The Ins. Co. of North Am. v. Mcdowell & Brown. the Merchants' Ins. Co. of Chicago v. Mcdowell & Brown.Lumberman's Ins. Co. v. Mcdowell & Brown.

• Decision Date: 31 January 1869
• Citation: 50 Ill. 120,99 Am.Dec. 497,1869 WL 5185
• Court: Illinois Supreme Court
• Parties: THE INSURANCE COMPANY OF NORTH AMERICAv.MCDOWELL & BROWN.THE MERCHANTS' INS. CO. OF CHICAGOv.MCDOWELL & BROWN.LUMBERMAN'S INSURANCE COMPANYv.MCDOWELL & BROWN.

50 Ill. 120

1869 WL 5185 (Ill.)

99 Am.Dec. 497

THE INSURANCE COMPANY OF NORTH AMERICA

v.MCDOWELL & BROWN.THE MERCHANTS' INS. CO. OF CHICAGO

v.MCDOWELL & BROWN.LUMBERMAN'S INSURANCE COMPANY

v.MCDOWELL & BROWN.

Supreme Court of Illinois.

January Term, 1869.

OPINION TEXT STARTS HERE

APPEAL from the Circuit Court of McLean county; the Hon. JOHN M. SCOTT, Judge presiding.

The facts are fully presented in the opinion.

Messrs. HATCH & SLADE and Messrs. WELDON & MCNULTY, for the appellants.

Where, by the policy, the application and the survey, and conditions annexed, are made a part of the contract, so far as they relate to the property insured, they must be true, or the policy will be void. Howard Fire and Marine Ins. Co. v. Cornick et al., 24 Ill. 461; New England Fire and Marine Ins. Co. v. Wetmore et al., 32 Ill. 243, 244.

In Herron v. Peoria Marine and Fire Ins. Co., 28 Ill. 238, this Court says: “They (the representations in the application) are subject to attack by defendant, and if he shows their falsity, if material, the assured cannot recover.”

We contend that anything is “material” to a risk which, if known to the insurance company, would have induced it to ask a higher rate of premium, or to reject the risk altogether. Columbian Ins. Co. v. Lawrence, 10 Pet. (U. S.) 507; Columbian Ins. Co. v. Lawrence, 2 Pet. 25.

It has elsewhere been decided that an inquiry made by insurer shows that the company deems the matter inquired about material; an answer by the assured admits the materiality. Wilson v. Conway Ins. Co., 4 R. I. 141; and a false representation of a material fact avoids the policy, whether made by mistake or design, the effect on the company being the same, where the company, as in this case, gets all its information from the application. Carpenter v. American Ins. Co., 1 Story, (C. C. U. S.) 57.

The covenant at the end of the application includes incumbrances, as showing the insurable interest of the insured. If all incumbrances are not set forth, the policy is void. Richardson v. Maine Ins. Co., 46 Maine 394; Hutchins v. Cleveland Mutual Ins. Co., 11 Ohio St. 477; Bowditch Mutual Fire Ins. Co. v. Winslow, 3 Gray 415. See same case reported again in 8 Gray, 38. Patten v. Merchants and Farmers' Mutual Fire Ins. Co., 38 N. H. 338. See also Battles v. York County Mutual Ins. Co., 41 Maine, where a discrepancy of one hundred dollars between the existing mortgage and that set out in the application rendered the policy void. Lowell v. Middlesex Mutual Fire Ins. Co., 8 Cush. 127; Haywood v. New England Mutual Ins. Co., 10 Cush. 444; Brown v. Peoples' Mutual Ins. Co., 11 Cush. 280; Packard v. Agawam Mutual Fire Ins. Co., 2 Gray 334. An inadvertent omission to state all material facts, especially where the application is the only information the company has by which to judge the risk, avoids the policy. Beebe v. Hartford Mut. Ins. Co., 25 Conn. 51; Dennison v. Thomaston Mut. Ins. Co., 20 Maine, 125; N. Y. Bowery Ins. Co. v. N. Y. Fire Ins. Co., 17 Wend. N. Y. 359; Carpenter v. American Ins. Co., 1 Story C. C. U. S. 57.

One condition of the policy is, that if the assured “shall have or hereafter make any other insurance on the property herein insured, or any part thereof, without notice to and consent of this company in writing, this policy shall be null and void.”

Notice to and knowledge on the part of the agent is not a compliance with the condition requiring consent in writing. Worcester Bank v. Hartford Fire Ins. Co., 11 Cush. 265; Tate v. Citizens' Mut. Fire Ins. Co., 13 Gray, 79; Mellen v. Hamilton Fire Ins. Co., 5 Duer. N. Y. 101, affirmed in 17 N. Y. 609; Battain v. Merchants' Ins. Co. of N. O. 3 Rob. La. 384; Forbes v. Agawam Mut. Ins. Co., 9 Cush. 470; Conway Tool v. Hudson River Ins. Co, 12 Cush. 144; Burt v. Peoples' Mut. Ins. Co., 2 Gray, 397; Kimball v. Howard Fire Ins. Co., 8 Gray, 33; Deitz v. Mound City Mut. Fire & Life Ins. Co., 38 Mo. 85; Smith v. The Ins. Co.,24 Penn. St. 320.

Messrs. PACKARD & DICKINSON, for the appellees.

The point is made upon the application being a warranty. We do not controvert the doctrine that it may be a warranty, and that it is, in certain cases.

The warranty of the owner of the property, as to the truth of his representations, will not be extended beyond what it was evidently intended to embrace by the parties. Howard Fire and Marine Ins. Co. v. Cornick, 24 Ill. 455; Atlantic Ins. Co. v. Wright, 22 Ill. 462; Farmers' Ins. and Loan Co. v. Snyder, 16 Wend. 481; 4 Wend. 72. But it should appear on the face of the policy, and should not be regarded unless inserted in the policy. See Kentucky Ins. Co. v. Southard, 8 Ben Mon. 637, 639.

The answer in application refers only to lamps generally used, and will be confined to them, as was held in Howard Ins. Co. v. Bruner,23 Pa. State Rep. 50.

Smoking was at one time practiced in the mill, to some extent, but as soon as proprietors learned it was not allowed, it was prohibited, and notices put up to that effect. After that, no smoking was done on the premises. Schmidt v. Peoria Marine and Fire Ins. Co., 41 Ill. 295.

But the fire did not occur through, or by any of the means negatived by the answers, and covered by the inquiries in the application; and, therefore, taken in their strictest sense, appellees are not thereby prevented from recovering in this case. See N. E. Fire and Marine Ins. Co. v. Wetmore, 32 Ill. 221; Johnson v. Berkshire Ins. Co., 4 Allen 388; 10 Peters 506; 2 Parsons on Contracts, 449.

In all these transactions by the agents of insurance companies relative to other insurance, the act of the agent is the act of the principal, and fully binds him. The later authorities are full and ample upon this point. We cite as conclusive on this point, N. E. Fire and Marine Ins. Co. v. Schettler, 38 Ill. 169, 170, 171.

Especially is this so when the act to be done is the duty of the agent. Fulton Bank v. N. Y. and Sharon Canal Co., 4 Paige 127; Lightbody v. North American Ins. Co., 23 Wend. 18; New York Central Ins. Co. v. Nat. Prot. Ins. Co., 20 Barb. 468; Sexton v. Montgomery County Mutual Ins. Co., 9 Barb. 191. See, also, McEwen v. Montg. Mutual Ins. Co., 5 Hill, 101; Bank of United States v. Davis, 2 Hill 51; Sutton v. Dillaye, 3 Barb. 529; 8 How. 235; Liscom v. Boston Ins. Co., 9 Met. 205.

The proofs of loss were sufficient under the rule, and are only held to be made as full and complete as the circumstances of the case would permit. See Morton v. Renssellaer and Saratoga Ins. Co., 7 Cowen, 545; also, McLaughlin v. Washington County Mutual Ins. Co., 23 Wend. 525; see also what proofs were held sufficient in Gilbert v. N. A. Ins. Co., 23 Wend. 43; Bumstead v. Div. Mutual Ins. Co., 12 N. Y. (2 Kernan) 81. Nor does the fact that he afterwards, at the request of the company, attempted to make a fuller statement, invalidate the first. See last case cited, 12 New York 81. It is not necessary that the assured should furnish his proofs in such form as is required on the trial of a cause. See 11 Johns. 242; 3 Sandf. 26; Savage v. Com. Exchange Ins. Co., 4 Bosw. (New York) 1; 2 Parsons on Contracts 461.

But the proofs being made by the agent of the company, they are bound thereby and cannot now complain.

And if this were not so, their refusal to return them for correction, is an acceptance and waiver. See Turley v. N. A. Fire Ins. Co., 25 Wend. 374; O'Neil v. Buffalo Fire Ins. Co., 3 N. Y. (3 Comst.) 122.

It is further contended that suit was brought too soon--the policy providing sixty days after proof of loss made, etc. The proofs were made on the 28th day of May, and sent to the home office immediately, and suit was commenced August 20, leaving eighty-three days intervening. This twenty-three days would seem to be time enough to send these papers to the home office at Erie. Pa., or to Philadelphia, or to any other reasonable place in the United States, not excluding California. It was certainly a reasonable time, and the proofs having been taken by their agents, and intrusted to their care, that is all they are entitled to. Beals v. Home Ins. Co., 26 Barb. 614; 18 Ill. 562.

Mr. JUSTICE WALKER delivered the opinion of the Court:

These three cases present substantially the same questions, and will be considered together. There are minor points in one or two not common to the others, but we shall consider in this opinion all of the questions presented by the several records, which we deem material to their determination. Appellees, in the autumn of 1866, purchased of one Burt, a steam flouring mill, in Minonk, Illinois, for the sum of $4,500, and received a bond for a deed to the property. At the time of their purchase the property was insured for $2,500, in the La Salle County Mutual Insurance Company, which was not assigned, but was canceled. Appellees, on the 2d day of November, 1866, obtained a policy on the property for $2,000, from the Lumberman's Insurance Company; and on the sixteenth day of the same month, a similar policy for $1,500, in the Merchants' Insurance Company. At about this latter date appellees commenced the repair of the mill, and after the improvement was completed, they obtained a policy in the North American Company for $3,000, and another in the Sangamon Insurance Company for $2,500; in all, nine thousand five hundred dollars.

During this time appellees borrowed money of Mrs. McDowell and Joseph Brown, and gave mortgages on the mill to secure its payment, and had given a mortgage to Burt to secure a portion of the purchase money, and of which the insurance companies had notice through their agents. The mill was destroyed by fire on the 20th of May, 1867. The cause thereof is not shown in the record. After notice to the companies, their several general agents met at Minonk and investigated the loss and attending circumstances. After the investigation the agents proposed an arbitration, to which appellees refused to assent. They then promised to pay if appellees would prove that the mill was worth...