Hart v. Niagara Fire Ins. Co. of State of New York

• Decision Date: 23 October 1894
• Citation: 38 P. 213,9 Wash. 620
• Court: Washington Supreme Court
• Parties: HART ET AL. v. NIAGARA FIRE INS. CO. OF STATE OF NEW YORK ET AL.

38 P. 213

9 Wash. 620

HART ET AL. v. NIAGARA FIRE INS. CO. OF STATE OF NEW YORK ET AL.

Supreme Court of Washington

Oct 23, 1894

Appeal from superior court, Pierce county; M. J. Gordon, Judge.

Action by George E. Hart, as a partner of, and for and on behalf of the copartnership of Hart & Jewell, and the Pacific National Bank of Tacoma, a corporation, mortgagee, against the Niagara Fire Insurance Company of the State of New York. Hiram Jewell, of the firm of Hart & Jewell, was made a party defendant after commencement of the action, because of his refusal to continue as a party plaintiff. Plaintiffs had judgment, and the defendant insurance company appealed. Affirmed.

Page Crowley, Sullivan & Grosscup, for appellant.

Snell &amp Johnston, for respondents Hart & Jewell.

Parsons Corell & Parsons, for Pacific National Bank.

DUNBAR C.J.

This action was brought in the superior court of Pierce county by the plaintiffs to recover from the defendant the Niagara Fire Insurance Company the sum of $940, plaintiffs claiming that amount due them upon a policy of insurance issued by the defendant company to George E. Hart, and assigned by him to the copartnership of Hart & Jewell, the property covered by the insurance being certain mill property situated near the city of Tacoma. The interest of the Pacific National Bank as plaintiff in the suit arises by virtue of the chattel mortgage made by the copartnership firm of Hart & Jewell to secure the payment of $4,000 to the bank, the policy of insurance providing that the loss should be paid to the plaintiff bank. There was also other insurance upon the property, placed in other companies, making the total insurance of the company $10,000. The policy of insurance was issued on the 17th day of October, 1892. On the 18th day of October, the interest of Hart was transferred to the copartnership firm of Hart & Jewell. The mill was burned on the 30th day of November, 1892, while the policy of insurance was in full force, if it had not been forfeited. Plaintiffs alleged their loss, $10,500; alleged due notice of the fire, and loss thereby, to the defendant company, in conformity with all the terms and conditions of the policy; alleged that they performed and carried out all the terms and conditions required of them in said policy of insurance; that proof of loss was furnished and received by the corporation; and that 60 days had elapsed since said proof was furnished, etc. Subsequent to the commencement of the action, Hiram Jewell, whose name appeared in the original action, upon motion, was dismissed as one of the plaintiffs; whereupon plaintiff Hart and the plaintiff Pacific National Bank filed a supplemental complaint, making said Jewell a defendant. As this action of the court does not seem to affect the questions in controversy, we will not further notice it.

The policy was an ordinary insurance policy, and contained the usual terms and conditions of such policies. The particular provisions of the policy which the defendant claimed in its answer and on the trial of the cause to have been violated are as follows: "(1) This entire policy, unless otherwise provided by agreement, indorsed hereon or added hereto, shall be void if the hazard be increased by any means within the knowledge of the insured, *** or if the interest of the insured be other than unconditional and sole ownership, or if the subject of insurance be a building on ground not owned by the insured in fee simple. (2) It is understood and agreed that, during such time said mill is idle or not in operation, a watchman shall be employed by the insured to be in and upon the premises constantly, day and night." It eventuated that the mill insured was built on leased land, the same being school land, which was not subject to sale, but which had been leased by the respondents from the county commissioners of Pierce county. It is denied that the policy was issued by the company with knowledge of the location and situation of the property, except as the same was shown in the description in the policy itself; denied that they had any knowledge or information as to whether the plaintiffs, at the time of the fire, had an interest in the property described in the policy to an amount exceeding the aggregate of the amount of all sums mentioned in the complaint, or any other amount; denied that they had ever made a contract of insurance with the plaintiffs, or either of them, except upon the conditions and rules of the policy annexed to the complaint; denied that the mill was burned without any fault of the plaintiffs; that any sum whatever was due from them to the plaintiffs; and denied that the plaintiffs had performed all the conditions and requirements of the policy; affirmatively averred the conditions of the policy mentioned above; and further averred that the fire by which the property mentioned in the complaint was destroyed was kindled, or caused to be kindled, by the plaintiff Hart, intentionally, for the unlawful purpose of thereby procuring from the defendant and his other insurers the indemnity by them stipulated to be paid under the terms and conditions of the several policies; alleged that one Joseph F. Smith was, at the time the policy was issued, the owner of an undivided one-half of the property insured, and continued to be such owner until November, 1892. The reply averred that the person who received the application for the policy was, before said policy was issued, specifically and fully told, informed, and apprised of the fact, and fully knew that the property stood on ground owned and held by the state of Washington as school land, etc., and that the policy was issued with the knowledge of such facts; and alleged that it was the fault, neglect, and wrongdoing of said defendant in drawing the said policy of insurance that he did not state that the interest of said Hart was a leasehold interest. The other affirmative matters in the answer were denied by the reply. Upon this state of pleadings the case went to trial. Judgment was rendered in favor of the plaintiffs for the sum of $940.79, with interest and costs.

There are three main propositions of law discussed in this case:

First. Did the court err in instructing the jury that the defendant company was estopped from denying the ownership of Hart in the ground on which the mill property insured was located if, prior to the issuance of the policy, no questions were asked of Hart relating to the title of the ground, and no references were made by him as to the title? It is conceded by the appellant that, under the undisputed testimony in this case, this instruction would be sustained by the rule announced by this court, in Mesterman v. Insurance Co., 5 Wash. 524, 32 [9 Wash. 624] P. 458, and that Hansen would be considered the agent of the defendant company were it not for the fact that the policy contained a provision that, "in any matter relating to this insurance, no person, unless authorized in writing, shall be deemed the agent of this company"; but that, by reason of the incorporation of this provision in the policy, Hansen became the agent of the insured, instead of the insurer. If, as was said by the court in Mesterman v. Insurance Co., supra, the better reason is in favor of the rule that an insurance company is estopped from asserting the invalidity of its policy at the time it was issued for the violation of any of the conditions of said policy, or the application therefor, if, at the time it was so insured, the fact of such violation was known to the company or its duly-authorized agent; the respective rights of the parties ought not to be changed by any mere form of words which is placed in the policy, when the facts and the relations of the parties remain exactly the same. If, under the legal, well-established, and universally understood definition of "agency," the solicitor is in law and in fact the agent of the company, it should not be allowed to escape its responsibilities by a simple device of words which flatly contradict the true meaning of the contract. It is true enough that it is in no sense the duty of the courts to make contracts for parties, but it is equally true that it is their duty to prevent the evasion of honest responsibilities by the interjection into one-sided contracts of statements which, in a hidden manner, when technically construed, serve only to destroy the honestly intended and mutually understood conditions of the contract. If, in other words, the solicitor is actually the agent of the company, sent out by it to solicit business for it, receiving his instructions from the company, receiving his pay from the company, using blank forms prescribed by the company, and liable to discharge by the company, it would be a travesty on the administration of justice, which would shock the sense of every right-thinking person, to allow a company to escape a just responsibility by interjecting a provision in a policy denying this patent fact; especially in a case of this kind, where there was no written application, which is the document to which the attention of the assured is especially called, the one which he signs, and the one for which he ought to be held most strictly accountable. Even when a written application is made, the courts have almost universally held that where the assured gave proper answers to the questions, and the agent who acted as the scrivener wrote them down falsely, the company could not on that account escape its liability in case of damage. See 2 Wood, Ins. p. 837, and cases cited. What difference would it make in principle, in a case of that kind, to state in the policy that the agent should be considered the agent of the insured instead of the insurer,-a technical statement, of which only a lawyer knows the...