Quigley v. St. Paul Title Insurance & Trust Co.

• Decision Date: 13 February 1895
• Docket Number: 9201,9176
• Citation: Quigley v. St. Paul Title Insurance & Trust Co., 60 Minn. 275, 62 N.W. 287 (Minn. 1895)
• Parties: LUCIEN G. QUIGLEY and Others, Executors, v. ST. PAUL TITLE INSURANCE & TRUST CO
• Court: Minnesota Supreme Court

62 N.W. 287

60 Minn. 275

LUCIEN G. QUIGLEY and Others, Executors, v. ST. PAUL TITLE INSURANCE & TRUST CO

Nos. 9201, 9176

Supreme Court of Minnesota

February 13, 1895

Action in the district court for Ramsey county by the executors of John O. Quigley, deceased, to recover $ 3,500, with interest. The nature of the action is stated in the opinion. The answer set out in full the application for, and the policy of insurance, and alleged that the statement contained in the question concerning the existence of mechanics' liens and the answer thereto in the application for insurance, was false, was known by the applicant to be false; that he made other false statements; and defendant would not have issued its policy but for such false statements. When plaintiffs rested at the trial, defendant's motion for a verdict in its favor was overruled. The jury impaneled was then discharged, and the case was tried before Brill, J., who found that at the time defendant received the application and issued the policy it had full knowledge of the facts (so far as they were known to the applicant) that a building was in course of construction upon the premises, and that certain persons who had performed labor and furnished materials for it had not been fully paid. From an order denying defendant's motion for a new trial, defendant appealed. Affirmed. From an order denying plaintiffs' motion for a new trial, plaintiffs appealed. Reversed.

Stevens O'Brien, Cole & Albrecht, for appellant the Title Insurance Company.

The motion of defendant for a verdict in its favor should have been granted. Proof of the truth of the representations contained in the application was a condition precedent to recovery. Stensgaard v. St. Paul Real Estate Title Ins Co., 50 Minn. 429, 52 N.W. 910; Price v. Phoenix Ins. Co., 17 Minn. 473 (497). The question and answer in the application was a continuing warranty, and, if the facts were materially different from the representations, then there was no contract between the parties. Campbell v. Aetna Ins. Co., 9 Allen, 540; Biddle, Insurance, § 543; Gilliat v. Pawtucket Ins. Co., 8 R. I. 282; Murdock v. Chenango Ins. Co., 2 N.Y. 210. The policy, having been obtained by misrepresentations as to the existence of liens, which this court has construed to be warranties, never had any legal effect. Falis v. Conway Ins. Co., 7 Allen, 46; Pennsylvania Ins. Co. v. Gottsman's Adm'rs, 48 Pa. 151; Brown v. Commonwealth Ins. Co., 41 Pa. 187; Carpenter v. American Ins. Co., 1 Story, 57, Fed. Cas. No. 2,428; Hutchins v. Cleveland Ins. Co., 11 Ohio St. 477. In law the rights of laborers and material men constituted liens, within the meaning of the policy. Wilbur v. Bowditch Ins. Co., 10 Cush. 446; Stout v. City Ins. Co., 12 Iowa 371.

Stiles W. Burr, for respondents Quigley.

In Price v. Phoenix Ins. Co., the statements were held to be representations, and not warranties; and their untruth, matter to be pleaded and proved by the insurer. The question whether warranties were conditions precedent was not in the case. The modern rule is that warranties are not conditions precedent, and that the burden of pleading and proof of falsity of warranties, as well as of representations, is on the insurer. Continental Ins. Co. v. Rogers, 119 Ill. 474, 10 N.E. 242; Piedmont Ins. Co. v. Ewing, 92 U.S. 377; Redman v. Aetna Ins. Co., 49 Wis. 431, 4 N.W. 591; Jones v. Brooklyn Ins. Co., 61 N.Y. 79; Van Valkenburg v. American Ins. Co., 70 N.Y. 605; Murray v. New York Ins. Co., 85 N.Y. 236; Swick v. Home Ins. Co., 2 Dill. 160, Fed. Cas. No. 13,692; Holabird v. Atlantic Mut. Life Ins. Co., 2 Dill. 166, note, Fed. Cas. No. 6,587; Northwestern Mut. Life Ins. Co. v. Hazelett, 105 Ind. 212, 4 N.E. 582; National Ben. Ass'n v. Grauman, 107 Ind. 288, 7 N.E. 233; Indiana Ins. Co. v. Rundell, 7 Ind.App. 426, 34 N.E. 588; Indiana Ins. Co. v. Byrkett, 9 Ind.App. 443, 36 N.E. 779; Phoenix Ins. Co. v. Stocks, 149 Ill. 319, 36 N.E. 408; Grangers' Ins. Co. v. Brown, 57 Miss. 308; Boisblanc v. Louisiana Ins. Co., 34 La. Ann. 1167; Campbell v. New England Ins. Co., 98 Mass. 381; Simmons v. Insurance Co., 8 W.Va. 474; Union Ins. Co. v. McGookey, 33 Ohio St. 555; Trenton Ins. Co. v. Johnson, 24 N. J. L. 576; Leete v. Gresham Ins. Society, 7 Eng. L. & Eq. 578; Wheelton v. Hardisty, 8 El. & B. 232, 298. There was no warranty. The policy referred to the application. By the terms of the application, it was agreed that the statements were true "to the best of the applicant's knowledge and belief." Such a warranty was to be controlled by the same rules as other representations. Aetna Ins. Co. v. Grube, 6 Minn. 32 (82); Redman v. Hartford Fire Ins. Co., 47 Wis. 89, 1 N.W. 393; Fitch v. American Ins. Co., 59 N.Y. 557; Mulville v. Adams, 19 F. 887; Clapp v. Massachusetts Ben. Ass'n, 146 Mass. 519, 16 N.E. 433; Elliott v. Hamilton Ins. Co., 13 Gray, 139; Garcelon v. Hampden Ins. Co., 50 Me. 580; May, Ins. § 161.

Stiles W. Burr, for appellants Quigley.

The insurance clause in the policy imposed the same obligation upon the insurer as the modern covenant of warranty on the covenantor. Rawle, Cov. Tit. (5th Ed.) § 116 et seq.; Devlin, Deeds, § 935 et seq. The clause agreeing to defend the insured in all actions either imposed on the defendant no other or greater liability than the insurance clause, or else it imposed a positive, affirmative obligation on the insurer, somewhat similar to that of an attorney who has accepted a retainer in a like action, with the added duty to pay all costs and expenses. If the latter, then its liability for losses sustained through its negligence would be the full amount of actual damages sustained. Weyerhauser v. Dun, 100 N.Y. 150, 2 N.E. 274.

OPINION

CANTY, J.

On July 1, 1889, one Amelia Kingsley was the owner of a certain city lot in St. Paul, and was then erecting a building thereon, which was not completed for several months thereafter. She procured a loan of $ 2,200 of plaintiffs' intestate, John O. Quigley, and mortgaged the lot to him to secure the repayment of the same. The mortgage is dated on that day, but was not recorded until October 22, 1889. The business of the defendant corporation is that of insuring titles, and on September 20, 1889, a written application was made to it by Quigley's agent to insure the title of this lot to the extent of the mortgage interest of Quigley therein. The application was accepted, and a policy of insurance dated October 22, 1889, issued to Quigley accordingly. Thereafter Quigley foreclosed the mortgage, and bid the lot in at the foreclosure sale. The time to redeem expired on February 26, 1892. No redemption was made, and Quigley became the owner of the lot. But between October 10, 1889, and April 10, 1890, work and labor of the value of $ 95 was performed for Mrs. Kingsley in painting the building as a part of the erection of the same. A mechanic's lien was filed therefor. Suit was brought to foreclose the same, in which Quigley was made a party, and a judgment of foreclosure was entered, adjudging the mechanic's lien paramount to the lien of the mortgage. The lot was sold to satisfy the judgment, and the time to redeem from that sale expired on August 18, 1892, and no redemption was made. This divested the title of Quigley which he had acquired under his foreclosure sale nearly six months before. The defendant was duly notified by Quigley of the commencement of the suit, and undertook and conducted the defense of the same in the name of Quigley under the provisions of the policy.

The complaint in this action alleges that Quigley was in his life-time a resident of New York, and that neither he nor these plaintiffs had any knowledge or notice of the entry of said judgment, nor of the sale under it, until after the time to redeem from that sale had expired. The action is brought to recover from defendant as damages the value of the lot, -- which is alleged to be $ 3,500, -- on the ground that it was the duty of defendant to indemnify and save harmless Quigley and these plaintiffs from this mechanic's lien, and that defendant was negligent in failing to satisfy the lien, and in failing to pay the sum necessary to redeem from the sale under the judgment before the time to redeem from that sale expired, and in failing to notify plaintiffs that it did not intend to redeem, and thereby give plaintiffs an opportunity to do so. The case was tried by the court below without a jury. Judgment was ordered for plaintiffs for $ 2,200 and interest, and each party made a motion for a new trial, and appeals from an order denying such motion.

1. We will first consider the appeal of the defendant. Said application contains the following provisions: "It is agreed that the following statements are correct and true to the best of the applicant's knowledge and belief, and that any false statements or any suppression of material information shall avoid the said policy. * * * Present value of buildings? $ 2,800, when completed. Are there any incumbrances on the property; any mortgages, judgments, mechanics' or other liens; * * * any pending or threatened litigations, any of which affect any part of the above property, known to to you or rumored? State fully. Nothing except mtges. of $ 500 and $ 500, which are to be satisfied. Are any of said incumbrances, if any, to remain; and which not? Only the $ 2,200 now insured." At the time the application for the insurance was made, no part of the labor or material for which said mechanic's lien was filed had been furnished, but other labor and material had been furnished in doing other portions of the work of constructing the building, and of the amount to be paid for the same there remained unpaid the sum of $ 1,700, all of which was afterwards paid out of the proceeds of said loan.

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