property, which, for that reason, are material as matter of inducement to the contract by which the parties stipulate and agree upon the value of the property, under the influence of the statute. Such representations, falsely made, with a fraudulent intent to influence an over-valuation of the property to be insured, ought to be regarded as material to the risk, if believed by the insurer and relied upon by him in issuing the policy and thus fixing the value by writing the amount of the insurance therein.
The statute (section 7030, R. S. 1909) among other things provides: "No company shall take a risk on any property in this State at a ratio greater than three-fourths of the value of the property insured, and when taken, its value shall not be questioned in any proceeding." This statute, it has been frequently said, applies to insurance written on personal as well as on real property. It is said that it becomes a part and parcel of every policy of fire insurance issued in the State. It appears to be something more than what is usually regarded as a valued policy statute, in that it carries an inhibition against every insurance company in taking a risk at a ratio greater than three-fourths of the value of the property. Such being true, it estops the insurer, after the issuance of a valid policy, from disputing that the subject-matter of the insurance was of the value, at the time the policy was issued, not only equal to the amount of the insurance written thereon, but one-fourth more, as well. [See Gibson v. Ins. Co., 82 Mo.App. 515; Stevens v. Ins. Co., 120 Mo.App. 88, 96 S.W. 684; Crossan v. Ins. Co., 133 Mo.App. 537, 113 S.W. 704.]
But obviously the statute intends that the contract valuation of the property so fixed by the amount of the insurance written in the policy shall be a valid one. There is nothing in the face of the statute to suggest otherwise, and, indeed, the implication is to the contrary. The statute contemplates and reckons with an insurance company in taking a risk through issuing its policy on property. In this connection it says, "when taken, its value shall not be questioned in any proceeding." Obviously the words "when taken" imply that the negotiations antecedent thereto shall be honest and fair--that is, free from covin and deceit--with respect to material matters, to the end that a valid contract in respect of such value may be had. Although the question here made was not in decision there our Supreme Court, in giving judgment upon the validity of our valued policy statute, which pertains to real estate alone, intimated that...
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