Smith v. National Fire Insurance Co. of Hartford

• Decision Date: 16 February 1926
• Docket Number: 36717
• Citation: 207 N.W. 334,201 Iowa 363
• Parties: JOHN SMITH et al., Appellees, v. NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, CONNECTICUT, Appellant
• Court: Iowa Supreme Court

207 N.W. 334

201 Iowa 363

JOHN SMITH et al., Appellees, v. NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, CONNECTICUT, Appellant

No. 36717

Supreme Court of Iowa, Des Moines

February 16, 1926

Appeal from Montgomery District Court.--EARL PETERS and E. B WOODRUFF, Judges.

SUIT to reform and recover upon a fire insurance policy. Judgment for plaintiff. Defendant appeals.

Affirmed.

Stout Rose, Wells & Martin, for appellant.

Ira C Paschal, for appellee.

MORLING, J. DE GRAFF, C. J., and EVANS and ALBERT, JJ., concur.

OPINION

MORLING, J.

The insured, John Smith, was originally plaintiff, and will be so referred to, though the plaintiff bank, as assignee, has been substituted. The contest arises over the existence of a later policy, which defendant claims resulted in the avoidance of its policy. The plaintiff claims that, as a part of the arrangement between him and the defendant's agent, Fortune, which resulted in the issuance of the policy, the plaintiff was to have permission to take out the additional insurance.

It is apparently conceded that the policy was on a standard form, which, before it was filled out, contained the clause set out in the petition, namely:

"It is hereby agreed that the insured may obtain $ other additional insurance in companies authorized to do business in the state of Iowa."

As filled out, however, the word "no" was substituted for the word "other," so that the policy as delivered reads:

"It is hereby agreed that the insured may obtain $ no additional insurance in companies authorized to do business in the state of Iowa."

The policy also provided that, if the assured should thereafter procure other insurance, it should be void.

The plaintiff asks for reformation so that the policy shall read that he may obtain other insurance. The trial court granted reformation, and the first question is whether the evidence authorized that relief.

Plaintiff bought the property in 1919 of Mrs. Thompson, through Fortune. Fortune had written a former policy for Mrs. Thompson on the property. Plaintiff testifies that, about December 1, 1919, Fortune told him that the insurance would expire on December 3, 1919, and that:

"I told him I had a contract to receive a deed in March, and it was up to Mrs. Thompson to provide for the insurance; and he said he had been talking with her, and he wanted to fix up a policy that we would take over March 1st; and I informed him I was in the insurance business, and I really preferred to write our own business. He said it would be an accommodation to him; he had considerable business for this company, and was adjusting some of their losses at the time. He did not like to lose the business, and he would consider it a personal favor if I would let him write that insurance; and I informed him there was not enough insurance anyway. He said, if I would give him permission to write this insurance, he would give me permission to go ahead and put on whatever insurance I wanted when I got the title," which was to be March 1st.

Plaintiff says that he told Fortune at this same time that he desired to take out $ 5,000 additional, and would take it in the Phoenix of Hartford. Another witness gives practically the same testimony.

Fortune said:

"I don't remember that Smith said anything to me, at the time I solicited him for this insurance, about his intention to take other insurance on this dwelling house. I don't think he did. I don't remember any conversation with him on that subject of taking other insurance" at that time.

Fortune says that this was first mentioned about March 1st, when the policy was delivered to plaintiff. Up to that time, Fortune held the policy in his office, "as a representative of Mrs. Thompson." He repeats:

"I have no recollection of Smith's intention to take other insurance being mentioned by him to me until about March, 1920, when I handed over this policy to John Smith himself."

The plaintiff did not sign any application for the policy with defendant, but Fortune filled out and forwarded an application, which stated that there was no other fire insurance on the property. The policy was not written in Fortune's office, but was written evidently by the general agents. Plaintiff says that, when he received possession, in March, 1920, he said something to Fortune about his intention at some time to take out other insurance. After the loss occurred, plaintiff wrote to the agents that:

"Along about March 1, 1920, I told Mr. Fortune, your agent, that I expected to take out additional insurance."

The policy sued on is for $ 7,000. The additional policy is for $ 5,000. It was stipulated that:

"The total amount of said loss and value of said building so destroyed was the sum of $ 8,884, and defendant's pro rata would be $ 5,182.33."

Mrs. Thompson's old policy was for $ 3,000. The general agents, in sending the new policy to Fortune, inquired whether he was satisfied that the dwelling would "carry the amount of insurance asked for." Fortune replied that the house was modern, with oak finish in first story; that similar houses built that year were costing from $ 10,000 to $ 12,000; and that he was satisfied that it was not over-insured. He also wrote the general agents that they had no other insurance on it. It is urged that the evidence shows no more than a declaration of purpose to take additional insurance in the future; that this information was given to Fortune March 1st, while the policy was issued, and was in force, from December 3d preceding.

I. We agree with the finding of the trial court that the policy was issued and accepted on the understanding that the plaintiff should have the privilege of obtaining additional insurance.

II. Mrs. Thompson was the owner of the legal title. Plaintiff was the equitable owner. Fortune solicited plaintiff to take out a policy that would protect both. Plaintiff agreed to the taking out of such a policy, that should contain permission for additional insurance. Fortune knew that such was the policy that plaintiff agreed to take. Defendant issued the policy on such...