Schumitsch v. Am. Ins. Co.

• Citation: 3 N.W. 595,48 Wis. 26
• Parties: PAUL SCHUMITSCH, APPELLANT, v. THE AMERICAN INSURANCE COMPANY, RESPONDENT.
• Decision Date: 31 August 1879
• Court: Wisconsin Supreme Court

48 Wis. 26

3 N.W. 595

PAUL SCHUMITSCH, APPELLANT,

v.THE AMERICAN INSURANCE COMPANY, RESPONDENT.

Supreme Court of Wisconsin.

Filed August Term, 1879.

Appeal from Winnebago circuit court.

Elbridge Smith, for appellant.

J. W. Lusk, for respondent.

COLE, J.

The court below was asked to direct a verdict for the defendant on several grounds, but upon what precise ground such direction was given does not appear in the case. It is not necessary to refer to these several grounds, as the second one alone is sufficient to sustain the direction of the court, even if there were no other obstacle in the way of a recovery upon the policy. The second ground upon which the direction was asked is, in substance, that the defendant was not liable for the loss because the undisputed testimony in the case showed that the real estate, when the insurance was effected, was encumbered for a much larger amount than stated in the application, or than was disclosed to the agent who solicited the risk. Among other questions asked in the printed application, which was signed by the plaintiff, was this: “Is your property encumbered? By what, and to what amount, and to whom?” Ans. “Mortgage of $1,200.” This was a representation of an existing fact in respect to the property insured material to the risk, and if false avoided the policy. Ryan v. The Springfield F. & M. Ins. Co. 46 Wis. 671. In the application the plaintiff in effect agreed that the statement made by him in respect to the property should be deemed and taken to be promissory warranties. The policy itself also provides that the application shall be deemed and be a part of the contract, and constitute a warranty on the part of the assured. Now, to our minds, the proof is very strong that the only encumbrance which was actually disclosed to the agent at the time the application was made was the $1,200 mortgage mentioned in the ninth answer. If this were so, then it is perfectly well settled, by the decisions of this and other courts, that the misrepresentation as to existing encumbrances avoided the policy; for it is admitted that there were at this time mortgages amounting to $2,963 which were liens upon the real estate.

But it is said by plaintiff's counsel that his client was an ignorant man, who could neither read nor write and did not understand what was written in the application by the agent of the defendant, but that he fully informed such agent in regard to these encumbrances, and that it was the agent's fault that they were not mentioned in the application. The evidence upon this point is quite conflicting, and did the case turn upon the question whether or not the plaintiff informed the agent of these existing mortgages on the property, the case should have gone to the jury to determine how the fact was. But this is not all there is in regard to the encumbrancesupon the real estate. There was the Kellogg $10,000 mortgage, upon which, according to the stipulation, $5,000 remained unpaid. Now, there is not least scintilla of evidence, nor pretence even, that the plaintiff disclosed to the agent the existence of this encumbrance. The plaintiff says he did not know until the day before he testified that there was such a mortgage, and of course he said nothing about it to the agent at the time the application for insurance was made. But the mortgage was of record; the plaintiff was chargeable with notice of its existence, as it was in his chain of title. This mortgage was executed by Scott, the plaintiff's grantor, and placed upon record nearly two years before the plaintiff obtained his deed from Scott. This mortgage was executed January 25, 1869.

It appeared from the evidence that the mortgage embraced other valuable real estate besides the plaintiff's farm; but that fact does not affect the question nor aid the plaintiff's case, for he was bound by his contract to make a full disclosure as to that mortgage and all other encumbrances then existing upon the property. “The fact misrepresented was a most material one, bearing directly upon the degree of hazard involved in making the insurance. The hazard may well be regarded as greater when the interest of the insured is lessened by encumbrances on his title.” Cooper v. The Farmers' Fire Ins. Co. 50 Penn. St. 297; Ryan v. Ins. Co. supra; Davenport v. New England M. Ins. Co. 6 Cush. 340;Haywood v. Same, 10 Cush. 444;Wilber v. Bowdich M. Ins. Co. 10 Cush. 446;Towne v. Fitchburg M. Ins. Co. 7 Allen, 51.

It...