Penn. Mut. Fire Ins. Co. v. Schmidt
| Decision Date | 02 April 1888 |
| Docket Number | 22 |
| Parties | PENN. MUT. FIRE INS. CO. v. FRANK SCHMIDT |
| Court | Pennsylvania Supreme Court |
Argued February 15, 1888
ERROR TO THE COURT OF COMMON PLEAS OF SCHUYLKILL COUNTY.
No. 22 January Term 1888, Sup. Ct.; court below, No. 312 July Term 1884, C.P.
On June 25, 1884, an action of covenant was brought by Frank Schmidt against the Pennsylvania Mutual Fire Insurance Company, to recover upon a policy issued on January 17, 1882, for three years, to the amount of $1,100. The pleas were non est factum, covenants performed absque hoc.
At the trial on March 23, 1887, it was made to appear that the policy in suit contained as one of its conditions the following: --
7. If the property insured shall be incumbered at or after the date of this policy by mortgage, judgment, mechanics' lien, or otherwise by any legal proceedings, or levied upon or taken into possession or custody under an execution or other proceeding at law or equity, and the assured shall neglect or fail to give written notice thereof and pay such additional premium as the company shall determine, and obtain a written consent of the company to the continuance of the policy, such insurance shall be void and of no effect.
It appeared further that at the date of the policy the property was subject to a purchase money mortgage for $4,000 securing four bonds in judgment for $1,000 each, and that the existence of this incumbrance was noted in the application and the loss if any made payable to the mortgagee as his interest might appear; that after the date of the policy and before the fire on November 12, 1883, which totally destroyed the property insured, the plaintiff paid off one of the $1,000 judgments and satisfaction thereof was entered of record on January 9, 1883.
After the close of the plaintiff's case, the defendant company put in evidence a judgment against Frank Schmidt and John Ladwigg in favor of German Gregory and others, trustees of the Hook and Ladder Co. No. 1 of Shenandoah, for $500 entered on September 4, 1883, on a judgment bond dated February 13, 1883, conditioned for the faithful performance by Frank Schmidt of the duties of the treasurer of the said company.
In the plaintiff's case in rebuttal, the plaintiff was called:
Counsel proposed to prove by the witness under what circumstances and upon what conditions the hook and ladder company bond was given; that it was given upon the express condition that judgment was not to be entered upon it, and judgment was entered in bad faith and in breach of that condition, and that the plaintiff knew nothing of the entry of the judgment until after the fire. The offer was objected to as incompetent, irrelevant and immaterial.
By the court: With reference to this offer to show that the bond given to the hook and ladder company by the plaintiff as treasurer of that company should not be entered up, and that it was signed upon that condition, we have examined all the authorities we have been able to find since the adjournment of the court. The opinion in the case of Seybert and this company, 103 Pa. 282, was delivered by Justice PAXSON in 1883, and we find two other cases, one the case of Thierolf v. Universal Fire Insurance Company, 110 Pa. 37, also an opinion by the same judge delivered in 1885 in which there was an incumbrance upon the property insured and also upon other property not insured. The Supreme Court held that it did not in itself avoid the policy, although there was a condition in the policy that an incumbrance upon the property not made known should avoid the policy. Then there is in the case of the Lebanon Mutual Insurance Company v. Losch, also, an incumbrance that was in existence at the time the insurance was taken out, and an answer in the application that there were no incumbrances. For the reasons therein stated, that was held not to void the policy. Now, we recognize the force of the decision of Seibert v. Insurance Co., but that decision holds that the fact as claimed by the insured that he did not know that the incumbrance had been entered up, or that it had become an incumbrance upon the company by entering was no excuse, for the reason that it was his duty to know that it might be entered by them any time he having given the power to enter a judgment against him.
Here the proposition is, as I understand the offer, to show that the plaintiff had no reason to know that this would be entered up, because of a contract that it should not be entered or be made an incumbrance upon his property; and we think, as bearing upon the question of his knowledge of its entry and therefore upon the question of his omitting to make known the fact to the company, that the testimony should be heard. The effect of it will have to be determined after we know what it is.
Under this offer, the plaintiff testified, in substance, that he had been chosen the treasurer of the hook and ladder company and had informed the officers thereof that he would not accept the appointment if he had to give a bond and that bond was to be entered up, as it would interfere with his business, and that it was agreed that judgment would not be entered on the bond; that when he objected that the entry of judgment would injure his business, he meant all his business transactions, but he did not mention his insurance to the company; that the trustees of the hook and ladder company were changed every six months, and he never knew that judgment had been entered upon the bond until February 24, 1884, when he made an affidavit relating to his insurance and loss in the presence of an agent of the defendant company by whom he was then first informed of it, and that soon afterward he turned in the funds of the hook and ladder company, ceased to be their treasurer and on March 19, 1884, the judgment was satisfied. In this testimony the plaintiff was corroborated by several witnesses.
At the close of the testimony, the defendant requested the court to instruct the jury:
1. That, under all the evidence in the case, the verdict should be for the defendant.
The plaintiff presented three points for instructions, one of which was:
2. That, the evidence showing that of the $4,000 incumbrance on the property insured at the time of the insurance, $1,000 was paid off before the fire, and that at the time of the fire there were only $3,500 of incumbrances on the property, being $500 less than there was at the time of insurance, this case does not come within the scope and purpose of the 7th clause in the conditions of insurance, and the policy is not vitiated by the entry of the $500 judgment.
The court, BECHTEL, J., after fully reviewing the testimony, charged the jury as follows:
We have concluded to submit to you the question whether or not under all the testimony before you this condition of this policy has been violated; whether there has been a misrepresentation, a concealment or a fraud practiced upon the company, or whether there has been any false swearing; with the instruction that if you find that the plaintiff has misrepresented, or concealed, or practiced fraud upon the company, or has sworn falsely in the particulars claimed by the defendant in this case, then he has violated this condition of the contract, and under the plain reading of the contract itself it prevents him from recovering any thing, and it would be your duty in case you so find, to find a verdict in favor of the defendant. It would be a complete answer to the entire policy.
If upon the other hand you come to the conclusion from the testimony before you that there were no misrepresentations made, that there has been no concealment, no fraud practiced, and no false swearing, then the provision of the policy has not been violated and he would not be prevented from recovering under that clause of the policy.
[It is also claimed by the defendant that under the 7th section of the policy he is prevented from recovering anything in this case and we will direct your attention now to that.
There is no controversy about the fact that the bond given to the hook and ladder company was entered before the loss occurred, before the fire, and after the time that the insurance had been obtained upon the property; nor that it was satisfied on March 19, 1884, as appears from the record. Now, if you should find that, at the time this bond was given, it was executed by the plaintiff with the express agreement between the plaintiff and the hook and ladder company to whom it was given that it should not be entered up, and that the bond was entered in violation of that agreement; that Schmidt, the plaintiff, had no knowledge of the fact that the bond had been entered until after the fire occurred, when the affidavit was brought to him by Young and Shoemaker, then we think the conditions of this policy or these conditions of the policy were not violated, because he was unable to inform the company of the existence of that of which he had no knowledge, and he was not in the position that he would have been in, if there was no such agreement made between him and the company. In other words, if you find that his failure or neglect to give notice in writing to the company of the entry of this incumbrance was due to the want of knowledge, and an entry of the incumbrance that was contrary to his contract with the hook and ladder company, then we do not think it would in itself prevent a recovery.
If upon the other hand, there was no contract between him and the company that it should not be entered up, but simply that the trustees should hold it, then he would be in the position of having the incumbrance entered up against him and in the position of being bound to know that it might at any time be entered against him, and he would be required to...
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