Patten v. Merchants' & Farmers' Mutual Fire-Insurance , 40 N.H. 375 ( 1860 )

Sargent, J.

The exception which was taken to the admissibility of the testimony in this case cannot prevail. The objection was that the interrogatory having been put and answered by the applicants, the present plaintiffs, it was not competent for them thus to contradict or explain such answer. But the testimony offered had no tendency to contradict or explain the answer given by the applicants, and was not offered, that we can see, for any such purpose. All that it did tend to show, and all that it was probably offered to show was, not to contradict the plaintiffs’ answer, for that had already been done by the defendants, by showing that the answer was not true in fact. Nor was it to contradict the fact that the plaintiffs had thus falsely answered the question, nor was it to explain that answer in any way, but merely to show that whatever the answer may have been, however incorrect in its statement of facts, yet, that the agent of the company who drew the application and wrote down this answer of the plaintiffs’ upon that application, at the same time that he did so knew perfectly well that the answer was incorrect, and had full knowledge of the existence of the incumbrances whose existence that answer denied. It is the introduction of a new and independent fact, not for the purpose of contradicting or explaining the answer, but to show that whatever the answer may have been, the defendants had not been, and could not have been misled or injured by it. The only portion of the evidence that could be said in any sense to explain the answer given in the application, was that which was offered to show that there was no fraud on the part of the plaintiffs in answering the question incorrectly. There can be no doubt but that this was competent. "Where it is admitted that a certain act has been done, or false statement made, and it becomes material to inquire whether it was done or made fraudulently or inadvertently, it would be something new and very extraordinary if the evidence bearing upon that question must all be excluded, upon the ground that it tends to explain the act or statement. A simple statement of the position shows its fallacy. There was, therefore, no foundation for this objection. If the defendants’ views of the law of the case were correct, the proper objection would have been that the testimony offered was immaterial, and could not affect the case, if admitted.

But though the question was not raised in that way, yet the same question is raised upon the ruling of the court, which was, that if the jury found that Mr. Topliff, the defendants’ agent, knew of the existence of the mortgages at the time he made application, and that there was no fraud on the part of the insured, the misrepresentation in the application, &c., would not render the policy invalid. Now, if this ruling of the court was right, then the evidence offered was clearly admissible. But if- the ruling was wrong, and the fact of the knowledge of the incumbrances on the part of the defendants’ agent, is not to affect the case at all, then the evidence was simply immaterial and irrelevant.

"Was the ruling of the court correct ?

This ease has once before been transferred (38 N. H. 338), upon the same state of facts substantially as now appears, except this fact of knowledge on the part of the defendants’ agent of the existence of the incumbrances, at the time the application was made; and in the absence of any evidence of such knowledge on the part of the company, the conclusions, as to the effect of the false representations, which were arrived at then, are entirely satisfactory, except that the general current and weight of authority is that the question as to the materiality of the representation is one of fact for the jury, and not one of law for the court. But admitting that the misrepresentation in the plaintiffs’ answer was of a material fact, and one which would avoid the policy in the absence of the knowledge of its falsity, the question here arises, whether the existence of such knowledge on the part of the company’s agent, at the time of the application, changes the position of the case ; and we think, upon an examination of the ease and the decisions upon this subject in our State, that it must be held that such knowledge must and should affect the decision of the cause.

The defendant company is to 'be charged with knowledge of all facts known to their agent. Marshall v. Ins. Co., 27 N. H. 157; Hovey v. Blanchard, 13 N. H. 145; Campbell v. Ins. Co., 37 N. H. 35.

In Boardman v. Ins. Co., 20 N. H. 551, it is said that to have the effect to avoid the policy, the false representation must have been material, or, in the language of Phil. Ins. 410, the fact represented must be “ one upon which the parties can be presumed to have proceeded in making the contract.’’- “A false representation cannot avoid the policy, unless it be on a point material to the risk.” A misrepresentation of any fact that is not material does not avoid the contract, while those that are material do so, because they were “ such as may be supposed to have had a bearing upon the contract, and to have influenced the defendants in adjusting its terms.” This is evidently the true reason why a distinction is made between a misstatement in relation to an immaterial matter, and one that is material; and it is to be presumed, in the absence of evidence to the contrary, that the party does rely upon every representation that is material, and is influenced by it in adjusting the terms of his contract. Hence the propriety of holding, as was held in the former opinion delivered in this case, that, under the circumstances then appearing, the misrepresentation was such as must avoid the policy. But take the case as it is now presented: The defendants, having at the time full knowledge of the existence of the incumbrances, how could they “be supposed to have had a bearing upon the contract, and to have influenced the defendants in adjusting its terms ?” or how could such a representation, however false, be said to be “ one upon which the parties could be presumed to have proceeded in making the contract?” "Why should a misrepresentation, made without fraud, upon a material point, where the facts are fully known to the other party, and where such representation does not amount to an express warranty, as in this case, be presumed to have been relied and acted upon any more than a mis-statement upon some immaterial matter would be ?

So in Marshall v. Columbian Mutual Fire Ins. Co., 27 N. H. 165, it is held that when “ the application is taken by an agent of the company, acting for them, and he is aware of the facts which are not included in the application, the company will be presumed to know them, and under such circumstances an unintentional misrepresentation or concealment of facts will not make void the policy.”

It is claimed in the argument that there is a difference between a concealment of a fact and a misrepresentation concerning the same fact. But if a party intentionally conceals a material fact in his application, and then certifies that he has given a full account of all the circumstances affecting the risk, that would be as much a fraud upon the company, and would avoid the policy as quickly, as though he had made an intentional mis-statement of the same circumstances, and then certified that he had made a true statement, &c. It is as necessary that the company should have a full statement of all material facts, as that the statement of those facts should be correct; and if a company is not to be presumed to have been deceived or misled by such concealment of a material fact, because they had knowledge of its existence, it might be difficult to see how they can any more be held to have been deceived or misled by a mis-statement concerning the same facts, when the company had at the same time full knowledge as to the real state of the case. We see no cause for making any distinction between the two cases. Campbell v. Ins. Co., 87 N. H. 35, is also a strong case in favor of the plaintiff’; and we see no way, so long as these two decisions last mentioned remain as the law of the State, in which this verdict can be set aside, unless the court should undertake to make a distinction where there was no difference, at least in the principle involved.

"We think the ruling of the court, in relation to the testimony of Cross, was well enough. His testimony was admitted without objection; and after it appeared that he had no positive knowledge upon the subject, the court should, as they did, have suggested that fact to the jury; but we cannot see that the jury would be likely to have been misled by the instructions given.

There must, therefore, be

Judgment on the verdict.