with a prayer that the appellee should be adjudged and decreed the owner of said lands, free from all right, title interest and equity of redemption of appellant.

The second paragraph was in general denial of the complaint.

A demurrer to the first paragraph of the answer was overruled and a reply in denial filed. A trial resulted in a general verdict for the appellee, accompanied by some answers to interrogatories, which were not inconsistent with it, and a judgment followed, amongst other things decreeing that the appellee should hold, possess and enjoy the lands in controversy free and discharged of all right, title and equity of redemption of appellant.

A good many questions were reserved in the evidence and on the instructions of the court, which were brought to the attention of the court in proper form by a motion for a new trial.

The first question for us to consider here in its natural order, is the sufficiency of the first paragraph of appellee's answer. That paragraph is somewhat informal in its construction, as it purports on its face to be both an answer and a counterclaim-a double office which this court has decided that a single pleading cannot perform. Campbell v. Routt, 42 Ind. 410. As an answer, it sets up affirmative matter inconsistent with the allegations of the complaint and avers the entering into a new agreement upon a sufficient consideration, which constituted a good defence to appellant's claim for a specific performance of the original contract between the parties. Story's Equity, vol. 1, sec. 770; 1 Greenl. on Ev., Secs. 302, 304; Browne on the Statute of Frauds, Secs. 409, 429, 430, 433 and 434, Arnoux v. Homans, 25 How, P. R. 427; Billingsley v. Stratton, 11 Ind. 396; Baldwin v. Salter, 8 Paige Chy. 472. Considered therefore as an answer merely, it was sufficient on demurrer.

Upon the trial, however, it was treated principally, if not entirely, as a counterclaim and it was evidently on that theory that a judgment was rendered in favor of the appellee as above recited. It is consequently as a counterclaim that we have mainly to consider it here. Its sufficiency as a counterclaim, as well as an answer, has been very ably discussed by both parties and their very elaborate citation of authorities bearing upon the points at issue between them has greatly assisted us in coming to a conclusion upon the legal questions involved in the discussion.

It is very earnestly contended by the appellant that the alleged surrender and concellation of the defeasance set up in the paragraph under consideration did not in any manner divest the original contract between the parties of its mortgage character and hence constituted no defence to his complaint and that, for still stronger reasons, such surrender and concellation did not make out a case for the affirmative relief demanded in that paragraph. Many of the authorities cited by him lay down abstract rules which would seem to support the positions thus assumed.

But the appellee insists that the surrender and concellation of the defeasance averred by him, constituted a new and binding contract between

the parties which superseded the original agreement and which practically converted the deed from the appellant to him into an absolute conveyance in fee simple.

That the deed and defeasance, taken together, constituted only a mortgage from appellant to appellee, is a proposition too well established to require the citation of authorities to sustain it. As to that, there is no controversy between the parties here. But what effect, if any, did the surrender of the defeasance for cancellation have on the original agreement between the parties, conceding it to have been surrendered in the manner and under the circumstances alleged by the appellee?

In Washburn on Real Property, vol. 2, p. 62, 4th ed., it is said: "The doctrine universally applicable is, if once a mortgage, always a mortgage. Nor can it be made otherwise by any agreement of the parties made at the time of the execution of the deed, nor upon any consideration whatever. Equity will not admit of a mortgagor embarrassing or defeating his right to redeem the estate by any agreement which he may be induced to enter into in order to effect a loan.

"This does not preclude any subsequent bona fide agreement in respect to the estate, between the parties; and where a mortgagor voluntarily cancelled the instrument of defeasance which he held, it gave to the deed which it was intended to defeat the effect of an original, absolute conveyance as between the parties."

In the case of Ramsen v. Hay, 2 Edw. Chy. 534, it is also said: "There is nothing in the policy of the law to prevent a mortgagee from acquiring an absolute ownership by purchase from the mortgagor at any time subsequent to the taking of a mortgage, and by a fresh contract to be made between them. Courts view with jealousy and suspicion any dealings between the mortgagor and mortgagee to extinguish the equity of redemption; but, if it be fair and honest on the part of the mortgagee, the purchase will not be disturbed. The law only prohibits a mortgagee from availing himself of a stipulation contained in the mortgage deed of some covenant or agreement forming part of the same transaction with the loan, and the taking of the security, by which he shall attempt, upon the happening of some future event or contingency, to render the estate irredeemable and obtain an absolute ownership. In such cases the maxim applies of once a mortgagee, always a mortgagee.' Henry v. Davis, 7 Johns. C'hy. 40; Clarke v. Henry, 2 Cowen, 332. But it can not interfere with the right to foreclose when the mortgage has become forfeited, nor with any fresh contract which the mortgagor may choose to make with the mortgagee for a sale or relinquishment of the equity of redemption, and vesting the latter with an irredeemable estate."

In Hilliard on Real Property, vol. 1, page 546, 4th ed., it is also said: "Where a deed is given, accompanied by a defeasance which is not recorded, a subsequent surrender and cancelling of such defeasance by agreement, for the purpose of giving the grantee an absolute title, without un

fairness between the parties, or as to strangers, and before any rights of creditors have intervened, will vest the absolute title in the grantee.

The same doctrine is also recognized in Hilliard on Mortgages, vol. 1, 4th ed., page 84, sec. 18. There are numerous reported cases to the same effect. See West v. Reed, 55 Ill. 242; Falis v. C. M. F. Ins. Co., 7 Allen, 46; Rice v. Bird, Pick 350; Trull v. Skinner, 17 Pick. 213; Green v. Butler, 26 Cal. 595; Harrison v. Trustees, 12 Mass. 456; Marshall v. Stewart, 17 Ohio, 356; Venmun v. Babcock, 13 Iowa, 194.

After a careful review of the foregoing authorities, and many others which we deem it unnecessary to specifically refer to here, we are of the opinion that the surrender of the defeasance for cancellation, under the circumstances as alleged, vested an absolute title to and ownership in the lands in suit.

The paragraph of the answer we are discussing is not formally and technically pleaded as a counterclaim, and does not, in precise terms, ask for a recovery of the possession of the lands in dispute, or for a quieting of the appellee's title to those lands, but we think it alleges substantial facts sufficient to entitle the appellee to some kind of affirmative relief under it, and that it was properly held good upon demurrer.

[The judgment was, however, reversed for errors committed by the court in its charges to the jury, and which raised different questions from those above considered.]

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1. AGENT PROCURING INSURANCE-VOID CONDITION IN POLICY,-A condition in a policy of insurance which, in effect, declares that in everything relating to the effecting of the insurance, the agent who procures it shall be deemed the agent of the insured and not of the insurer, involves a legal contradiction and is void.

2. STATEMENTS IN AN APPLICATION FOR INSURANCE are ordinarily representations merely, unless converted into warranties by a refereuce to them in the policy and a manifest purpose that the whole shall form an entire contract. And a warranty in an application may be limited by the conditions in the policy.

3. APPLICATION- ANSWERS WRITTEN BY AGENT -ESTOPPEL.-Where, in the preparation of an application for insurance, answers are given by the assured to the interrogatives of the agent of the insurers, and the latter writes down or dictates an erroneous deduction or result, he assumes for his principals that it is true, or that it is the equivalent of the verbal disclosure. And in such a case a court of law, borrowing from equity the doctrine of estoppel in pais, estops the insurers to

insist on a breach of the warranty, or untruth of the representation, but permits the insured to prove the truth of such disclosure-the rule excluding parol proof to vary or contradict a written instrument not being applicable.

4. MATERIAL FACTS MUST BE DISCLOSED BY THE ASSURED. It is the duty of an applicant for insurance to make disclosures to the insurers of all facts material to the risk; and this duty is the same whether required by the charter of the insurers or not. The insurers are entitled to know the whole truth, and the withholding of any material fact is tantamount to a false representation, and will be visited with the same penalty.

5. OVER-VALUATION OF PROPERTY.-Every overvaluation of property for insurance will not avoid the contract of insurance. If the assured, in good faith, puts a value upon the property greatly in excess of its cash value in the market, believing it to be worth the valuation put upon it, and not intending to mislead or defraud the insurance company, then such overvaluation will not defeat a recovery on the policy. To render void a contract of insurance for over-valuation there must be some element of fraud or intention to deceive, with a view to obtain insurance on the property for a greater amount than could otherwise be obtained,

6. NOTICE, OR WAIVER OF NOTICE, OF OTHER INSURANCE.-Where an applicant for insurance on certain property gives notice, in his application, that he has applied to another company for insurance to a specified extent upon the same property, and the insurers last applied to, on the face of the policy issued by them, consent that such a policy "concurrent" as the assured had already applied for might be underwritten, that is a sufficient notice, or waiver of further notice, of the issuance of the policy first applied for.

7. WARRANTIES-HOW LIMITED.—A warranty in a contract of insurance, as to the condition, situation, risk and value of the property which is the subject of the insurance, can not be extended to any property, or any matters, not specified in such warranty.

ERROR to the Circuit Court of Hind County.

W. L. Nugent, for plaintiff in error; Harris & George, for defendant in error.

SIMRALL, C. J., delivered the opinion of the


Wilson, the local agent of the Planters' Insurance Company, in Boliver county, solicited and procured Myers to effect the insurance in question in that company. He had been regularly appointed in writing. His general duties were to solicit and procure customers, take applications for policies, collect the premiums, and forward both to the principal office at Jackson, and give binding receipts for insurance for fifteen days. To facilitate him in the business, he was furnished with printed blanks of applications, to be filled up under his supervision, which were intended to inform the company of all circumstances material to the risk. It must be assumed that Wilson was selected on account of his supposed fitness for the employment. But he was also furnished with printed instructions respecting his duties. He was directed to publish the company as widely as possible, to canvass diligently for customers, to study carefully "the blanks and instructions, so that he would be able at once to make out and understand each form

of application correctly." In another place he is assured that" a thorough study of the instructions and blanks will enable him to answer any question understandingly, as to the company's manner of doing business,"" and he will be able to fill out the blanks rapidly and correctly." He must inform applicants that the concealment of any material facts renders the policy void. In his deposition Wilson gave an interpretation of what he conceived to be his duty, which accords with the instructions, to wit. "It is my invariable rule to interrogate the applicant, and, upon his replies, if necessary, I instruct him how to frame his answers."

The defendant below, the insurance company, contested the plaintiff's right to recover, on the ground that untrue answers were given by Myers to the questions propounded in his application for insurance. To that the insured replied that there are no misrepresentations or concealments, but the answers are true, whether they shall be regarded as warranties, or representations of the facts pertaining to the condition, situation of the property, the incumbrances upon it, value, etc. And, however that may be, they were fully disclosed to Wilson and known to him, and therefore the company are precluded from setting up that defense. To that the company rejoins that the insured covenanted with them that, as to all such matters, Wilson should be his agent, and not the agent of the company.

The questions arise on the covenant in the application "that the foregoing, with the diagram thereon, is a full and true description and warranty of the conditions, situation, risk, and value of the property on which the insurance is applied for; and which shall form the basis of this policy. * * * And I, the applicant, do hereby further agree that the policy of which this application is the basis, and which will be issued thereon, shall be accepted by me, with the express understanding that, if the note or notes given for the premium


* shall be unpaid at the time of any loss, the policy shall be considered null and void." And, also, the fourteenth condition printed on the back of the policy, to wit: "It is part of this contract that any person other than the assured, who may have procured this insurance to be taken by the company, shall be deemed to be the agent of the assured, * * and not of this company, under any circumstances whatever. in any transaction relation to this insurance."


The verbiage of this condition is not candid; it seems to have been used with studied design to obscure the real purpose. It is a snare set in an obscure place, well calculated to escape notice. It is not written or printed on the face of the policy. It is not so much as alluded to in the application; nor is the agent, in his printed instructions, enjoined to inform those with whom he treats of it. The average man of the community, the layman, interested in such a policy, after carefully reading it over, may well be supposed to hold this soliloquy: "What does this mean? Who is the other person referred to, who might have helped to procure the insurance? I called in no friend to aid me with advice. No one was engaged about it,

except the agent and myself. Surely the allusion can't be to him, for he acted for and represented the company. If he were meant, the language would have pointed unmistakably to him." The covert meaning is that Wilson (and all others in his position,, in anything done or said by him in procuring the insurance," shall not in any circumstances whatever, or in any transaction relating to the insurance," be the agent of the company, but the agent of the assured.

Wilson was constituted agent for the company. The charter expressly authorized the Planters' Insurance Company to appoint agents and define their duties. Acts 1874, p. 138. There is no pretense that Wilson ever surrendered his trust, or that the power was ever revoked. If he could by stipulation be converted into an agent for the assured, he must be held as also the agent of the company; for in that capacity he professed to deal with Myers. It would be difficult for him to represent both parties as agent, touching the same subject-matter. Ostensibly he acted for the company in soliciting risks to be taken by it, in receiving and transmitting premiums, and in delivering policies. He was supplied with the requisite forms, and, in effect, was instructed to aid applicants to fill them up. On well-settled principles, he was competent to bind his principal within the legitimate range of his employment. He appeared before the public as their trusted and accredited attorney in fact. It is fair to presume that he had their confidence, and that they indorsed his skill and qualifications. Surely credulity can not be imputed to the public if they accepted and treated with Wilson as the representative of the company within the pale of his employment, and believed (unless his authority was restricted) that he could well do all things within the line of his duties which the company themselves could do. If his powers were restricted within narrower limits than the nature of his business would indicate, it was incumbent on the company to give notice to those who negotiated with him. Therefore, the propriety of the enunciation in Insurance Company v. Mahone, 21 Wall. 156: "That the acts and declarations of the agent are to be considered as the acts and declarations of the insurer, and the applicant was justified in so understanding them." Why justified in that conclustion? Because he purported so to act, and was held out to the public in that character by his principal; and the assured had no knowledge of private restrictions, if there were any. It is the suggestion of morality and reason that parties should deal with each other in the characters which they assume.

The fourteenth condition under review is extraordinary; whilst holding on to Wilson as the company's agent, it exacts a covenant from the assured that in all things concerning procuring the insurance, and in all circumstances relating to the insurance, he is the agent of the assured. The object is, plainly, to relieve the company from all responsibility for the acts and declarations of their agent, and to make the assured take the risk of his errors and mistakes. We do not say that the company could not restrict the apparent and ostensi

ble authority of its agents. It might be altogether fair and reasonable to write or print in the applications, with which the agents were supplied, a notice that the company, in taking risks, would be governed exclusively by the surveys and answers to the written interrogatories, and not by any verbal answers given to the agents, or information imparted to him, unless written in the application. That would give notice to customers that the consequences of erroneous answers, or concealments of matters material to the risk, not disclosed in the written application, rested on them, and on them alone. In such circumstances, ordinarily prudent men would seek the advice and assistance of those who were skilled in such matters.

Counsel for the respective parties have directed much of their arguments to the questions whether the statements of Myers, as to the condition, sitution, title, and incumbrance, are warranties or representations.

A warranty extends to every matter which it embraces, whether material to the risk or not; and the assured commits himself to their literal truth. Representations do not effect the contract if not willful, or if not material. They are collateral to the contract; and it will suffice if they are equitably or substantlally complied with. It is sometimes difficult to determine whether the statements of the assured belong to the one class or the other. When they appear on the face of the policy, they do not necessarily become warranties. Their character must be gathered from the form of the expression, the purpose of the insertion, and by their relation to other parts of the instrument. It is an established maxim that warranties will not be created, or extended, by construction. Daniels v. Insurance Co., 12 Cush. 416; Miller's Case, 31 Iowa, 226; Forbish's Case, 4 Gray. 337, 340. Ordinarily, statements in the applications are representations, unless converted into warranties because of a reference to them in the policy, and a clear, manifest purpose that the whole shall form one entire contract. If the reference to the application is for another purpose, or no purpose is indicated to make it part of the policy, it will be so treated. Campbell's Case, 98 Mass. 391; Snyder's Case, 13 Wend. 92.

Following the description of the property are these words: "For a more particular description, and as forming a part of this policy, by which the assured is to be bound, special reference being had to the assured's application and survey," In an anterior part of the policy, is the declaration that the property is insured "subject to the conditions and stipulations indorsed thereon, which constitute the basis of this insurance." One of the stipulations referred to, and printed on the back of the policy is as follows: "1st, that the basis of this contract is the application; ** * * and if such application does not truly describe the property, this policy shall be null and void. And any false statements or representations of facts material to the risk shall be deemed fraudulent, and be an absolute voidance of the policy."

The application does, undoubtedly, contain a warranty, and is imported into the contract. But

the policy qualifies the stipulation in the application, within much narrower limits. The condition alluded to in the body of the policy is to this effect: that the policy shall be voided if the assured has not correctly described the property, and if he has made any false statements or misrepresentations in the application, of facts material to the risk. In the face of the policy, the insurers declare, in substance, that they assume the risk subject to this and the other conditions indorsed thereon, "which constitute the basis of the contract." When we come to look closely at what that basis is, we find it to be that the statements are representations of facts material to the risk. The falsity of any fact, however trivial and unimportant, the subject of a warranty, avoids the contract. But the underwriter assumes the risk, not on the warranty of the assured that his statements are absolutely and literally true, but on the faith that his statements and representations are true in all respects material to the risk. To avoid the policy the statements must be not only untrue, but such untruth must be predicated of a fact or facts material to the risk. If it be about a immaterial matter. no such consequence would follow. A provision that the statements are to be regarded as warranties is controlled by a subsequent recital that the assured is responsible for their truth, so far as they are material to the risk. So, if the covenant is that the statements are true as to "condition, value, risk," etc., but as to all other matters representations merely. Lindsay v. N. M. Ins. Co., 3 R. I. 157; May on Ins. 166, sec. 160.

This case is very much like one recently before Lord Cockburn, Fowkes v. Manchester & London Ins. Co., largely quoted in May on Insurance, section 168, wherein the Queen's Bench held that, construing the declaration of the assured and the policy together, the fair import of the contract was "that the assured agreed that his answers to the questions propounded by the company shall be the basis of the contract between them-that is to say, if he was guilty of any fraudulent concealment or designedly untrue statement in these answers, the policy shall be null and void," etc. So in this case; the first condition refers to the application, and declares if the assured has made "any false statements or misrepresentations." Elliott v. Mutual Ins. Co., 13 Gray, 139, is, perhaps, more in point. Here, the words "misrepresentations or suppression of material facts" were held to control other expressions in the instrument, and to so far control them as to make it clear that the assured did not warrant. We think in this case that Myers is bound by his statement, as representations, and not as warranties. But whether the one or the other, is not material in the view we have taken of the questions contested.

There are two lines of decisions in the books, which pursue divergent lines. The one holds that parol testimony is inadmissible to show the participation of the agent in the preparation of the application-as, that correct responses were made to the interrogatories, but, on the suggestion of the agent, an incorrect result of such responses was written down by the agent, or the applicant at his

dictation. These decisions rest on the idea that the object and effect of the testimony is to vary or contradict the written contract. Such were the earlier cases in New York and many other states. That doctrine is still adhered to in Massachusetts, Rhode Island and Virginia, and perhaps in some other states. The other class, of later origin, rapidly increasing in numbers and favor, declares that insurance companies constituting local agents to canvass for business, take and forward applications, collect premiums, and give binding contracts of insurance for fifteen days pending applications, (such agents as Wilson), must be held responsible for the acts and declarations of the agents, within the scope of the employment, as if they proceeded from the principal,

The general rule, settled by many authorities, is that the insurers can not take advantage of the omission or mis-statement of any fact which it was their duty to state correctly; and this is true when the defect occurs in the application for insurance, prepared by themselves, or any one by them authorized, with a knowledge of all the facts. Bonley v. Insurance Co., 36 N. Y. 550; Peck's Case, 22 Conn. 575; Bebee's Case, 25 Conn. 51; Franklin's Case, 42 Mo. 457; Beal's Case, 16 Wis. 241. In Malleable Iron Works v. Insurance Company, 25 Conn. 465, the court said of an agent (equipped for business as was Wilson), that he had an implied power to explain the questions and the answers required, and that his error or omission could not be given in evidence as a breach of warranty by his principals. Beal's Case, 16 Wis. 241; Plumb's Case, 18 N. Y. 392; Rowley's Case, 36 N. Y. 550; Moleer's Case, 5 Rawle, 342; Ayer's Case, 21 Iowa. In the American Leading Cases, the annotation to Carpenter's case, after a collation and review of the authorities, states this result: "Where the business of the agent is to solicit for his principal, and procure customers, and he misleads the insured by a false or erroneous statement of what the application should contain, or, taking the preparation into his own hands, procures his signature by an assurance that it is properly drawn, the description of the risk, though nominally from the insured, ought to be regarded as proceeding from the company." May's Case, 25 Wis. 306; Schelliler's Case, 38 Ill. 166; Wilkinson's Case, 13 Wall. 236; Insurance Co. v. Mahone, 21 Wall. If the insurers assume the preparation of the contract, they can not take advantage of the failure of the instrument to express any fact or circumstance that has been duly communicated by the insured, and omitted by negligence, mistake or design by their officers or agents. The principle equally applies when the error or misdescription is in the application, if it was prepared or dictated by the agent. Beal's Case, 16 Wis. 241. These cases, and others that might be cited, deny the applicability of the rule excluding parol testimony which varies or contradicts a written instrument, and place its competency on another ground, namely, "where one party has, by his representations or conduct, induced the other party to the transaction to give him an advantage which it would be against equity and good conscience for him to assert, he will not

be permitted, in a court of justice, to avail himself of that advantage." The courts apply the doctrine of equitable estoppel, so beneficial and just when properly used.

It would seem that, strictly, the more appropriate remedy would be a suit in chancery to reform the contract. Those courts that reject the parol evidence, in the great majority of cases, would relieve in that mode. But, as we have seen, the tendency is to attain the same result at law, by allowing the truth to be proved by parol, and giving to it the force of an estoppel in pais. Whether the disclosures of the assured are made warranties or representations is immaterial. The testimony shows what answers were given to the interrogatories to the agent. They bring to his notice the actual facts. If the agent writes down or dictates an erroneous deduction or result, he assumes for his principal that it is true, or that it is the equivalent of the verbal disclosure. The assured would be regarded as declaring to the insurer: "If the answer, as written, is your understanding of the facts disclosed to your agent, then I am bound by them as' warranties,' or as representations, as the case may be." Mahone's Case, 21 Wall.

If this were a suit in chancery for reformation of the contract, that court would esteem the verbal statements of Myers, in answer to the interrogatories, as incorporated into the contract, and decree accordingly, if there were no other objections. A court of law would reach precisely the same end, by putting the insurer under an estoppel to insist on a breach of the warranty, or the untruth of the representation. It is but another addition to the numerous instances where courts of law have borrowed principles from the equity courts, and adopted and enforced them. Nor should any limitation be put upon the naturalization into the common law of equitable principles, when its methods of procedure and forms of action are adapted to render complete justice.

In Chase v. Insurance Company, 20 N. Y. 54, there was a stipulation in the application (which we have before characterized as reasonable); it was, "that the company would not be bound by any act done, or statement made, to or by any agent or other person, not contained in the application." In the later case of Rohback, 62 N. Y. (1875), literally the same covenant as in the case before us was sustained. It had been condemned by the Supreme Court of New York.

Its inevitable effect is to greatly weaken the indemnity on which the assured rely. It is inconsistent with the acts and conduct of the insurance companies in sending abroad all over the land their agents and representatives to canvass for risks. It is an effort by covenant to get the benefits and profits which these agents bring them, and at the same time repudiate the relation they sustain to them, and to set up that relationship with the assured, and that, too, without their knowledge and consent. It is not a limitation or restriction of power, but the dissolution of the relationship with themselves, and the establishment of it between other parties.

This fourteenth condition attempts a logical and

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