Lundman v. United States Fidelity & Guaranty Company
| Decision Date | 22 May 1925 |
| Docket Number | 24,551 |
| Citation | 204 N.W. 159,163 Minn. 303 |
| Parties | A. Q. LUNDMAN v. UNITED STATES FIDELITY & GUARANTY COMPANY |
| Court | Minnesota Supreme Court |
Action in the district court for Wright county upon an oral contract of insurance against loss by burglary. The case was tried before Giddings, J., and a jury which returned a verdict in favor of defendant. Defendant appealed from an order setting aside the verdict and granting a new trial. Reversed.
When reformation of policy is necessary to recover upon verbal contract of insurance.
1. Where a verbal contract of insurance is made to take effect immediately, but to be evidenced by a policy thereafter to be issued, and a policy is issued, delivered and retained, it is presumed that the verbal contract merged in the policy. And if a loss not covered by the terms of the policy occurs, but is claimed so to be by the terms of the oral contract recovery cannot be had unless the pleading and proof show plaintiff entitled to a reformation of the policy.
When grant of new trial was error.
2. In this case, where plaintiff declared upon the oral contract and expressly declined to litigate any issue for reformation of the policy delivered and retained, and which did not cover the loss, defendant was entitled to a verdict. Hence it was error to grant plaintiff a new trial, even though the verdict for defendant was influenced by an incorrect charge.
1. See Insurance, 32 C.J. p. 1129, § 233; p. 1142, § 248.
2. See Insurance, 32 C.J. p. 1142, § 248; New Trial, 29 Cyc. p. 790.
Cobb, Wheelwright, Hoke & Benson and J. B. Faegre, for appellant.
George G. Schierts and Kueffner & Marks, for respondent.
Appeal by defendant from the order granting plaintiff a new trial after an adverse verdict.
On January 31, 1923, an agent of defendant solicited plaintiff, who was in the jewelry business at Annandale, Minnesota, to take burglary insurance upon his goods when locked in the safe or vault in the store. Plaintiff was prevailed upon to accept such insurance to the extent of $2,000 for one year, the premium of $26.40 to be paid to the local agent at that place. No writing passed at that time, but the insurance was to be effective at once. A short time thereafter a policy was delivered. Plaintiff says he casually looked at it and placed it in the safe, but did not read it through. Later the premium was paid. About 2 o'clock in the morning of June 28, 1923, plaintiff, who lived over the store, was awakened by the door bell and on opening the street door was confronted with robbers, who forced him to open the store and safe, took the jewelry and merchandise therein of nearly $3,000 in value, and left plaintiff bound and gagged. The policy defendant delivered to plaintiff insured: For all direct loss by burglary occasioned by the felonious abstraction from the interior of the locked safe mentioned "by any person or persons making felonious entry into such safe or vault by actual force and violence, of which force or violence there shall be visible marks made upon the exterior of such safe or vault by tools, explosives, chemicals or electricity." Of course, entry to the safe in the manner testified to by plaintiff was not covered by the policy he received.
Plaintiff ignores the policy and sues upon the oral contract of insurance made on January 31, 1923, wherein he claims the agent agreed that the insurance covered if robbers compelled the owner, or person in charge, to open the safe as well as when burglars forced the same leaving visible marks thereon. The theory of recovery is this: There was an oral contract of insurance effective when made which covered this loss, and such contract was not modified or in the least affected by the delivery of a policy not known by the assured to exclude risks covered by the oral contract. On the trial and here plaintiff plants himself solely upon the oral contract, openly announcing that he does not seek or desire a reformation of the policy. The learned trial court submitted the case to the jury upon plaintiff's theory. The verdict was for defendant and the court granted a new trial on plaintiff's motion for errors of law. It must be conceded that the court erred in the instruction that defendant's agent did not have the authority to make such a contract as plaintiff claims. But defendant contends that notwithstanding the error no new trial should be had for, upon its motion for a directed verdict when the testimony was closed, it was entitled to the verdict rendered. If that be so the verdict was right and should remain, and it was error to grant a new trial.
Contracting orally with the understanding that a subsequent written or printed version thereof will be executed or delivered, means that the parties are bound by the terms of the written or printed instrument designed to be the final consummation and accurate expression of the oral temporary agreement. In the instant case plaintiff admitted that a policy was to issue. It was issued and delivered to him within two months of January 31, 1923. He accepted and retained it. That became the sole contract between the parties.
In the early case of Guernsey v. American Ins Co. 17 Minn. 83 (104), it was held an action at law to recover a loss would not lie, if the policy without reformation did not warrant a recovery. But now the practice seems well established that the insured may bring an action to reform the policy and to recover on a loss under it as reformed. Spurr v. Home Ins. Co. 40 Minn. 424, 42 N.W. 206; Kelly v. Citizens Mut. Fire Assn. 96 Minn. 477, 105 N.W. 675; Mahoney v. Minn. F. Mut. Ins. Co. 136 Minn. 34, 161 N.W. 217. But where the oral contract has been superseded by a written policy, the policy cannot be ignored. And, if a recovery is sought for property covered by the policy, the pleading and proof must show a right to recover under its terms or else under terms to which the insured is entitled to have the policy reformed or corrected. Well understood rules in equity determine whether reformation may be had. The character of the proof required is also well settled. Plaintiff did not in the complaint state any facts entitling to reformation and when the testimony was closed plaintiff's counsel said: ...
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