Waller v. Northern Assur. Co.

• Decision Date: 01 April 1881
• Citation: 10 F. 232
• Parties: WALLER v. NORTHERN ASSURANCE CO.
• Court: United States Circuit Court, District of Iowa

10 F. 232

WALLER v. NORTHERN ASSURANCE CO.

United States Circuit Court, D. Iowa.

April, 1881

Shiras Van Duzee & Henderson, for plaintiff.

Finke &amp Lyon, for defendant.

This is an action at law upon a policy of fire insurance to recover damages for the destruction by fire of a certain building. The policy sued on declares that John R. Waller has paid the premium for insuring against loss or damage by fire the property hereinafter described, in the several sums following, to-wit: On his five-story, shingle-roof frame building, etc. Said policy further provides as follows:

'If the interest of the assured in the property be any other than the entire, unconditional, and sole ownership of the property for the use and benefit of the assured, or if the building stands on leased ground, it must be so represented to these companies, and so expressed in the written part of this policy; otherwise the policy will be void.'

It appeared on trial, and the fact was found by the jury, that the interest of the assured was that of a mortgagee only though he held by a deed unconditional on its face and was in possession. When the assured applied for the insurance no inquiries were made by the company's agent, and no representations were made as to the nature and extent of the plaintiff's interest in the property, and there was no statement in the policy concerning the same. The property was found by the jury to be of the value of $8,000 or $9,000, and it is conceded that the interest of the assured therein was much less, being only about $5,000. Plaintiff moves to set aside the general verdict in favor of defendant upon the ground that it is inconsistent with the general findings, which are in substance stated above.

McCRARY C.J.

The policy provides that 'if the interest of the assured in the property be any other than entire, unconditional, and sole ownership of the property for the use and benefit of the assured, * * * it must be so represented to the insurer, and so expressed in the written part of the policy, otherwise the policy will be void. ' The interest of the assured in the property insured in the present case was not an entire, unconditional, and sole ownership, but on the contrary he held only a lien in the nature of a mortgage given to secure a loan of some $5,000. This fact was not represented by the assured to the defendant, and is not stated in the policy.

There is no proof tending to show that the defendant was aware of the fact. On the contrary, it clearly appears that the plaintiff's mortgage, so far as the record disclosed the facts, is a secret lien, being a conveyance absolute on its face; and since it was accompanied by actual possession in the mortgagee, there was nothing to rebut the presumption that he was the absolute and sole owner. These circumstances made it the duty of plaintiff to disclose the nature of his interest, even if it were conceded that a mortgagee out of possession, and whose interest is disclosed by the record, might be excused from so doing. There are strong reasons for upholding and enforcing the provision of the policy under consideration. It is certainly a very reasonable and proper provision in a contract of insurance of this character, which requires the party seeking insurance upon property to state any facts which it is material for the insurer to know. That the nature and extent of the assured in the property is material, must appear upon the least reflection.

In Ins. Co. v. Lawrence, 2 Pet. 25, Marshall, C.J., in delivering the opinion of the supreme court of the United States, speaking of this very question, said:

'It may not be necessary that the person requiring insurance should state every encumbrance upon his property which it might require of him to state if it was offered for sale, but fair dealing requires that he should state everything which might influence, and probably would influence, the mind of the underwriter in forming or declining the contract.

'A building held under a lease for years, about to expire, might be generally spoken of as the building of the tenant; but no underwriter would be willing to insure it as if it was his, and an offer for insurance stating it to belong to him would be a gross imposition.

'Generally speaking,

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