294 S.W. 58 | Ark. | 1927
On November 22, 1924, appellee, E. L. Paul, was the owner of thirty-seven bales of cotton in transit via Missouri Pacific Railroad Company from Grady to Pine Bluff, Arkansas, shipper's order bill of lading for twenty-seven bales of such cotton having been issued and delivered to appellee, and the other ten bales moving separately from H. A. Bankston to H. A. Bankston, Pine Bluff, Arkansas, notify E. L. Paul, c/o Pine Bluff Compress Warehouse Company, Pine Bluff, Arkansas. On that date appellee went to the office of the Home Insurance Agency in Pine Bluff to procure insurance on this cotton, which he did through Mr. George W. Wells, president of the agency company, who caused to be issued a policy of insurance in appellant company in the sum of $5,000 for a premium of $22.40 for a term of six months from November 22, 1924, to May 22, 1925, against loss by fire on the following described *962 property, "while located and contained as described herein, and not elsewhere, to wit:
"$5,000 on cotton in bales, owned or held by the assured, in trust, or on commission, or on joint account with the Pine Bluff Compress Warehouse Company's Compress and Warehouse, and on platforms and tramways adjoining said compress, situated near the eastern city limits of Pine Bluff, Arkansas, and also while in or on cars on sidetracks and switches before actual delivery of cotton is made to the said compress, but not while in transit nor while bill of lading is in force. * * * It is further understood and agreed that, if this policy cover"s at more than one place or location (and within the meaning of this clause each warehouse, yard or platform is understood to be a separate location), then the whole amount of insurance named herein shall be distributed and apply in each location as the value of the property insured in each location bears to the total value of the property insured in all locations. * * *"
Prior to obtaining this insurance appellee had borrowed a sum of money from the National Bank of Arkansas, for which this cotton was security, and, by agreement of parties, a loss payable clause to the National Bank of Arkansas was attached to the policy and delivered to the National Bank of Arkansas by the agency, on the direction of appellee, Paul, who did not read and never saw the policy until after the loss hereinafter mentioned.
The Pine Bluff Compress Warehouse Company had for many years owned and operated a very large compress and warehouse near the eastern city limits of Pine Bluff, which it called No. 3, and the St. Louis Compress Company had owned a cotton warehouse on the west side of the city, which, in September, 1924, it sold to the Pine Bluff Compress Warehouse Company, and which was know as warehouse No. 1, but same had not been used by the latter company for the storage of cotton until the middle of November, and neither Mr. Paul nor Mr. Wells of the insurance agency knew, at the time this *963 policy was issued, that the Pine Bluff Compress Warehouse Company either owned or was using for storage of cotton warehouse No. 1 in the western part of the city. In press or warehouse No. 3 there were two rates for insurance on cotton stored therein, depending on the location of the cotton in the compartments. There were twelve storage compartments in this press, and, if the policy was to cover while located in compartments from one to twelve, the premium rate is 64 cents, but if the location of the cotton is limited to compartments five to twelve, the premium rate is 39 cents per hundred dollars. The premium rate in warehouse No. 1 is $2.31 per hundred dollars, and if the policy covers cotton in both warehouses, in the nature of a blanket coverage, the premium rate is $2.81 per hundred dollars. At the time the policy was written, neither party having in mind the possibility of the location of the cotton in the warehouse No. 1, they discussed the difference in rates in warehouse No. 3, and Mr. Paul chose the higher rate in order that there might be no contention regarding the location of the cotton in the event of loss.
The twenty-seven bales covered by the bill of lading before mentioned were brought into Pine Bluff promptly, but were not unloaded in warehouse No 3 on account of congestion, and, by direction of the warehouse company, they were delivered to and stored in warehouse No. 1. Thereafter, on December 11, warehouse No. 1 was destroyed by fire, in which these twenty-seven bales were burned. The other ten bales were delivered to compress No. 3 in the eastern end of the city. Appellee did not discover, for some time after the fire, that his cotton had been destroyed, but he did later discover this fact, and, on December 31, 1924, he was in the office of the Home Insurance Agency and advised Mr. Wells that, twenty-seven bales of his cotton were burned. Mr. Wells promised to notify the company of the loss, and stated that it would not be long before he would hear from them. On that day, December 31, after Mr. Paul had left the office, Mr. Wells wrote him a letter advising him *964 that, in his judgment, the company was not liable, for the reason that he had discovered, on examination, that the policy covered loss in press No. 3, and did not cover loss in press No. 1, and in this letter he made this statement:
"After you were in our office this A.M., and when we started to report loss to the company, we found that this policy was issued, upon your instructions, to cover in press No. 3, situated in the eastern part of Pine Bluff, at rate of 64 cents per annum. We mention rate, as there could be no doubt as to whether the policy should cover, for, at time you took out this policy, you had us give you tentative figures as to the cost of same. The rate in press No. 1, which burned, is $2.31 per $100."
After denying liability, he stated in the letter that they were reporting the loss to the company, advising it fully, and would let Mr. Paul hear from him again when he heard from the company. The agency thereafter, on the first of each month, rendered a bill to appellee, Paul, for the premium on this and other policies, and, on March 16, 1925, while in the office of the agency, he signed a check written out by Mr. Wells for $30.40, covering his bill for this and other premium, and on that day, after Mr. Paul had left the office, Mr. Wells wrote a letter to him, returning the check for $30.40, and again denying liability under the policy in question, in which he stated:
"We could have and would have been just as pleased to write you insurance there (meaning in press No. 1) as in press No. 3, in fact, we would have liked it better, as rate in that location is higher, and, as we work upon a commission basis, our commission would have been greater."
Appellant having denied liability, appellees, E. L. Paul and the National Bank of Arkansas, brought suit in the Jefferson Chancery Court for a reformation of the policy, by changing the description of the location of the property insured from what it was a issued to read "while contained in any compress or warehouse belonging to the Pine Bluff Compress Warehouse Company, in or adjacent to the city of Pine Bluff, Arkansas," and *965 for judgment for $3,000, the agreed value of the twenty-seven bales of cotton, interest, 12 per cent. damages, attorney's fees, and costs. The court, after hearing the evidence, decreed a reformation of the policy in accordance with the prayer of the complaint, gave judgment thereon for $3,000, and added the penalty and attorney's fees in the sum of $300, in which the court made a finding of fact to the effect that, quoting appellant's abstract, "there was a mutual mistake, that is, that there was a meeting of minds and an agreement actually entered into, but that the policy, in its typewritten form, does not express what was really intended by the parties." The court further found that the agent Wells and appellee, Paul, both understood the cotton was insured while in the custody of the warehouse company, and so intended it, and that, even if it could be said that that was not the intention of the agent, then his conduct was so inequitable as to justify reformation. "For either reason, this court finds the evidence clear, satisfactory and convincing that the intent of the parties was not correctly expressed in the typewritten portion of the policy, and the policy — that part of it where the mistake of the draftsman occurred in failing to give the correct location of the property — should be reformed." From the decree against it appellant has appealed to this court.
Appellant's first contention for a reversal is that the decree of reformation is not sustained by the evidence, for the reason, first, that, to entitle a party to reform an instrument in writing, it must be shown that the mistake was common to both parties, and that the instrument as delivered did not express the contract as understood by either, and that the evidence in this case is not sufficient to show this: and, second, that reformation of a written contract will be granted only where the proof is clear, unequivocal, decisive and beyond reasonable controversy; and that the evidence in this case does not measure up to this standard. As abstract propositions of law, both of the above declarations or statements of the law are correct. The substance of the first proposition *966
is taken from Varner v. Turner,
The second syllabus of the next case sustains the second proposition of law above stated as follows: "While equity will reform a written instrument on account of a mutual mistake if it does not reflect the intention of either party, yet the proof of such mistake must be clear, unequivocal and decisive."
Any number of decisions of this court might be cited, and a great number of them are cited and quoted from in appellant's brief, running from McGuigan v. Gaines,
While Mr. Wells testified very positively that he wrote the policy in accordance with the instructions of Mr. Paul, he says that, when Mr. Paul came into his office and asked him what it would cost to insure the thirty-seven bales, he asked him where the cotton would be, and that Mr. Paul said in the Pine Bluff Compress Warehouse Company, showing conclusively, to our minds, that it was the intention of both parties that the cotton should be insured while in the possession of the Pine Bluff Compress Warehouse Company, wherever it might be located. This conclusion is further borne out by the fact that, in the letter of December 31, 1924, he stated that the policy was issued on Mr. Paul's instructions to cover in press No. 3 "at rate of 64 cents per annum. We mention rate as there could be no doubt as to whether the policy should cover, for at time you took out this policy you had us give you tentative figures as to cost of same."
In other words, Mr. Wells bases his statement that Mr. Paul instructed him to insure this cotton in warehouse No. 3 on account of the rate charged. The fact that he charged him a 64-cent rate is the foundation for Mr. Wells' belief that Mr. Paul gave him such definite instructions, rather than an independent recollection that Mr. Paul had so instructed him. This letter was written December 31, shortly after the fire, and his recollection of the matter at that time was undoubtedly better than it was at the time of the trial. In his letter of March 16 Mr. Wells states that he would have been pleased to have written his insurance covering press No. 1. On December 31, Mr. Paul went to Mr. Wells' office and notified him that twenty-seven bales of his cotton had been destroyed in warehouse No. 1, and Mr. Wells at that time did not know, or at least did not remember, that the policy did not cover warehouse No. I, and told Mr. Paul that *968 he would notify the insurance company and would hear from them shortly. He did not know, or did not remember, that it was not covered until he looked at his records and found that he had caused the policy to be written so as to cover only in press No. 3. Again, it is not disputed that Mr. Paul wanted his cotton insured and that Mr. Wells agreed to insure it while in the possession of the Pine Bluff Compress Warehouse Company. Mr. Wells, as agent of appellant, agreed and undertook to do this. If therefore, having undertaken to protect Mr. Paul against loss of this cotton by fire, while in the possession of the warehouse company, he either carelessly, negligently or fraudulently so wrote the policy as to limit the coverage to loss to a particular possession instead of possession generally, this would amount to inequitable conduct, such as to justify reformation of the policy.
In the case of Welch v. Welch,
"Equity has jurisdiction to reform written instruments in but two well defined cases: (1) Where there is a mutual mistake — that is, where there has been a meeting of minds — an agreement actually entered into, but the contract, deed, settlement, or other instrument, in its written form, does not express what was really intended by the parties thereto; and (2) where there has been a mistake of one party accompanied by fraud or other inequitable conduct of the remaining parties. In such cases the instrument may be made to conform to the agreement or transaction entered into according to the intention of the parties. The conditions of fact giving rise to the exercise of the jurisdiction to grant reformation are numerous. Almost all written instruments may be reformed when a proper occasion is furnished." *969
In order to justify reformation it is not necessary that the facts be undisputed. In Troupe v. Ancrum,
"While, to justify reformation of an instrument for mutual mistake, there must be something more than a mere preponderance of the evidence, the rule does not require that the proof be undisputed; it is sufficient if the testimony is unequivocal and clear, that is, such as to satisfy the court that the mistake was made and that the instrument does not express the intention of the parties."
A policy of fire insurance, like any other written instrument, is subject to reformation, where the facts and circumstances will justify, so as to express the real intention of the parties. Conn. Fire Ins. Co. v. Wigginton,
It necessarily follows, from what we have said, that the decree of the court in reforming this policy to cover the loss of these twenty-seven bales of cotton is correct.
The last contention of counsel for appellant is that the court committed error in assessing a penalty and attorney's fee, and this contention is made on the ground that the penalty and attorney's fee statute applies only to a suit on a written policy, and that no recovery was had in this case on the written policy involved herein; that the policy was reformed by parol testimony and a recovery had on the policy thus reformed. We agree with counsel that the court erred in assessing penalty and attorney's fees, but for a different reason from that alleged. The case of Aetna Ins. Co. v. Short,