10 F. Cas. 156 | U.S. Circuit Court for the District of Minnesota | 1870
The principal de-fence relied on is that the plaintiff in effecting the insurance concealed the fact that there was an incumbrance on the lot and building to the amount of about 83,000, at the time the policy in suit was issued. It is not denied that in point of fact there was a mortgage of this amount upon the property. There is no proof that the defendant or its agent knew of the existence of this incum-brance when the policy was delivered to the plaintiff.
In the application (which is made part of the policy and a warranty on the part of the plaintiff) the question as to mortgages or in-cumbrances is not answered. In the application there is printed over the signature of the plaintiff the following, to-wit: “The applicant (the plaintiff) hereby covenants and agrees with the said company that the foregoing is a just and true exposition of the facts and circumstances in regard to the condition, situation, and value of the property insured, so far as the same are known to the applicant, and material to the risk.” In the policy there is this provision, to-wit: “If the assured conceals any fact material to the risk in the application or otherwise,” this will avoid the policy.
It is admitted that on September 24, 1837 (prior to the date of the policy in suit), the property was sold on the mortgage before mentioned by virtue of a power of sale contained therein, and purchased by a third party. But under the statute of Minnesota, the purchaser at such sale did not acquire a title to the property; the title still remained in the plaintiff, and no title would pass to the purchaser unless the plaintiff failed for one year to redeem the property; in other words, notwithstanding the sale, the mortgage was still nothing but an incumbrance at the date of the policy sued on, — October 1, 1S67.
It was the duty of the owner of property, the title to which was in this condition, on applying to have it insured, to disclose to the company the facts relating to the state of the title as, if not redeemed, the tit e would be lost to the assured before the expiration of the policy. In contracts of insurance, good faith and fair dealing are required from both parties; such good faith and fair dealing would ordinarily- require the party proposing to get the property insured to disclose the state of the title, if it was in the condition above mentioned.
The question in the case at bar is whether the necessity of such disclosure was waived by the company. If you find from the evidence that the plaintiff’s property had been insured before in companies represented by the defendant’s local agent; that such insurance being about to expire, the defendant’s local agent applied to the plaintiff to keep the property insured and to allow such agent to insure it in the defendant’s company; that the plaintiff consented; that the agent of the defendant made out, or caused the application to be made out, in the office, and in the absence of the plaintiff; that when made out, it and the policy a'ready filled up and signed were taken to the plaintiff's store; that the application was not read