Kister v. Lebanon Mutual Ins.
18 A. 447
Pennsylvania Court of Common P...
1889
Check Treatment

Opinion,

Mb. Justice Clark:

That Strominger was the agent of the company in effecting this insurance, is too plain to admit of discussion. He subscribed his name to the application as agent; he made a statement of the exposures as agent, and approved the risk as agent; and all this was brought to the immediate notice of the company before the policy issued. The company forwarded the policy to him and he delivered it, lifted the premium, embraced it in a formal report to the company at the end of the month, deducting his commissions, and sent it to the special agent. He subsequently received all the assessments and gave the receipts which were recognized by the company, and were at the trial given in evidence. He was without doubt the agent of the company in this particular transaction, and must be so regarded.

The policy contains a clause as follows:

“If any broker, or other person than the assured, shall have procured this insurance to be taken by the company, such broker or other person shall be considered the agent of the assured and not of this company.”

It is said that the defendant is a mutual company, of which the plaintiff is a member, and he will be presumed to have known this regulation. But Kister was not yet a member of the company. The application was one of the preliminary negotiations to that end, and certainly he will not be presumed to have known in advance of a provision in a policy which had not yet issued. But according to our construction, the agents of the company are not embraced in this provision; the refer*564ence is to persons operating on their own account, or on behalf of the assured, and not representing the company in procuring the insurance. The use of the term, “broker,” indicates the class of persons intended. Where general words follow particular ones, the rule is to construe them as applicable to subjects ejusdem generis. If it was intended by the policy to provide that the company’s agent, when taking an application, was not the company’s agent, but the agent of the assured, it would have been an easy matter to say so. Susquehanna Ins. Co. v. Perrine, 7 W. & S. 348, is a case of that kind. There a person preparing the application was styled as surveyor, and it was provided that such applications might be made either by the applicant “ or by the surveyor,” and in all cases the assured will be bound by the application, for the purpose of taking which “ such surveyor will be deemed the agent of the applicant.”

Assuming the truth of the matters alleged in the offer, this case bears a close analogy to Eilenberger v. Insurance Co., 89 Pa. 464; for the policy in that case contained a provision similar to that in the policy in suit, a provision, however, which contained no restrictive words whatever; and it was held that they did not apply to an agent of the company who solicited insurance, made out applications, sent them to the home office, delivered the policies and remitted the premiums. Whilst we have no particular evidence as to the authority of Strominger, these are the acts which he performed, and they were approved by the company. The other cases cited by the company on this branch are fully discussed and distinguished in the Eilenberger case, and further reference to them seems unnecessary now. “ An examination of the facts in those cases,” says Mr. Justice Tbunkey, “ will aid in understanding the scope of the opinions. In each there was no question but that the warranty was made, and it was conceded that if there were a mutual mistake between the contracting parties, parol evidence was admissible to reform the policy. None declares that the fraud or mistake of a knavish or blundering agent, done within the scope of the powers given him by the company, will enable the latter to avoid a policy to the injury of the insured, who innocently became a party to the contract. The authorities go far, very likely not too far, in holding the *565assured responsible for his warranty, and in excluding oral evidence to contradict or vary it; but they do not establish that where an agent of the assurer has cheated the assured into signing the warranty and paying the premium, and the policy was issued upon the false statements of the agent himself, the assured shall not prove the fact and hold the principal to the contract, as if he had committed the wrong.”

A copy of the application accompanied the policy, and it is argued that Kister could and ought to have read it, and, if he had done so, he would have seen the answers were untrue. These are considerations which were properly addressed to the jury. We cannot say that the law, in anticipation of a fraud upon the part of a company, imposed any absolute duty upon Kister to read his policy when he received it, although .it would certainly have been an act of prudence on his part to do so: Howard Ins. Co. v. Bruner, 23 Pa. 50; Insurance Co. v. Wilkinson, 13 Wall. U. S. 222. One thing is certain, however; the company cannot repudiate the fraud of its agent, and thus escape the obligations of a contract consummated thereby, merely because Kister accepted in good faith the act of the agent without examination.

We are of the'opinion also, that if the amount of the incumbrances was not increased during the continuance of the policy and before the date of fire, there was no breach of the condition against incumbrances, within the spirit and meaning of the policy. It may be conceded that in case of a warranty, it is a matter of no consequence whether or not the act stipulated for be material to the risk. One of the objects of the warranty, it is said, is to preclude the controversy as to the materiality of the thing in question. Yet it must still he ascertained, under the ordinary rules of construction, what the thing is that is warranted, and this being ascertained, the insured is held to a full and literal performance of it: Home Life Ass’n v. Gillespie, 110 Pa. 88. But this covenant or condition against future incumbrances does not stand upon the footing of a warranty. The warranty covers-the representations contained in the application, whilst the condition referred to is a provision of the policy only, and is not within the terms of the warranty. The incumbering of the premises to be insured was intended to operate as a forfeiture. Now, if it be assumed that the plaintiff’s proof would *566come up to the offer, which we say should have been received, it would appear that the plaintiff, at the time o£ the application, disclosed the fact that there were liens to the amount of $4,000 against the premises insured; that some of these were paid, but that he did not know how much; that at the time the application was made the amount of these incumbrances was less than $3,000; that at no time did they exceed that amount, nor equal the amount represented. This provision of the policy is based upon the increased risk resulting from incumbrances ; a person is supposed to have less interest in the preservation of his property when it is incumbered beyond its value. If the testimony contained in the offer is true, the company was willing to assume the obligation with the incumbrances then existing, and if these incumbrances were not increased in amount during the continuance of the policy, then the company was merely held to the risk which it at first assumed, and no more. The applicant, in stating the amount of incumbrances on his property, may include not only those actually entered, but such as are liable to be entered; for if he has given a judgment note or bond, he knows that it may, and probably will be placed upon record. He may not have knowledge of the amount actually entered, but be able to state the amount in condition to be entered, and may represent the amount of liens accordingly. If the lien of one of the judgments entered should expire, it would certainly not be treated as a breach of the condition to have it revived; or, if the assured, in order to raise money to pay a lien pressing for payment, should enter another in its place of equal amount, that would not affect the risk upon the premises insured; yet, in either case, the assured may be said to “ have the same incumbered.” The question we have been considering was referred to, but not decided, in Insurance Co. v. Schmidt, 119 Pa. 449.

Indemnity is the real object and purpose of all insurance, and this is to be kept constantly in view, and favored in the construction of policies of insurance. Such contracts are to be construed liberally, and it is presumably the intention of the insurer that the insured shall understand that in case of loss he is to be protected to the full extent which any fair interpretation will give: Teutonia Ins. Co. v. Mund, 102 Pa. 95. “ Forfeitures are odious in law, and are enforced only *567where there is clear evidence that that was what was meant by the stipulations of the parties. There must be no cast of management or trickery to entrap the party into a forfeiture: ” Helme v. Insurance Co., 61 Pa. 107.

The judgment is reversed, and a venire facias de novo awarded.