Russell v. Detroit Mut. Fire Ins. Co.

• Decision Date: 02 May 1890
• Court: Michigan Supreme Court
• Parties: RUSSELL v. DETROIT MUT. FIRE INS. CO.

45 N.W. 356

80 Mich. 407

RUSSELL v. DETROIT MUT. FIRE INS. CO.

Supreme Court of Michigan

May 2, 1890

Appeal from circuit court, Wayne county; GEORGE S. HOSMER, Judge.

Conely, Maybury & Lucking, for appellant.

Chas. S. McDonald and Elliott G. Stevenson for appellee.

MORSE J.

The plaintiff sued upon a policy issued by defendant, March 2, 1888, for one year. The insurance was $1,000 upon a two-story frame building occupied for general store purposes, and described in the policy as "situate on the south side of Main street, in the village of Sumpter Wayne county, Michigan; $200 on the store furniture, and $200 on the general stock of merchandise." August 5, 1888, the building burned, and was a total loss. The defenses insisted upon in this court are that the property was not located in a village or city, and that there was a mortgage upon the premises at the time of the taking of the insurance, while the application stated there were no incumbrances. It appears without contradiction that the application-the answers to the questions therein-was filled out by one Hiram Tafft, who solicited the insurance on behalf of the defendant, being employed as such solicitor by the insurance company. He had no authority to issue policies. He testifies that he filled out the application, relying upon his own knowledge and information, and the plaintiff signed it. He asked the plaintiff no question as to incumbrances. He answered the question in relation thereto, "No," because the expiring policy (which plaintiff held in another company) did not say anything about paying the loss to a mortgagee. He did not think it necessary to inquire about mortgages except where loss was to be made payable to mortgagee. Plaintiff testified that when Tafft insured him, two years before, in the Continental Insurance Company, he asked plaintiff whether there was a mortgage on the property, and plaintiff told him there was one for $600 on the acre of ground where the store was, and that it also covered two acres on the opposite side of the street, including a saw-mill. Tafft asked him no questions about it when the application was made for insurance in defendant company.

The defendant is a corporation organized under an act to provide for the incorporation of mutual fire insurance companies, and defining their powers and duties, approved April 15, 1873, as amended by subsequent acts. See Laws 1873, pp. 107, 108; How. St. c. 132, �� 4247-4267. It is only authorized to insure buildings "that constitute detached risks in villages and cities." Id. � 4247. Much testimony was given upon both sides as to the character of the place-a four corners-where this store was situated. The court instructed the jury that it was a village, in the sense of the statute, being guided by the definition of "village" as given by Webster, to-wit: "An assemblage of houses in the country less than a town or city, and inhabited chiefly by farmers and other laboring people." It is the contention of defendant's counsel that the statute confines the risks to incorporated villages, or at least to those that are platted. We are not inclined to so limit it; but we think, from the facts of this case, that the question becomes unimportant. The application described the property as situate in the town of Sumpter, south side of Main street. When the policy was issued, the word "village" was substituted at the home office of the company for the word "town." In no sense can the plaintiff be said to be responsible for this. He made no representation by word of mouth, nor by the signing of the application, that his property was situated in a village. He is not at fault if it is not a village. The defendant called this hamlet or collection of stores and houses at this four corners a "village," and under the circumstances it is now estopped from denying that it is a village because it is neither platted nor incorporated as such. The testimony shows this place to be a village in the common acceptation of the term. The company accepted this common understanding for the purposes of insurance under its charter, and it cannot now be permitted to insist upon a higher standard. If the property insured had stood alone in the country the case might have been different; but when, as the counsel for defendant admits, the question as to whether it was village property was so close that it ought to have been submitted to the jury upon the testimony, it is no more than justice that the defendant take its own definition, rather than that it be left to others to be determined largely upon opinions.

As to the second defense, it is claimed by the plaintiff that he did not read the application signed by him; that Tafft knew there was a mortgage on the premises; that Tafft was the agent of the company, and his knowledge was the knowledge of the defendant; and that therefore, in taking the application and issuing the policy as it did, the defendant cannot complain of the statement in the application that there was no incumbrance upon the property. But defendant's counsel, while conceding that this claim might be good if the defendant was a stock insurance company, insists that in a mutual company each person insured, being a member thereof, is bound to know the rules and regulations, and that they are binding upon him; and that in making the application Tafft was the agent of plaintiff, as well as of the company, and that he cannot excuse the misrepresentations made in the application by saying that Tafft was the agent of the defendant. The answer of plaintiff's counsel to this contention is that, under the law, plaintiff did not become a member of the defendant corporation until he received his policy, and that during the negotiations for the insurance a mutual company occupies no better or other position than one organized on the stock plan, and cannot profit by a contract induced by the fraud of its agent; that Tafft was therefore the agent of defendant, and not of plaintiff, when he wrote and forwarded the application.

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