Merchants' Mut. Fire Ins. Co. of Colo. v. Harris

• Decision Date: 05 June 1911
• Parties: MERCHANTS' MUT. FIRE INS. CO. OF COLORADO v. HARRIS et al.
• Court: Colorado Supreme Court

116 P. 143

51 Colo. 95

MERCHANTS' MUT. FIRE INS. CO. OF COLORADO v. HARRIS et al.

Supreme Court of Colorado

June 5, 1911

Appeal from District Court, City and County of Denver; Hubert D Shattuck, Judge.

Action by Ernest Harris and another against the Merchants' Mutual Fire Insurance Company of Colorado. From a judgment for plaintiffs, defendant appeals. Affirmed.

R. E. Stevens, for appellant.

George Allan Smith, for appellees.

BAILEY J.

Plaintiffs sue for reformation of a certain contract of insurance, and for recovery of $2,000.00 for loss of, and damage to property covered thereby, at the city of Boulder, Colorado. The policy was written in favor of the plaintiff, Ernest Harris, individually, on the 13th day of June, 1906, for one year, the premium being $24.40. The fire occurred July 26th next after the issuance of the policy. It is claimed that $1,200.00 of the insurance was on property belonging to Sol Arkush, one of the plaintiffs, and the balance, $800.00, on property of the other plaintiff, Harris. It was sought in the suit to reform the policy to make it speak the truth touching ownership, according to the alleged facts. Plaintiffs had judgment for $2,000.00, the amount of the policy, and a decree for its reformation as prayed. The defendant brings the case here to review that judgment and decree.

A complete understanding of the facts disclosed at the trial, and generally of the issues involved, can best be had by setting forth at length the findings of the trial court. These findings evidence the utmost care in the disposition of the case, and show that the matter was adjudged only after full consideration of both law and fact questions. The statement of findings, as it appears in the record, follows:

'And the court having read the pleadings and heard all of the evidence presented and the arguments of counsel, and being now fully advised in the premises, doth find the issues in this cause for the plaintiffs, and doth further and specifically find the following facts:

'That the defendant company was, on June 13, 1906, and now is an insurance corporation, organized under the laws of the state of Colorado and carrying on the business of fire insurance in said state; that on June 13, 1906, the plaintiff, Sol Arkush, was the owner of a certain stock of goods and store furniture and fixtures, described in the application and policy of insurance hereinafter mentioned and which were situated in the store building at No. 928 Pearl street in the city of Boulder, and continued to be the owner thereof until after the fire at said building on July 26, 1906; that the plaintiff, Ernest Harris, was in charge thereof as the agent of Arkush, and that at said times the plaintiff Ernest Harris was the owner of certain household furniture and goods which he had in the back part of said storeroom, which he occupied also as a living room; that said place was known as 'The Exposition' and the business therein conducted was in the name of the 'The Exposition.'

'The court doth further find that on June 13, 1906, W. J. King was an agent of the defendant company employed and authorized by it to travel about the state of Colorado to solicit and procure for it applications for fire insurance, and was furnished by the defendant with certain printed blank applications for insurance in the defendant company; that it was part of his duty, after procuring the same to be signed by applicants for insurance, to forward such application to the defendant company filling the same out with such other information as he might be able to obtain himself about the proposed risk in addition to that which he obtained from the applicant; that on June 13, 1906, said King visited The Exposition, and solicited the plaintiffs, through the plaintiff, Harris, to take out fire insurance on the aforesaid property; that King filled in answers to only part of the questions printed on the face of the application, and procured the plaintiff Harris to sign the same in the name of 'The Exposition by E. Harris, Mngr.'; that King at the time was fully and trulyinformed by Harris as to the diversity of ownership of the property, and of a certain chattel mortgage to Selchow and Righter, hereinafter mentioned, and the condition thereof; that King stated to Harris that the application signed in the name of 'The Exposition by E. Harris, Mngr.' was the proper way to make application for a policy of fire insurance in the defendant company to cover the property of both plaintiffs on said premises, and that the application thus signed was in correct form and the defendant would issue a proper policy thereon which would insure both of the plaintiffs to the extent applied for in said application.

'The court doth further find that King forwarded said application to the defendant company, who received and accepted the same and thereupon, and without consultation with plaintiffs, or notifying plaintiffs or either of them, that the application was in any way incorrect, issued to them its policy of fire insurance, covering the property described in the application, as follows, to wit:

'Two hundred dollars ($200) on the store furniture and fixtures,

'One thousand dollars (1,000) on the stock of merchandise, and

'Eight hundred dollars ($800) on the household furniture and goods;

'That the defendant company, in writing the policy, ignored the application as to the name 'The Exposition,' and issued the policy in the name of Ernest Harris instead of 'The Exposition'; that the policy was then mailed by defendant to the plaintiff Harris, who was unfamiliar with insurance law or the provisions of insurance policies, and who, upon receiving the policy, examined the same but casually, and observing that the property and amounts of insurance applied for were all right, believed that the policy was correct and that it insured himself and Arkush in the amounts and on the property therein described, and thereupon sent the defendant company the premium for said policy, and that plaintiff retained said policy under such belief.

'The court doth further find that on July 26, 1906, a fire occurred at the store without fault on the part of the plaintiffs, and by reason thereof, the plaintiff Sol Arkush suffered a direct loss and damage to the store furniture and fixtures in excess of the sum of two hundred dollars ($200) and to the stock of merchandise in excess of the sum of one thousand dollars ($1,000); and the plaintiff Ernest Harris suffered a direct loss and damage to the household furniture and goods in excess of the sum of eight hundred dollars ($800); that notice of the fire and loss was sent to the company, and in response thereto, and within a day or two, J. R. Gardner, manager of the defendant company, visited the burned premises, asked who owned the property and was informed that Sol Arkush owned the store furniture and fixtures and stock of merchandise, and that Ernest Harris owned the household furniture and goods; that he thereupon asked for the policy, which was produced, whereupon he refused to adjust the loss, stating as his reason that the policy was in the name of Harris; that on August 8, 1906, the defendant company wrote to Harris denying all liability on said policy on the alleged ground that Sol Arkush was the owner of the property described in the policy, and enclosed a check payable to Ernest Harris for the amount of the premium theretofore paid, which the plaintiff Harris refused to accept, and which he later caused to be returned to the company.

'The court doth further find that the Selchow and Righter mortgage covered but a part of the property insured, and that Harris informed the agent, King, of the existence of the mortgage at the time the application for insurance was signed, and the amount that was still unpaid and secured thereby; and that it was due to the act and advice of the agent, King, that the question as to incumbrances contained in the application, instead of being answered affirmatively, was left blank as were a number of other questions which were contained in said application.

'The court further finds that no misrepresentations were made, or concealments practiced, either in the application or otherwise, by the plaintiffs, or either of them, and that the conduct of the plaintiffs toward the defendant was fair and in good faith, and that no evidence was presented in the case to warrant the serious charge made in the pleadings of the defendant that the fire was the result of the malicious and willful act of the plaintiff, Ernest Harris; that there was nothing in the case to show that the fire occurred other than as the result of unknown accidental circumstances.

'The court doth further find that the law and equities of this case are with the plaintiffs; that the defendant company, after having received the plaintiffs' application, issued its policy of insurance and received the premium therefor, ought not, after a loss has occurred, be permitted to escape liability on the plea that owing to its own mistake the policy was not issued in the proper names of the assured, especially when its agent who solicited the insurance was fully informed as to the facts at the time the application was signed, and advised that it be signed as it was, and when the company without cause disregarded the application and wrote the policy in the name of but one of the assured.

'The claim that the Selchow and Righter mortgage avoided the policy does not appeal to the court. Under the circumstances of this case, it is a technical defense without a meritorious reason in its support, for the evidence is uncontroverted that it was satisfied long before the fire occurred; also the agent of the company was informed of its existence and the amount

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