Home Insurance & Banking Co. v. Lewis, 48 Tex. 622

48 Tex. 622 | Tex. | 1878

Gould, Associate Justice.

“In cases of written agreements, where there has been an innocent omission or insertion of a material stipulation, contrary to the intention of both parties,” equity will reform the contract, (1 Story’s Eq., sec. 155,) and “ a policy of insurance is just as much within reach of the principle as any other written contract.” (Andrews & Shepherd v. Essex Fire Ins. Co., 3 Mason, 10; Kerr on Fraud and Mistake, 421; Harris v. Columbiana Co. Ins. Co., 18 O., 116; Firemen’s Ins. Co. v. Powell, 13 B. Mon., 311; National Fire Ins. Co. v. Crane, 16 Md., 260; Flanders on Fire Insurance, 83.)

Though it was at one time doubted whether a policy would be reformed to the extent of altering a warranty or a condition precedent to any assumption of liability by the insurers, the more recent authorities hold that mistakes in the warranty, where the agent of the insurance company, to whom the applicant correctly stated the facts, has made the blunder in reducing the application to writing, will be relieved against, or will operate as an esteppel to prevent the company from making the warranty available as a defense. (May on Ins., sec. 497, et seq.; Union Mut. Ins. Co. v. Wilkinson, 13 Wall., 222; Flanders on Fire Ins., 100, and references; Id., 303; 18 Ohio, supra; 7 Nev., 186; 25 Wis., 291; 4 R. I., 141; 1 Smith Lead. Cas., 789, 791; Howard Fire Ins. Co. v. Bruner, 11 Harris, 23 Penn., 57.)

If the warranty is not as agreed on by both parties, but by mistake is incorrectly reduced to writing, it would seem clear that the mistake should he corrected.

But a falsity of a part of the description does not vitiate a deed, where from the whole instrument the thing conveyed may be certainly ascertained. (2 Pars. on Cont., 514; Berry v. Wright, 14 Tex., 273.)

In such eases, the mistake is corrected by construction; and this is so as to the description of the thing insured, though made a warranty in the policy of insurance. (Flanders on Fire Ins., 242; Yonkers v. New York Fire Ins. Co., 6 Robert., (N. Y. Superior Court, 1868,) 319.)

That there was a mistake both in the application and the policy, in inserting the number of the block as 309, is evident, because that block was wholly unimproved; and that the true number of the block should have been 609, was equally evident, because on that block, and that block only, were to be found, on lots numbers 11,14 and 15, houses such as were described and belonging to the assured, Charles Lewis. There was enough of the description true to correct the mistake in the number of the block by construction, if it were open to correction at all.

The officers of the company testify that -at that time it was the rule of the company not to accept risks in one block, in towns of the size of Hearne, to an amount over $3,000; that at the time of Lewis’ application they had a risk in favor of J. T. Burt, on property in block 609, to the amount of $2,500, which risk was not cancelled until March 17, 1873, and that if the number of the block had been known the risk would have been refused.

On the other hand, Lewis testifies that Burt had removed from the premises before his application, and under its terms it is claimed that the policy thereby became void at once. The inference is, that, with full knowledge of all the facts, the rule would not have prevented the insurance. It does not appear that Lewis was informed as to the rule of the company stated above.

How, in so far as the materiality of the number of the block to the making of the contract was a question of fact, it was one for the jury. If the fact were that this mistake in the number of the block was not material, that is, if it would not have prevented the contract had the company known the true number of the block, and if the mistake was caused, not by the plaintiff, but by the act of defendant’s agent, then we think it was not error to correct and to enforce the corrected contract. In that event, it belongs to the class of trifling mistakes not affecting the validity of the contract. (Long on Sales, 284.)

The insertion in the contract of a warranty as to every item of the description as given by the assured, to protect the company against the fraud or mistake of the assured, does not establish a difference in the essential elements of insurance and other contracts. If the minds of the contracting parties actually met, save as to an immaterial matter, the contract was complete. By the terms of the contract, the application is considered a part thereof and a warranty by the insured, and “ any false representation by the assured of the condition, situation, or occupancy of the property, or any omission to make known any fact material to the risk, or any misrepresentation whatever, either in written application or otherwise,” avoids the policy. For the purpose of guarding against false representation by the assured, whatever is warranted is material, and the accused cannot dispute it. But it does not follow that the minds of both contracting parties must have agreed on every particular embraced in the warranty, otherwise there is no contract. If so, there could be no contract when the parties have misunderstood each other in any matter of description, however trivial or minute. The precautions of insurance companies against fraud should be enforced; but those precautions do not, and cannot, prevent mistakes in reducing insurance contracts to writing; and where these mistakes are as to immaterial matters which would not have prevented the contract, they should be corrected and the contract enforced.

It follows, from these views of the law, that the petition stated a good causé of action, and that the court did not err in so holding.

The charge given is as follows :

“Plaintiff claims that the insurance effected by him was .applied for on block 609 in the town of Hearne, and written .down by mistake of the agent of the insurance company as ¡block 309. The defendant claims the error to have been made by the plaintiff. If the jury believed, from the evidence, that the plaintiff inaccurately stated the block, either by design or accident, and that such error was material, and that the company would not have made the insurance if the block had been correctly stated, and that the company did not subsequently, during the continuance of the policy and before the fire, know correctly the actual situation of the property on which Lewis was insured, with reference to other property insured by the company, the jury will find for the. defendant. But if the jury believe, from the evidence, that the error in the number of the block was in fact immaterial, or that the mistake was caused by the agent of the company, or that subsequently to the issuance of the policy, and before the fire occurred, the president or agent of the company became aware of the location of Lewis’ property, with reference to other property insured by the company, and took no step to cancel said policy, the jury must find for the plaintiff. The jury must judge, from the evidence, how far the mistake of the number of the block was material to the insurance company.”

The latter part of this charge assumes that the president was an officer whose duties and authority were such that his knowledge of the locality of the property would affect the company with notice. If the president represented the company for the purpose of making contracts, or had authority equivalent to that of a general agent in making contracts, and became aware of the mistake, this charge was correct. But the evidence is that he was not so authorized. There is no other evidence as to his duties or authority, except that he inspected this property, for the purpose of seeing if the flues were safe. We are not informed by the record as to what were the powers or duties of the president, and find nothing to justify the assumption, as matter of law, that notice to the president was notice to the company. (Flanders on Fire Insurance, 179; Keenan v. Dubuque M. Fire Ins. Co., 13 Iowa, 382.) Although the point is clearly presented in the brief of appellant, and supported by authorities, the appellee has not met it otherwise than by assuming that the verdict of the jury was correct on other grounds. But, for aught that we can know, the verdict may have been rendered on the ground of waiver, and not on other grounds. We are constrained, therefore, to conclude that this error in the charge is fatal to the judgment.

The judgment is accordingly reversed and the cause remanded.

Reversed and remanded.