German Mutual Insurance Company v. Niewedde
| Decision Date | 31 January 1895 |
| Docket Number | 1,392 |
| Citation | 39 N.E. 534,11 Ind.App. 624 |
| Parties | GERMAN MUTUAL INSURANCE COMPANY v. NIEWEDDE |
| Court | Indiana Appellate Court |
From the Jackson Circuit Court.
Judgment affirmed.
R Applewhite, J. F. Applewhite, A. Seidensticker, J. E McCullough and H. N. Spaan, for appellant.
W. H Endebrock, A. N. Munden, W. K. Marshall, B. H. Burrell and L. F. Branaman, for appellee.
The appellee's complaint sought to recover for the loss of a stock of goods by fire, against which it was insured by appellant. The answer was a general denial, and in addition thereto that there had been a breach of the condition of the policy by an existing incumbrance. To this answer appellee pleaded a waiver of the condition.
The general verdict was for appellee, with various answers to interrogatories, upon which judgment was rendered in his favor over appellant's motion for new trial.
From the evidence it appears that the appellee made oral application for the policy, no written application being required. The agent agreed to issue the policy, and the premium was paid, but no policy was then delivered, it being afterward sent by mail. The appellee testifies that no questions were asked as to mortgages or incumbrances, and no statements made relative thereto by him; that he did not see the policy at the time and did not know a mortgage would invalidate the policy by its terms. The agent, however, testified that when a former policy was issued, he had told appellee that he was prohibited by this company from taking mortgaged property, and on his application for this policy he asked him if everything was the same as before, and he said yes.
When the policy was issued, the property, worth about $ 4,700, was subject to a mortgage for $ 528, executed about a month before, and duly recorded, which remained unpaid at the time of trial, but appellant had no knowledge of its existence until after the loss. The policy contained a provision of forfeiture if the property was incumbered unless so represented and expressed in the written part of the policy.
That this provision is valid and enforceable, can not be controverted. Bowlus v. Phenix Ins. Co., 133 Ind. 106, 32 N.E. 319; Continental Ins. Co. v. Vanlue, 126 Ind. 410, 26 N.E. 119; Continental Ins. Co., etc., v. Kyle, 124 Ind. 132, 24 N.E. 727; Geiss v. Franklin Ins. Co., 123 Ind. 172, 24 N.E. 99.
While the courts are averse to giving effect to forfeiture clauses, and will construe the contract most strictly against the company, resolving all doubts in favor of the policy-holder, we are not authorized to make a new contract for the parties, nor to disregard that which they have themselves created. Continental Ins. Co. v. Vanlue, supra, and authorities above cited; Dover Glass Works Co. v. American, etc., Co. (Del.), 29 A. 1039.
It is, however, equally the law that the valid and enforceable provisions of the contract may be waived, not only by express agreement, but by the conduct of the company. Evans v. Queen Ins. Co., 5 Ind.App. 198, 31 N.E. 843; Home Ins. Co., etc., v. Marple, 1 Ind.App. 411, 27 N.E. 633; Sweetser v. Odd Fellows, etc., Assn., 117 Ind. 97, 19 N.E. 722; Havens v. Home Ins. Co., 111 Ind. 90, 12 N.E. 137.
In determining whether a harsh and inequitable forfeiture clause, such as we have here, is to be deemed waived, the courts have generally applied the same liberal rule in favor of the insured as governs in the construction of the contract itself.
That knowledge of the fact which, by its terms, would avoid the policy, is a waiver of such provision, is conceded by appellee's learned counsel. Havens v. Home Ins. Co., supra; Phenix Ins. Co., etc., v. Lorenz, 7 Ind.App. 266, 33 N.E. 444.
But counsel insist that nothing short of actual knowledge will suffice to accomplish this result.
In this view of the law they are not sustained by the weight of authority, nor have they any equity upon their side.
If the law is as they assert, then the company takes and keeps the money of appellee and makes to him absolutely no return whatever.
The contract was, as appellant declares, void ab initio. No risk ever attached. The company hazarded nothing, it simply received appellee's money and had that much clear profit in the transaction with no chance whatever of loss. The appellee, without having in any way deceived or misled the appellant, without having had his attention called to the mortgage clause, with appellant apparently displaying at the time no interest whatever in the question of incumbrances, pays his money for an insurance policy expecting to get protection; relying upon appellant's failure to make any inquiry, he depends upon this policy as an indemnity in case of loss, but when the loss comes discovers that he had no insurance. If the law really requires such a holding, then our province is but to declare it.
The law, however, does not demand so inexorable an adherence to the letter of the contract under all circumstances and all conditions.
In quite a number of cases it has been adjudged that the failure of the company to inquire about or call any attention to some particular fact operates to relieve the insured from a forfeiture which would follow his omission to disclose it under the strict wording of his policy, although the fact was one material to the risk but not one unusual or extraordinary. Clark v. President, etc., 8 How. 235, 12 L.Ed. 1061; Washington Mills, etc., Co. v. Weymouth, etc., Ins. Co., 135 Mass. 503; Guest v. New Hampshire Fire Ins. Co., 66 Mich. 98, 33 N.W. 31.
This doctrine was expressly approved in Continental Ins. Co. v. Munns, 120 Ind. 30, 22 N.E. 78, where MITCHELL, J., says: "The rule applicable is that a failure or neglect on the part of the insured to make known facts which the insurer may regard as material to the risk, is not a breach of a condition in the policy avoiding it, in case of any omission to make known every fact material thereto, because the insured has a right to suppose that the insurer will make proper inquiries concerning all facts, except such as are supposed to be known, or are regarded as immaterial."
In these cases the fact depended upon as a forfeiture came within the terms of general language contained in the policy, declaring it thereby avoided.
For the purpose, doubtless, of meeting these and similar holdings, it became usual to insert in the policies special forfeiture clauses dependent upon the existence of particular facts specifically mentioned, as in the policy under consideration.
In Short v. Home Ins. Co., 90 N.Y. 16, one of these policies became the subject of controversy. It was therein provided that the policy should be void if the house became or remained vacant. It was then vacant and so remained until burned. There was no written application, no questions or statements as to occupation, but there was evidence that the agent made inquiries about such matters as he deemed material, lived in the same city and had ample opportunity to learn the facts.
The court said: ...
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