Glens Falls Insurance Company v. Michael

• Decision Date: 17 January 1907
• Docket Number: 20,432
• Citation: 79 N.E. 905,167 Ind. 659
• Parties: Glens Falls Insurance Company v. Michael et al
• Court: Indiana Supreme Court

79 N.E. 905

167 Ind. 659

Glens Falls Insurance Company v. Michael et al

No. 20,432

Supreme Court of Indiana

January 17, 1907

Original Opinion of June 8, 1905, Reported at: 167 at 659.

Jordan J. All concur except Gillett, J.

OPINION

Jordan, J.

Appellant has petitioned for a rehearing and supported the same by an able argument on the part of its counsel. We have examined the authorities cited by counsel and have again given the case careful and patient consideration. Upon the question here involved the authorities may be said to "fight on both sides." Nevertheless, they are not so overwhelmingly on either side that they should be held, as seemingly insisted, to preclude us from adopting and following what we believe to be the better rule and the one which, because of its fairness and reasonableness, commends itself to our approval. It is admitted that our holding at the former hearing upon the point in issue is sustained by the supreme courts of Nebraska, Montana, Washington California, and "possibly Kentucky," and by the decision of the court in the case of Manchester Fire Assur. Co. v. Abrams (1898), 89 F. 932, 32 C C. A. 426, but this concession is certainly too narrow, for, with the courts hereinbefore mentioned must be classed or included the supreme courts of Michigan, Oregon, Virginia, Mississippi, Pennsylvania, Missouri, Alabama, Wisconsin, West Virginia, and probably New York. The decisions of some of the latter courts directly sustain the doctrine in question, while others may at least be said indirectly to support the principle. To the cases or authorities cited and relied on by this court in its original opinion herein, we may add the following: Allesina v. London Ins. Co. (1904), 45 Ore. 441, 78 P. 392; Union Assur. Soc. v. Nalls (1903), 101 Va. 613, 44 S.E. 896, 99 Am. St. 923; Farmers, etc., Ins. Co. v. Mickel (1904), (Neb.), 72 Neb. 122, 100 N.W. 130; Brunswick, etc., Co. v. Northern Assur. Co. (1905), 142 Mich. 29, 105 N.W. 76; 1 Wood, Insurance (2d ed.), § 176; 3 Cooley, Briefs on Insurance, 2630, 2631.

In the appeal of Allesina v. London Ins. Co. supra, the policy there involved, when issued, contained a printed provision that it should be void "if the subject of the insurance be personal property, and be or become encumbered by a chattel mortgage." This policy was issued upon an oral application, the agent of the company making no inquiry of the insured concerning liens or encumbrances upon the property, nor were there any statements or representations made in reference thereto by the insured, and he had no knowledge that such information was material, or that the policy to be delivered would contain any provision in reference thereto, or that if the company knew of the mortgage upon the property it would decline to assume the risk. The insured paid and the company received and accepted the premiums, and the property was destroyed by fire during the life of the policy. The court, in that case, said: "The only question on this appeal is whether, under these circumstances, the defendant can defeat a recovery on the ground that the policy issued by it and delivered to the plaintiff and for which he paid and it accepted and retained his money was invalid from the beginning because of the mortgage clause." This case, under the facts, may be said to be on principle on "all fours" with the case at bar. The policy involved in that appeal was sustained. In deciding the case the court, in the course of its opinion, said: "A contract of insurance, like any other contract, must, of course, be given force and effect according to its terms as agreed upon by the parties, but provisions in the printed forms, inserted for the benefit of the insurer, may be waived by it in special instances. In determining whether there has been such a waiver, a court should not overlook the fact that insurance policies are prepared by the company for general use, without reference to particular cases, and contain divers and sundry provisions and stipulations concerning different subjects. The contract is not like ordinary contracts between individuals, wherein every clause and stipulation is considered and agreed upon by the parties before the agreement is executed. A policy of insurance is prepared in the office of the company and becomes binding on the assured because it is delivered to and accepted by him. In accepting it he has a right to assume that the company does not intend to insist upon the printed clause therein relating to encumbrances on the property if it makes no inquiry of him concerning the matter, and he has made no statements in reference thereto, and has not been advised that the question was at all material. The preparation and issuance of the policy is the act of the company, and if, in pursuance of a previous agreement to insure, it issues and delivers a policy purporting to cover loss or damage by fire, and accepts and receives the money of the insured, without making any inquiry of him as to encumbrances, or without advising him of the effect on his contract of an encumbrance, it is receiving and accepting his money under circumstances but little short of false pretenses, if the contract is void from the beginning, and never in fact had any force or validity, because of a provision inserted therein by it without the knowledge of the assured, rendering it void if the property is encumbered. In such a case the company would not only wrongfully receive and accept the money of the insured, but would mislead him into the belief that his property was insured, when in fact it was not, thus deceiving a party honestly seeking and paying for insurance." In 1 Wood, Insurance (2d ed.), § 176, the rule is stated as follows: "When a policy is issued upon a verbal application, without any representations in reference thereto, all information relative to the risk, except such as is unusual and extraordinary, is waived, and the policy is valid, even though it contain a clause or stipulation that 'the insured covenants that the representations given in the application for this insurance contain a just, full and true exposition of all facts and circumstances in respect to the condition, situation, value and risk of the property insured,' and, although the policy professes to be made upon the faith or representations made by the insured, yet, it is valid, even though no representations whatever were made in reference to the risk, and the lack thereof is not a matter of defense. The insurer cannot charge the assured with laches, induced by its own conduct." In 3 Cooley, Briefs on Insurance, pp. 2630, 2631, the author says: "If an insurance company issues a policy of insurance without any application, or without...