Robinson v. Union Automobile Insurance Company
| Decision Date | 10 April 1924 |
| Docket Number | 22682 |
| Citation | 198 N.W. 166,112 Neb. 32 |
| Parties | JASPER W. ROBINSON, APPELLEE, v. UNION AUTOMOBILE INSURANCE COMPANY, APPELLANT |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Custer county: BRUNO O HOSTETLER, JUDGE. Affirmed.
AFFIRMED.
Doyle & Halligan, J. S. Garnett and George N. Foster, for appellant.
Sullivan Squires & Johnson, contra.
Heard before Morrissey, C. J., ROSE, DAY and GOOD, JJ., and REDICK District Judge.
This is an action to reform an automobile insurance policy, so as to make it cover loss caused by collision, and to recover under the policy as reformed. Defendant admits the issuance of the policy, but denies that it covers, or was intended to cover, loss by collision. The trial resulted in a judgment for plaintiff, reforming the policy and awarding him judgment for the amount of his loss. Defendant appeals.
Was plaintiff entitled to a reformation of the policy? The correct answer to this question determines this appeal. There is little, if any, conflict in the evidence that is material to the issues raised.
The defendant is, as its name implies, an insurance company which insures the owners of automobiles against loss by fire, theft, lightning, tornado, liability, property damage, collision, etc. Its home office is in the city of Lincoln, Nebraska. One Brown was its local soliciting agent at Broken Bow, where plaintiff resided. Brown was furnished literature and rate cards and authorized to solicit insurance, take applications and forward to the company, where, if approved, a policy was issued and sent to the agent and by him delivered to the insured. The agent also collected the premium. Brown called upon the plaintiff and solicited him to take out a policy covering his automobile in defendant company. The character of policies and coverage, together with rates therefor, were discussed between plaintiff and Brown. Plaintiff indicated that he desired a full or total coverage policy that would protect him against loss by fire, theft, tornado, liability and collision. Brown consulted his rate card and informed plaintiff that such a policy would cost, for a three-year term, $ 100. The plaintiff assented and drew his check for $ 100, payable to Brown, and Brown then filled out an application which plaintiff signed. This application was forwarded to the company, and within a few days a policy was sent to the agent and by him delivered to plaintiff. It is conceded that the policy, as issued, does not cover loss occasioned by collision. Plaintiff did not read nor examine the policy until after the loss occurred. He then made claim to the company for the loss, and the company declined to pay because the policy did not cover collision insurance. Plaintiff was not aware of this until so informed by the company, and was not convinced that the policy, as written, did not cover loss by collision until he had submitted it to his attorneys. Thereupon, this action was brought to reform the policy as above stated.
The written application was introduced in evidence. The following is the form of the application:
Then follows a schedule of declarations which is not material to the present consideration. It will be observed that the application does not, in terms, mention collision insurance. The president of the insurance company testified that it was the custom, when collision insurance was to be included, for the agent to write a letter, informing the company of such fact, or to make a notation upon the application that collision insurance was desired. The form of policy issued does not, as stated, cover collision insurance, and the president of the company testified that, when collision insurance was to be included, a rider was placed upon the policy especially covering loss from this cause. The president produced a rate card, which he testified was in force at the time, and which showed the rate on plaintiff's automobile, for three years, for general coverage, except collision insurance, to be $ 125, and that the additional rate, for the same time, for collision insurance was $ 65. He testified that this rate card was furnished to all of the agents for their guidance. However, it will be observed that the policy was issued for a premium of $ 100, which does not conform to the rate, as disclosed by the rate card, when collision insurance is not included. Brown, the agent who solicited the insurance, was called as a witness and testified that he was furnished a rate card for 1919, which had been destroyed when the new rate card for 1920 was issued; that the 1920 rates were considerably higher than the 1919 rates. He produced the 1920 rate card, and that disclosed that the rate upon plaintiff's car, for a three-year period, for complete coverage, including collision insurance, was $ 112.50. The witness Brown further testified that the rate on the card, furnished him in 1919, for complete coverage, including collision insurance, was $ 100. There can be no question whatever that both plaintiff and the agent Brown understood that plaintiff was contracting for a policy which would insure against loss by collision.
Defendant advances several propositions of law, which, it argues, if properly applied, will defeat plaintiff's right to a reformation of the contract of insurance. Its first proposition is that, in the absence of fraud or mistake, all previous verbal understandings are merged in the written contract, and it is conclusively presumed to contain the entire engagements of the parties with all the conditions of their fulfilment.
We are in accord with the principle stated, but fail to see the application of it to the situation in hand. Under sections 7757, 7772, Comp. St. 1922, Brown, in taking the application, was the agent of the company. It could act only through an agent. The agent was furnished a rate card and authorized to solicit insurance. He had ostensible authority to state and quote to a prospective applicant the rate for any kind of policy he was authorized to solicit. He did quote to and agree with the plaintiff upon the rate. In so doing he was the company. He was also acting for the company in taking plaintiff's application. Both plaintiff and the agent Brown stated positively that the plaintiff desired, ordered and paid for a policy that would protect him from loss by collision. It was the intention of both parties to have the application include this feature. If the application was not specific enough to cover it, it is obvious that there was a mutual mistake of the parties.
It is next contended that, where a party accepts a contract of insurance and makes no effort to examine or read the policy until a loss occurs, he is bound by the terms of the policy as written. Several authorities are cited as sustaining this principle, and, as applied to the situations in the cited cases, the principle may be accepted as sound. The cases cited, however, in the main are actions on contracts as written and where one or the other of the parties seeks to avoid the legal effect of some clause in the contract of which he had no personal knowledge. They are not actions for reformation of the contract. In such an action where one party seeks the aid of a court of equity to require the...
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