Fitchner v. Fid. Mut. Fire Ass'n

• Decision Date: 18 October 1897
• Citation: 72 N.W. 530,103 Iowa 276
• Parties: FITCHNER ET AL. v. FIDELITY MUT. FIRE ASS'N.
• Court: Iowa Supreme Court

103 Iowa 276

72 N.W. 530

FITCHNER ET AL.

v.FIDELITY MUT. FIRE ASS'N.

Supreme Court of Iowa.

Oct. 18, 1897.

Action in equity on a policy of insurance against loss by fire in the sum of $1,000 on the building, and the same amount on stock of goods contained therein. At the time of the loss there was $12,000 insurance on the stock and $8,000 on the building. The application and also the policy contained this clause: “$12,000 total concurrent insurance allowed;” and the plaintiffs ask that this be so reformed as to be $20,000, instead, and that the $12,000 be limited to insurance on the merchandise. There was also an issue with reference to incumbrances. Decree was entered for plaintiffs, and defendant appeals. On rehearing. See 68 N. W. 710. Affirmed.Dudley & Coffin, for appellant.

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

LADD, J.

The three questions presented are: Was there a mistake? If so, can it be corrected? And was there any incumbrance on the property? The firm of George H. Fitchner & Co., composed of Fitchner, who lived at Correctionville, and H. C. Laub, whose home is at Denison, was engaged in trade at Correctionville, owning a building valued at from $9,000 to $12,000, and a stock of merchandise estimated to be worth from $14,000 to $20,000, at the date of the policy. P. A. Doughty, as soliciting agent of the defendant and other companies, procured from Laub, at Denison, applications for $6,000 insurance on the stock and $5,000 on the building. The applications were written by Doughty, and, being unable to complete them before leaving, were finished after Laub had signed them. The latter testifies that he told Doughty that he wanted to place $12,000 insurance on the merchandise and $8,000 on the building, and that Doughty advised him to take more, and wanted to write applications for all of it. This Laub refused, stating he had promised insurance in a company at Sioux City, and some to parties at Council Bluffs. Doughty concurs in all this, except as to amount on the building, and says Laub requested permission of other insurance, and he told him he might exercise his discretion in that, provided he did not exceed three-fourths of the value of the stock; that in writing the application, through a clerical error, the total concurrent insurance was fixed at $12,000 on all the property, instead of being limited to the merchandise. While there was talk that the stock would be increased later in the fall, this had no reference to the arrangement concerning the amount of insurance at that time. These were the only witnesses to the transaction, and, without doubt, both understood there was to be $12,000 insurance on the stock, and that it was not so limited through the error of Doughty in writing the application. Seldom is a mistake more conclusively established.

2. It is said Laub ought to have discovered the mistake. The applications were very hastily prepared by Doughty, as he wished to make a train. He worked on them till near midnight. Laub testifies that he was tired out, and did not read the applications. They were signed, and afterwards completed by the agent. The amount of insurance he wished to carry had been fully discussed and agreed to. Doughty was the agent of the company, and acted in that capacity in preparing the applications. The insured ordinarily rely upon the agent to properly set out the facts in the applications, and Laub did as men usually do, in assuming that the defendant's agent had done his duty. Stone v. Insurance Co., 68 Iowa, 737, 28 N. W. 47;McComb v. Insurance Co., 83 Iowa, 247, 48 N. W. 1038. The mere failure of the assured to read his application, or the copy of it on the policy, does not establish negligence. Bennett v. Insurance Co., 70 Iowa, 600, 31 N. W. 948;Hagan v. Insurance Co., 81 Iowa, 321, 46 N. W. 1114;Donnelly v. Insurance Co., 70 Iowa, 693, 28 N. W. 607;Boetcher v. Insurance Co., 47 Iowa, 353. Nor is the mere omission to read the policy negligence. Barnes v. Insurance Co., 75 Iowa, 11, 39 N. W. 122;Jamison v. Insurance Co., 85 Iowa, 229, 52 N. W. 185; Boetcher v. Insurance Co., supra. Laub had no reason to suppose the policy and application were drawn differently than understood. As to matters affecting the rights of the firm at the time the policy was delivered, or in the future, it must be charged with notice, but the law did not require him to search through the policy to ascertain past mistakes or misstatements of the agent or company. Under the circumstances disclosed, it cannot be said that the plaintiff was negligent in failing to discover the error of the defendant and its agent.

3. Doughty had the information that the firm then desired and was placing $12,000 of concurrent insurance on the merchandise, and the company was charged with the same knowledge. This was a condition of things then existing, and incident to the very business of insurance. Application to all of the companies could not be made at precisely the same...