Forkner v. Twin City Fire Ins. Co.

• Decision Date: 12 May 1927
• Docket Number: No. 4758.,4758.
• Citation: 19 F.2d 419
• Parties: FORKNER v. TWIN CITY FIRE INS. CO.
• Court: U.S. Court of Appeals — Sixth Circuit

19 F.2d 419 (1927)

FORKNER v. TWIN CITY FIRE INS. CO.

No. 4758.

Circuit Court of Appeals, Sixth Circuit.

May 12, 1927.

Dwight L. Pendleton, of Winchester, Ky. (Valentine W. Bush, of Winchester, Ky., on the brief), for appellant.

Beverley R. Jouett, of Winchester, Ky. (John T. Metcalf, of Winchester, Ky., on the brief), for appellee.

Before DENISON and MOORMAN, Circuit Judges, and KILLITS, District Judge.

MOORMAN, Circuit Judge.

On motion of defendant, the District Court for the Eastern District of Kentucky dismissed a bill in equity wherein complainant sought to reform two fire insurance policies to conform, as he alleged, to agreements that he had made with the agent of the defendant company. The policies contained provisions rendering them void if a gasoline engine was used in or within 15 feet of any building described in the policies, "unless the written consent of the company is obtained and the additional premium charge made therefor," or if additional insurance was procured on the property, unless permitted by "agreement indorsed" on the policy. They also contained provisions to the effect that no officer, agent or other representative of the company should "have power to waive any provision or condition of this policy except such as by the terms of this may be subject of agreement indorsed hereon or added hereto." The bill alleged that when the contracts of insurance were entered into it was agreed and understood between the parties thereto that complainant would be permitted to maintain and operate a gasoline engine on the property; that it was further agreed between them that complainant would be permitted to take out additional insurance on the hemp and tow covered by the policies, without restriction as to amounts; and that, through mistake, inadvertence, and oversight, the agent of defendant failed to indorse or write into the policies the agreements so made.

The lower court held that the averments of the bill failed to state grounds for equitable relief. This position is defended by the insurance company on the ground that, though the bill alleged that it was agreed and understood that complainant would "be permitted to continue to operate said gasoline engine" and "to take out additional insurance," it was not alleged that defendant agreed to make such conditions effective by indorsements on the policies — the only way its agent could effectively agree to them — and therefore, notwithstanding the allegations of the bill, no such binding agreements as alleged therein were or could have been made. It is also argued that the bill did not sufficiently allege a mutual mistake warranting reformation. This latter interpretation, we think, is entirely too narrow, for, while the bill contains some surplusage, it plainly states that contracts of insurance were entered into, the terms of which, respecting the operation of the engine and the taking out of additional insurance, were by mistake omitted from the written contracts or policies.

Upon the theory that the bill sufficiently alleges mistake on the part of the insured, counsel for the insurance company argue that grounds for reformation are not shown, because it was not alleged that the local agent agreed to the conditions which complainant seeks to have incorporated into the policies, and whether so or not, he had no authority to agree to them, except in the specific way of indorsement, and, having failed to make the indorsements, no such contracts as alleged were made. We think the bill alleges agreements to make the indorsements or otherwise incorporate the conditions into the policies. Furthermore the argument erroneously assumes that the policies as written constitute the contracts; it is built upon the theory that...