116 Wis. 392 | Wis. | 1903
Lead Opinion
Two propositions are presented for consideration : First, were tbe applicants for insurance bound by .their applications because of their failure to know what they .signed ? Second, did the retention of the policies by the applicants for several -months, without objection, constitute an acceptance thereof and waive the fraud, if there was fraud, 'in securing the applications? The learned counsel for respondent devoted nearly all their printed argument, as they •did nearly all their oral argument, to the first proposition. As we do not think it is necessarily decisive of the case, we •shall assume that in deciding it the trial court did not err. •On the second proposition the court held that the applicants •did not accept the policies because they repudiated them -within a reasonable time after knowing that the instruments •were not what they supposed their applications called for; that the mere retention of the policies without such knowledge • did not constitute an acceptance. Appellant’s counsel contend that when the policies were received the applicants were, as ordinarily prudent persons, put upon inquiry as to the character thereof, that they should have examined the policies, •and that their failure to do so, and retention thereof for sev•eral months before making any complaint, was an acceptance ■ of them as fulfilling the applications as they supposed such ; applications were made, and a waiver of fraud, if there was -fraud, in obtaining the same.
As we view the turning question above suggested, the law 'has been firmly settled in favor of appellant, and has been applied by this court in many cases. It does not militate, as -counsel for respondent seem to think, against the maxim that a person cannot take advantage of his own wrong, büt en-forces that other one, which is quite as well established, that the court will not constitute itself the guardian of persons of rmature age and ordinary intelligence, protecting them against
The first case in which the principle above stated is distinctly declared in the decisions of this court is Locke v. Williamson, 40 Wis. 377. The court there said:
“We have concluded to hold this rule in respect to an ex-ecutory contract: that when the defects in the goods are patent and obvious to the senses, when the purchaser has a full opportunity for examination, and knows of such defects, he must, either when he receives the goods or within what under the circumstances is a reasonable time thereafter, notify the seller that the goods are not accepted as fulfilling the warranty; otherwise the defects will be deemed waived.”
It is easy to apply the foregoing to the' facts of this case. The applicants for insurance had ample opportunity to examine their policies when the same were received. It was their duty to do that. An examination of the policies, even of a casual character, would have revealed all the material facts. The applicants did nothing by way of examining the papers for months after receiving them, during all of which time the defendant carried the risks it had assumed. What appears to counsel for respondent to be want of harmony in the authorities, in respect to such a situation, in the main, grows out of failure to take in the full scope of the -rule that every person must use reasonable diligence for his own protection, or in confusing it with other rules with which it does-not conflict. Counsel errs most grievously in the idea advanced, that negligence is never a defense in a case grounded on fraud against the wrong-doer, as the cases above cited amply show, though it is true that there are,expressions in legal opinions that may be referred to in justification of the error, and later we will refer to an instance of that kind in our own decisions, and probably there are others. However, on a question so well settled, contrary statements in opinions,, used arguendoought not, it would seem, to lead one astray. In 14 Am. & Eng. Ency. of Law (2d ed.) 115-117, the rule stated is supported by citations from English decisions, and from most of the states of the Union. The author says:
“This doctrine is not based upon any consideration for the-party who has been guilty of the false representations, but upon the ground that public policy requires that persons shall be required to exercise at least ordinary prudence in their-dealings, instead of calling upon the court- to relieve them from the consequences of their inattention and negligence.’'
The rule we have discussed has been applied elsewhere generally, and in many cases quite similar to the one before us, some of the more important of which are cited in the brief of counsel for appellant. In New York Life Ins. Co. v. McMaster, 87 Fed. 63, it was held that where a person receives an insurance policy pursuant to an application it is his duty to examine it and see those things in respect thereto which are open to ordinary observation by a person of ordinary intelligence, and that if he neglects to do so, taking it for granted that he has received what he applied for or intended to apply for, he is guilty of inexcusable negligence and in law his conduct amounts to an acceptance of the policy received regardless of whether it corresponds to the policy applied for or intended to have been applied for or not; that representations made by an insurance agent at the time of the application for a policy of insurance is made constitute no excuse for failure of the applicant to look at his policy when it is delivered to him, to see if it corresponds to the one expected, and to discover the facts in that regard if that can be done by a reasonable examination of the paper; that if one fails to read his contract under such circumstances, having full opportunity for doing so and ability to read, he is guilty of gross negligence and cannot be heard successfully to say that he kept it in ignorance of its character; that the rule in that regard applies to all contracts, insurance contracts being no exception. In Fennell v. Zimmerman, 96 Va. 197, 31 S. E. 22, it was held that it is the duty of a person, on receipt of an insurance policy pursuant to his application, to examine it; that he commences receiving benefits immediately upon the policy coming to his hand, and that it is his duty to examine the paper upon its receipt and to return it within a reasonable,
In this case the representations made to the applicants for insurance in no way prevented them from examining the policies when they were received. It was their duty to malee such examination. Had they performed that duty they would have easily discovered all that they complain of. The opening lines of the letter sent appellant with his policy told the whole story. A casual glance at it would have informed him that the policy was not such as he expected to receive. Certainly he cannot, under any rule, be excused for omitting to read the first three lines of a letter addressed to him on so important a business matter, which contained other information of interest to him than that with reference to the character of his policy, viz., information in regard to the amount of his annual payment. All the parties were insured for months before appellant had any intimation that the policies were not satisfactory. It cannot be doubted that, if death had come to any of them in that period, his policy would have
By the Court.- — The judgment of the circuit court is reversed and the cause remanded with directions to render judg-ement in favor of defendant for costs.
On June 19, 1902, a motion by the respondent for a rehearing was granted.
For the appellant there was a brief by Fethers, Jeffris & Mouat, and oral argument by M. Q. Jeffris.
For the respondent there was a brief by Buyer & Buyer, and oral argument by Wm. Buyer. They contended, inter alia, that there was no negligence in plaintiff’s failing to read the applications and policies; that the plaintiff did not, either at the time of signing the application or after receipt of the policy, owe to the defendant any duty requiring him to suspect that its representations were false, and take precautions accordingly by reading the application before signing, or the policy when received; that the defendant is estopped from imputing negligence because of plaintiff’s reliance upon its representations; that mere negligence in failing to guard
Rehearing
The following opinion was filed November 11, 1902:
A rehearing having been had in this case, we have examined the questions involved with this result: We are satisfied the law was correctly laid down in the former decision, though it is considered that the same was not in all respects correctly applied to the facts. If we should attempt to write an opinion discussing* at length all the propositions advanced in defense of the judgment appealed from, reviewing each of the multitude of authorities cited in support thereof, eliminating in detail those believed not to he in point as to any proposition legitimately in the case, harmonizing those which are correctly decided, and pointing out the errors of expression therein, and such errors and decisions in the others, we are fearful the result would be an opinion of such great length that in so attempting to light a clear way through the mass of things to which our attention has been called, the law, though correctly stated, would not be so clearly declared as to enable trial courts and the profession to easily understand the position of this court by which they are to be guided in future cases involving the same questions. The ground required to be explored to that end, if we were to take the course indicated, would be so extensive that the essential principle finally elucidated would after all be in a measure obscured to one who, from necessity or otherwise, must act from a quick view of things, and the result would be mistakes in the application of the law. Desiring, however, to leave nothing untouched that might in any event give rise to a thought on the part of counsel who with much labor presented the
A brief restatement of tbe facts seems appropriate to tbe end that tbe change decided upon from tbe previous result, may be better understood. We treat tbe facts as found by tbe court as verities, and add such undisputed matters on tbe •evidence, not mentioned specifically in tbe findings, as are of' importance.
Appellant’s agent induced respondent to sign an application for a $10,000 policy of life insurance by representing to .him that it called for one that would be fully paid for in ten annual payments of a specified amount. He signed and parted with such application, relying on tbe truth of such representations. During tbe negotiations between respondent and appellant’s agent, resulting as stated, tbe latter urged tbe former to take out wbat be called a five per cent, debenture policy, while respondent insisted from first to last that be wanted and would purchase only a contract that would be fully performed on bis part by ten annual payments. In due time a policy was sent to respondent by mail, ostensibly responsive to bis application, accompanied by a letter froifl. appellant’s agent to tbe effect that it was a five per cent, debenture policy issued pursuant to tbe application. Respondent put tbe policy away among bis papers without making any •examination thereof, relying upon its being wbat tbe agent assured him tbe application called for. He gave cash and motes therefor to tbe amount of $1,062 for tbe first premium, which notes be subsequently paid. About four and one-balf
One George H. Parker applied to appellant for a $5,000-policy of life insurance under circumstances similar in all respects to those characterizing respondent’s application, except the one Parker supposed he was to obtain was a twenty annual payment life contract. In due time a policy was delivered to him by mail, accompanied by a letter, not stating-anything to the effect that it was pursuant to or in accordance with his application. He gave cash and notes to the amount of $144 for the first premium, which notes he afterwards-paid. He examined the policy for the first time about four months after its receipt, readily and at once discovering that it was an annual payment life policy instead of one such as he supposed his application called for. A few days thereafter he notified appellant’s managing agent that he had been deceived into applying for, receiving and keeping a policy different from the one he desired, tendered the policy back, and' demanded to be restored to his former position by a refunding to him of all that he had given for the policy except a proportionate amount of the premium to cover the time his-life had been insured, which demand was refused.
Arthur H. Barrington, under circumstances similar to those last detailed, applied to appellant for a policy of life insurance, supposing he was to obtain a twenty annual pay
There was nothing in either instance misleading the applicant into receiving and retaining his policy as stated, other than what occurred at the time the application was made,, except, in respondent’s case, the circumstance of the assurance^ in the letter accompanying the policy, that it was the one applied for.
Parker and Barrington severally assigned their right against appellant to respondent before this action was commenced. The court held that in each case, by artifice and fraud of appellant’s agent, the assured signed his application-for a policy, supposing it to call for one different from that actually sent in response thereto; that by reason thereof the applicant was not estopped from rescinding the transaction-with appellant if, before the expiration of a reasonable length of time after he obtained actual knowledge of the facts, he-made his election in the matter; that he acted in that regard within such reasonable time, and that respondent was therefore entitled to recover as to each of the causes of action sued on.
If this decision depends wholly on whether the applicants for insurance were estopped from rescinding the policies, by signing the applications therefor, they would be entitled to the relief granted by the circuit court. It is elementary that
Counsel vigorously urges receding from the former decision to the effect that it is negligence for a person to omit to examine his policy of insurance as soon as reasonable opportunity therefor is afforded, relying on assurances made by the-comp'any’s agent at the time he took the application, as to the kind of policy it called for. We must adhere to our former-conclusion on that point, notwithstanding the decisions confidently relied on by counsel to show that it is in conflict with other decisions of this court and authorities elsewhere. We-believe the former decision is right on principle, is well sup
“This is not the case of a party, in the absence of fraud or mistake, failing to know the contents of a written instrument signed by himself by reason of his own negligence or want of reasonable care, as . Herbst v. Lowe, 65 Wis. 316, 26 N. W. 751. . . . Certainly no one will contend that a person can procure the signature of a party to a contract by false representations, and then enforce the contract on the -ground that, had the party so deceived been more vigilant, he would have discovered the fraud in time to have withheld his*415 signature from the contract. In other words, a person cannot procure a contract in bis favor by fraud, and then bar a defense to it on the ground that had not the other party been so ignorant or negligent he could not-have succeeded in deceiving him.”
That clearly shows that the court did not have in mind the action of a person in accepting an article in fulfillment of an order therefor, nothing being then done to prevent or deter such.person from seeing obvious departures from the thing bargained for. The distinction between the two classes of cases has not always been carefully pointed out in legal opinions, and not always recognized, leading to expressions therein quite liable to cause one to go astray if he does not keep in mind the philosophy of the rule that caveat emptor applies when no deceit is exercised to reasonably excuse a person from dealing at arm’s length, and not when there is such deceit; and therefore, while it may not apply to estop a person from successfully complaining of a transaction on account of what occurred at the time of entering into it, it may as to electing whether to abide by the transaction if he is inexcusably negligent in the matter. Those distinctions are accurately pointed out in the reasoning of Judge SaNboeN in New York Life Ins. Co. v. McMaster, 87 Fed. 63, and McMaster v. New York Life Ins. Co. 99 Fed. 856.
Another of the authorities relied on by counsel — one which he insists is directly in conflict with Mamlock v. Fairbanks and is supported by the better reasoning — is Strohn v. D. & M. R. Co. 21 Wis. 554; citing Boorman v. Am. Exp. Co. 21 Wis. 154, and King v. Woodbridge, 34 Vt. 565, in both of which it was held that a party is presumed to consent to the conditions of a paper to which he deliberately becomes a party, the idea being that it would be negligence for him not to know its contents; and so such knowledge is conclusively presumed in the absence of some reasonable excuse for his ignorance. 'So far as the expressions in the Boorman and Strohn Gases
“From the delivery and acceptance of the bill of lading at the time the goods were delivered to defendant for shipment, the presumption arises that plaintiff assented to it. . . . The presumption is not conclusive, but mere ignorance of the contents of the bill of lading, arising from failure to read it or to make some reasonable effort to obtain information in that regard, in the absence of any evidence of fraud on the part of the defendant or of the use of any means to deter the shipper' from fully understanding the contract, is not sufficient to overcome it.”
Again the court, after saying, in effect, that ignorance is no-defense to a contract where the making thereof springs from inexcusable neglect, used this language:
*417 “The familiar rule applies that if a person makes a written contract with another, he takes upon himself the responsibility of acting intelligently, and exercising ordinary care to inform himself of its provisions. Failure to read the contract or to examine it, or, in case of inability to do so without assistance, to obtain such assistance if reasonably within reach, is negligence as a matter of law.”
To the same effect are Herbst v. Lowe, 65 Wis. 316, 26 N. W. 751; Fuller v. Madison Mut. Ins. Co. 36 Wis. 599; Bonneville v. Western Assurance Co. 68 Wis. 298, 32 N. W. 34; Wilcox v. Continental Ins. Co. 85 Wis. 197, 55 N. W. 188; Coates & Sons v. Buck, 93 Wis. 128, 67 N. W. 23. In this class of cases the question involved was, under what circumstances can a person, by oral evidence, impeach a written contract? As shown in the federal cases, the deceit of one person affecting the conduct of another in becoming a party to a written instrument, must refer to the particular instrument in controversy, and to deceit in the transaction leading to the injured party’s signing or accepting the instrument. That applies in this case to the signing of the applications for insurance, but not to the acceptance and retention of the policies.
Another of the authorities cited on this branch of the case is Gunther v. Ullrich, 82 Wis. 222, 52 N. W. 88, where a person purchased real estate on the faith of false representations, made at the time of the purchase, respecting the location of the property. West v. Wright, 98 Ind. 335, is another case. There a person purchased land of another on the faith of false representations made by such other as to the record title to the property.
■ Strong language was used in deciding the case, condemning the transaction and stating the law along lines many times laid down by this court, but having no reference to such a situation .as that here presented, so far as relates to the acceptance and retention of the policies, leaving out of view for
“I cannot, however, assent to extend the maxim caveat emptor so far as to hold that where a vendor of real estate, for the fraudulent purpose of effecting a sale, makes a positive representation of particular facts respecting the title, which he knows or has good reason to believe to be false, and which turn out to be false in fact, but which, if true, would make the title good, he cannot be held liable in an action for fraud, or the vendee can have no right to rescind, because he had it in his power to ascertain from the records the truth or falsehood of the representation and the true state of the title, but has neglected to do so, in reliance upon the truth of the vendor’s representation of the facts. There may be good prudential reasons why, when I am selling you a piece of land, or a mortgage, you should not rely upon my statement of the facts of the title, but if I have made that statement for the fraudulent purpose of inducing you to purchase, and you have in good faith made the purchase in reliance upon its truth, instead of making the examination for yourself, it does not lie with me to say to you, ‘It is true I lied to you, and for the •purpose of defrauding you, but you were guilty of negligence, .of want of ordinary care, in believing that I told the truth; ,and because you trusted to my word, when you ought to have*419 suspected me of falsehood, I am entitled to the fruits of my falsehood and cunning, and you are without remedy.’ ”
It will be easily seen that the court held that there was no negligence on the part of the injured person in that case, because he relied upon the positive representations made by the wrongdoer at the time the transaction was entered into. To make that apply to this case we must be able to point to something said or done by the appellant at the time the policies were delivered, reasonably calculated to deter the persons receiving the same from making any examination thereof. Prince v. Overholser, 75 Wis. 646, 44 N. W. 775, was referred to. There the rule of Mamlock v. Fairbanks, 46 Wis. 416, 1 N. W. 167, was expressly affirmed, the court saying, in effect, that to take the case out of the rule there must be fraud or mistake of such a nature that the defendant could not, with reasonable diligence, acquire knowledge thereof when put upon his inquiry.
We should say in passing that we deem it to be elementary law, as held in Locke v. Williamson, 40 Wis. 377, that when a person receives an article pursuant to an order or contract therefor, he is put upon inquiry as to departures therein from the thing bargained for, which are open to ordinary observation, nothing occurring then to induce him to accept the article as satisfying the order or contract without examining it. Such is the rule laid down in the federal court in the McMaster Gases in all stages of the litigation over the six policies involved in the transaction, with which the court had to deal. In all stages of the litigation up to and inclusive of the final disposition thereof by the supreme court of the United States, as we shall see hereafter, the rule we have stated was clearly recognized and applied. We might go on through substantially all the great array of cases cited by •counsel to show that deceit practiced by-the appellant’s agent in obtaining the applications for insurance excused the applicants from making any examination of their policies when re
It is earnestly contended by counsel for respondent that the former decision, holding that negligence on the part of the insured persons, in receiving and retaining the policies for a long time without objection, stands effectively in the way of respondent’s recovery, is wrong on principle: (1) Because negligence does not preclude relief by a person damaged by intentional wrongdoing; (2) Negligence of one does not accrue to the benefit of another to whom he owes no duty; (3) The court’s decision is out of harmony with the doctrine that a person cannot profit by his own wrong; (4) Nothing short of actual knowledge prevents relief till the right involved is extinguished by the statute of limitations, — that reasonable means of knowledge, and negligence in not profiting by it, from which knowledge in fact is presumed, is not. sufficient. We will briefly answer each of the propositions,, though in doing so we must repeat, somewhat, what was. formerly said.
1. The conclusive answer to the first proposition is that it does not necessarily apply here, leaving out of view the question of whether anything occurred inducing belief as to the-character of the policies at' the time they were received, because it relates only to when there is a concurrence of inten
2, 3. Tbe second proposition does not fit tbis case, because tbe inexcusable negligence of a person, in entering into or abiding by a business transaction witb another guilty of deception, influencing sucb person’s conduct in tbe matter, is not held to be a direct defense to sucb person’s claim for redress, but to be evidence of acquiescence witb knowledge of tbe facts, or in connection witb injury to sucb other by delay in sucb person’s asserting bis right to relief, if sucb assertion were successful, or in connection witb some other efficient circumstance, to estop sucb person from doing anything inconsistent therewith. Even a wrongdoer has rights which tbe law respects. A person injuriously affected by tbe wrong of another in a business transaction may himself be guilty of wrong in asserting bis right to redress, so affecting tbe latter as to give him tbe right to use tbe doctrine of estoppel for bis protection against the former’s claim. A third answer is tbis: Inexcusable negligence of a person in bis business transactions witb another is not, as said in tbe former opinion, held to be a defense to tbe former’s claim for redress out of any favor found in tbe law for tbe latter, or defense, strictly so called, to sucb claim at all, in any other sense than that tbe law affords no redress under tbe circumstances, its policy being only to aid those who use some reasonable degree of care to guard their own interests. All of sucb reasons, we apprehend, will readily be recognized as elementary law.
Answering more particularly counsel’s first proposition, a contract entered into by fraud on one side, or. mistake through negligence on tbe other, is not absolutely void. While in one sense it is not tbe contract of tbe latter at all, because of bis nonassent to its terms witb knowledge of tbe facts, be may add tbe element of assent at any time, actually or con
“Omission to repudiate within a reasonable time is evidence, and may be conclusive evidence of an election to affirm the contract; and this,” says tbe writer, “is in truth tbe only effect of lapse of time,” by itself.
Again tbe writer says (page 541):
“Tbe party who made tbe misrepresentation in tbe first instance may have acted on tbe faith of tbe contract being valid in sucb a manner that a subsequent rescission would work irreparable injury to him.”
Keeping in mind that rescission, whether tbe object of a suit in equity or forming tbe basis of a rescission at law, is governed by equitable principles (Gates v. Raymond, 106 Wis. 657, 82 N. W. 530; Gay v. D. M. Osborne & Co. 102 Wis. 641, 78 N. W. 1079; Ludington v. Patton, 111 Wis. 208, 86 N. W. 571), tbe application of this language from tbe opinion of Sir BaeNes Peacooe, in Lindsay Petroleum Co. v. Hurd, L. R. 5 P. C. 221, 239, to tbe facts before us is not difficult to see:
*423 “Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equiyalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. . . . Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.”
In Clough v. L. & N. W. R. Co. L. R. 7 Exch. 26, 35, Mellor, J., said, in effect, that if a person is induced to enter into a contract by fraud, he has his election to avoid it till he elects to affirm it, and that lapse of time alone may constitute conclusive evidence of such election, with this exception, however :
“If the rights of innocent third persons intervene in the meantime, or if in consequence of the delay the position of the wrongdoer is affected, it will preclude him (the injured party) from exercising his right of rescission.”
See also to the same effect, Oakes v. Turquand, L. R. 2 H. L. 325; Houldsworth v. City of Glasgow Bank, 5 App. Cas. 317; Kerr, Fraud & Mistake (3d ed. Williams), 10.
Those principles apply with great force to this class of cases. The respondent had the full benefit of his insurance for nearly a year before he repudiated the transaction, and his assignees had the benefit of theirs for months before they acted in that regard. The entire period covered by the first premium upon respondent’s policy had, before he refused to abide by such policy, nearly expired. No one would venture to claim that if he had died during such period of delay the company would not have been bound by the policy and his personal representatives would not have enforced it. During all that time the money paid by respondent for his policy
Speaking more particularly in regard to the third reason we have given for condemning counsel’s second proposition, that the rule declared in the former opinion, that negligence may prevent a recovery in a case like this, is wrong on principle, — the rule following the maxim, The law assists the vigilant, not the careless, “'Vigilaniibus, et non dormientibus succurant jura,” is grounded on that wise policy in the law which at every turn of life casts upon all persons in severalty, who are of sound mind and mature years, the personal duty to exercise some reasonable degree of care for their own protection, enforcing it, in some cases, solely by refusing to open the doors of judicial tribunals to those who deal heedless of their interests, depending upon the courts to protect them from injurious results, as that policy which in the end best protects individual members of society and at the same time guards against those responsibilities that can be better borne in an individual way, being unnecessarily or unreasonably, to any extent, cast upon the public at large. In that, as can readily be seen, the courts, while not excusing at all the
“There are many instances in which a person may be guilty of a moral delinquency, without incurring a legal responsibility; for legal obligations are necessarily more circumscribed in their nature than moral duties. Fides servanda is indeed a rule of law, as well as of morality, and will be rigorously enforced in favor of one who is chargeable with no culpable negligence or inattention to his own interest. But to one so chargeable, the law will not afford relief. . . The law does not deny its aid in such case, because it looks upon a want of candor and sincerity with indulgence, but because it will not encourage that indolence and inattention, which are no less pernicious to the interest of society. A diligent attention to our own concerns as well as good faith to others, is a virtue; and the law, while it recognizes the rules-which tend to preserve the latter, at the same time is careful to guard the principles which prompt to the exercise of the former. With respect to points plainly within the reach of every man’s observation and judgment, and where an ordinary attention would be sufficient to guard against imposition, the want of such attention is, to say the least, an inexcusable negligence. To one thus supinely inattentive to his own concerns, and improvidently and credulously confiding in the naked and interested assertions of another, the maxim, 'Vigilantibus et non dormienlibus jura subveniuntf emphatically applies, and opposes, an insuperable objection to his obtaining the aid of the law.”
The supreme court of Ohio, in Ætna Ins. Co. v. Reed, 33 Ohio St. 283, speaking on the same subject and citing in support a multitude of authorities, said that in matters of contract, if one negligently omits to guard his own interests, the law will not lend its help to aid him. Pages could be covered in citations to the same effect.
“If he rescinds on the ground of fraud, he must do it at once on discovering the fraud.”
“Any delay, especially if it be injurious to the other party, would be regarded as a waiver of his right.”
“The mere lapse of time, if it be considerable, goes Tar to establish a waiver of this right; and if it be connected with an obvious ability on the part of the defrauded person to discover the fraud at a much earlier period, by the exercise of ordinary care and diligence, it would be almost conclusive.”
In Erlanger v. New Sombrero Phosphate Co. 3 App. Cas. 1283, the language heretofore quoted from the judgment of the privy council in Lindsay Petroleum Co. v. Hurd, L. R. 5 P. C. 221, was cited with approval, with remarks by Lord BlackbuRU, recognizing that the deceived party may forfeit his right to rescind by failing to make his claim in that regard with reasonable promptness after “he knows or may with reasonable diligence know that he has been defrauded.” Moncreiff, Fraud & Misrep. 282.
McCarty v. New York Life Ins. Co. 74 Minn. 530, 77 N. W. 426, is cited by counsel as in direct conflict with Mamlock v. Fairbanks. The court there treated the subject of negligence as evidence of waiver, and negligence as a defense, but not as involving the right to judicial remedies as affected by public policy. A clear distinction was pointed out between negligence of a person in not protecting himself from fraud perpetrated by another at the time of signing and delivering to such other an application for an insurance policy, and negligence in failing to discover obvious departures from the
“The rule, as generally, laid down in the books, is that the right of rescission accrues only after discovery of the fraud, and that delay is not imputable against the party defrauded, until he makes that discovery. But, we have no doubt that there may be cases where the party is so grossly negligent in failing to use means of knowledge within his possession, which he was bound to avail himself of, that delay would be imputable to him, even before he actually discovered the fraud. Hence perhaps a more accurate statement of the rule is that delay is not imputable to the party defrauded until he has sufficient knowledge of the fraud to make the delay material, or such means of knowledge as he was bound to avail himself of.”
Leáke, Cont. 324, and Browne v. McClintock, L. R. 6 H. L. 456, were referred to, which amply support what was said. That which the learned judge said was perhaps the way to accurately state the rule was thus recognized by Mr. Justice
“A court of equity will not undertake, any more than a court of law, to relieve a party from the consequences' of his own inattention and carelessness. Where the means of knowledge are at hand and equally available to both parties, and the subject of purchase is alike open to their inspection, if the purchaser does not avail himself of these means and opportunities, he will not be heard to say that he has been deceived by the vendor’s misrepresentations. If, having eyes, he will not see matters directly before him, where no concealment is made or attempted, he will not be entitled to favorable consideration when he complains that he has suffered from his own voluntary blindness, and been misled by overconfidence in the statement of another.”
The exception mentioned, — which is found in all careful statements of the law in these words: “where no concealment is made or attempted” — we have heretofore shown, refers to concealment made or attempted by some act of the wrongdoer at the time, or efficiently reaching to the occasion, when the wronged party should exercise his senses, reasonably, to protect his own interests. It will be seen that the law was so distinctly applied in the McMaster Gases to which, we shall presently refer. We might go on reenforcing the MamlocTe Gase by a large number of citations, though we confess that the inaccurate statement of the rule under discussion, recognized by Judge Mitchell, as before indicated, can be found many times in legal opinions where constructive knowledge was not material, and in some instances, probably, .it formed the basis for erroneous decisions, and for misleading judicial declarations in others, some of which are found quoted in the brief of counsel for respondent and were referred to by him with great emphasis upon the oral argument. It would seem that the confession by so learned a judicial writer as Judge Mitchell, that the statement of the law as to when time for the rescission of ’a contract for fraud com-
Leaving out of view what we formerly regarded as controlling decisions of this court, the McMaster Oases in the federal court were cited as worthy of the highest regard in reaching a correct conclusion. It is now contended by respondent’s counsel, as we .understand his argument, that admitting the effect of the decisions in the court of appeals, those cases (87 Fed. 63, and 99 Fed. 856), if in any event they could be considered as voicing the doctrine of the federal courts, are of no force because the last decision was reversed by the supreme court of the United States, it being held, “in substance, that knowledge of the contents of the policies was not ‘legally imputable’ to McMaster because of his failure to read them.” “But,” says the learned counsel, “it is not necessary to multiply citations to show the error of the assumption that the doctrine of constructive notice can he made available as a cover for fraud.” In that is a most striking indication of the misapprehension in the mind of counsel of what we aimed to say, and in our view plainly said in the former opinion, and a strikingly illegitimate characterization of the solemn decision of this court, which was based on what counsel admits to be the established doctrine if Mamloch v. Fairbanks, 46 Wis. 416, 1 N. W. 167, is to stand as the settled law. Constructive notice was not formerly held to be under any circumstances a “cover for fraud.” It was held to be evidence of assent, regardless of the fraud, or, if not such, of inexcusable negligence, waiving judicial remedies for fraud; and not upon mere assumption, but upon the authority of this court in previous decisions, and of most other, courts.
Returning to the McMaster Gases, we will say, and endeavor to demonstrate, that counsel "is in error in his view that the supreme court, in reversing the decision of the court of appeals, 99 Fed. 856, held that possession of a policy of insurance does not impute knowledge of its contents, in the absence of any deception practiced upon the possessor subsequent to his making the application therefor, reasonably calculated to deter him from examining such policy at the time of its receipt. The court, as it seems to us, held directly to the contrary. We can best demonstrate the correctness of that view by giving a full history of the Mc-Master litigation as found in the federal reports. Here is the history: Fred A. McMaster signed applications for six policies of life insurance in the New York life Insurance' Company, delivering them to such company’s agent. After the applications were signed the agent, without the applicant’s knowledge or consent, wrote into them these words: “Please date the policies same as applications,” in order to further his own interests by obtaining credit for the work in the year-in which such applications were made, helping to make up the necessary amount of insurance taken by him during such year to entitle him to a greater percentage upon the business of such year, as his compensation for service than he would otherwise obtain. The policies were issued, dated as directed,, making the annual premium payment December 12 in each, year, when it otherwise would have been made December 18-in each year. As the applications were when signed, the first payment would have covered thirteen months from the time
“He could not have been deceived as to the terms or legal effect of these contracts, if he read them. It was his duty to read and know the contents of the policies when he accepted .them. It is true that the evidence is that he did not read them, but the legal effect of his acceptance is the same as if*435 lie bad read tbem. He bad tbe opportunity to read and to learn tbeir contents, and, if be did not, it was bis own gross negligence, and no act of tbe insurance company or its agent that concealed tbem and misled bim as to tbeir effect.”
Taking up tbe question of whether tbe statement made by tbe agent when tbe applications were made, to tbe effect that tbe first payment would cover thirteen months, was sufficient to take tbe case out of tbe rule requiring a person, upon receiving an article ostensibly upon fulfillment of an order or contract, to see obvious departures therein from tbe thing bargained for, tbe court held that nothing short, of something said or done at tbe time of tbe delivery of tbe article, tbe applicant therefor then having ample opportunity to examine it as to defects therein, open to ordinary observation, throwing bim off bis guard and reasonably excusing bim from making such examination, will excuse bim from improving tbe opportunity for such examination; and if he does not intend to assent to keep the_ contract in satisfaction of bis order, within a reasonable time thereafter, from notifying tbe party from whom be received such article that it will not be so accepted. 'This language on tbe subject was used, in addition to that just quoted:
“Tbe statement of tbe agent fourteen days before tbe deceased received the policies that they would insure bim for thirteen months from tbe payment of tbe first premiums was not a statement of an existing fact. It was not calculated to impose upon bim, or to prevent bim from reading bis policies and learning for himself whether this promise bad been kept ■or broken.”
To tbe quoted language in tbe whole the court cited many •authorities, including cases decided by this court. Tbe conclusion reached was that neither a court of law nor of equity could afford tbe MeMaster estate relief. Tbe decision was inferentially approved by tbe federal supreme court by its judgment refusing to issue a writ of certiorari to review it. 171 U. S. 687, 18 Sup. Ct. 944. Later, McMaster’s adminis
“We are unable to concur in the view that McMaster’s-omission to read the policies when delivered to him and pay*437 ment of the premiums made constituted sucb negligence as to estop plaintiff from denying that McMaster by accepting the policies agreed that the insurance might be forfeited within thirteen months from December 12, 1893.” McMaster v. New York Life Ins. Co. 183 U. S. 25, 22 Sup. Ct. 10.
There is the rule clearly recognized that when a person receives a policy of insurance in response to an application therefor, or as the result of a written application, or a written application and verbal communications between him and the agent of the company issuing the policy, unless some misrepresentation or fraud is practiced upon him at the time of the delivery of the policy, furnishing some reasonable excuse for his not reading and- knowing its provisions so far as they would, by such reading, be readily understood, it is such negligence not to so read and know, that if he neglects to object to the policy within a reasonable time after receiving the same, the delay will estop him from obtaining judicial aid to remedy any injury he may suffer from the policy not being as agreed upon. That, as r7e have seen, is not because of any breach of duty on his part to the wrongdoer, but because of breach of duty to himself, or his assent to the contract. The idea of counsel for respondent that there can be no negligence in circumstances such as we have discussed which can help the wrongdoer because the injured party owes the wrongdoer no duty, grows out of failure to appreciate that negligence in a case like this does not, except when coupled with circumstances effecting an estoppel, presuppose duty of the injured person to the wrongdoer, but, as we have indicated, duty of such person to himself.
All the reasons advanced for a different decision than that formerly announced as to the law of this case, which seem worthy of attention, have now been discussed. There remains to be considered the subject of whether we before correctly applied the law to the facts. At the threshold of that inquiry we meet the point made by appellant’s counsel — not considered on the former occasion because unnecessary in view of
True, a cause of action at law to recover the consideration paid upon a contract void for fraud is not complete so that a suit may be maintained to enforce it until the transaction has been fully repudiated, the complaining party having done all that in justice he ought to do, measured by settled laws on the subject, to restore the wrongdoer to his former' position. The idea is that the existence of the cause of action itself depends upon the contract, binding till avoided, having been in fact avoided. Hence, in such a ease as this the plaint
Some other points are made by appellant, which are rendered immaterial by tbe conclusion we have reached.
Now in applying tbe law to tbe facts, in view of what has been said each of tbe policy holders must be considered as having bad knowledge of tbe fraud from tbe time when, by tbe exercise of ordinary care, be might have bad it. That time, as to Parker and Barrington, was substantially when they received their policies. As to each of them, as we have seen, there was no statement made, or circumstance which occurred after tbe making of tbe applications, reasonably excusing him for not examining bis policy when it was received. Since, as to each of them, when be did make such examination, be easily and at once discovered tbe fraud that bad been perpetrated upon him, we must assume that be ought to have bad knowledge thereof very soon after bis policy came to bis bands. We have no finding by tbe trial court as to electing to rescind tbe policies within a reasonable
As to the Bostwick policy it is considered that the assurance contained in the letter accompanying it when it came into respondent’s hands, in effect that it was in accordance with the understanding which he supposed and had a right to suppose was written into the application, was reasonably calculated to lull him into security on the subject and cause him to lay the policy aside without examining it. It is useless here to discuss at length the particular wording of the letter containing such assurance. We have weighed it in every reasonable aspect in which it can, in’our judgment, be viewed, resulting in a conclusion — not without some misgivings, we «onfess, on the part of some of the members of the court as to its correctness — -that it was not as a matt.er of law entirely unreasonable for Bosiwiclc, relying upon the letter which presumably he read, to lay the policy aside without reading it. True, the letter characterized the policy as a five per cent, debenture contract, and Bostwick testified that such a policy of a particular character was urged upon him by the agent at the time the application was taken, and that he then insisted that he would not take anything but a ten annual payment life policy, indicating, in one view, that the two policies were at the time of the application considered as entirely different. But it is also true, as we understand it, that a five per cent, debenture policy might well be written on a ten annual payment plan. Therefore, the assurance contained in the letter, that the policy was in accordance with the application,
By the Gourt. — The judgment of'the circuit court is reversed and the cause remanded with directions to decide the question of fact suggested as being yet unsolved, and to then render judgment in accordance with this opinion.
Concurrence Opinion
I concur in the result of the decision in this case, except as to the Bostwiclc policy; and as to that I think the judgment should be affirmed. As to that policy, the evidence, in my judgment, clearly brings the case within the well-established rule stated in a recent standard work, cited by plaintiffs counsel, as follows:
“By the overwhelming weight of authority, ordinary prudence and diligence do not require a person to test the truth of representations made to him by another as of his own knowledge, and with the intention that they shall be acted upon, if the facts are peculiarly within the other party’s knowledge or means of knowledge, though they are not exclusively so, and though the party to whom the representa*444 tions are made may bave an opportunity of ascertaining tbe truth for bimself.” 14 Am. & Eng. Ency. of Law (2d ed.) 120.
The principle upon which the rule is based is sanctioned in cases cited in the opinion filed and the decision herein. It is cited merely as a concise summary of the law applicable to the Bostwich policy. Such evidence is, in my opinion, sufficient to sustain the judgment. The mere fact that the trial court did not specifically find upon the subject is no good ground for refusing to affirm the judgment so far as it relates to that policy. Wilkinson v. Wilkinson, 59 Wis. 560, 18 N. W. 527, and cases there cited; Jones v. Jones, 11 Wis. 520, 38 N. W. 88; Deitz v. Neenah, 91 Wis. 425, 426, 64 N. W. 299, 65 N. W. 500; Williamson v. Neeves, 94 Wis. 656, 69 N. W. 806; Disch v. Timm, 101 Wis. 189, 77 N. W. 196; In re Callahan, 102 Wis. 561, 78 N. W. 750.
A motion to file a second motion for rehearing was denied February 3, 1903.
