Glens Falls Insurance Co. v. Michael

DISSENTING OPINION. Impressed as I am with the view that my brethren err in disregarding the condition as to ownership and title which is found in the policy in suit, the task is devolved upon me of stating the grounds of my opinion.

The condition referred to is in the following language:

"This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void * * * if the interest of the insured be other than unconditional and sole ownership; or if the subject of insurance be a building on ground not owned by the insured in fee simple."

And this is not all. Immediately preceding the attesting clause of the policy is the following:

"This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto."

No preliminary application is required under the terms of the policy.

It is to be observed that the clause first quoted is so plain as not to admit of construction. The policy is void, it asserts, if certain conditions as to ownership and title do not exist, unless by agreement indorsed on or added to the policy it is provided otherwise.

The majority opinion, while it speaks in a prefatory way of the rule that insurance policies are construed most strongly against the company, does not pretend to construe said words. On the contrary, the whole effort is to escape their force. While I should be prepared to sanction the proposition that any fair doubt as to the construction of the contract should be solved against the insurer, yet it is plain that where room to doubt concerning the meaning of the condition does not exist, and where there is no element of illegality or fraud present, the court should not undertake to strip the company's undertaking of a vital condition, and then enforce the promise, on the poor excuse that the property owner failed to read the contract. If there was no meeting of the minds, the court ought not to undertake to supply so vital an element. It is true that the forms of insurance policies are prepared by experts, and that it is the habit of the careless not to read the conditions which are made to underlie the undertakings of such companies, but if a reason for the breaking down of the limitation in question can be extracted from these circumstances, I do not know what limitation of liability exists in life or fire insurance contracts, or in the contracts of the great corporations generally which issue limited liability undertakings in serving the public, that could not be brushed aside by the courts, where the failure to read the writing resulted in a hardship which might otherwise have been avoided.

It was said by one of the great writers of legal literature: "It is likewise a general and most inflexible rule, that wherever written instruments are appointed, either by the requirement of law or by the compact of the parties, to be the repositories and memorials of truth, any other evidence is excluded from being used, either as a substitute for such instruments or to contradict or alter them. This is a matter both of principle and policy: of principle, because such instruments are in their nature and origin entitled to a much higher degree of credit than parol evidence; of policy, because it would be attended with great mischief if those instruments upon which men's rights depended were liable to be impeached by loose collateral evidence." Starkie, Evidence (10th Am. ed.), *648.

While the rule of contra proferentem ordinarily seems to be applied in all of its vigor in construing insurance contracts, yet I am not aware of any well-considered case which countenances the idea that a party may be relieved upon so unwarranted an excuse as the one which the appellees in this case asserted. In Wierengo v.American Fire Ins. Co. (1894),98 Mich. 621, 626, 57 N.W. 833, it was said: "In this case, where there was no written application, nor any terms of the policy agreed upon by parol except the amount, the insured must be charged with knowledge that the policy he receives contains the contract binding upon him as well as the insurer. He must know that the policy, which is the contract, contains the usual terms of such instruments. He may not lay it aside without reading, and, when he seeks to recover upon it, and finds that under its plain provisions he cannot recover, say: ``I did not read it. The insurer did not tell me what it contained. I did not know that it was necessary to tell him about the title and condition of my property, and therefore I am not bound by its terms.' Had Mr. Pearson or his principal read the contract — which he could have done in a few moments — they would at once have known these plain and important conditions, which the defendant had the clear right to insert, and to make a condition of its validity. Certainly the insured must be held to some degree of diligence in obtaining knowledge of the contracts to which they are parties. Ignorance will not relieve a party from his contract obligations. The law only relieves him therefrom in cases of fraud, mistake, waiver, or estoppel. An insurer is not required by the law to inquire into the condition of the title to the property insured, or to inform the insured of all the conditions and terms of the policy to be issued, or to read it to him, or inform him of its contents. When received and accepted without objection, he must be held bound by its terms, unless these terms are waived by the insurer. This is the law of contracts, and there is no reason or authority for holding that an insurance contract is an exception thereto. A deed is the contract between the grantor and the grantee, although the grantee does not sign it. Its terms and conditions are binding upon the grantee, and he cannot avoid them except for one of the reasons above stated. If he accepts a deed without reading it, and there is no fraud on the part of the grantor, or mutual mistake as to its terms, he is bound by it. If a mortgagee accepts a mortgage without a covenant against prior incumbrances, or if it contains an express provision that it is subject to prior incumbrances, it is binding upon him, unless the covenant against incumbrances was omitted by fraud or mistake. The same rule applies to insurance contracts." The necessity that a fire insurance company, which for a small sum of money promises to pay a large amount of money by way of indemnity in case of fire, should be fully informed as to the extent of the risk is obvious. Chief Justice Marshall said, in Columbian Ins. Co. v. Lawrence (1829), 2 Pet. *25, *49, 7 L. Ed. 335: "The contract for insurance is one in which the underwriters generally act on the representation of the assured; and that representation ought consequently to be fair, and to omit nothing which it is material for the underwriters to know. * * * Generally speaking, insurances against fire are made in the confidence that the assured will use all the precautions to avoid the calamity insured against, which would be suggested by his interest. The extent of this interest must always influence the underwriter in taking or rejecting the risk, and in estimating the premium. So far as it may influence him in these respects, it ought to be communicated' to him. Underwriters do not rely so much upon the principles, as on the interest, of the assured; and it would seem, therefore, to be always material that they should know how far this interest is engaged in guarding the property from loss." So it was declared in Syndicate Ins. Co. v. Bohn (1894), 65 Fed. 165, 170, 12 Cow. C. A. 531, 536, 27 L. R. A. 614, that limitations like the one in question "rest upon a sound policy of the business of insurance — a policy founded in reason, and in accord with an enlightened public policy; the policy of reducing the moral hazard to which the underwriter is exposed. ``Moral hazard,' in insurance, is but another name for a pecuniary interest in the insured to permit the property to burn. Statistics, experience, and observation all teach that the moral hazard is least when the pecuniary interest of the insured in the protection of the property against fire is greatest, and that the moral hazard is greatest when the insured may gain most by the burning of the property."

It ought not to be necessary, however, to seek to justify the existence of a condition precedent. It ought to be enough that it is a component part of the contract, and has not been waived, and that the contract must be made the basis of recovery. In the vigorous language of Woodward, C. J., in Pennsylvania Ins. Co. v. Gottsman (1864),48 Pa. St. 151, 158: "The ground of forfeiture is the contract,not the opinion of a jury about increase of risk. * * * The suit is upon that contract, and if it is forfeit, the suit falls with it. It cannot be enforced in behalf of a party who violated a fundamental condition." There are cases which support the view of the majority in this case, but I assert that they are not only comparatively few, but also that it is evident that they owe their origin to a misapplication of the old doctrine of concealment. Before the adoption of the standard policy, it was the practice to embody the warranties of the assured in an application, and as a result it followed that in many cases, where the company had neglected to take an application, the only defense which the company could assert was concealment. Now, concealment involves the proposition that the assured ought to have made the disclosure, and therefore the courts, in passing on these cases, and the text-writers, in discussing them, frequently made reference to the fact that, as the representatives of the insurance company were experts, the assured had a right to suppose that as to the ordinary risks, such as the condition of the title, etc., the company had acquainted itself with the facts. It was enough, therefore, so far as the interest of the assured was concerned, that he had an insurance interest. With the incoming of the standard policy all of this was changed; but a few courts, misapprehending the non-application of the doctrine of concealment to a peremptory condition precedent that the ownership must be sole and unconditional, and the title in fee simple, were led into error by the language of the books to which I have referred. The condition in the standard policy provides the manner in which the policy may be made to take effect, where the ownership is not sole and unconditional and the title in fee, namely, by procuring a special indorsement to be placed on or added to the policy; and the effect of such a condition as this is to call on the policy holder to make disclosure, and to authorize the company, at least in the absence of notice, to assume that the ownership and title complies with the condition. It is a well-known fact that insurance companies issue policies without a formal examination of the title, and, in the face of the stipulation in the policy, the property owner has no right to assume that the company will not stand upon its rights.

In the absence of misleading conduct, waiver can only be predicated upon the relinquishment of a right which is known (Bishop, Contracts [2d ed.], § 792; 29 Am. and Eng. Ency. Law [2d ed.], 1091, 1093), and the knowledge upon which a claim of waiver is based must be actual, and not merely constructive.Aetna Ins. Co. v. Holcomb (1896),89 Tex. 404, 34 S.W. 915; Orient Ins. Co. v.Williamson (1895), 98 Ga. 464, 25 S.E. 560; Mutual FireIns. Co. v. Deale (1861), 18 Md. 26, 79 Am. Dec. 673; 16 Am. and Eng. Ency. Law (2d ed.), 935. And see Hazlett v.Sinclair (1881), 76 Ind. 488, 40 Am. Rep. 254;Stockwell v. State, ex rel. (1885), 101 Ind. 1.

The weight of authority, where a matter of principle is involved, is a minor consideration; but since I am not only so unfortunate as to differ with my brethren, but also to be confronted with a formidable amount of apparent authority for the conclusion reached, it becomes necessary to review their authorities. Morotock Ins.Co. v. Rodefer Bros. (1896),92 Va. 747, 24 S.E. 393, 53 Am. St. 848, holds that the clause relative to unconditional and sole ownership does not have reference to the legal title, but to the interest of the insured in the property, and that therefore the existence of a mortgage does not violate said clause. The next case — Manhattan Fire Ins. Co. v.Weill Ullman (1877), 28 Gratt. (Va.) 389, 26 Am. Rep. 364 — involved the same point, and was a case where the agent knew that the property stood on leased ground.Philadelphia Tool Co. v. British, etc., Assur.Co. (1890), 132 Pa. St. 236, 19 A. 77, 19 Am. St. 596, is an obscure case in its statement of facts, and seems to rest on the ground that "the policy covering only the interest of the lessee, the ownership of the fee becomes immaterial." InWestern, etc., Pipe-Lines v. Home Ins. Co. (1891),145 Pa. St. 346, 22 A. 665, 27 Am. St. 703, the facts were these: Insurance had been written on oil in a large storage tank. There was no condition as to ownership of the real estate, but the property had been described as situate upon certain land. A flood had washed the tank containing the oil to other real estate, where the fire occurred. The insurance company denied liability because of this, and also because the pipe-line company had but a qualified title to the oil. It was held that the description of the real estate on which the tank had been located was not a warranty against an involuntary change in the location of the tank. As to the lack of an absolute ownership of the oil, it was held that the defense was not available, as the insurance company had denied liability on another ground, and as the insurance company was required to take notice, in view of the corporate character and business of the pipe-line company, of the manner in which such business was ordinarily conducted. Short v. Home Ins. Co. (1882),90 N.Y. 16, 43 Am. Rep. 138, involved the condition against the premises becoming vacant or unoccupied. The case seems to rest largely on the fact that the agent testified that it was his habit to make inquiry concerning matters that he regarded as important. Although there are one or two statements in the case concerning the duty of making inquiry, yet I am of opinion, in view ofWeed v. London, etc., Ins. Co. (1889),116 N.Y. 106, 22 N.E. 229, and Quinlan v. ProvidenceWashington Ins. Co. (1892),133 N.Y. 356, 31 N.E. 31, 28 Am. St. 645, that the New York court of appeals cannot be said to sanction the view that the fundamental conditions of a policy may be disregarded. In Hoose v.Prescott Ins. Co. (1890), 84 Mich. 309, 47 N.W. 587,11 L. R. A. 340, certain conditions upon which the validity of a policy depended had not been complied with, but the agent had actual knowledge of the facts, and the delivery of the policy was treated as a waiver of such conditions. In Hall v. Niagara Fire Ins.Co. (1892), 93 Mich. 184, 53 N.W. 727,18 L. R. A. 135, 32 Am. St. 497, there was a waiver of the condition as to title, by the consent of the agent subsequently given to a transfer of the policy to a person who had acquired the fee-simple title.Miotke v. Milwaukee, etc., Ins. Co. (1897),113 Mich. 166, 71 N.W. 462, was a case which turned on the proposition that in view of the conduct of the agent in dealing with the assured — an ignorant foreigner — it would be a fraud to permit the company to avoid its policy. In Lycoming Fire Ins. Co. v.Jackson (1876), 83 Ill. 302, 25 Am. Rep. 386, a finding in favor of the assured rested on testimony that the agent had actual knowledge as to the condition of the title. In Morrison v.Tennessee, etc., Ins. Co. (1853),18 Mo. 262, 59 Am. Dec. 299, there was no provision in the policy concerning ownership. The case involves nothing but the doctrine of concealment. The holding in Quarrier v. Peabody Ins.Co. (1877), 10 W. Va. 507, 27 Am. Rep. 582, was that the existence of a deed of trust did not violate the condition as to sole and unconditional ownership. In Georgia Home Ins. Co. v.Holmes (1897),75 Miss. 390, 23 So. 183, 65 Am. St. 611, there was a mortgage on the property. The assured had requested the agent to furnish an application and to inspect the house. The agent did not comply with these requests, but answered that he knew the property. It was held that the policy was issued on the presumed knowledge of the company, and it was not a defense that the agent was in error. Vankirk v.Citizens Ins. Co. (1891), 79 Wis. 627, 48 N.W. 798, involved the doctrine as to concealment. The citations to 1 Wood, Insurance (2d ed.), § 212, p. 517, and 1 May, Insurance (4th ed.), § 207, are to the same point. I shall refer to the latter author hereafter. German Mut. Ins. Co. v.Niewedde (1895), 11 Ind. App. 624, must be regarded as overruled by Sisk v. Citizens Ins. Co. (1897),16 Ind. App. 565. As to the further authorities upon the point under discussion, which are found in the majority opinion, it must be admitted that the supreme courts of Nebraska, Montana, Washington, and California, and perhaps Kentucky, as well as the opinion inManchester Fire Assur. Co. v. Abrams (1898), 89 Fed. 932, 32 Cow. C. A. 426, are properly cited as holding that the condition as to ownership and title does not avoid the policy. In two instances there were dissents; in some of the cases there was a mere assumption in the discussion that it was the doctrine of concealment which was involved; while, in the cases which go further, it will be perceived that they also are based on the root error just referred to.

I turn now to the authorities which uphold my view. The following cases evince the peremptory character of the condition here involved, or of a like condition: Geiss v. Franklin Ins.Co. (1890), 123 Ind. 172, 18 Am. St. 324; Syndicate Ins.Co. v. Bohn, supra; Waller v. Northern Assur.Co. (1881), 10 Fed. 232; Crikelair v. Citizens Ins.Co. (1897), 168 Ill. 309, 48 N.E. 167, 61 Am. St. 119;Hinman v. Hartford Fire Ins. Co. (1874),36 Wis. 159; Hebner v. Palatine Ins. Co. (1894),55 Ill. App. 275; Dumas v. NorthwesternNat. Ins. Co. (1898), 12 Ohio App. D. C. 245; Duda v. Home Ins.Co. (1902), 20 Pa. Super. Ct. 244; Brown v. CommercialFire Ins. Co. (1888), 86 Ala. 189, 5 So. 500; Liberty Ins.Co. v. Boulden (1893),96 Ala. 508, 11 So. 771; Collins v. St. Paul, etc., Ins.Co. (1890), 44 Minn. 440, 46 N.W. 906; Weed v. London, etc.,Ins. Co., supra; Fitchburg Sav. Bank v. Amazon Ins.Co. (1878), 125 Mass. 431; Sisk v. Citizens Ins.Co. (1897), 16 Ind. App. 565; Mers v. Franklin Ins.Co. (1878), 68 Mo. 127; Barnard v. National Fire Ins.Co. (1887), 27 Mo. App. 26; Westchester Fire Ins. Co. v. Weaver (1889),70 Md. 536, 17 A. 401, 18 Atl. 1034, 5 L. R. A. 478; PhoenixIns. Co. v. Public Parks, etc., Co. (1896),63 Ark. 187, 37 S.W. 959; Orient Ins. Co. v. Williamson, supra;Rosenstock v. Mississippi Home Fire Ins. Co. (1903),82 Miss. 674, 35 So. 309. In the leading case of SyndicateIns. Co. v. Bohn, supra, Sanborn, J., used the following language: "It is contended that the contracts in these policies, which exclude the Bohns from insurance under them upon any interest but that of unconditional ownership, are without binding force, because no inquiry respecting their title was made by the companies, and no statement concerning it was made by the Bohns, when these policies were issued. But neither inquiry nor statement before the issue of the policies was requisite to the validity of these contracts. The policies themselves, containing, as they did, the contracts that they should be void if the interest of the assured had not been truly stated to the company, or if it was not truly stated in the policy, or if it was not the sole and unconditional ownership, and a description of it was not indorsed on the policy, were pointed inquiries of the assured whether their interest was the sole and unconditional ownership of the property described, and their silence and acceptance of the policies was the answer. The policies themselves were notice to the Bohns that the companies deemed their interest that of unconditional ownership, that they insured them against loss to that interest only, and that they expressly excluded every other interest from the insurance unless the Bohns immediately notified them that they held a different interest, and caused a true description of it to be written into or indorsed upon the policies. The silent acceptance of the policies by the Bohns closed these contracts, and bound them to the agreement tendered by the policies, that every interest of theirs but that of unconditional ownership was excluded from the promised indemnity." In Waller v. Northern Assur. Co., supra, the policy provided: "If the interest of the assured in the property be any other than the entire, unconditional, and sole ownership of the property for the use and benefit of the assured, * * * it must be so represented to the companies, and so expressed in the written part of this policy; otherwise the policy will be void." The interest of the assured was only a lien in the nature of a mortgage, given to secure a loan of about $5,000. This fact was not represented to the insurer, and was not stated in the policy. It was said by McCrary, J.: "There are strong reasons for upholding and enforcing the provision of the policy under consideration. It is certainly a very reasonable and proper provision in a contract of insurance of this character, which requires the party seeking insurance upon property to state any facts which it is material for the insurer to know. * * * The provision in question is, therefore, one which must be upheld and enforced; not simply upon the ground that it is a warranty, and therefore to be enforced independently of its materiality, but upon the ground that it calls for the disclosure of material facts. * * * But it is insisted that compliance with this provision of the policy was waived by the defendant, because its agent made no inquiry concerning the extent of plaintiff's interest, and plaintiff made no statement upon the subject. The evidence does not support this position. The contract was that if the interest of the assured was any other than the entire, unconditional, and sole ownership, then he was to represent the facts to the company — not that he was to disclose them truthfully if requested, or that he would make true and full answers to questions upon the subject. The duty of disclosing his interest, the same being less than the entire ownership, was plainly devolved upon the plaintiff, and for good reason, since he knew, and the agent of the company did not know, the facts. In other words, under the contract the defendant was authorized to assume that the property was owned absolutely by the applicant for insurance, unless the contrary was represented by him, and more especially in a case where the applicant held what appeared to be an absolute title. A waiver of this condition of this policy cannot, therefore, be presumed from the mere fact that the agent of the defendant made no inquiry upon this subject. The case might have been different if the plaintiff had been called upon to sign an application, and to answer written or. printed questions touching his interest, and had failed to do so. In such a case the issuing of the policy, notwithstanding a failure to answer some of the questions, might well be held a waiver of such answers.Hall v. People's, etc., Ins. Co. [1856], 6 Gray 185;Liberty Hall Assn. v. Housatonic, etc., Ins. Co. [1856], 7 Gray 261. And it may also be true that where the policy requires an application, and provides that it shall contain a full and true exposition of all the facts in regard to the condition, situation, value, and risk of the property insured, a company insuring without such application may be held to waive the representations required to be embraced therein. Commonwealth v. Hyde, etc., Ins.Co. [1873], 112 Mass. 136. These authorities are not in point, for the reason that in the present case no written application was provided for in the policy, and, as already stated, the duty of divulging the fact that he was not the full owner of the property devolved upon the plaintiff. Besides, it would be an unwarranted extension of the doctrine of estoppel to hold that a party may waive that, the existence of which he does not know, and is not in duty bound to ascertain."

In Dumas v. Northwestern Nat. Ins. Co., supra, the precise question which is here involved was before the court. In the course of a careful opinion the court, after referring to such condition, said: "But it is said that all this is of no consequence, inasmuch as the defendant company made no inquiry as to the true condition of things, and there was no fraudulent concealment on the part of the plaintiff. And there is excellent authority for the doctrine, that ``as to the ordinary risks connected with the property insured, if no representations whatever are asked or given, the insurer must be supposed to assume them; and if he acts without inquiry anywhere concerning them, he seems quite as negligent as the insured, who is silent when not requested to speak.' Clark v. ManufacturersIns. Co. [1850], 8 How. *235, 12 L. Ed. 1060. The agents of insurance companies are usually experienced men, well informed as to the information which they should have in anticipation of the risk which they assume; and the rule is not unreasonable which would require them to make all due inquiry for the procurement of such information. Nor is it unreasonable that the insured should be held harmless from the mere failure to give information, when he is not interrogated, and when perhaps he is not aware of the importance or immateriality of the matter to which the information should extend. But this is not a case of representation or misrepresentation, of failure to give information or failure to elicit it by proper inquiry. The parties have deliberately put it into their contract, and have made it an essential condition of that contract that the contract itself should not be binding if there was any mortgage on the property or the title was not that of unconditional ownership. There was no inhibition by law against the insertion of such a condition in the contract; and it may well be that its insertion was a matter of precaution, to guard as well against the negligence or failure of agents to elicit proper information, as against the negligence or failure, not fraudulent, of persons seeking insurance to give such information. The condition is not illegal and does not contravene any rule of public policy; and even if its practical effect should be held to be to throw upon the insured party the burden of giving voluntarily the information which otherwise the insurer would have been required to elicit by proper inquiry, we know of no rule of law that. would preclude parties from contracting to that effect, if they so desire." Duda v. Home Ins. Co., supra, is a well considered case upholding the views I am endeavoring to maintain. I refer to it for an explanation of the Pennsylvania cases. InBrown v. Commercial Fire Ins. Co., supra, the court said: "The assured by accepting a policy in which such condition is incorporated, becomes bound thereby; and when he claims to enforce the contract, and receive its benefits, he is estopped from denying his assent to the stipulation." In Weed v. London, etc., Ins.Co., supra, a policy was issued to insure the "Estate of O. Richards." Richards had deeded the property to Dean Sage, in trust to sell the same and distribute the proceeds of such sale protanto among the creditors of said Richards, any residue, after the payment of debts, to be reconveyed to said Richards or to his heirs. The agent who issued the policy knew of the failure of Richards, but did not know of the trust deed. There was a standard form of policy, and it was held that "this condition as to the ownership of the property was precedent as to the attaching of the risk; and as Richards' estate had no title it was broken upon the delivery of the policy. Upon this point of the case, therefore, the plaintiff failed to prove a valid contract and was not entitled to recover." In Collins v. St. Paul, etc., Ins. Co., supra, the court, after denying the right to a reformation of the policy upon the facts, said: "Even if so reformed, no recovery could be had, for the policy provides that the company shall not be liable ``if the interest of the assured in the property is not one of absolute and sole ownership,' and it appeared beyond controversy that the plaintiff had only a life estate in the property. Of course she had an insurable interest, but that interest was not insured. The policy expressly excluded from its operation any interest other than the absolute and sole ownership." In Crikelair v.Citizens Ins. Co. (1897),168 Ill. 309, 310, 48 N.E. 167, 61 Am. St. 119, Boggs, J., in delivering the opinion of the court, used the following language: "By the stipulation in the policy, the terms of which are plain, direct, and unambiguous, the parties hereto agreed that if the insured property, at the time the insurance was effected, was encumbered by chattel mortgage, the indemnity should not attach but the policy should be void. This was the contract of the parties deliberately made, and the only question presented is, whether they are bound by it. They were competent to enter into the stipulation, no rule of law was contravened by it, and there is no ground apparent to us upon which to base a claim of either estoppel or waiver. The law declared by the greater weight of authority is that, where a policy contains a stipulation such as the one in the case at bar, and the property be, at the time of the execution of the policy, covered by a mortgage, no recovery can be had unless it appears that there was a waiver or estoppel by which the company is precluded from relying on the contract."

The text-writers may ordinarily be relied on to make an unbiased statement of the adjudications as they are, and therefore I quote briefly from some of the writers on the law of insurance. A late writer, after referring to the condition as to ownership and title which is found in the standard policy, makes this comment: "Without this requirement there would be no duty incumbent on the insured to state the character of his interest, provided he had an interest that was insurable. The condition above quoted, however, requires a description of that interest, and it seems that the condition applies even to those policies that are issued without a previous application; for, if the policy does not elsewhere contain a statement of the character of the interest, it will be implied, by reference to the latter condition, that the interest is represented as being sole and unconditional." Vance, Insurance, p. 443. Another writer says: "There is some conflict of authority on the question of the binding effect of provisions of this character in a policy issued without a written application. The weight of authority doubtless supports the view that the insured, by accepting the policy, is charged with knowledge of its contents." Elliott, Insurance, § 257. Still a third text-writer states the doctrine thus: "A condition that if the insured is not the sole, entire, and unconditional owner the policy shall be void is reasonable and valid, and violation of it will prevent recovery. And failure to disclose the real state of the title if not sole, etc., will be fatal although the insured was not questioned as to that fact." 1 May, Insurance, § 287a. In 13 Am. and Eng. Ency. Law (2d ed.), 228, it is said: "Explicit questions are largely or wholly replaced by conditions that the interest of the insured must be truly stated, and that if the title or interest is other than one specified, it must be specifically described, or the insurance will be avoided; and the statements of title in the policy, where there are such conditions, are construed in the same manner as answers to express interrogatories. The conditions have the effect of questions as to the nature of the title or interest, and in case a statement thereof would be false or insufficient if made in answer to a question, or if the facts are not disclosed which would be required in such answers, there is a breach of the contract. Where such conditions are contained in the policy, and there is no statement of the title or specific interest, an acceptance of the policy amounts to a representation by the insured that his title or interest is that stated in the condition, and if his title or interest is substantially different, the insurance is avoided." The case ofGeiss v. Franklin Ins. Co. (1890),123 Ind. 172, 18 Am. St. 324, is deserving of special attention, since it is a decision of this court, and involves practically the same question as the one before us. There was a condition as to sole, absolute, and unconditional ownership in the policy, and among other things which the company agreed to insure was a soda-fountain and apparatus, which had been purchased under a conditional-sale contract, and had not been fully paid for. It appeared in the evidence that the plaintiff was not aware of the legel effect of the contract of conditional sale, so far as it affected the ownership of the property, until he had taken professional advice after the fire. It was held that the policy was entirely void. Mitchell, C. J., speaking for the court, said: "It is conceded that the assured was not the sole, absolute, and unconditional owner of the soda-fountain, and apparatus connected therewith. It follows, as a matter of course, that, as applied to that item of property, the policy was void. Carpenter v.German-American Ins. Co. [1889], 52 Hun 249, 4 N. Y. Supp. 925. The question is, can it be upheld as respects the other separate and distinct classes of property ? * * * We fully appreciate the unfortunate situation of the assured, but courts of law cannot be made asylums in which every person who has made a mistake can take refuge against his own contract deliberately entered into. Where the validity of the insurance is made to depend upon the assured's being the absolute and unconditional owner of the true title of the property insured, a failure to set forth the title with substantial accuracy renders the policy void, not only as to the property, the title to which is not truly represented, but all other property covered by the same policy, and subject to the same risk. This is so, even though the owner had no intention to deceive." It thus appears that we have a case in our own reports which the principal opinion is virtually overruling.

The conclusion of the majority is opposed to principle; it is out of accord with the weight of authority, and it involves a disregard of the doctrine of stare decisis. As I have attempted to point out, this holding cannot be maintained if the court looks to the solemn dispositive agreement of the parties in determining their rights. I cannot give my sanction to a decision that nullifies the most important element in the contract, from the standpoint of the company.

It is to be remembered that fire losses are in almost every instance paid out of the premiums received, and not out of the capital of the company. Careful people, who read their policies, are entitled to some consideration, and ought not to have their premiums enhanced by the fact that essential limitations of liability put into insurance policies are disregarded by the courts. I cannot better conclude this portion of my opinion than by calling attention to the following language of Story, J., in Carpenter v.Providence Washington Ins. Co. (1842), 16 Pet. 495, 10 L. Ed. 1044: "The public, too, have an interest in maintaining the validity of these clauses, and giving them full effect and operation. They have a tendency to keep premiums down to the lowest rates, and to uphold institutions of this sort, so essential, in the present state of our country, for the protection of the vast interests embarked in manufactures, and on consignments of goods in warehouses. If these clauses are to be construed with a close and scrutinizing jealousy, when they may be complied with in all cases, by ordinary good faith and ordinary diligence on the part of the assured, the effect will be to discourage the establishment of fire insurance companies, or to restrict their operations to cases where the parties and the premises are within the personal observation and knowledge of the underwriters. Such a course would necessarily have a tendency to enhance premiums; and to make it difficult to obtain insurances where the parties live, or the property is situate, at a distance from the place where the insurance is sought. But, be these considerations as they may, we see no reason why, as these clauses are a known part of the stipulations of the policy, they ought not to receive a fair and reasonable interpretation according to their terms and obvious import. The insured has no right to complain, for he assents to comply with all the stipulations on his side, in order to entitle himself to the benefit of the contract, which, upon reason or principle, he has no right to ask the court to dispense with the performance of his own part of the agreement, and yet to bind the other party to obligations, which, but for those stipulations, would not have been entered into."

As to the question of pleading, I am of opinion that the answer of appellant was good without an averment that it had tendered a return of the premium. The holding of it after knowledge of the fact that the risk had never attached would at most operate as a waiver, and matter of that character ought, in the order of things, to come from the plaintiff. It appears to me that if there is nothing further in the case than a failure of the minds of the parties to meet, the case is one for a return of the premium. New York LifeIns. Co. v. Fletcher (1886),117 U.S. 519, 6 Sup. Ct. 837, 29 L. Ed. 934; Waller v.Northern Assur. Co. (1884), 64 Iowa 101, 19 N.W. 865. I vote for a reversal.

ON PETITION FOR REHEARING.

JORDAN, J. — Appellant has petitioned for a rehearing and supported the same by an able argument on the part of its counsel. We have examined the authorities cited by counsel and have again given the case careful and patient consideration. Upon the question here involved the authorities may be said to "fight on both sides." Nevertheless, they are not so overwhelmingly on either side that they should be held, as seemingly insisted, to preclude us from adopting and following what we believe to be the better rule and the one which, because of its fairness and reasonableness, commends itself to our approval. It is admitted that our holding at the former hearing upon the point in issue is sustained by the supreme courts of Nebraska, Montana, Washington, California, and "possibly Kentucky," and by the decision of the court in the case ofManchester Fire Assur. Co. v. Abrams (1898), 89 Fed. 932, 32 Cow. C. A. 426, but this concession is certainly too narrow, for, with the courts hereinbefore mentioned must be classed or included the supreme courts of Michigan, Oregon, Virginia, Mississippi, Pennsylvania, Missouri, Alabama, Wisconsin, West Virginia, and probably New York. The decisions of some of the latter courts directly sustain the doctrine in question, while others may at least be said indirectly to support the principle. To the cases or authorities cited and relied on by this court in its original opinion herein, we may add the following: Allesina v. London Ins. Co. (1904),45 Ore. 441, 78 P. 392; Union Assur. Soc. v.Nalls (1903), 101 Va. 613, 44 S.E. 896, 99 Am. St. 923;Farmers, etc., Ins. Co. v. Mickel (1904), (Neb.), 100 X. W. 130; Brunswick, etc., Co. v. Northern Assur.Co. (1905), 142 Mich. 29, 105 N.W. 76; 1 Wood, Insurance (2d ed.), § 176; 3 Cooley, Briefs on Insurance, 2630, 2631.

In the appeal of Allesina v. London Ins. Co., supra, the policy there involved, when issued, contained a printed provision that it should be void "if the subject of the insurance be personal property, and be or become encumbered by a chattel mortgage." This policy was issued upon an oral application, the agent of the company making no inquiry of the insured concerning liens or encumbrances upon the property, nor were there any statements or representations made in reference thereto by the insured, and he had no knowledge that such information was material, or that the policy to be delivered would contain any provision in reference thereto, or that if the company knew of the mortgage upon the property it would decline to assume the risk. The insured paid and the company received and accepted the premiums, and the property was destroyed by fire during the life of the policy. The court, in that case, said: "The only question on this appeal is whether, under these circumstances, the defendant can defeat a recovery on the ground that the policy issued by it and delivered to the plaintiff and for which he paid and it accepted and retained his money was invalid from the beginning because of the mortgage clause." This case, under the facts, may be said to be on principle on "all fours" with the case at bar. The policy involved in that appeal was sustained. In deciding the case the court, in the course of its opinion, said: "A contract of insurance, like any other contract, must, of course, be given force and effect according to its terms as agreed upon by the parties, but provisions in the printed forms, inserted for the benefit of the insurer, may be waived by it in special instances. In determining whether there has been such a waiver, a court should not overlook the fact that insurance policies are prepared by the company for general use, without reference to particular cases, and contain divers and sundry provisions and stipulations concerning different subjects. The contract is not like ordinary contracts between individuals, wherein every clause and stipulation is considered and agreed upon by the parties before the agreement is executed. A policy of insurance is prepared in the office of the company and becomes binding on the assured because it is delivered to and accepted by him. In accepting it he has a right to assume that the company does not intend to insist upon the printed clause therein relating to encumbrances on the property if it makes no inquiry of him concerning the matter, and he has made no statements in reference thereto, and has not been advised that the question was at all material. The preparation and issuance of the policy is the act of the company, and if, in pursuance of a previous agreement to insure, it issues and delivers a policy purporting to cover loss or damage by fire, and accepts and receives the money of the insured, without making any inquiry of him as to encumbrances, or without advising him of the effect on his contract of an encumbrance, it is receiving and accepting his money under circumstances but little short of false pretenses, if the contract is void from the beginning, and never in fact had any force or validity, because of a provision inserted therein by it without the knowledge of the assured, rendering it void if the property is encumbered. In such a case the company would not only wrongfully receive and accept the money of the insured, but would mislead him into the belief that his property was insured, when in fact it was not, thus deceiving a party honestly seeking and paying for insurance." In 1 Wood, Insurance (2d ed.), § 176, the rule is stated as follows: "When a policy is issued upon a verbal application, without any representations in reference thereto, all information relative to the risk, except such as is unusual and extraordinary, is waived, and the policy is valid, even though it contain a clause or stipulation that ``the insured covenants that the representations given in the application for this insurance contain a just, full and true exposition of all facts and circumstances in respect to the condition, situation, value and risk of the property insured,' and, although the policy professes to be made upon the faith or representations made by the insured, yet, it is valid, even though no representations whatever were made in reference to the risk, and the lack thereof is not a matter of defense. The insurer cannot charge the assured with laches, induced by its own conduct." In 3 Cooley, Briefs on Insurance, pp. 2630, 2631, the author says: "If an insurance company issues a policy of insurance without any application, or without representations in regard to certain facts, the company will be presumed to have written the policy on its own knowledge, and cannot complain, after loss, that such facts were not correctly stated in the policy or disclosed by the insured. * * * Analogous to the rule stated is another one to the effect that though the policy by its terms requires the disclosure of all material facts, yet if the insurer issues it on an oral request or application, and makes no inquiry in regard to matters covered by certain conditions in the policy — as, for instance, encumbrances — it will be assumed that the insurer waives knowledge as to such facts." The author says, however, that the rule stated is not supported by all the authorities, but, on the contrary, it is a mooted question whether an insurer waives the condition in a policy by issuing it without inquiry.

While it is true that the quantum of appellees' interest or title in the property insured was not a fee simple, still they had an insurable interest as tenants for life, and that is the only interest which appellant can be said to have insured, and the value of the property destroyed by fire, when tested by such interest, would be the measure of the company's liability. We cannot discover wherein appellant has been actually prejudiced by reason of the fact that the interest of appellees in the property insured was not that of a fee simple. Possibly it might be said that the fact that appellees were not the owners in fee might afford a temptation or inducement for them to set the property on fire, on the supposition that they would receive the full amount for which it was insured, regardless of the value of their interest. As appellant company did not in any manner inquire of appellees in respect to their interest in or title to the property, they certainly had no reasons for presuming when they paid the price of the insurance and received the policy issued to them that the company would not have insured the property had it known that their interest in the building insured and in the premises upon which it was located was that of a life estate instead of a fee simple. Generally speaking, it may be asserted that it is not the custom of the insurance company to place the policy to be issued by it before ``the person to be insured prior to its delivery to him, but the first opportunity afforded him for an examination of the many printed conditions and stipulations therein contained is after he has paid the premium for the insurance and the policy has been delivered. It ought not to be considered or regarded that he agreed to all of the conditions and stipulations in the policy before he was aware or had knowledge thereof, especially in respect to such stipulation or condition declaring that the policy shall be void if his interest in or title to the property insured is other than that therein stipulated by the company without its having made any inquiry of him relative to his interest or title in or to the property which he desired insured, or in the absence of any representations or statements made by him in respect to his interest or title.

Appellant's learned counsel contend that it cannot be asserted that it waived its right to repudiate the liability upon the policy unless it is shown it had knowledge of all of the facts constituting the waiver. But it certainly had knowledge of its own conduct in the matter, and a waiver may be manifest by conduct as well as by words.Phenix Ins. Co. v. Tomlinson (1890), 125 Ind. 84,9 L. R. A. 317, 21 Am. St. 203.

Possibly, with equal force, it might be said that appellees ought not to be considered as having consented or agreed, without knowledge thereof, to the condition or stipulation in the policy which avoided the insurance, if their interest or title to the property was otherwise than that of a fee simple. It is true that it can with plausibility be asserted that it was their duty to read the policy issued to them, but suppose they did read it after its delivery and the payment by them of the premium and then discovered the provision in respect to a forfeiture, they were not then in a position, and had not the right, to cancel or surrender the policy and recover back the premium which they had paid; for the very moment the risk actually attached they could not thereafter have recovered back the premium. Standley v. Northwestern, etc.,Ins. Co. (1884), 95 Ind. 254; Phenix Ins. Co. v.Tomlinson, supra.

Suppose they had made a demand thereafter of appellant company for a return of the premium paid, the latter would possibly have parried the demand by asserting that its right under the circumstances was one which it could at. its option waive, therefore it would retain the premium paid by appellees and await results. The case of German Mut. Ins. Co. v.Niewedde (1895), 11 Ind. App. 624, to which we referred in the former opinion, presented the question of a waiver of the breach of the conditions contained in the policy therein involved by reason of an existing mortgage encumbrance against the property. That case, upon the issue of waiver as herein involved, is directly in point, and supports our holding, and upon the question as to what will constitute a waiver of a forfeiture clause in a policy the case has not been overruled, as contended by counsel, by any of the later decisions of the Appellate Court.

In Continental Ins. Co. v. Munns (1889),120 Ind. 30, 5 L. R. A. 430, this court held that the neglect of the party insured to make known facts which the insurance company may regard as material to the risk is not a breach of a condition in the policy avoiding it. The court in that case asserted that the insured had the right to assume that the insurance company would make inquiry concerning all facts, except such as it is supposed to know, or which it regards as immaterial. In the course of the opinion in that appeal this court said: "An applicant for insurance is not bound, unless inquired of, to disclose whether or not the property insured is encumbered. As the public records usually give information in reference to such matters, he may assume that the insurer knew of any existing encumbrances, or deemed it immaterial whether or not the property was encumbered." So, in this case, possibly appellees may have assumed that appellant made no inquiries of them in respect to their particular interest in the property in question because it had ascertained from the public records of what that interest consisted. Much stress is placed by counsel for appellant upon the fact that the policy in this case is what is denominated a "standard policy," all of which class of policies is said to contain the sole-ownership clause or stipulation. It is argued that by the use of these policies all inquiries of the insured to disclose the extent and condition of his title to or interest in the property has been rendered unnecessary, and is so held by the courts; but an examination of the cases which we have cited will prove the contrary, for at least in many of them, if not all, the policies involved embrace the sole-ownership clause or a stipulation against existing encumbrances. Nevertheless, the courts affirmed that notwithstanding this clause or stipulation, where there was nothing in the policy requiring the insured to disclose the character or condition of his title to the property or the extent of his interest therein, and, if the insurance company had failed to make an inquiry in relation thereto, and issued the policy without any representations or statements made by the insured in respect to the character or extent of his interest or title, the company could not be heard to complain that his interest was less than a sole ownership or was encumbered by an existing mortgage lien. The case of Geiss v. Franklin Ins. Co. (1890),123 Ind. 172, 18 Am. St. 324, is relied upon by appellant. In that case, however, there was no issue raised or tendered of a waiver upon the part of the company of the condition in the policy that it should be void "in case the assured was not the sole, absolute, and unconditional owner of the property." Therefore that case cannot be said to lend any support to the question of waiver at issue in this appeal. It may probably be a mooted question as to whether the insured in that case had any insurable interest in the soda-fountain, the title of which, under the agreement between him and the seller, was to remain in the latter until the purchase price thereof had been paid in full. So far, however, as the decision in that case can be said to announce or support a principle contrary to that which we assert and adhere to in this case, it is expressly disapproved.

We are satisfied with the conclusion which we have reached in this case, and the petition for rehearing is therefore overruled. All concur except Gillett, J.