Back v. Peoples National Fire Insurance

"To warrant the reformation of a contract on the ground of mutual mistake, the mistake must have been common to both parties, and it must appear that by reason of it both have done what neither intended, and the evidence should be clear, substantial, and convincing as to both these facts." Snelling v.Merritt, 85 Conn. 83, 100, 81 A. 1039.

One of the reasons of appeal is that in this action no antecedent variant agreement was alleged or proved. As to this point the complaint alleged, and the court has found, that the plaintiff in seeking to insure his house informed the defendant's agent that it stood on ground not owned by him in fee simple. The knowledge of the agent, thus acquired while he was acting within the scope of his authority and in the course of the particular transaction which the information affected, is in law the knowledge of the defendant. Trumbull v.Hewitt, 65 Conn. 60, 74, 31 A. 492. The defendant cannot hide behind its agent's negligence in failing, if he did fail, to communicate that fact. Therefore, the legal effect of the facts alleged and proved is, that when the defendant, being so informed, agreed to issue a policy of insurance on the plaintiff's house, it agreed to insure the house although it stood on ground not owned by the plaintiff.

Another reason of appeal is that the court erred in refusing to charge, as requested, that the plaintiff must establish the facts upon which he based his claim to a reformation of the policy, "beyond a reasonable doubt"; and erred in charging the jury that the fact inquired about by the first interrogatory might be established by a fair preponderance of the evidence. In support of the rule of proof contended for, the defendant relies on statements, often found in cases of this kind, to the effect that the basic facts of mistake and of consequent failure to effectuate the real intent of the parties must be established by "clear and convincing," or "overwhelming,' evidence; or by evidence such as to leave "no reasonable doubt," or "no room for doubt." Snelling v. Merritt, supra; Palmer v.Hartford Ins. Co., 54 Conn. 488, 9 A. 248; Park Bros. Co. v. Blodgett Clapp Co., 64 Conn. 28, 29 A. 133;Bishop v. Clay Ins. Co., 49 Conn. 167; Hearne v. MarineIns. Co., 87 U.S. (20 Wall.) 488, 490. These authorities do not justify the claim of law made in the defendant's request, which assumes that the formula "beyond a reasonable doubt" is indispensable in charging the jury in actions for the reformation of written contracts. The cases cited do not adopt that formula, for they state the broad proposition, that the proof must be convincing, in a variety of ways. This makes it certain that the expressions relied on refer merely to the difficulty of overbalancing the presumption that the writing expresses the real agreement of the parties. The evidence must be convincing, not because the rule of proof differs from that in other civil actions, but because the counter weight of the written contract cannot ordinarily be overbalanced by parol evidence which is not clear, or not convincing, or leaves room for doubt. No uniform standard of proof can be required by law in this class of cases, for the presumption in favor of the written evidence of the agreement varies according to the facts of the particular case. The plaintiff must, as in all civil cases, establish his affirmative allegations by a fair preponderance of the evidence; and in this class of cases, as in those where fraud is alleged, the preponderance of evidence must be clear and convincing. In this case, for example, it turns out after the loss that the policy is wholly void on its face by reason of a fatally defective description of the subject-matter of the insurance. Since the parties could not mutually, intentionally and in good faith, have agreed to misdescribe the subject of insurance in such a way as to make the policy self-destructive, the policy is in that particular inexplicable except on the theory of deception, inadvertence or mistake, on the part of one or both parties. A contingency has happened on which it is provided in the writing itself that the policy shall be wholly void. In other words, that it shall not be treated as expressing the real agreement of the parties. And so the usual presumption, that the writing expresses the real agreement, is wholly overcome by the admitted fact that the house stood on ground not owned by the insured in fee simple. It is in fact a part of the defendant's own case that the policy does not express the real agreement of the parties, and the question whether they made any other mutual agreement, and if so what that agreement was, are simple questions of fact unembarrassed by any presumption arising from the policy itself.

The court properly instructed the jury that the actual, fair value of the house at the time when it was destroyed by fire, did not necessarily control their conclusion as to the amount of loss or damage sustained by the plaintiff; because the plaintiff might, in the near future, have been required either to abandon the house to the owners of the land, or to go to the expense of moving it to some other location, or to sell it to a purchaser who would assume that expense. Nevertheless, the jury in answering the second interrogatory fixed the fair value of the building immediately before the fire at $2,000, and in answering the third interrogatory fixed "the amount of loss or damage sustained by the plaintiff by reason of the destruction of the building by fire" at the same figure of $2,000. From the identity of these answers the defendant argues that the jury must have failed to grasp the distinction pointed out by the court, and hence that the court erred in denying the defendant's motion to set aside or disregard the answer to the third interrogatory. We think, however, that the real difficulty which the jury had arose from the form of the third interrogatory, which may easily be understood as asking for the amount of the loss sustained by the plaintiff by reason of the destruction of the building, including the admitted loss of $300 on its contents. We are bound to read the answers to the interrogatories so as to make them consistent, if that can reasonably be done, and it can be done in this case. So understood, the finding of the jury is that the plaintiff's actual loss on the building alone was $1,700, of which only $1,500 was covered by the policy.

It is alleged that the court erred in ruling that the plaintiff was not guilty of laches in failing to read or examine the policy, and the attempt is made to distinguish this case from Palmer v. Hartford Ins. Co.,54 Conn. 488, 9 A. 248. In that case the complaint alleged that the plaintiff applied for a renewal of an expiring policy of fire insurance on the same terms as before, and that defendant promised to renew the insurance on the same terms; that plaintiffs, relying on this promise, did not read the policy and did not discover until after the loss that it contained a co-insurance clause which materially affected the amount of recovery. The prayer was for a correction of the policy and for recovery of the loss payable under the policy as corrected. On demurrer sustained and appeal from a judgment for the defendant, we reversed the judgment on the ground that defendant, having promised that the new policy should be on the same terms as the old, was not in a position to charge the plaintiff with neglect in failing to discover that it was not so. The Palmer case seems to be exactly in point. This defendant having agreed to insure the plaintiff's house, although it stood on land not owned by the insured, is in no position to charge the plaintiff with negligence in failing to discover that it did not do so.

Upon this issue of plaintiff's negligence the defendant relies on findings that the plaintiff has carried insurance on his house since 1900, under successive three year policies, none of which described it as standing on land not owned by him; and that the plaintiff never read any one of these former policies. We think, however, the transaction in suit stands by itself. The policy is referred to in the testimony as a "renewal"; but the essential fact is that the plaintiff at the time of applying for it informed the defendant's agent that the house stood on land not owned by him. The transaction thus begun gave rise to a fresh set of legal rights and obligations.

The court did not err in computing interest on the face of the policy from the date of the action. The money sued for was not detained by the defendant, because the value of the plaintiff's interest in the house was uncertain and unliquidated. Besides that would not justify the detention of the admitted loss of $300 on its contents. The sole ground on which the money was detained was that the defendant was not liable at all, and the detention was therefore wrongful.Capitol City Lumber Co. v. Sudarsky, 95 Conn. 336, 341,111 A. 349.

There is no error.

In this opinion the other judges concurred.