Fid. & Cas. Co. v. Palmer

• Court: Connecticut Supreme Court
• Writing for the Court: RORABACK, J.
• Citation: Fid. & Cas. Co. v. Palmer, 99 A. 1052, 91 Conn. 410 (Conn. 1917)
• Decision Date: 21 February 1917
• Parties: FIDELITY & CASUALTY CO. v. PALMER.

99 A. 1052

91 Conn. 410

FIDELITY & CASUALTY CO.

v. PALMER.

Supreme Court of Errors of Connecticut.

Feb. 21, 1917.

Appeal from Superior Court, Fairfield County; James H. Webb, Judge.

Action by the Fidelity & Casualty Company against Frank Palmer. Defendant filed a cross complaint. Judgment for defendant, and plaintiff appeals. No error.

The action is to recover an excess premium alleged to be due on a policy of insurance. The policy was reformed in pursuance of a prayer for such relief in the defendant's cross-complainant.

The plaintiff, on April 1, 1911, was a corporation duly organized under the laws of the state of New York. At this time one Herbert S. Miller of Stamford was conducting an insurance agency, and was the agent of the plaintiff in Stamford. The defendant was then carrying on the business of a general contractor, and was engaged in laying a sewer in Stamford. Early in April, 1911, Miller, as such agent, solicited of the defendant permission to insure the defendant against liability for injury or death of his servants and employés engaged in constructing the sewer. At that time Miller, acting as agent of the plaintiff, informed the defendant that the premium for such policy would be based upon the amount of compensation paid by the defendant to his employés while engaged on this sewer construction, and requested the defendant to furnish an estimate of the probable amount of such compensation, or pay roll. The defendant thereupon disclosed to Miller fully all information that could be given to enable a reasonable estimate of the compensation, or amount of the pay roll being made, and named the sum of $25,000 as such reasonable estimate. Miller thereupon informed the defendant that the premium upon an estimated compensation or pay roll of $25,000 would be substantially $100 or $125. Miller also informed the defendant that as to the difference between this estimate and the actual amount of compensation there would be a pro rata additional charge for any excess over the estimate, and a pro rata rebate to the defendant in case the actual compensation should prove to be less than the estimate. The defendant thereupon agreed to accept a policy written in accordance with the representations of Miller. Thereupon Miller applied to one Edwards, the plaintiff's district agent at Bridgeport, for the issuance of the policy, and informed Edwards that the estimated amount of compensation was $25,000. A policy was received by Miller from the district agent, and by Miller sent to the defendant by mail. This policy was dated April 11, 1911, and was to continue in force for one year from its date. Upon receiving the policy, the defendant did not read or in any way examine the same. Within a few days after sending this policy to the defendant, Miller sent to and the defendant received a bill for a premium of $125, which the defendant subsequently paid and Miller receipted the same. This receipted bill is substantially as follows:

"Stamford, Conn., Apr. 19, 1911.

"Mr. Frank Palmer, to H. S. Miller, Real Estate and Insurance. Dr.

Terms Cash

Date

Policy No.

Company

Term

Amount

Premium

April 11

2209475

Fidelity & Casualty

1 yr.

$25,000.

$125.

"Paid May 15, 1911. H. S. Miller."

Before the defendant accepted this policy and paid the premium he was assured by Miller that the amount which he would be obliged to pay as premium would be $125 on the estimated compensation of $25,000, with a pro rata additional charge for any excess over said estimated amount, and a pro rata rebate to the defendant in case the actual amount should prove to be less than the estimate. Through mistake or error on the part of the plaintiff, or its agents, the estimated amount of the defendant's pay roll or compensation was stated in the policy to be $2,500 instead of $25,000. The rate of premium was stated in the policy to be $5 for every $100 of compensation, and the estimated premium was stated in said policy to be $125. The defendant was somewhat illiterate and unable to read the English language with facility, but kept the policy in his possession during the entire period for which it was written without reading the same, or endeavoring in any way to ascertain whether or not it conformed with his understanding of the statements made to him by the agent Miller as to the amount of premium he would be obliged to pay. The defendant had no general knowledge of what rates were charged for insurance of this character other than from the statements and representations made to him by the agent Miller. It does not appear whether the plaintiff had any established premium rate for insuring risks of this character. The defendant relied solely upon the statements and representations of Miller before mentioned as to the amount of premium he would become obligated to pay, and by reason of these statements and his belief therein the defendant was induced to accept this policy. The defendant would not have accepted the policy if he had known or understood that by the terms expressed therein he would become obligated to pay, by way of premium, at the rate of $5 on each $100 of compensation. Before delivering this policy to the defendant, Miller looked at the statement of the premium therein and ascertained it to be $125. On the 24th day of September, 1912, and within one year after the termination of this policy, the plaintiff caused its auditors to examine the books and records of the defendant, with his consent, for the purpose of determining the amount of compensation earned by the employés of the defendant. This examination disclosed that the actual compensation earned by the employés and paid to them by the defendant while engaged on this work and during the term of the policy was $28,905.15. This compensation is in excess of the estimate as set forth in the policy by the amount of $26,405.15. The premium on this excess compensation at the rate expressed under the terms and provisions of said policy amounts to $1,320.25. No other payment by way of premium on said policy has been made by the defendant, except the payment of the sum of $125 to the plaintiff's agent, Miller, as above stated.

From the facts as they appear to have been admitted by the pleadings it appears that on May 24, 1911, an employé of the defendant was killed while engaged in the defendant's sewer construction work. From the same source we also ascertain that on July 27, 1911, the insurance company, with the knowledge and consent of the defendant and for the purpose of indemnifying him from loss occasioned by the death of this employé, paid $600.

Upon these facts the trial court reached the following conclusions: (1) That there was a mutual mistake whereby the policy as written did not express the agreement actually entered into between the defendant and the plaintiff acting though its agent, Miller. That this mistake was not caused by any act of the defendant, nor did any act of his contribute to the causing of this mistake. That in failing to read the policy, the defendant was not guilty of such negligence or laches as should debar him from equitable relief. (4) The defendant is entitled to have the policy reformed as prayed for in his cross-complaint.

Judgment was rendered that this policy be reformed by correcting the "schedule of statements therein so that the same shall read as follows: 'estimated compensation for the period of policy, $25,000; premium rate for $100 of compensation, 50 cents.' And that the plaintiff should recover from the defendant the additional earned premium upon said policy as so reformed, amounting to $19.52, with interest."

Theodore G. Case, of Hartford, for appellant. Nichols C. Downs, of Stamford, for appellee.

RORABACK, J. (after stating the facts as above). The plaintiff contends that the trial court erred in overruling its claims that:

"It is the duty of one receiving a policy for insurance pursuant to an application to examine it for the purpose of determining whether or not he is receiving what he applied for; that it is his duty to return it to the insurer within a reasonable time if not satisfactory, and that if he retains possession of the policy during the term for...