Leisen v. St. Paul Fire & Marine Ins. Co.

• Decision Date: 10 September 1910
• Citation: 20 N.D. 316,127 N.W. 837
• Court: North Dakota Supreme Court
• Parties: LEISEN v. ST. PAUL FIRE & MARINE INS. CO.

20 N.D. 316

127 N.W. 837

LEISEN

v.ST. PAUL FIRE & MARINE INS. CO.

Supreme Court of North Dakota.

May 28, 1910.

Rehearing Denied Sept. 10, 1910.

Syllabus by the Court.

Plaintiff, whose sole interest in the property insured was that of a holder of a sheriff's certificate under a mortgage foreclosure sale, applied for, and there was issued to him, a fire insurance policy, the premium for which was paid to and retained by defendant company. The policy was the standard form adopted in this state, containing the following stipulations: “This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning this insurance or the subject thereof; or if the interest of the insured in the property be not truly stated herein. * * * This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void * * * if the interest of the insured be other than unconditional and sole ownership. * * * This policy is made and accepted subject to the foregoing stipulations and conditions together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto, and no officer, agent or other representative of this company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto and as to such provisions and conditions no officer, agent or representative shall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached.”

In applying for such insurance plaintiff acquainted defendant and its agent with the true facts regarding his interest in the property, but notwithstanding such information the defendant's agent carelessly and negligently omitted to state in the policy the nature of plaintiff's said interest. About three weeks after the policy was issued a loss occurred. In an action to recover on the policy, defendant seeks to escape liability upon the ground that such policy, by its terms, is and was void at its inception on account of the above facts.

Held, for reasons fully stated in the opinion, that defendant is estopped to urge such defense.

Where a fire insurance company with full knowledge of facts which, under the stipulations contained in the application or policy, renders such policy void at its inception, issues and delivers the same and collects and retains the premium therefor, it will be deemed in law to have impliedly waived such forfeiture and will not be permitted to urge the invalidity of the policy in an action to recover for a loss there-under. Certain language contained in the opinions in Johnson v. Insurance Co., 1 N. D. 167, 45 N. W. 799, and Lamb v. Insurance Co., 119 N. W. 1048, approving the federal rule to the contrary, is disapproved.

Where a policy of insurance has been delivered and the premium collected with full knowledge of all the facts, it would operate as a fraud upon the insured if the insurance company was permitted to avoid the policy after a loss by urging the invalidity thereof at its inception on account of stipulations contained therein.

Restrictions in a policy limiting the power of agents to waive conditions except in a certain manner cannot be held to apply to those conditions which relate to the inception of the contract, where the agent with full knowledge of the facts issues the policy and collects the premium and the insured has acted in good faith.

Additional Syllabus by Editorial Staff.

Agents authorized to procure applications for insurance and to forward them to the insurer for acceptance are agents of the insurers as to representations made by them as to the character or effect of the statements therein, and when such an agent, by direction or direct act, makes out an application incorrectly, notwithstanding all the facts are stated to him by applicant, the error is chargeable to the insurer.

Both at common law and under Rev. Codes 1905, § 6058, providing that policies in the statutory form shall be subject to the same rule of construction as to their effect or the waiver of any of their provisions as if the form thereof had not been prescribed, a prescribed standard policy is none the less a contract and to be construed as such, and, while it may affect a question of pure waiver, does not abrogate the doctrine of estoppel.

Appeal from District Court, Cass County; Charles A. Pollock, Judge.

Action by John Leisen against the St. Paul Fire & Marine Insurance Company. From an order overruling a demurrer to the complaint, defendant appeals. Affirmed.

Spalding, J., dissenting.

Geo. A. Bangs, for appellant. V. R. Lovell, for respondent.

FISK, J.

This is an action to recover on an insurance policy. The complaint is in the usual form, alleging: That in consideration of $51 paid by the plaintiff to defendant the latter issued its policy of insurance, a copy of which is annexed to and made a part of the complaint, whereby defendant insured the plaintiff against loss or damage by fire in the sum of $1,000 on a certain frame building situated on lots 9 and 10, block 21 of the village of Leonard, Cass county, for the term of one year from January 6, 1906. That plaintiff duly performed all of the terms of said contract of insurance on his part to be performed, and that on January 29, 1906, said building was totally destroyed by fire, which fire did not occur by reason of any of the causes enumerated in said policy exempting the insurance company from liability in case of fire or loss, and that plaintiff's loss by reason of such fire exceeded the sum of $1,500. That the destruction by fire as aforesaid was complete and the loss total, and that there was no disagreement between the plaintiff and defendant as to the amount of said loss, but that shortly after defendant was notified of the loss it denied any liability under the policy on the ground that plaintiff's title to the property insured was not truly stated in the policy or the application therefor. Plaintiff, in his complaint, anticipates the defense that the policy never attached or became effective by reason of the fact that plaintiff's title to the property insured was not that of unconditional and sole ownership, etc., and in this respect alleges the following facts: “That at and during the said month of January, 1906, plaintiff was and still is the owner and holder of a certain sheriff's certificate of mortgage foreclosure sale of and upon the said frame building and the lot or parcel of land on which the same was situated, and at the time of the destruction of such building by fire hereinafter referred to, there was due and unpaid on the said certificate of mortgage foreclosure sale an amount exceeding the total amount of such insurance, and that at the time of the plaintiff's application for the insurance aforesaid, and at the time of the execution and delivery of the policy aforesaid, the plaintiff notified and informed the defendant company and its agent the nature and character of plaintiff's insurable interest in the frame building aforesaid, and that plaintiff was the owner and holder of a sheriff's certificate of mortgage foreclosure sale as aforesaid, but the defendant and its said agent, though it then and there knew as aforesaid the character and extent of plaintiff's insurable interest in the frame building and premises aforesaid, carelessly and negligently stated and caused to be stated in the said policy of insurance and application therefor that plaintiff was the owner in fee simple of said premises and the whole thereof, and thereby waived the conditions of said policy of insurance exempting the defendant company from liability in case the plaintiff's interest in the premises insured be not truly stated in such policy or in the application therefor.”

The policy is the standard form adopted in this state, and contains, among others, the following stipulations: “This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning this insurance or the subject thereof; or if the interest of the insured in the property be not truly stated herein. * * * This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void * * * if the interest of the insured be other than unconditional and sole ownership; or if the subject of insurancebe a building on ground not owned by the insured in fee-simple. * * * This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements or conditions as may be indorsed hereon or added hereto, and no officer, agent or other representative of this company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto and as to such provisions and conditions no officer, agent or representative shall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached.”

A demurrer was interposed to the complaint upon the ground that the complaint fails to state facts sufficient to constitute a cause of action. Such demurrer was overruled, and the appeal is from the order overruling the same.

In brief, appellant's contention on this appeal is that under the facts alleged in the complaint the policy is and was void at its inception for the reason that the interest of...