Mishiloff v. American Central Ins. Co.

• Decision Date: 06 March 1925
• Citation: 128 A. 33,102 Conn. 370
• Court: Connecticut Supreme Court
• Parties: MISHILOFF v. AMERICAN CENT. INS. CO.[a1]

128 A. 33

102 Conn. 370

MISHILOFF v. AMERICAN CENT. INS. CO.^[a1]

Supreme Court of Errors of Connecticut.

March 6, 1925

Appeal from Superior Court, New Haven County; Christopher L. Avery Judge.

Suit by Jacob Mishiloff against the American Central Insurance Company to reform an insurance policy and for damages thereon for loss by theft. From a judgment for plaintiff, reforming the policy and awarding $3,000 damages, defendant appeals. Error in part, reversed, and judgment directed.

Suit to reform an insurance policy and to recover damages thereon for loss by theft, brought to the superior court for New Haven county and tried to the court, Avery, J.; judgment for plaintiff reforming the policy and for $3,000 damages, and appeal by defendant. Error; judgment ordered for defendant.

Acceptance and retention of premiums after demand for return is election by insurer to waive existing breach.

Plaintiff about November 17, 1921, purchased an automobile under a conditional bill of sale for $4,500, of which $600 was paid in cash; another automobile was turned in at an agreed value of $2,400, and the balance $1,500 evidenced by eight notes seven for $100 each, payable in 1, 2, 3, 4, 5, 6, and 7 months from date, and the eighth note for $800, payable 8 months from date. The sales agreement was duly executed and recorded, and recited that the automobile had been placed in the possession of plaintiff and should remain the property of the vendor and become the property of the plaintiff when the $1,500 was fully paid. Plaintiff applied to Stowell, who conducted a general insurance agency, and who had issued to him a policy of fire and theft insurance, for a like policy on his new automobile. Plaintiff made no written application for this policy, nor made any representations as to his interest, and Stowell asked plaintiff no questions as to his interest in the car. Stowell, acting as a broker, telephoned Quinn, local agent for defendant, giving him the number of the car, name of the owner, and amount of insurance desired and requested him to issue a fire and theft policy on this car. Stowell believed plaintiff was the " unconditional and sole owner" of the car. Quinn made no inquiry of Stowell as to plaintiff's interest, and Stowell made no other representation concerning plaintiff's interest. The policy was issued by defendant through Quinn and delivered by him to Stowell, and by him to plaintiff. Plaintiff did not read the policy, and was unable to read it at this time or at the time of the application, and did not know of its terms until after the loss of the car. About October 13, 1922, this car was stolen from plaintiff's garage, and it became, as to plaintiff, a total loss. Plaintiff duly notified defendant, and filed the required proof of loss. Defendant has not returned, and did not offer to return, the premium until after suit brought. The policy was in the standard form of policy, and contained and was issued subject to the following:

" (2) It is a condition of this policy that it shall be null and void. * * * (c) If the interest of the assured in the property be other than unconditional and sole ownership or if the subject of this insurance be or become incumbered by any lien or mortgage except as stated in warranty No. 3 or otherwise indorsed hereon. * * *"

And under the heading warranties, appeared the following:

" (3) The facts with respect to the purchase of the automobile described are as follows: Purchased by the assured. Month, November; year, 1921; new or secondhand, new; actual cost to assured including equipment, $4,600. The automobile described is fully paid for by the assured, and is not mortgaged or otherwise incumbered, except as follows: No exceptions."

At the time the car was stolen there was a balance due on the car of $500, which plaintiff thereafter paid, and the entire loss at the time the policy was issued was bound to fall on plaintiff, unless the balance due could not be collected from him. The amount of the premium would have been the same had the defendant known of the real condition of the ownership by plaintiff of the automobile. Stowell has never been the agent in Connecticut of defendant. In reference to this policy he was brokeraging the policy; that is the term used when insurance agents exchange business with each other, each taking a part of the commission paid on the business by the company issuing the policy.

J. Dwight Dana, of New Haven, for appellant.

Samuel Markle, of New Haven, for appellee.

Argued before WHEELER, C.J., and BEACH, CURTIS, KEELER, and KELLOGG, JJ.

WHEELER, C.J. (after stating the facts as above).

The motion to correct is granted substantially as set forth in reasons of appeal 14, 15, 17, 23, 24, 26, and 31, and the corrections incorporated in the statement above. Paragraph 35, that Stowell was not the agent of plaintiff, is stricken out as not established; he was to a limited degree his agent. Plaintiff also alleges error in failing to strike out paragraph 37, reciting that the policy of insurance was issued under a mutual mistake, etc. The trial court adjudged that the policy be reformed to comply with the character of the ownership of the plaintiff, " and that there shall be deemed to have been attached thereto a slip or rider, as is provided by section 4073 of the General Statutes, signed by the plaintiff or its agent, stating that:

" It is understood and agreed that the automobile, the subject of this insurance, was purchased by Jacob Mishiloff, the assured, from the Platt & Libbey Company, under a conditional bill of sale, and was owned by the said Mishiloff on the date on which this policy was executed subject to said conditional bill of sale, and this policy shall not, on that account, be considered null and void, notwithstanding any provisions to the contrary herein contained."

Reformation of the policy was made by the trial court upon the ground of a mutual mistake on the part of the parties to the contract. The court could exercise its power of reformation only in a case in which the mistake was common to both parties and, by reason of it, both had done what neither intended. Snelling v. Merritt, 85 Conn. 83, 81 A. 1039; Bishop v. Clay Insurance Co., 49 Conn. 167, 171; Hearne v. Marine Insurance Co., 20 Wall. 488, 22 L.Ed. 395.

The court rests its judgment of reformation upon its finding at page 37, " it was due to a mutual mistake of the parties that the insurance policy was not written in accordance with the facts," and upon the fact that the policy does not represent what each of the parties intended. The court has not found that either Stowell or Quinn had any knowledge that the automobile was held by the plaintiff under a conditional bill of sale; in fact the contrary appears. The policy as issued was the policy the defendant intended to issue, and one of its conditions was that it should be void if the interest of the assured in the automobile was other than that of " unconditional and sole ownership." The plaintiff upon the facts found believed that his interest in this automobile was insured, and did not know otherwise until after its loss. There was then no basis for a conclusion that there had been a mistake common to both parties, nor a basis for a finding that each of the parties made a contract which neither intended. The facts found support the conclusion that the defendant intended one contract of insurance and the plaintiff another. In such a situation we say in Snelling v. Merritt, 85 Conn. 83, at page 101, 81 A. 1039, 1046:

" The mistake of one only of the parties, inducing him to sign a contract which, but for the mistake, he would not have entered into, may be a ground in some cases for canceling the contract, but it cannot be a ground for a reformation of it."

If paragraph 37 be regarded as a finding of fact, it is not supported by the evidence. If it be regarded as a conclusion of fact, it is not supported by the subordinate facts. We regard its statement as a conclusion of law, and, since it does not appear in the finding directly or by inference that the parties made a common mistake in making this contract, and thereby did what neither intended, the conclusion as one of law cannot be sustained. Other principal assignments of error are based upon the proposition that the policy was null and void ab initio and never took effect, because the interest of the assured in the property, being that of a vendee under a conditional bill of sale, was not the " unconditional and sole ownership" which was made a condition of the policy. The attempt to construe this provision as referring to subsequent changes in the title must fail. " The words used refer to the present and not to the future, and the conditions relate to facts as they exist at the date of the policy." Parsons, Rich & Co. v. Lane, 97 Minn. 98, 102, 103, 106 N.W. 485, 487 (4 L.R.A. [N. S.] 231, 7 Ann.Cas. 1144). This condition is one precedent to any right of recovery by the insured under the policy. Its fulfillment is a necessary prerequisite to the validity, and hence to the operative effect of the policy. Weed v. L. & L. Fire Ins. Co., 116 N.Y. 106, 22 N.E. 229; Matthie v. Globe Fire Ins. Co., 68 A.D. 239, 74 N.Y.S. 177; Id., 174 N.Y. 489, 67 N.E. 57; Brown v. Commercial Fire Ins. Co., 86 Ala. 189, 5 So. 500.

We know of no better definition of this condition in an insurance policy than that found in Hartford Fire Insurance Co. v. Keating, 86 Md. 130, 38 A. 29, 63 Am.St.Rep. 499:

" To be ‘ unconditional and sole’ the interest must be completely vested in the assured, not contingent or conditional, nor for years or for life only, nor in common, but of such a nature that the insured must sustain the entire loss if the property is destroyed, and this is so whether

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