Sullivan v. Phoenix Ins. Co. of Brooklyn

• Decision Date: 09 October 1885
• Citation: 8 P. 112,34 Kan. 170
• Parties: DANIEL SULLIVAN v. THE PHENIX INSURANCE COMPANY OF BROOKLYN
• Court: Kansas Supreme Court

8 P. 112

34 Kan. 170

DANIEL SULLIVAN v. THE PHENIX INSURANCE COMPANY OF BROOKLYN

Supreme Court of Kansas

October 9, 1885

Error from Atchison District Court.

ACTION by Sullivan against The Phenix Insurance Company of Brooklyn to recover $ 600, with interest, upon a certain policy of insurance. Trial at the February Term, 1884. After the evidence on behalf of both parties had been submitted, the court directed the jury to find against the plaintiff verdict and judgment accordingly. Sullivan brings the case here. The opinion states the material facts.

Judgment reversed.

W. W Guthrie, for plaintiff in error.

Jackson & Royse, for defendant in error.

JOHNSTON J. All the Justices concurring.

OPINION

JOHNSTON, J.:

On December 23, 1881, the Phenix Insurance Company of Brooklyn issued a policy of insurance by which the plaintiff was insured against loss by fire for a term of three years on a dwelling house together with the furniture therein. The policy contained a stipulation that the written application of the assured should be considered a part of the policy, and a warranty upon his part that the property insured was in the condition he represented it to be, and that if there was any false representation made by the assured with regard to the condition of the property, or any omission to make known any and every fact material to the risk, it would operate to avoid the policy. Before the term of the policy had lapsed, and on March 22, 1883, the property insured was mostly destroyed by fire. The company refused, upon application, to pay the loss, and the plaintiff accordingly brought this action. The grounds for refusal, as alleged in the answer of the insurance company, were, that in the application for insurance, signed by the plaintiff, it was represented that the house was provided with brick chimneys starting from its foundation; that there were two stoves in the house, and the pipes therefrom entered brick flues; and that no stove-pipes passed through the roof or side of the house. These representations were untrue, as it appears that one stove-pipe, instead of entering a brick flue, as stated in the application, passed directly through the roof of the house, where it is alleged that the fire which destroyed the house originated.

In reply to these allegations the plaintiff admitted the signing of the application, but stated that the application was written out by Robert Forbriger, the agent of the company, to whom the plaintiff had given a correct and truthful account of the condition of the building, including the fact that there was one brick-and-stone chimney in the house, and one stovepipe, properly protected, which passed directly through the roof; and further, that he requested the agent of the company to view the premises before insuring them, which the agent declined to do; that the agent of the company then pronounced the statements made by the plaintiff to be entirely satisfactory, and informed him that the policy would be issued at once. After these statements were made the agent wrote up what he said was an application, in a manner unknown to the plaintiff, as he was unable to read it for himself; but believing that it contained, as the agent represented, the substance of the statements which he had made, he signed the same, and the policy was immediately delivered to him by the agent. He alleges that any and all conditions in the policy conflicting with such statements made to and accepted by said agent, were withheld from and not communicated to him; and further, that the fire originated at an entirely different part of the premises from where the stove-pipe passed through the roof.

The case was tried with a jury, and after the testimony on behalf of both parties had been submitted, the court directed the jury to find against the plaintiff. The plaintiff brings the case here for review, and raises two questions, which he states as follows:

"First: Had the plaintiff the right to plead the fraud and misrepresentations in obtaining his signature to the application set up as a warranty?

"Second: If the plaintiff had the right to plead the fraud and misrepresentations, had the court the right to take from the consideration of the jury the duty of weighing the evidence upon controverted facts in relation to the statements and misrepresentations?"

The first question we think must be answered affirmatively. It is true the representations written in the application, and purported to have been made by the plaintiff, in regard to the flues, were untrue. They are doubtless to be regarded as material to the risk, and would, as provided in the contract of insurance, avoid the policy, unless the action of the company and its agent relieves the plaintiff from such a consequence. It is not denied that the answers in the application admitted to be untrue were wholly written out by the agent of the insurance company, nor that the plaintiff is an illiterate man, who was unable to and did not read the application to which his name was attached. The agent Forbriger, who filled up the application, was invested with authority as the general agent of the insurance company at Atchison, to solicit and transact its business at that place. He had been provided with blank applications by the company, upon which were printed instructions directing the agent to fill them up in a certain manner. Now the claim and theory of the plaintiff is that no misrepresentations were made by him, and that the false answers were purposely written out by the agent of the company without any authority from or knowledge by the plaintiff, and this after he had truthfully answered every question propounded to him. If this theory is sustained by the testimony, the insurance company would be estopped from insisting on the defense of a breach of the warranty, and the plaintiff would be entitled to recover. Assuming the existence of the facts alleged by the plaintiff, it cannot be said that there has been a breach of the warranty as claimed by the insurance company, because no such warranty was actually made by the plaintiff. That which purported to be a warranty was the unauthorized and wrongful act of the defendant's agent, and had never been sanctioned or agreed to by the plaintiff. The action of the agent in such a case would be a wrong upon both parties, but if any party is to suffer by reason of the wrong-doing of the agent, it should be the company which clothed him with authority and for which he was acting, rather than the assured, who acted in good faith and innocently became a party to the contract. The view taken is sustained by the authorities, the current of which is to the effect that where an agent of an insurance company, acting within the general scope of the business intrusted to him, whose duty it is to fill up blank applications, deceives and misleads the assured by deliberately writing false answers in the application and procuring it to be signed by the assured, when the assured had given full and correct answers to the questions asked, the company receiving the premium, and for which the agent was acting, will, in case of a loss, be held responsible for the misrepresentations, and will be estopped from insisting on the breach of the warranty, and the untruth of the representations. (Union Ins. Co. v. McGookey, 33 Ohio St. 555; Planters Ins. Co. v. Myers, 55 Miss. 479; Bartholomew v. Merchants Ins. Co., 25 Iowa 507; Sprague v. Holland Purchase Ins. Co., 69 N.Y. 128; American Ins. Co. v. Luttrell, 89 Ill. 314; Pechner v. Phoenix Ins. Co., 65 N.Y. 195; Ins. Co. v. Wilkinson, 13 Wall. 222, 20 L.Ed. 617; Germania Fire Ins. Co. v. McKee, 94 Ill. 494; Andes Ins. Co. v. Fish, 71 id. 620; Atlantic Ins. Co. v. Wright, 22 id. 473; Malleable Iron Works v. Phoenix Ins. Co., 25 Conn. 465; Eilenberger v. Protective Mutual Fire Ins. Co., 89 Pa. 464; Protective Ins. Co. v. Harmer, 2 Ohio St. 452; Boetcher v. Hawkeye Ins. Co., 47 Iowa 253; Geib v. Ins. Co., 1 Dill. 443, 10 F. Cas. 157; Ins. Co. v. Mahone, 21 Wall. 152, 22 L.Ed. 593; Ayres v. Hartford Fire Ins. Co., 17 Iowa 176; Am. Cent. Ins. Co. v. McLanathan, 11 Kan. 533; Hine and Nichols's Digest of Insurance Decisions, pp. 39, 40, and authorities there cited.)

To avoid the estoppel, it is claimed by the insurance company that Forbriger was the agent of the insured in the procurement of the policy. The ground of this claim is an ambiguous provision, obscurely printed in the policy, which reads as follows:

"It...