Firemen's Insurance Company of Newark, New Jersey v. Sydney E. Butcher

• Decision Date: 01 October 1929
• Citation: 147 A. 267,102 Vt. 183
• Parties: FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY, v. SYDNEY E. BUTCHER ET AL
• Court: Vermont Supreme Court

147 A. 267

102 Vt. 183

FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY, v. SYDNEY E. BUTCHER ET AL

Supreme Court of Vermont

October 1, 1929

February Term, 1929.

Equity---Prayer Waiving Oath as Indicating Bill Not for Discovery---Insurance---Fraudulent Acts and Representations of Insured's Agent---Ratification of Agent's Acts---Extent of Insured's Responsibility for Agent's Acts and Representations---Principal and Agent---Determination of Scope of Agency---Parties---Diversity of Interest Preventing Joinder in Action at Law on Policy as Basis of Equity Jurisdiction---General Prayer as Entitling Party to Relief Agreeable to Case Made by Bill.

1. Bill in equity held not to be for purpose of discovery, where it appeared from prayer that defendants were asked to answer as required by law, but not under oath, which was expressly waived.

2. Fraudulent acts or false representations made by son, when acting as his mother's servant or agent in procuring insurance policy, would in law be her acts, and any evidence tending to show such agency should be admitted when properly offered for that purpose, whether suit be at law or in equity.

3. Suit at law by insured, claiming benefit of policy procured for her by her son while acting as her servant or agent, was ratification of acts, representations, and agreements of son in that connection.

4. Insured is answerable to fullest extent for what her agent did or represented in obtaining policy, within scope of what she expected him to do or represent, or within that which she knew he had done or represented, if she still persists in taking benefit of agent's act.

5. Scope of an agency is to be determined not alone from what principal may have told agent to do, but from what he knows or in exercise of ordinary care and prudence ought to know agent is doing in transaction.

6. Where fire insurance policy covered both real and personal property, and loss of former was payable to mortgagee as his interest might appear, but loss as to personalty was payable exclusively to insured, in action at law by insured and mortgagee's estate, held that such estate having no legal interest in recovery for destruction of personalty could not be properly joined in suit for recovery under policy, and that both classes of loss being caused by same fire and covered by same policy, a complete and adequate remedy on policy could only be had in court of equity, where all parties could be heard and justice rendered, hence action at law should have been amended into suit in equity and transferred to chancery in accordance with provisions of G. L. 1797.

7. In bill by insurance company to transfer action at law into court of chancery, where bill contained specific prayer for such transfer, that action at law be enjoined, that insurance policy be declared void for fraud, that equities of mortgagee, if any, be determined, and for general relief held that under such general prayer insurer might have relief agreeable to case made by bill, and that scope of bill is to be determined, not by special prayer for particular relief but by case stated.

APPEAL IN CHANCERY. Heard on bill and demurrers of the several defendants thereto, in vacation after the September Term, 1928, Windham County, Sherman, Chancellor. From a decree sustaining the demurrer as to each defendant, adjudging bill insufficient, and dismissing same, the plaintiff appealed. The opinion states the case. Reversed, and cause remanded with directions.

Decree reversed, and cause remanded, with directions that the demurrers be severally overruled, the bill adjudged sufficient to show the necessity of the transfer prayed for, and that, on remand of this case, defendants Ella G. Butcher and Manley Estate be ordered to amend their said action at law into a suit in equity, and then transfer the same to the court of chancery, to be there proceeded with to a determination, as the conditions and circumstances of the case may require.

Frank E. Barber and Ernest W. Gibson, Jr., for the plaintiff.

Carpenter & Clawson and H. E. Whitney for the defendants.

Present: WATSON, C. J., POWERS, SLACK, MOULTON, and WILLCOX, JJ.

OPINION

WATSON

The allegations in the bill of complaint show that on about the 17th day of October, 1927, the plaintiff Fire Insurance Company (insurer), through its agent in Brattleboro, this State, on application of Sydney E. Butcher, the son of Ella G. Butcher (insured), issued to the latter the policy in question, No. 385,352, containing items as follows: Item No. 1, insurance on the main house $ 5,000; Item No. 2, insurance on household and personal property, $ 500; and Item No. 3, barn and addition, $ 1,500: Total $ 7,000. The policy contained a provision whereby the loss, if any, on real estate, was payable to John B. Manley, mortgagee, as his interest might appear, etc.

On the 21st day of November, 1927, the said buildings, together with more or less of said household and personal property, were destroyed by fire; that on January 24, 1928, the insured filed a purported proof of loss with the insurer company, stating that the fire occurred on the 21st day of November, 1927, from an unknown cause; that the premises at the time of the fire were unoccupied; that certain of the personal property covered by the policy, was totally destroyed, and that the full amount of the insurance was claimed for the loss of said personal property.

On the 10th day of July, 1928, the said insured and the Estate of John B. Manley brought a suit at law against the insurance company, returnable at the following September term of the Windham county court, for the sum of $ 7,500, seeking to recover upon the aforesaid items of the policy, the said suit being assigned for trial at that term of court. On the 14th day of September, the subpoena to this bill of chancery was signed by the chancellor, notifying the defendants therein to cause their appearance to be entered with the clerk of court, on or before the expiration of forty-two days from the date thereof, etc.; and to notify the said defendants to appear before the court of chancery at, etc., on the 20th day of the same month, then and there to show cause, if any they have, why the said law case should not be transferred to the court of chancery, and there heard and determined in conjunction with the issues raised by the allegations in the bill, and that until such hearing or until further order of court herein, the plaintiffs in the law case be restrained and enjoined from further prosecuting the same.

Each of the defendants demurred to the bill of complaint on the ground that this court has no jurisdiction because a court of law first took jurisdiction, and all the matters and things complained of can there be tried and determined, the complainant having full and adequate relief in a court of law.

The chancellor sustained the demurrer as to each defendant, adjudged the bill insufficient, and dismissed the same. The only question on the appeal therefore is: Was the decree erroneous?

Paragraphs VI and VII of the bill seem to contain a summary of the grounds alleged, upon which the insurer claims the right to have the suit at law transferred to the court of chancery.

Paragraph VI reads: "The plaintiff further avers that the said John B. Manley and his estate are entirely innocent of any fraudulent conduct in the premises but that inasmuch as the said insurance policy does not contain the so-called standard mortgage clause, the rights of the said estate under its claim for damages...