Meyers v. Lebanon Mutual Insurance

Opinion by

Mr. Justice Williams,

The plaintiff sues on a policy of insurance against loss by fire. The defence set up is, in substance, that the policy was obtained by means of misrepresentations and is for that reason not binding on the company. The misrepresentation is alleged to be in the answer to question No. 13 in the application on which the policy was issued. The question is “ what proportion of the value of the property will remain uninsured after this policy is issued ? ” The answer written into the application by the soliciting agent of the company and signed by the applicant is: “ The building alone cost $13,000.” There was a stipulation in the application that the answers should be warranties of the truth of the facts stated in them. The proofs show that the house was worth at the time of the fire not more than six thousand dollars; and the company asserts that the answer to No. 13 amounted to a fraudulent overestimate of the value of the building at the time the insurance was applied for. To this the plaintiff replies that the answer complained of did not relate to the value of the house at the time it was insured, or at any time; but to its cost at the time of its erection. And that in so far as it may be thought to be evasive or misleading this effect is due to the omission by the agent of the company of part of the answer orally made to the question when it was read to him by the agent at the time the insurance was applied for. He further alleges that the omission was not known to him at the time he signed the application, and did not come to his notice until after the loss occurred. The answer as he says it was made was, “ I have been informed by different parties that the house cost about $13,000, and I think it is now worth about $7,000.”

The first question is over the effect of the written answer upon the plaintiff’s right to recover. It is evident that it is not responsive. If a responsive answer was deemed important for the information of the company in order to enable its officers to determine whether to accept or refuse the application, it should have been returned in order that the needed answer might be given. It was not returned; but the risk was accepted upon the answer appearing in the application. What does the appellant assert in this answer ? That the cost of the building was $13,000. This does not mean that he paid that sum for it, but that the cost to the builder who caused its erection was $13,000. The truth of this statement is warranted by the stipulation in the application. If the original cost of the house was as stated, there is no falsehood in the answer, and the warranty of its truth is not broken. We find no evidence in this case, as presented to us, that the house cost less than the answer asserts; and as the onus of proof to show its falsehood is on him who asserts it, the answer must stand until its untruth is shown. If the cost of the house is truly stated, the company has nothing of which to complain; for, waiving its right to a responsive answer to its question, it issued its policy on the answer appearing in the application, and it can only ask that the answer it accepted be true. As this is not seriously questioned, we see no reason why the plaintiff was not entitled to recover upon the case as it stood before his offer was made to show the answer actually given by him to the agent of the company.

The remaining question, whether the offer was admissible, is therefore not necessary to the decision of the case. As the question is however fairly raised on the record it is enough to say that it is ruled by Eilenberger v. The Protective Mutual Insurance Company, 89 Pa. 464. The insured did not become a member of the company until the policy was actually issued. In the negotiations preceding, and resulting in the policy, the company is represented by the soliciting agent, and as said in the case just cited, the company cannot escape the consequences of the fraud or mistake of its agent, by inserting in its policy a stipulation that “ such agent shall be deemed the agent of the insured,” without putting the insured on his guard in advance of the negotiations.

Whether any notice, though given in advance, can relieve a party from the consequences of his own or his agent’s fraud or mistake, by which a contract was secured that would not otherwise have been made, is more than doubtful, but need not now be determined. The question thus presented is not whether the terms of a written contract may be varied by oral testimony, but whether an omitted statement may be supplied when the paper from which it was supplied was prepared by the other party to the contract and signed by the person to be affected without reading the paper or having heard it read. Such conduct may show great confidence in the person with whom one is dealing, or want of care on his own part in informing himself of the exact character of the paper signed, but as against the party by whom the fraud or mistake was committed, it does not estop the too careless or too trustful party from alleging the truth. Under the view we have taken of this case it was not necessary to enter upon this line of proof, but it was not error to do so.

The judgment is affirmed.