the Aetna Live Stock, Fire &Amp; Tornado Insurance Company v. Jay Olmstead

• Decision Date: 12 July 1870
• Citation: 21 Mich. 246
• Court: Michigan Supreme Court
• Parties: The AEtna Live Stock, Fire & Tornado Insurance Company v. Jay Olmstead

21 Mich. 246

The AEtna Live Stock, Fire & Tornado Insurance Company v. Jay Olmstead

Supreme Court of Michigan

July 12, 1870

Heard July 11, 1870 [Syllabus Material] [Syllabus Material]

Error to Wayne circuit.

This was an action upon a policy of insurance, brought in the circuit court for the county of Wayne, by Jay Olmstead against the AEtna Live Stock, Fire and Tornado Insurance Company. The plaintiff declared specially upon the policy, and averred the loss in the usual form. The defendant pleaded the general issue, and gave notice that it would prove that a warranty in the application, as to incumbrances, was false. The alleged warranty was contained in the answer to the ninth interrogatory of the application, and was in the following words:

"9. Incumbrance. If any, state the amount. Is there any insurance by the mortgagees? State the amount. 9. No."

The questions to be reviewed in this court arise upon the charge of the court, who, on the request of the plaintiff, instructed the jury:

1. If, at the time of taking the application, C. W. Olmstead, the agent of the company, knew of the existence of the mortgages, they do not render the policy void, whether they were mentioned in the application or not. The knowledge of the agent is the knowledge of the company.

And on the refusal of the defendant's request to instruct the jury:

1. That under the policy in this case, the answer to the ninth interrogatory in the application is a warranty by the assured, and it being conceded that at the time the application was made the property was incumbered, by way of mortgage, to the amount of about four thousand eight hundred dollars, the policy is absolutely void, and the fact that the agent, C. W. Olmstead, knew at the time he took the application, of the existence of both mortgages, does not, in law, constitute a waiver by the company of the warranty as to incumbrances, and the plaintiff cannot recover.

2. That where the agent who takes the application does not issue the policy, as in the case at bar, notice to the agent is not notice to the company, for the purpose of creating a waiver by the company of an express warranty.

The defendant excepted to the charge as given, and to the refusal to charge as requested; and a verdict having been rendered for the plaintiff, the judgment entered thereon comes into this court by writ of error.

Judgment affirmed.

S. Larned and F. A. Baker, for plaintiff in error:

I. The existence of incumbrances on property to be insured is a fact, material to the risk, if specifically inquired after in the application for insurance, and if the answer to the inquiry is false the policy is void, whether the application is a warranty by the assured or a mere representation: Patten v. Merchants & Farmers' Ins. Co., 38 N. H., 338; Richardson v. Me. Ins. Co., 46 Me. 394; Davenport v. New England Ins. Co., 6 Cush. 340; Packard v. Agawam Ins. Co., 2 Gray 334; Bowditch Ins. Co. v. Winslow, 3 Gray 415; 8 Gray 38; Friesmuth v. Agawam Ins. Co., 10 Cush. 587; Wilbur v. Bowditch Ins. Co., 10 Cush. 446; Hayward v. New England Ins. Co., 10 Cush. 280; Hutchins v. Cleveland Ins. Co., 11 Ohio St., 447; Brown v. People's Ins. Co., 11 Cush. 444; Murphy v. People's Eq. Ins. Co., 7 Allen 239; Towne v. Fitchburg Ins. Co., 7 Allen 51; Jacobs v. Eagle Ins. Co., 7 Allen 132; Gohagen v. Union Ins. Co., 43 N. H., 176.

But where an application is made a part of the policy, the statements made in it, in answer to specific interrogatories, are warranties by the assured, even though the application is not declared in express terms in the policy, to be a warranty: Pennsylvania Ins. Co. v. Gottsman, 43 Penn. St., 151; Battles v. York Ins. Co., 41 Me. 208; Smith v. Empire Ins. Co., 25 Barb. 497, and cases cited.

II. A warranty, in a policy of insurance, is either affirmative or promissory, and is in the nature of a condition precedent; and whether a warranty be material to the risk or not, the insured stakes his claim to indemnity upon its precise truth, if it be affirmative, or upon the exact performance of it, if executory: 1 Bouvier's Institutes, 492.

In the present case the counsel for the plaintiff seeks to avoid the effect of the false warranty as to incumbrances, by showing that the agent who took the application knew of the existence of the undisclosed mortgages, and conversed with the plaintiff about them, at the time the application was signed; and whether such knowledge by the agent can change and contradict the written agreement of the parties is really the only question to be determined. Where the parties have reduced a contract to writing, it has always been considered a wise and salutary rule, that all prior and contemporaneous verbal arrangements are conclusively presumed to have been merged in the writing, and that all oral testimony of a previous colloquium between the parties is incompetent. In the following cases, analogous to the case at bar, this rule was applied, and the policies held to be invalid, although the insured truly informed the agent, who filled up the application, of a fact untruly stated in it: Jennings v. Insurance Co., 2 Denio 75; Manufacturing Co., v. Insurance Co., 21 Conn. 19; Kennedy v. Insurance Co., 10 Barb. 285; Tebbets v. Insurance Co., 3 Allen 569; Riply v. Insurance Co., 30 N. Y., 136; Lee v. Insurance Co., 3 Gray 583; Wilson v. Insurance Co., 4 R. I., 141.

These cases are not in conflict with the decision of this court in Peoria Ins. Co. v. Hall, 12 Mich. 202, because the warranty in that case was implied from the fact, that the assured accepted a policy containing the particular condition in question, but did not make any express warranty over his own signature, as in the cases cited above, and in the case at bar.

Moore & Griffin, for defendant in error:

We consider this case determined by the case of Peoria Marine & Fire Ins. Co., v. Hall, 12 Mich. 203. The answer to the 9th interrogatory is not a warranty. Neither the policy nor the application makes it so: AEtna Ins. Co. v. Grube, 6 Minn. 82; Garcelon v. Hampden Fire Ins. Co., 50 Me. 580; Patten v. Merchants & Farmers' Mutual Fire Ins. Co., 40 N. H., 375; Nicoll v. American Ins. Co., 3 Woodb. and M., 529; Hartford Protection Ins. Co. v. Harmer, 22 Ohio (N. S.), 433; Roth v. The City Ins. Co., 6 McLean 325.

If there is any doubt, the construction will be in favor of insured: Daniels v. Hudson River Fire Ins. Co., 12 Cush. 416; Wilson v. The Conway Fire Ins. Co., 4 R. I., 142.

But we insist that even though the answer to interrogatory 9th be treated as a warranty, it will make no difference: Ames v. The N. Y. Union Ins. Co., 14 N. Y., 253; Plumber v. Cattaraugus Mutual Ins. Co., 18 N. Y., 392; Rowley v. The Empire Ins. Co., 3 Keyes (N. Y.), 567.

OPINION

Cooley, J.

Olmstead recovered judgment in the court below upon a policy of insurance issued by the plaintiffs in error, and by which they insured him against loss by fire on his hotel and the furniture therein, and hotel barn, in the village of Lyons. A loss having occurred, the insurers refused to pay on the ground of a breach of warranty by the insured, which, by the terms of the policy, rendered that instrument void.

It appears that by the policy, it was expressly provided that "if an application, survey, plan or description of the property, herein insured, is referred to in this policy, such application, survey, plan or description shall be considered a part of this policy, and a warranty by the insured." The policy was based upon an application, which contained questions and answers, and the ninth question, with the answer thereto, was as follows:

"9. Incumbrance; if any, state the amount. Is there any insurance by the...