17 N.M. 223 | N.M. | 1912
OPINION OP THE COURT.
The appellant relies largely upon the case of the Trustees of St. Clara Female Academy, etc., v. Dolliver Insurance Co., (Wis.) 66 N. W. p. 1140, for reversal, but as we read the case, the facts in that case and the one now before the court are not parallel. There a building was in process of erection by a contractor under a contract by which the trustees agreed to procure insurance to protect the interest of the contractor. The agent to whom application was made for the insurance knew nothing whatever about the contract. The application for the insurance policy was made by Sister Mary Edmond, and she described the transaction in respect to the insurance, in substance as follows: “I told Mr. Hobbins I did not understand how insurance was taken out on a building in course-of erection, and that I left entirely into his hands to attend to it.” On being asked what was said during the interview with the agent in relation to the contractor and his interest in the building, she answered: “I have no recollection of Mr. McAlpine’s (the contractor) name being-mentioned.” The agent stated, upon being asked if it was his intention when he wrote the policies, to protect the interests of all the parties: “I could not say that, as I supposed I insured the sisters.” The court in its statement of the facts said: “And the evidence is clear and decisive-that the agent Hobbins had not been requested by anyone-to insure McAlpine, or to make him a party to the policies for any purpose whatever. The insurance was made to-the plaintiff as owner, and for a period of three years.” The court says, in discussing the law:
“When it is said that a written agreement may be corrected or reformed so as to express and carry out the intention of the parties, this must be understood as applying to the intention of the parties by reason of' some mutual agreement made between them, and upon which their-minds have actually mutually met, and not to some real or conjectural intention they may have separately entertained, but which never acquired the character of real contractual intention. As applied to the present ease, it was not enough that McAlpine or the plaintiff, or both of them, intended to have the property insured for them as their interest might appear. It was necessary for them, in order to have the relief demanded, that the defendant companies, or their agent so understood the matter, and undertook or agreed to write the insurance accordingly. While it is not material what language the parties used to-express their mutual intent, the court will carry it into effect and reform the instrument accordingly.”
As we view the facts and the doctrine announced in the-case just considered, we think it supports the action of the lower court in the present case. It will be noticed that the-court holds in that case that it is not material what language the parties use to express their mutual intent, but the question is whether their minds actually met upon a common understanding or mutual intent. In. the case now before the court, the appellee applied to the agent of the appellant for the policy 'of insurance. He stated that he was the owner of the property and was furnishing some of the material, and desired insurance, and that Mr. Bryant was the contractor. It must be understood that no question as to the rights of Mr. Bryant under the policy was before the court for consideration, but the sole question was as to the rights of the appellee thereunder. The agent who wrote the policy admits that the application was made by appellee as stated by him, but says further that he asked appellee if the policy should be written in his name, and he said “Yes,” but that thereafter the agent suggested that as Bryant was contractor, it should be written in his name, to which appellee made no response. But the agent for the appellant says that he thought he was protecting Mr. Dearborn’s interest under the policy, and that he thought Dearborn’s interest was protected all along until the adjuster refused to pay it. Another strong circumstance tending to show that it must have been the mutual intention of the parties that the insurance shouldprotectthe interest of the appellee, was the fact that he paid the premium upon the policy in question. From the facts, we believe there was substantial evidence which justified the lower court in arriving at the conclusion that the name of the appellee was omitted from the policy, and that his interests were not protected thereunder by the mutual mistake of the parties.
The law, in respect to the effect of such a mistake is well settled by the courts. In the case of Snell v. Insurance Co., 98 U. S. p. 85, Mr. Justice Harlan speaking for the court says:
“We have before us a contract from which, by mistake, material stipulations have been omitted, whereby the true intent and meaning of the parties are not fully or accurately expressed. A definite, concluded agreement as to insurance, which, in point of time, preceded the preparation and delivery of the policy, is established by the legal and exact •evidence, which removes all donbt as to the understanding of the parties. In the attempt to reduce the contract to writing there has been a mutual mistake, caused chiefly by that party who now seeks to limit the insurance to an interest in the property less than that agreed to. be insured. The written agreement did not effect that which the parties intended. That a court of equity can afford relief in such a case, is, we think, well settled by the authorities. In Simpson v. Vaughn, (2 Atk. 33), Lord Iiardwicke said that a mistake was ‘a, head of equity on which the court always relieves.’ In Henkle v. Royal Exchange, (1 Ves. Sen. 318), the bill sought to reform a written policy after loss had actually happened upon the ground that it did not express the intent of the contracting parties. The same eminent judge said: No.doubt but this court has jurisdiction to relieve in respect of a plain mistake in contracts in writing as well as against fraud in contracts, so that if reduced to writing contrary to the intent of the parties, on proper proof, would be rectified.’ In Gillespie v. Moon (2 Johns, (N. T.) ch. 585), Chancellor Kent examined the question both upon principle and authority and said: T have looked into most, if not all, of the cases in this branch of eqiuty jurisdiction, and it appears to me established, and on great and essential grounds of justice, that relief can be had against any deed or contract in writing-founded in mistake or fraud. The mistake may be shown by parol proof, and the relief granted to the injured party, whether he sets up the mistake, affirmatively by bill, or as a defense.’ In the same case he said: Tt’appears to be the steady language of the English chancery for the last seventy years, and of all the compilers of the doctrine of that court, that a party may be admitted to show, by parol proof, a mistake, as well as fraud, in the execution of a deed or other writing.’ And such is the settled law of this court. Graves v. Boston Marine Insurance Co., 2 Cranch 419; Insurance Company v. Wilkinson, 13 Wall. 222; Bradford v. Union Bank of Tennessee, 13 How. 57; Hearne v. Marine Insurance Co., 20 Wall. 488; Equitable Insurance Co. v. Hearne, Id. 494. It would be a serious defect in the jurisdiction of courts of equity if they were without the ¡lower to grant relief against fraud or mutual mistakes in the execution of written instruments. Of course parol proof in all such cases, is to be received with great caution, and, where the mistake is denied, should never be made the foundation of a decree, variant from the written contract, except it be of the clearest and most satisfactory character.
An insurance agent, not versed in law, and the owner of property desiring insurance, enter into an agreement for insurance. The agent and the party to be insured agree that a certain result shall be accomplished, viz., that a policy shall be written by the agent which will protect the interest of the party applying for the insurance in the property; the premium is paid; a loss occurs, and it develops, that through a mistake of fact, or law, which is mutual, the agreement as reduced to writing fails to carry out the real contract which the parties sought to enter into. Why should not a court of equity reform the contract, so that it will conform to the real agreement of the parties, and enforce it, where the proof is clear, and there is no doubt of the mistake? We think every principle of justice and right demands the correction of the mistake and the enforcement of the contract. In this case the insurance company, through its agent attempted to write the policy according to the understanding of both parties and to effectuate insurance that would protect Dearborn. Its agent and Dearborn thought this had been accomplished, but it develops that through a mistake either of fact or law, the written contract did not express the real agreement of the parties. Dnder the facts we think the lower court did not err in reforming the contract of insurance and rendering judgment for the appellee. The cause is therefore affirmed.