195 Iowa 250 | Iowa | 1923
I. The policy in suit was issued by the defendant Iowa State Live Stock Insurance Company. This company having gone into liquidation, the defendant Farmers Live Stock Insurance Company assumed its policies. The last named defendant concedes its liability to the same extent as the former company would have been liable. We shall not differentiate between the two defendant companies in the discussion, but shall refer to them as one entity, and as the insurance company. The policy in suit purported to be issued to E. A. Smith, one of the plaintiffs herein. It was also made payable to the plaintiffs Simonton and Wyckoff, as their interests may appear. These last named plaintiffs joined With Smith in the action, and
(1)“Because the undisputed evidence in this case shows that the death of the sows described in the policy of insurance herein under the pleadings, that they did not meet death by accident.
(2) “That the undisputed evidence shows that said sows mot their death by and through the negligence of E. A. Smith, ■ one of the plaintiffs herein.
(3) “That the undisputed evidence shows that there was a breach of warranty contained in the application, which is a part of the policy as to the conditions and warranty as to the care of the animals, and that they would not be exposed to danger.
(4) “That the undisputed evidence shows that the plaintiff E. A. Smith was not the sole and unconditional owner of the subject of insurance.”
(5) Because the evidence was without dispute that Smith obtained the insurance by false and fraudulent representations as to the cost of the animals and as to his actual payment of cash therefor.
“Goldie C Second never had a litter of pigs. She was born November 6, 1919. Sows of this kind are •generally bred at six to eight months. It would make a difference in the value whether she was a breeder or nonbreeder, and Goldie C Second was worth about $45 to $50, if she was not a breeder. I have bought hogs from Simonton and Wyekoff, and they have bought of me, and I have helped auctioneer sales for them, and I was a ring man at this sale. As a rule, ring men generally do considerable boosting. At this sale, there were about four ring men, all breeders of this particular kind of hogs. At these fine stock sales, these ring men usually do a lot of blowing and puffing. Just by reading it and hearing it, I know there is a great deal of exchanging among them. One man will attend another fellow’s sale and bid away up on the stuff, and he in turn will bid on the other’s stuff, when he has a sale. I know Baker & Stockman [attorneys for defendants]. I remember a particular conversation we had over in their office Monday morning. I told them I believed Goldie C Second was worth from $150 to $200, if I wanted to buy her. I think I actually made a mistake when I told them that. I should have said, worth about $2,000. I remember we were talking about these fancy prices, and I told them there that Goldie G Second was worth about $150 to $200, if I would want to buy her, and that Spotted Queen Second was worth about $250 to $300, if I wanted to buy her. That was my judgment.”
The witness Gilmore, who was a breeder from Illinois, and had assisted at the Simonton and Wyekoff sale of July 21, 1920, admitted on cross-examination that he knew nothing about the breeding of these two sows. He did not know sire or dam or
Whether Smith was a “ringer” or a mere dupe at the Simonton and Wyckoff sale, we shall treat as an open question, upon this record. On the one hand, he appears to have given his note for the purchase price at 8 per cent interest, and secured the same by mortgage. On the other hand, he appears to have been well protected by the collateral agreement, which
(1) How long would it take Smith to pay this purchase price, with 8 per cent interest, out of the product of the sows?
(2) How long could Simonton and Wyekoff afford to pay an annual insurance premium of $1,350, while waiting for Smith to realize the principal and interest out of such product?
Smith’s successful bids at the sale were in round numbers, and one of them, at least, was somewhat spectacular. The bid of $3,000 made for Goldie C was made, not by Smith, but by his son, a little lad nine years of age, who was proclaimed by Smith to the attendant crowd as a member of the firm of Smith & Son, and as part owner of the purchased animal. These are but side lights, and tend to cast doubt upon the sober sincerity of the big undertaking which Smith so cheerfully assumed. But the outstanding and material fact in the case is that, though Smith was the insured, as the purported owner, and procured the insurance and made the false representations, there never was a moment when he had a dollar of direct interest in the insurance or in the premium which paid for it. Such interest as he had was indirect, and was hostile to the survival of the sows. Nor was the interest of Simonton 'and Wyekoff any less hostile. The scheme thus conceived and put into effect. was calculated to create a moral hazard in the highest degree. It clearly indicated a willingness on the part of Simonton and Wyekoff to sell the sows to the insurance company for 80 per ■ cent of a purported price sufficiently inflated to stand the discount. It was well calculated to advance the possibilities of accident to a high degree of probability that the sows could not survive the insurance term. The accidental death which resulted on November 30th was the simplest solution of the double conundrum, and operated *to the affirmative pecuniary advantage of Simonton and Wyekoff, and to the discharge of Smith
This brings ns bach to the basic proposition that Smith’s representation of value and of purchase price was thoroughly false, both in letter and in spirit.
*258 11 The general rule is • that the principal is bound by the knowledge of his agent, and that rule is based on the duty of the agent to communicate to the principal his knowledge with reference to the subject of the negotiation, and the presumption that he has performed that duty. Distilled Spirits, 11 "Wall. 356. There are exceptions, however, to the rule. * * * The notice to the pinncipal of such facts as were known to the agent, and were present in his mind at the time of the transaction, but the knowledge of which was not acquired in the business of the agency, is constructive. Ordinarily, the circumstances are such as to beget a presumption that the communication was in fact made. But when they are of such character that, according to all human experience and observation, the probability is just the reverse, it would be absurd to indulge that presumption. See Kennedy v. Green, 3 Mylne & K. 699. In the present case, if defendant had had actual notice when it took the draft of the facts known to Anderson, it would have been chargeable. But there is no probability that it would, with that knowledge, have taken it, and thereby incurred the liability. If he had communicated to it the facts within his knowledge before receiving the benefits which accrued to him under the transaction, all the objects he had in view would have been defeated. His connection with the transaction with plaintiff, and his object in disposing of the draft, were such that it is extremely improbable that he ever made the communication to it, and we think it cannot be charged with constructive notice of the facts. ’ ’
See, also, 2 Corpus Juris 868 to 871; Innerarity v. Merchants’ Nat. Bank, 139 Mass. 332 (1 N. E. 282).
We find no merit in the pleaded waiver. We are of the opinion that the trial court properly directed a verdict for the defendant. Its judgment is, accordingly, — Affirmed.