Fitchner v. Fid. Mut. Fire Ass'n

• Citation: 68 N.W. 710
• Parties: FITCHNER ET AL. v. FIDELITY MUT. FIRE ASS'N.
• Decision Date: 21 October 1896
• Court: Iowa Supreme Court

68 N.W. 710

FITCHNER ET AL.

v.FIDELITY MUT. FIRE ASS'N.

Supreme Court of Iowa.

Oct. 21, 1896.

Appeal from district court, Polk county; C. P. Holmes, Judge.

Action in equity to reform a policy of insurance against loss by fire issued by the defendant to the plaintiffs on a certain building, and the stock of merchandise contained therein, on the ground of an alleged mutual mistake in said policy, and for judgment thereon as reformed. Defendant answered, denying the alleged mistake, and alleging that said policy is void because of a breach of a condition thereof against incumbrances. Plaintiffs replied, denying that there was any incumbrance; and upon these issues the case was heard, and decree and judgment entered in favor of the plaintiffs, from which defendant appeals. The issues will more fully appear in the opinion. Affirmed.Dudley & Coffin, for appellant.

McVey & Cheshire and J. P. Conner, for appellees.

GIVEN, J.

1. The plaintiffs were the owners of a store building and a stock of merchandise therein. In September, 1890, P. A. Doughty, a soliciting agent for the defendant and for other insurance companies, having examined said property, met with H. C. Laub, a member of the plaintiff firm, for the purpose of arranging for insurance on said building and merchandise, and upon other property belonging to Mr. Laub. Mr. Doughty desired to take all the insurance that Mr. Laub wished to place, but, Laub having promised to take $1,000 in a company not represented by Mr. Doughty, it was agreed that Doughty should take but $5,000 on the building. Mr. Doughty prepared 8 or 10 applications for Mr. Laub to sign, working until late in the night. Among these applications was one to the defendant company for $1,000 on said building, and $1,000 on said merchandise. This application was upon a printed blank, which was partially filled up by Mr. Doughty before the same was signed by Mr. Laub on behalf of the plaintiffs, and partially afterwards. Doughty presented the application, and the premium paid thereon by Mr. Laub, to the defendant, at its main office, whereupon the defendant issued to the plaintiffs a policy in conformity with said application, which policy, with the application indorsed thereon, was sent to the plaintiffs, and retained by them. About the 20th of November, 1891, the property insured was totally destroyed by fire, and proofs of loss were duly made. Said application and policy were both made to read, “$12,000.00 total concurrent insurance permitted.” Prior to the loss, plaintiffs had taken out concurrent insurance upon said building and merchandise in excess of $12,000. Plaintiffs allege that it was agreed between Mr. Laub and Mr. Doughty that the amount of concurrent insurance upon the building was unlimited, and that the amount of total concurrent insurance allowed to be taken on the personal property was limited to $12,000, and that, contrary to the terms of said contract, defendant, by mistake, wrote said application and policy, limiting the amount of concurrent insurance to $12,000 on both properties. Plaintiffs pray that said policy may be reformed to read, “ ‘Twelve thousand dollars ($12,000) total concurrent insurance on stock allowed,’ and that plaintiff may have judgment against the defendant in the sum of two thousand dollars ($2,000), with interest thereon from November 20, 1891.”

2. Appellant's first contention is that, to entitle appellees to a reformation of this contract, they must establish their case beyond a reasonable doubt, citing authorities holding that in such cases “the proof of mistake should be so clear and convincing as to leave no room for doubt.” We will not set out the evidence bearing upon the issue as to the alleged mistake. It is sufficient to say that by the testimony of Mr. Doughty and Mr. Laub, who alone were present at the making of the application, there can be no doubt whatever that it was agreed that $12,000 concurrent insurance was permitted on the stock of merchandise, and that, by mistake in filling the application, Mr. Doughty omitted to add the words “on the merchandise.” It is equally clear that both Mr. Doughty and Mr. Laub proceeded in the matter under the belief that the application was written in conformity with the agreement. Both acting upon this belief, the mistake was mutual on the part of Mr. Laub and the agent.

3. Appellant's next contention is that if plaintiffs, by the exercise of reasonable care, could have avoided this mistake, equity will not relieve by way of reformation; and it is claimed that the plaintiffs did not exercise reasonable care to avoid the mistake, in that Mr. Laub did not read said application at the time he signed it, and for that the plaintiffs held the policy, with the application copied thereon, without complaint, up to the time the loss occurred. Mr. Laub could have discovered this mistake by reading the application as it was at the time he signed it, and either of the plaintiff firm could have discovered it by reading the policy, or the application as copied thereon, after the policy was sent to them. It appears, however, that this they did not do, and did not discover the mistake until after the loss occurred. Counsel for appellant correctly say: “We are aware of the fact that it has been held in some cases that an applicant is not guilty of negligence in failing to read his application when it is written by the agent of the company. We are also aware of the fact that it has...