ance 66 on his dwelling house, household furniture therein, barn and shed adjoining, grain therein, on his hay and other fodder therein, live stock and farming utensils therein," and the policy followed the application, the court, upon proof that the application was made through an agent to agree with the terms of another policy, exhibited to the agent, which covered property anywhere on the farm, and that the application was made by the agent, and signed by the plaintiff without reading, and that the policy was received and not read until after the fire, the court refused to reform the policy, because it did not appear that the insurer understood the contract in the same way that the insured did.' So where a policy previously existing had permission endorsed thereon for other insurance, and before its expiration, application was made for its renewal, but instead of renewing it by renewal receipt, a new policy was issued, and the permission for other insurance omitted by the direction of the company, and the assured accepted the policy, and on two or three occasions had presented it to the company for changes in certain respects, but never had called attention to this omission, but, after a loss, applied for a reformation of the policy by the insertion of permission for other insurance, the court refused to reform it, as no contract for such permission appeared to have been made, but if such omission is the mistake or fault of the insurer, and no laches are shown on the part of the assured, amounting to an acceptance, the court will reform the policy, and it would seem in the case last referred to, that the plaintiff had a right to expect that, as he applied for a renewal of a policy containing such permission, if a new policy was issued, it would contain the same matter that was contained in the other, and that if the assured neglected to notify the assured of such omission, and he innocently accepted the policy, relying upon the insurer's good faith that it would be made as applied for, he was entitled to a reformation of the contract, and a refusal to direct it was inequitable and unjust. Must be mutual mistake ;-mistake on one side not enough-Illustrations. SEC. 482. Thus it will be seen, that policies of insurance cannot be reformed except to express the contract really made. And if the parties mutually misunderstood each other, it cannot be reformed to accord with the understanding of either, because no contract was, in fact, made. The fact that the assured made a mistake does not entitle him 'Guernsey v. American Ins. Co., 17 Minn. 104. 'McHugh v. Imperial F. Ins. Co., 48 How. Pr. (N. Y.) 230. to relief, because the insurer made the contract as the insurer represented matters to be, and there is no mistake in the contract. So relief will be denied after the statute of limitations has run upon the policy, or if the limitation fixed by the policy for the bringing of an action thereon has expired, or when, by the exercise of due diligence, the mistake ought to have been discovered.' If a person accepts a policy, which was obtained upon an application made by a third person, without his knowledge, which misdescribes the use to which the property is devoted, although he is ignorant of the misdescription so made by such person, and that the insurers were misled thereby, yet the policy is inoperative and void, although such misrepresentation was accidental, unintentional and without fraudulent intent. The insurers, being misled thereby, are not bound. In the language of AMES, J., "The misrepresentation takes away the foundation of the policy, and, as it was an affirmation of a fact as then existing, it is enough to prevent the policy from taking effect as a contract. The minds of the parties have not met." Thus, in the case referred to, an insurance broker solicited insurance upon the plaintiff's organ factory. He was told that insurance was 2 desired, but that no more than a certain rate named would be paid therfor. The broker afterwards partially filled up an application and took it to one Mowry, an agent for the defendant, and, in answer to the question, "what is manufactured, and of what material; are wood shavings made on the premises?" he told Mowry that it was used as an organ and melodeon factory, but he believed that a small part of it was sometimes to be used as a machine-shop. Mowry answered the question by writing "machinery," and the policy was issued as upon "a machine-shop," and was accepted and paid by the plaintiff, without objection or notice to the defendants of the error. A loss happening under the policy, it was held that no recovery could be had, for the reasons previously stated. But it should be stated that, in this case, Mowry, who wrote the reply to the question relative to the purposes to which the building was devoted, had no authority to countersign or issue policies for the defendant, but referred all applications directly to the company, who accepted or rejected the risk, and issued its policies from the office direct. If Mowry had been authorized to issue policies, and had stood in the place of the company in that Dodge v. Essex Ins. Co., 12 Gray (Mass.) 65; Hough v. Richardson, 3 Story (U. S.) 369; Brooksbank v. Smith, 2 Y. & Call. 58. Goddard v. Monitor Ins. Co., 108 Mass. 57. 66 respect, a different rule would doubtless have been enforced, unless the plaintiff had seen the error and failed to notify the company thereoj. In such a case, the agent being notified that the building was used as an organ and melodeon factory," would have been notice to the company, and the plaintiff could have secured redress by proceedings to reform the policy, so as to cover the risk as represented. But in order to secure that result, the plaintiff would have been required to show, not only that the company was fully acquainted with the character of the risk, but also that he himself had been guilty of no laches that estopped him from securing that species of relief. In a recent case in the court of appeals, in New York,' an action was brought to reform a policy, and to recover the loss thereunder when reformed, under the following circumstances: The policy was issued to one Palmer, loss, if any, payable to the plaintiff. The period of risk was for three years from June 1st, 1870. The policy contained this clause: "If the premises are, at the time of insuring or during the life of the policy, vacant, unoccupied or not in use, and remain thus for over ten days without the company's consent is indorsed hereon, this insurance shall be void and of no effect. The reformation sought was to have such consent indorsed upon the policy. The referee found, in substance, that it was known to the defendant and its agent, at the time of issuing the policy, that the building insured was vacant, and would probably remain so; that it was expressly understood that it would remain vacant until September, to which the agent consented; that the condition was in fine print, and that Palmer and the plaintiff were ignorant that it was contained in the policy until after the loss. As a conclusion of law, the referee found that the condition was waived, and that the defendants were estopped from setting up that the policy was void in consequence of the consent not having been indorsed thereon, and that the plaintiff was entitled to have the policy reformed. And the court held that this conclusion was not erroneous. Proceedings must be commenced before final judgment in action on the policy. SEC 483. When a party has brought an action at law and prosecuted it to judgment, and a judgment is rendered against him thereon, he cannot subsequently bring proceedings in equity to reform the contract. Having elected to pursue his remedy upon the policy at law, he thereby elects to treat it as embodying the contract, and cannot subsequently deny the fact." 'Cone v. Niagara F. Ins. Co., 60 N. Y. 619. 2 Washburn v. Gt. Western Ins. Co., 114 Mass. 175. Where the assured brings an action to reform a policy, and subsequently, but before the action for the reformation of the policy has been heard, brings an action at law upon the policy, and is defeated thereon, he cannot afterwards pursue his action for the reformation of the instrument.' Where a party has his election of two remedies, when an election is made, he is bound thereby, and any decisive act of the party with knowledge of his rights, and of the fact, determines his election in the case of conflicting and inconsistent remedies.* Application may be made after loss. SEC. 484. When an application for insurance is made and accepted, and a policy is issued which, either by mistake or fraud on the part of the insurer, essentially varies from the contract made, and the policy is not seen or examined by the assured until after a loss thereunder occurs, he is not estopped from seeking a reformation of the contract, upon the ground that he accepted the policy. Thus, where the plaintiffs entered into a contract for insurance with the defendant's agent, and paid him the premium, and took from him a receipt, stating that the insurance was for $10,000, upon "merchandise, generally contained in their three-story brick building, metal roof, etc., and occupied by them as a commission house," and a policy was issued containing all the provisions of the contract, except the words "as a commission house," and the policy was received by a clerk of the plaintiffs, and its terms were not known to the assured until after the loss, it was held that, inasmuch as the insurers refused to pay the loss upon goods held by commission, the assured were entitled to have the policy made to conform to the agreement, and could not be said to have accepted the change in the contract, as indicated by the policy. The fact that proceedings are not instituted for its reformation until after a loss, does not of itself bar the remedy. It is a circumstance to be taken into consideration in connection with other circumstances in determining whether the plaintiff waived the variance, but, if the delay is excused, the remedy remains.* 3 'Washburn v. Great Western Ins. Co., 114 Mass. 175. Sanger v. Wood, 3 John. Ch. (N. Y.) 416; Thwing v. Great Western Ins. Co., 111 Mass. 93. If the insured has been guilty of laches or delay in seeking a correction of the error-that is, if, after knowledge of the mistake, he takes no steps to secure its correction, he is treated as having waived the error, and cannot invoke the aid of a court of equity to reform it. Paddock v. Com. Ins. Co., 104 Mass. 521; Ryder v. Phonix Ins. Co., 10 id. 548; Thwing v. Great Western Ins. Co., 111 id. 110; Conant v. Perkins, 107 id. 79. Franklin F. Ins. Co. v. Hewitt, 3 B. Mon. (Ky.) 202; 2 Ben. F. I. C. 202. In Van Tuyl v. The Westchester F. Ins. Co., 55 N. Y. 657, the plaintiff procured insurance upon his stock and materials in his manufactory. One of the When the policy is inconsistent with the risk and the facts, which were known to the insurer or his agent when the policy issued, a reformation is not necessary, as the doctrine of waiver and estoppel comes in aid of the assured. For instances in which an action at law will lie when the risk is inconsistent with the policy, see chapter 20. printed conditions declared it void in case of the establishment running, in whole or in part, over or extra time, or running at night, without special agreement. The plaintiffs gave evidence to show that they previously insured with defendant, but had the policy canceled because of the condition above mentioned being in the policy; that plaintiffs' agent informed defendant that the United States Insurance Company of Baltimore was writing on the property, and that their policy did not contain that clause; that defendant thereupon agreed to write as the other companies did, and to follow the form of the United States policy, which plaintiffs were to and did furnish for defendant to copy. Plaintiffs thereupon produced a blank form, which the witness testified was a blank policy of the latter company. This was offered in evidence, and was objected to upon the ground that the copy shown defendant should be produced, and that a blank form not filled up was not proper evidence. The objection was overruled, and defendant excepted. Plaintiffs also gave evidence tending to show that they did not discover that the permission required was not in the policy until after the fire. The evidence, as to the agreement, was denied by defendant's agent who effected the insurance. It was held that the plaintiffs were entitled to have the policy reformed. See also, Phenix F. Ins. Co. v. Gurnee, 1 Paige Ch. (N. Y.) 278; 1 Ben. F I. C. 257; N. Y. Ice Co. v. N. Western Ins. Co., 23 N. Y. 357; National F. Ins. Co. v. Crane, 16 Md. 260; Harris v. Columbia, etc., Ins. Co., 18 Ohio, 116; Weed v. Schenectady, etc., Ins. Co., 7 Lans. (N. Y.) 452; Bidwell v. Astor, cte., Ins. Co., 16 N. Y. 263; Brioso v. Pacific Mut. Ins. Co.. 4 Daly (N. Y. C. P.) 246; Bunten v. Orient, etc., Ins. Co., 2 Keyes (N. Y.) 667; N. American Ins. Co. v. Whipple, 2 Biss. (U. S.) 418; Malleable Iron Works v. Phenix Ins. Co., 25 Conn. 465; Bennett v. City Ins. Co., 115 Mass. 241; Oliver v. Mut. Com. Ins. Co., 2 Curtis (U. S.) 277; Moliere v. Penn. F. Ins. Co., 5 Rawle (Penn.) 342; National Traders' Bank v. Ocean Ins. Co., 62 Me. 519; Lippincott v. Ins. Co., 3 La. 546; Law v. Warren, 6 Irish Eq. 299. A policy existing upon the property, by its terms, permitted other insurance. Plaintiff's agent, before it expired, applied for renewal, and defendant made a new policy, but omitted to indorse permission to make other insurance. This omission was not discovered by insured till after the fire occurred. The defendant's clerk testified that he was instructed by his superior not to insert the clause giving permission to make other insurance. It also appeared that the plaintiff presented the policy for material changes to be made in it on two different occasions before the fire occurred. It was held that it could not be reformed for the purpose of inserting permission to make other insurance, that to do so would be to impose upon the defendants, conditions and terms to which they never assented. McHugh v. Imperial Fire Ins. Co., 48 How. Pr. (N. Y.) 230. |