Campbell v. Charter Oak Fire & Marine Insurance

92 Mass. 213

Opinion

Dewey, J.

Footnotes

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The principal question here is as to the effect of certain papers executed by the insured, and delivered to the de fendants as the notices and statements made in compliance with art. 8 of the conditions of the policy. We do not understand that any objection is taken, or was open to the defendants, that the instructions were not sufficiently favorable to them upon the question as to the effect of the hotel having been used for illegal purposes, or as to the effect of using burning fluid in the same. The questions as to such use of the building were submitted to the jury to be settled as questions of fact upon all the evidence produced by the respective parties. It is contended on the part of the defendants that, irrespective of any evidence that was produced at the trial by the plaintiffs, to show that no such illegal use had actually been made, the present action cannot be maintained, inasmuch as the notice of loss by fire, and the accompanying statement of the manner in which the building was used, contained certain facts which wholly avoided the policy, Such statement of facts by the insured, it is said, must at least, while it remains in the office, as the representation of the facts in the case, unmodified and unqualified by any further documents, justify the defendants in declining to pay the loss, and constitute a good defence to an action instituted under those circumstances. This leads us to the inquiry as to the character of this statement, and the legal effect to be given to it.

The provisions on this subject in the policies made at an earlier period were much more general than those found in this policy. To a certain extent, a disposition has been manifested by the courts to deal with these statements liberally in favor of the insured, when objections have been raised to their sufficiency. This has been so where the defects have arisen from want of fulness in the statement, to which the insurers at the time took no objection, but refused payment of the loss upon some ground distinct from that of any defect in the preliminary proofs. But the objection arising from the omission to file in due time a notice of the loss and statement of the circumstances was sustained in the case of Smith v. Haverhill Ins. Co. 1 Allen, 297.

As already suggested, the conditions in this and similar policies are something more than is embraced in what have been usually spoken of as “ preliminary proofs.” Those, particularly in marine insurances, related usually to the mere fact ci the loss and the interest of the party, and gave such evidence as was then known to the party, authorizing the belief of a loss by the perils insured against. Under the conditions annexed to this policy, the statement of the loss by the insured is required to be accompanied by various other statements in reference to the subject of their claim, and particularly that the insured is to state “in what general manner the building insured, or containing the subject insured, and the several parts thereof, were occupied at the time of the loss, and who were the occupants of such building.”

In the present policy, the importance attached to the notice of the loss and statement of the circumstances, and the use of the property, is made obvious by the particulars required to be specified, and by the further provision that the loss is “ to be paid within ninety days after due notice and proof thereof made by the insured in conformity to the conditions annexed to this policy.”

The ground of defence to the present action is not the want of fulness in the notice of the loss and statement accompanying the same, but that the statement shows that the policy has been avoided by the acts of the insured, and that no liability exists thereon as against the defendants. In this statement the insured declared, “ I occupied and kept the said building as and for a public hotel at the time of the said loss, and had done so from the date of said policy.” This statement, taken in connection with the fact that the insured was not licensed to keep any such hotel, presented the case of carrying on an unlawful business, which avoided the policy, and would justify the defendants in not paying the loss.

A true statement was called for by the conditions of the policy. It was a condition precedent to the liability to be called upon to pay the loss. If this be rejected as being a false statement, then no statement has been filed, and for that reason the plaintiff cannot recover. If allowed to stand as a part of the statement, the policy had been avoided. It is difficult to perceive how the dilemma can be avoided, while this statement remains as the only one filed with the company.

The further statement which the insured has made, and which is described in the instrument under his signature as “ in addition and as a part of his preliminary proofs under policy No. 2021,” involves the case of the plaintiff in the further objection of stating “ that the house was always lighted by burning fluid m lamps, but none had been lighted on the day of the fire, or since the evening before the fire.”

So far as these statements or either of them were induced by the fraudulent acts of the insurers or their agents, 10 question can exist as to the right of the plaintiff to avoid them, and they may properly be controlled by evidence showing the facts to be otherwise, and that there has been in the use of the building no violation of the conditions of the policy.

But the more difficult question is, whether, when the statement filed by the insured is his free and voluntary act, and the insurers have no reason to doubt the truth of it, the insured may be allowed to contradict it, and establish a different state of facts on the trial of an action to recover the loss, upon showing that the statement was made under a mistake. Upon this point, we think the ruling of the court was erroneous. We do not mean to say that the party may not correct mistakes of fact in his original statement, but such corrections are not for the first time to be made known to the insurers at the trial of the action to recover for the loss, by the introduction of evidence showing that the statements filed were not true in a material fact, which, if it existed as stated, was fatal to the right of the insured to recover.

In Worsley v. Wood, 6 T. R. 710, the effect of a want of the preliminary proof stipulated for and required by the terms of the policy was much considered, and it was held that a compliance therewith was a condition to be performed before action brought for the loss. In the case of Irving v. Excelsior Ins. Co. 1 Bosw. 507, where the statements made in the preliminary proof showed that the plaintiff was not entitled to recover fcr the alleged loss, the court held that the plaintiff could not conuadict the statements thus made, on the ground that they were made through mistake. Take the case where the statement distinctly affirmed that the building had been alienated before the loss, or that the loss was occasioned by a riot or an insurrection; may not the insurers act upon such statements, and properly refuse to pay the loss ?

The inquiry is, wheth ;r, if the plaintiff relies upon the statement thus filed by hirr. as the notice required in compliance with the conditions of his policy, he must not take it as it is, take it as a true statement of his claim, and the foundation ior his suit. Having stated the use of the premises to have been such as would authorize the inference that the policy was void, and having filed no amendatory statement correcting such previous statement, can he upon the trial of the case be allowed to show that by mistake he has misled them in matters which he has obligated himself to state truly as a condition precedent to his right to remuneration for the loss? In the opinion of the court, the ruling excepted to was erroneous in qualifying the rule as to the conclusiveness of the statement, so as not to embrace a case where it was made by mistake. The defendants might properly rely upon the statement of the insured formally made under the provisions in the policy, at least until notice of such mistake; and an amendatory statement ought to be filed before instituting an action upon the policy.

Under the form of this policy, Henry Bates was the party insured, and the plaintiff has only the right to recover the avails of the same when it is made effectual by due notice and statement as to the loss.

We have not overlooked the points taken and urged in behalf of the plaintiff, that the court should allow estoppels excluding the truth only when honesty and good faith require it, and not to punish the party for an innocent mistake; but we apprehend that this rule can have no application to a question like the present, where the parties have created a liability solely on the terms stipulated in the policy.

It was also further urged that, as to the first statement, the defendants did not act upon it, but applied to the insured for further information, and obtained a more full and detailed statement. Perhaps so far as this second statement contradicts the first, it would be reasonable to give it the effect of an amended statement; but it must be taken as a whole, and, as such, if it qualifies the statement that the building was kept as a public hotel, it introduces another statement equally fatal to the policy, “that the house was always lighted by burning fluid in lamps.”

In any view we can take of this case, we think the plaintiff must meet the defence upon the hypothesis that the statements »f the loss and circumstances attending the same and the general nse of the property, which had been filed with the company, were true statements, and the insurers may rely upon them as such until duly notified that they were made under a mistake of the actual facts.

Exceptions sustained.

Gray, J. did not sit in this case.