Redman v. Hartford Fire Ins. Co.

• Decision Date: 24 May 1879
• Citation: Redman v. Hartford Fire Ins. Co., 47 Wis. 89, 1 N.W. 393 (Wis. 1879)
• Parties: REDMAN and others v. THE HARTFORD FIRE INSURANCE COMPANY
• Court: Wisconsin Supreme Court

1 N.W. 393

47 Wis. 89

REDMAN and others v. THE HARTFORD FIRE INSURANCE COMPANY

Supreme Court of Wisconsin

May 24, 1879

APPEAL from the Circuit Court for Monroe County.

Action on a policy of insurance issued by the defendant on certain machinery of the plaintiffs in their flouring mill in the city of Prescott. A written and printed application for the insurance, signed by the plaintiffs, preceded the policy. This application is in the usual form, of questions by the insurer, relating to numerous matters supposed to affect the risk, and the answers of the plaintiffs thereto. It closes with the following stipulation: "And the said applicant hereby covenants and agrees to and with said company, that the foregoing is a just, full and true exposition of all the facts and circumstances in regard to the condition situation, value and risk of the property to be insured, so far as the same are known to the applicant and are material to the risk, and the same is hereby made a condition of the insurance, and a warranty on the part of the assured." The policy provides that the application "shall be considered a part of this policy, and a warranty by the insured."

The case is more fully stated in the opinion.

The court below rendered a judgment of nonsuit against the plaintiffs; from which they appealed.

Judgment reversed, and cause remanded for new trial.

For the appellants, there was a brief by J. S. White, their attorney with Vilas & Bryant, of counsel, and oral argument by Wm. F Vilas. They contended, among other things, that if there was a "promissory warranty" by the assured, a breach of which is relied upon to avoid the policy, the burden was upon the defendant to prove such breach (Troy F. Ins. Co. v. Carpenter, 4 Wis., 20; Cassacia v. Phoenix Ins. Co., 28 Cal., 628; Lounsbury v. Ins. Co., 8 Conn., 459; Mut. Ben. L. Ins. Co. v. Cannon, 48 Ind., 264; Comm. Ins. Co. v. Moninger, 18 id., 352; Forbes v. Ins. Co., 15 Gray, 249; Flynn v. Ins. Co., 17 La. Ann., 135); that the defense set up in the answer, in respect to the lubricator used, was, that plaintiffs had used "an inferior and far less safe oil," whose use may have caused the fire, and defendant should be confined to that defense (Wood on Ins., 830); that plaintiffs' evidence, giving it a favorable construction for them (Imhoff v. Railway Co., 22 Wis., 683-4), tended to prove that the oil which they used was in fact composed of lard and sperm oil, and therefore the nonsuit was error; that at least plaintiffs' evidence showed that they had exercised ordinary care and diligence to obtain an article composed of lard and sperm oil, and had used the "Fine Engine Oil" in good faith, believing that it was so composed, and this was all that could be required of them. Wood on Ins., 144, 327, 848; Bronson v. Wiman, 10 Barb., 426; Swinnerton v. Ins. Co., 37 N. Y., 189; Marshall v. Am. Exp. Co., 7 Wis., 20. As to the construction of the contract, they argued that the understanding and intention of the insured are to be considered equally with those of the insurer; that the writing should in fact be construed unfavorably to the insurer, by whom it is prepared, rather than to the party who receives it (Wood on Fire Ins., § 171); that plaintiffs, as sensible men, can hardly be supposed, without clear evidence of the fact, to have agreed that, during the term of the policy, they would use nothing but lard and sperm oil, and that if they used anything else, though safer and better for their property and for the insurer's risk, they should forfeit all indemnity in case of loss, although the loss was entirely disconnected with such use; that there was nothing in the contract to produce that effect, unless it were the declaration in the policy that the application should be considered as a warranty; that when the policy refers to the application, made several weeks before the policy was issued, and declares it to be a warranty, it must be understood as referring to the whole of it together, and requiring it to be considered no more a warranty, or limitation of the contract, than the application alone makes it to be (Lindsey v. Ins. Co., 3 R. I., 157, 160; Miller v. Life Ins. Co., 31 Iowa, 217); that there is not a word in the application which indicates an agreement on the part of the insured that they would continue during the term of the insurance the use of the oil which they were then using; that the form of the question as to lubricating oil, "What material is used," etc., indicates that no specific kind of oil was in the insurer's mind as necessary to the acceptance of the risk; that the form of the question would naturally have been, "Will lard and sperm oil be used?" if it had been intended to limit plaintiffs to the use of that specific article during the life of the policy; that insurers, who prepare their own contracts, should not be allowed to accomplish unjust and unreasonable forfeitures, unless they are provided for by the clear and definite language of the contract itself, so that the insured can appreciate the risk he incurs (Ins. Co. v. Slaughter, 12 Wall., 404; Wilson v. Ins. Co., 4 R. I., 156; Anderson v. Fitzgerald, 24 Eng. L. & E., 13, per Lord ST. LEONARDS); that the very language in the caption of the application, which declares that "the applicant will answer the following questions, and sign the same as a description of the premises, on which the insurance will be predicated," and the form of the questions themselves, all of which are in either the present or the past tense, as well as their number and minuteness, and the character of many of the inquiries, show that a representation of existing facts was intended; that the statement that "the foregoing is a just, full and true exposition of all the facts and circumstances so far as known to the applicant and material to the risk," also shows clearly that plaintiffs agreed only that the application was an exposition of certain facts and circumstances, and was a condition of insurance or a warranty only so far as those facts were known to them and material to the risk (Aurora F. Ins. Co. v. Eddy, 55 Ill. , 213; Schmidt v. Ins. Co., 41 id., 295; U. S. F. & M. Ins. Co. v. Kimberly, 34 Md., 224; O'Niel v. Ins. Co., 3 N. Y., 122; Smith v. M. & T. F. Ins. Co., 32 id., 399; Sayles v. Ins. Co., 2 Curtiss C. C., 610); that there is certainly nothing in such an application which implies an agreement by the insured that the contract should be forfeited by the subsequent use of an oil not wholly of lard and sperm, but fully as safe (Garcelon v. Ins. Co., 50 Me., 580; Lindsey v. Ins. Co. and Miller v. Ins. Co., supra; Parker v. Ins. Co., 10 Gray, 302); that the doctrine of "promissory warranty" has not been settled in this state, and is in such a condition of confusion and uncertainty elsewhere as to leave this court free to adopt a just and honest rule; that, as parties have the right to make their own contracts, the insurer and the insured should be permitted to agree in plain and distinct terms that the latter shall perform, during the life of the policy or within some shorter period, certain covenants or agreements, and that unless he shall literally and strictly fulfill them, the insurance shall be forfeited; that such a consequence, however, should not be inflicted for breach of an agreement to perform certain acts or maintain certain conditions, except when it is plainly stipulated and bargained for; that, in the absence of such plain and distinct stipulation for a forfeiture, the consequences of a deviation from the agreement should be adjudged with justice according to the nature of the undertaking; that the doctrine, sometimes adopted in insurance cases, that there must be a strict and literal performance of every continuing agreement by one of the two contracting parties, at the peril of absolute loss of all claim to performance by the other, thus adjudging for the most trivial and harmless deviation from the literal promise, the utmost forfeiture that could be adjudged for the grossest and most fraudulent violation of the contract, is in defiance of the principles which govern all other contracts; and that in all cases, unless the terms of the contract explicitly demand a literal performance, a substantial performance should be held sufficient. Percival v. Ins. Co., 33 Me., 242; Crocker v. Ins. Co., 8 Cush., 79; Underhill v. Ins. Co., 6 id., 440; Hovey v. Ins. Co., 2 Duer, 554; N. Y. Belt. & Pack. Co. v. Ins. Co., 10 Bosw., 428; Sayles v. Ins. Co., 2 Curt. C. C. , 610; Peoria M. & F. I. Co. v. Lewis, 18 Ill., 553; Ins. Co. of N. A. v. McDowell, 50 id., 120; Hide v. Bruce, 3 Doug., 213; Arcangelo v. Thompson, 2 Campb., 620; Garcelon v. Ins. Co., Lindsey v. Ins. Co. and Parker v. Ins. Co., supra. See also First Nat'l Bank v. Hartford Ins. Co., 6 Cent. L. J., 316; Morse v. Ins. Co., 30 Wis., 540; Hoffman v. Ins. Co., 32 N. Y., 414-15; Wood on Ins., 329.

J. W Lusk, for the respondent:

1. The complaint charges, and the answer denies, that plaintiffs duly performed all the conditions of the policy on their part. This was sufficient to admit evidence of any breach whatever. Besides, the evidence as to breaches was admitted without objection; and it is too late now to object that there was a variance. Bowman v. Van Kuren, 29 Wis 215; Matthews v. Baraboo, 39 id., 677. 2. Plaintiffs' evidence showed clearly that the oiling was not done by the miller or engineer. As to the lubricating material, while it is true that each proprietor, to the question put by his counsel, "What kind of oil did you use in your mill?" answered, "Lard and sperm oil," yet all their other answers and their own written admissions showed conclusively that this was not true. Taking their own evidence as a whole, therefore, and putting upon it the most...