McBRIDE, C. J.
— The pleadings in this case are very lengthy and it is impracticable to reproduce them in this opinion. The main controversy, however, is as to the alleged misrepresentations in regard to the age of the machines covered by the policies. As a general rule, the later the model the greater value an automobile seems to have in the eyes of the purchasing public, although this is not always or necessarily true with respect to second-hand machines,
which is the case here. There is no doubt, and it is not denied, that the year model of a number of these machines was improperly stated in the covering notes. Plaintiff claims that these covering notes were made up by defendant’s agent from his own examination of the machines, and that whatever errors existed in the descriptions of the machines as to the year models were made by the agent himself and for which plaintiff is not responsible.
On this appeal, with the verdict of the jury standing as it does in favor of plaintiff, we must assume that such testimony is true, although it seems to be contradicted, in some particulars at least, by strong testimony introduced on behalf of the defendant. Assuming, as we must, that plaintiff’s statement is true, we are confronted with this state of facts: Plaintiff was engaged in the garage business in the town of Medford, Oregon, and in 1920 and 1921 took out the policies mentioned here, the general character of which is shown in the statement. There were no covering notes issued with the policy, but whenever plaintiff would purchase a car he would inform the agent of that fact and the agent would come personally, examine the car, make his own description and put his own valuation upon it, which description and valuation appeared in the covering note, or certificate, which the agent issued, or ought to have issued, to the plaintiff. Although defendant’s agent had made out these covering notes and claimed the premiums as required, he had, in many instances, neglected to deliver the certificates, or covering notes, to plaintiff. They were kept in the agent’s office until after the fire. The agent’s authority is not shown by the testimony, but there is no question but that it was extensive enough to authorize him to examine
these cars and to issue the covering notes. If the plaintiff made no representation as to the year model, as testified, there was nothing to be waived by the agent. If the agent, mistakenly and in the .course of a survey made by himself, inserted a wrong number in the covering note, there was nothing imputable to plaintiff for him to waive. There is no question of waiver in the case.
It is difficult accurately to state the precise nature of this form of policy. It is called an open policy, because there is no valuation in the body of the policy itself of the property insured, nor is there any property described in the body of the policy as being insured, and the amount of insurance covered by it would fluctuate from time to time as plaintiff purchased cars and submitted them for insurance or when he sold a car and withdrew it from further insurance. It would seem, in this kind of insurance, that every, covering note issued upon the payment of a premium practically amounted to a separate contract of insurance, it being evident that no liability for any loss would accrue against the insurance company until the premium had been paid and the covering note issued on each car so insured. Authorities upon this subject seem to be meager, but the logic of the situation would seem to indicate that this should be the rule, and the following decisions tend strongly to sustain that view;
State
v.
Williams,
46 La. Ann. 922 (15 South. 290);
Douville
v.
Sun Mutual Ins. Co. of New York,
12 La. Add 259;
Wright
v.
Fire Ins. Co.,
12 Mont. 474 (31 Pac. 87, 19 L. R. A. 211, 28 A. L. R. 802; note).
The question is generally discussed in the briefs as to whether the representations as to the year models of tljLe cars constitute warranties. In
the bodies of the policies certain matters are spoken of as warranties, but as no car is described in the policies themselves, it is impossible to find any warranty in those instruments unless we import into them the description in the covering notes and call them warranties. The peculiar manner in which these people did business and under which these policies were issued differentiates this case from many cases in which a written application for a policy is made and signed by the person desiring insurance. It has been frequently held that, where a written application states a thing absolutely to be true, and such statement is of a material fact, it will be construed as a warranty, even if the fact should not be material, and this is upon the theory that as both parties have agreed that it should be a warranty, the courts will not disregard a contract to that effect and hold what the parties have thus stipulated to be a warranty to be a mere representation. But courts are loath to hold that to be a warranty which the parties have not stipulated shall be such. And, except in policies • of marine insurance, where the doctrine of implied warranties is to a certain extent accepted, such doctrine is reluctantly and infrequently applied in cases arising upon fire insurance policies.
The difference in law between a warranty and a false representation is that breach of a warranty voids the contract, irrespective of its gravity, while a false representation will only void the contract when it is shown to have been made by the party claiming the benefit of the contract and made either with knowledge of its falsity or recklessly, without any knowledge as to whether it was true or false, such representation being of a nature that would reasonably tend to influence the action of the insurer in
accepting or declining the risk or in fixing the amount of the premium to he paid.
6. In this case, as before stated, there was no written application for a policy. There was no written application for a covering note, which note was necessary to make the policy effective for the protection of each automobile concerning which it was issued. According to plaintiff’s testimony, he made no false representations, in fact, no representations whatever beyond calling the attention of defendant’s agent to the particular automobile he wished insured. Under such circumstances we do not think that he should be held responsible for mistakes made by defendant’s agent:
Koshland
v.
Hartford Ins. Co.,
31 Or. 402 (49 Pac. 866);
Northwestern Nat. Ins. Co. of Milwaukee, Wis.,
v.
Chambers,
24 Ariz. 86 (206 Pac. 1081);
Wright
v.
Fire Ins. Co., supra;
Cooley’s Briefs on the Law of Insurance, Vol. 2, p. 1140, and cases there cited.
It is true that the difference in the age of the cars might affect the amount of insurance which defendant would choose to place upon them, although this is not necessarily the case, as a carefully used and conservatively driven car of the year model of 1918 might in fact be more valuable than a car of the same make of the 1921 model which had been carelessly or recklessly used. At all events, we think the authorities hold quite generally, in cases of this kind, where the examination is made by the agent of the insurer and the description of the property to be insured, and its value, are made by such agent, that any representation made by the person desiring insurance as to the value of the property, unless made in bad faith, could not be held to be such a misrepresentation as would render the policy void, al
though it might affect the amount of loss to be paid in case of the destruction of the property:
Wright
v.
Fire Ins. Co., supra.
It would, of course, be grossly unjust if the plaintiff fraudulently misrepresented the age of his automobiles, or their value, in order to get an increased insurance upon them, to allow him to recover anything. On the other hand, it would be equally unjust, if the defendant’s agent assumed the duty of examining the cars and ascertaining their year models and values, and, having done' so and issued covering notes and taken the premium from the insured, that the insurance company should be heard to say, “Our agent insured your cars for more than they were worth, describing them as newer cars than they were, and, after having had the benefit of a greater premium than we would otherwise have received, we will keep that premium and pay you nothing on account of your loss.” So long as the automobiles were not burned, the insurance company was making money by reason of the fact that the cars were valued higher than they would have been if the agent had placed a lower valuation upon them. If the agent was one working upon a commission on premiums, he would probably be the principal one to profit by a higher valuation, because the premium would be larger, but in the absence of testimony we cannot assume as a fact that he was working upon a commission rather than upon a salary, although it is probable that he was a mere local agent, working upon a commission. In examining the automobiles, ascertaining their value and year model, and other matters incident to the risk, he was acting within the scope of his authority, which, on that subject, is not limited by anything in the policy:
Northwestern Nat. Ins. Co. of Milwaukee, Wis.,
v.
Chambers, supra.
We find no error in the court’s ruling upon the subject, and tbe verdict of tbe jury has settled the question as to whether plaintiff made any material misrepresentations. In fact, if plaintiff’s testimony is to be believed, he made no representations except that he had purchased a car which he wished defendant’s agent to examine and insure. Bepresentations as to the value of a car are so largely a matter of opinion that it is difficult to predicate fraud in a mere appraisal of value. We find here nearly every witness disagreeing as to the value of the cars, and the jury, by its verdict, disagreeing with the witnesses. There is a tendency in the average human mind for a man to overvalue his own possessions.
“It is naught, it is naught, saith the buyer: but when he is gone his way, then he boasteth. ’ ’ Proverbs, xx, 14.
In other words, every man who makes a trade thinks that he is getting a good bargain, and it is not necessarily an evidence of .raud that the plaintiff thought his automobiles of greater value than defendant’s witnesses appraised them or that the jury found.
The court properly instructed the jury to the effect that if they found that plaintiff had misrepresented any car included in his covering notes or made any material misrepresentation, the jury should allow him nothing on that car, and on the theory that each covering note practically constituted a new contract this was correct. There were just as many policies as there were covering notes, as a matter of law. Tbe contract of insurance was never completed until the covering notes were signed by defendant’s agent.
When that was done there arose at once the legal liability on the part of plaintiff to pay the premium, and on the part of the defendant to pay the loss if a car was destroyed. And if plaintiff recklessly, or even fraudulently, or through motives of greed, overvalued a particular car, the policy, as to that particular car, became void.
A great deal was said about the moral risk that entered into these contracts of insurance, but we know, in actual practice, that insurance companies are not prone so much to inquire about the moral standing of a person as about the nature of his property and the amount of premium they can receive for insuring him. While they say that they would not have insured this property if they had known that plaintiff was making these misrepresentations as to year models and value, we apprehend that if the year models had been correctly stated in every instance, while they might not have valued the cars so highly, they would, nevertheless, have insured them at some sum. But that is beside the question here, because from plaintiff’s evidence it appears that he made no representations whatever, and that defendant’s agent placed the valuations, fixed by his own inspection— either from a careful or careless examination of the machines does not appear.
There can be no question but that plaintiff intended to have insured the particular cars shown to or reported to the agent, and that the agent intended to insure and include in the covering notes, among others, the identical cars that were injured in the fire. The year model was a part of the description, but, in view of the examination made by the agent, it could have had little or no influence upon his mind in determining the value. This error in the descrip
tion, either in the coverage or the complaint, conld not have misled the defendant to the extent of being a material variance between the pleading and proof.
Another objection urged is that plaintiff concealed the fact that some of the automobiles were mortgaged. The covering’ notes indicate that he reported the fact to the company that two of the cars were mortgaged, and, in fact, the insurance on the covering slips was for the benefit of the mortgagee. As to the others, plaintiff’s testimony indicates that while the mortgage had not been satisfied of record, it had actually been paid and discharged, so that, while there was apparently a mortgage upon them, none existed in fact. Failure to inform the agent that there was a paid mortgage on the records which had not been canceled was not such a fraudulent concealment as ought to exonerate defendant from paying the policy.
It is urged that the plaintiff misrepresented the place of storage of the machines, and that this representation renders the policy void. The evidence indicates that the machines were actually in the building described in the policy as their usual place of storage when the policy was issued. Later the owner of the building required it for other purposes and plaintiff was compelled to remove to another location. The representation disclosed in the policy was strictly true. There was no representation or promissory warranty that the machines would always be kept in the same building. The change was known to defendant’s agent and is not shown to have been made with any fraudulent intent. In fact, a majority of the covering notes in evidence were issued after the change of location and the
new location is specified in them. The contention is without merit.
In his proof of loss the plaintiff stated that the origin of the fire was unknown. There was no sufficient pleading on the part of the defendant that the plaintiff set the fire, or caused it to be set, or that he knew the origin of it. The defendant offered testimony tending to show that there was a stove in the garage which was burning at the time of the accident and that near it were deposited cans of oil and other inflammable material, and generally sought to introduce testimony casting suspicion upon the plaintiff as to the origin of the fire. If defendant desired to charge plaintiff with having set the fire or having caused it to be set, or having knowledge of its origin which he fraudulently concealed, such facts should have been pleaded as an affirmative defense, or as a fraudulent concealment of a material fact. In the absence of such a pleading the evidence offered was not competent for any purpose. The allegation in the answer under which the testimony was offered is as follows:
“XXI.
“And that as to the allegations of paragraph XXIII of the first cause of action, wherein the plaintiff alleges that the origin of the fire alleged in the complaint is to the plaintiff unknown, this defendant alleges that just prior to said fire the plaintiff moved the second hand cars described in said first cause of action into a building other than the one in which new cars and automobile supplies were kept by plaintiff for sale, and although the plaintiff at ail times was required to exercise reasonable care to prevent loss to said cars by fire, he nevertheless stored in the same room with said cars large quantities of inflammable oil and installed near said oil a heating
stove in which stove the plaintiff had made or caused to he made a fire on the evening of the night on which said fire occurred, and the said fire had its origin in that part of the said room in which said oil and stove were. And at the time of the taking out of the insurance sued upon herein the plaintiff was heavily involved financially and had on hand an .unusually large number of used cars of little value, and he failed to disclose to the defendant his finan_ cial condition or the fact that many of said cars were mortgaged. And in said proofs of loss so sworn to by the plaintiff the plaintiff stated that the origin of said fire was to him unknown, and did not disclose the existence of the said oil in the building where said cars were, nor the existence of the fire in said stove, nor did he disclose any of the other matters herein alleged.”
A mere reading of the above will disclose how far short it comes from alleging that plaintiff actually knew the origin of the fire and lied about it in his proof of loss. Every fact stated in the answer could be true and yet plaintiff’s statement in the proof of loss could be true. He was not required to state his guesses or suspicions or speculations, but to answer truly as to whether or not he actually knew the origin of the fire. The whole paragraph quoted is adroitly framed to cast the shadow of suspicion on plaintiff without in fact charging him with crime.
Several objections to the court’s instructions are predicated upon the theory that the statements in the covering notes are warranties, and, while this subject has already been referred to, its importance here renders it not improper further to discuss it. A warranty in a fire insurance policy is a plain assertion of the truth of a’ fact in connection with the subject matter of the insurance which neither party making it is permitted to deny or to
escape from its stipulated consequences by alleging its immateriality. An affirmative warranty is one which asserts an existing fact or condition and appears upon the face of the policy or some paper attached thereto and made a part of it by proper reference. If the stipulation requires the performance of an act after the issuance of the policy, it is generally held to be a promissory warranty. It is one of the qualities of a wararnty that it should be plain and unambiguous. A policy of fire insurance should not contain a trap for the unwary. There is no allusion in the policy here under consideration to the covering notes as warranties, and the language under the head of warranties described no automobile, but contains a mere blank form — whether intended as a form to be imitated in future applications for coverage does not clearly appear. It is ambiguous both as to intent and in its language. In fact, it would appear to be that an ordinary standard policy used in other kinds of fire insurance had been rather crudely worked over to serve the purpose of an automobile insurance policy, which, by subdivision 3 of Section 6342, Or. L., need not be a standard policy. If the covering slips prepared by defendant and signed by defendant’s agent are to be construed as warranties, such construction should work both ways, and the defendant should be precluded from disputing the verity of the stipulations therein contained. The real defense here is founded upon the alleged fact that plaintiff made oral representations as to the year models and age of the cars and other particulars, and thereby caused defendant to issue and sign these covering slips. In other words, it claims that the covering slips are false because plaintiff falsely and fraudulently repre
sented the facts. The slips were not warranties by the plaintiff, bnt were written np and signed by the defendant. This opened np the whole field for evidence of the alleged false representations of plaintiff in procuring’ the insurance, and, upon the whole, the matter was properly submitted to the jury.
Defendant objected to evidence being introduced tending to show that the descriptions of the cars, or rather, the misdescriptions, pointed out in the defendant’s answer, were the result of the mistake made by defendant, through its agent, Trowbridge. The bearing of this objection, so far as it relates to a variance between the pleadings and proof, has already been considered, but it is presented under another guise in an objection that it is a matter of estoppel, and should have been pleaded in the complaint.
Plaintiff’s complaint alleged that plaintiff had kept and performed all the conditions which the policies required him to perform with reference to the specific automobiles described in the complaint, describing them by the same model numbers specified in the covering notes. The defendant denied this generally, and, in addition, alleged that plaintiff, with intent to defraud and deceive defendant, had fraudulently represented a larg’e number of the cars specified in the complaint to be of later models than they in fact were, and had thereby caused defendant to insure them. Plaintiff, in his reply, denied making the false representations, or any representations, in regard to the age of the machines, and alleged that, if any such mistakes were made, it was the fault of defendant’s agent, who examined the cars and from such examination prepared the descriptions shown in the coverage notes. The fact that the alleged
discrepancies existed was only denied inferentially and, with the exception of one car, was clearly proved at the trial. We quote one of the allegations in the answer, like allegations being pleaded with respect to other machines:
“in.
“That as to the allegations of paragraph IX of said first cause of action the defendant never insured the car described in said paragraph under said contract of insurance, and the defendant alleges that at the time of the making of said contract of insurance the plaintiff so fraudulently represented to the defendant that-the car described in said paragraph IX was a 1917 Chevrolet roadster, whereas, in truth and in fact, as the plaintiff well knew, the same was a 1916 Chevrolet.”
In a preceding allegation defendant had pleaded that the alleged false representations were made with intent to deceive defendant and did deceive it, and were the cause of its entering into the contract. The reply denied the existence of the alleged discrepancies and thereafter continued as follows:
“And, for a further and separate reply to defendant’s further and separate answer to the plaintiff’s first cause of action, plaintiff alleges:
“I.
“That the defendant, before issuing covering notes covering the cars mentioned and described in plaintiff’s said first cause of action, inspected said cars and after an inspection of the same issued covering notes, covering said cars, and that if there was any mistake either as to the motor number, condition of cars, or the year in which the same were manufactured, it was a mistake and error of the defendant company, and that plaintiff in no wise made any mis
representations to defendant with reference to said cars, or any thereof.
“II.
“Plaintiff further alleges that if there was any mistake in the motor number or the year of manufacture of any of said cars, that the identical car or cars for which- covering notes were given by defendant company were given after an inspection of the same for the purpose and intention of covering the identical car or cars, irrespective of its or their motor number or the year of manufacture; and that the cars mentioned and described in plaintiff’s complaint under the name of the individual car had corresponding covering note issued and delivered by the company, as in plaintiff’s complaint alleged, and after an inspection duly had by defendant.”
The defendant urges the objection that evidence of the fact that the coverage slips were made out by defendant’s agent was matter of estoppel, and should have been pleaded in the first instance in the complaint, and was improperly pleaded in the reply and constituted such a departure from the facts pleaded in the complaint as to render such evidence inadmissible. Contrary to the prevailing rule in most jurisdictions, it has been held here that estoppel
in pais,
or equitable estoppel, should be specially pleaded, and this rule is now so firmly established by judicial decisions in this state that it is impracticable to attempt to overturn it, but it does not follow that an estoppel
in pais
should be pleaded with that nicety and attention to form that applies to the pleading of a technical estoppel. It is sufficient if the substantial facts that indicate that the opposite party should not be permitted to avail himself of a particular fact, or act, or omission should appear in the pleading. But it is equally true that where a material issue has been omitted from a
pleading, an issue on such fact, made in the answer and reply, will cure the defect:
Treadgold
v.
Willard,
81 Or. 658 (160 Pac. 803);
Easton
v.
Quackenbush,
88 Or. 374 (168 Pac. 631). Had the facts stated in the reply here been alleged in the complaint, while the allegation would have been subject to a motion to make it more definite and certain, it would certainly have been good in the absence of such a motion. The pleading is technically defective in not alleging that plaintiff had no knowledge of the alleged mistake when the agent committed it. It is a somewhat crude attempt to plead an estoppel, but, not having been moved against and the evidence admitted without objection, it should be held sufficient after verdict. Besides this, taking into consideration the fact that plaintiff had denied making any misrepresentations in regard to the models or conditions of the cars, the evidence was admissible under the issue thus raised.
The pleadings here seem to have followed closely the pleadings in
Koshland
v.
Hartford Ins. Co.,
31 Or. 402 (49 Pac. 866), and the point raised here was expressly raised in the brief of Chamberlain & Thomas, attorneys for the appellant in that case. At pages 57 and 58 of their brief they say:
“ * * No explanation of these encumbrances was sought to be -made by plaintiff in his case in chief, and upon his own theory of these cases, the effect of these encumbrances was to avoid the policy unless some explanation thereof were made. These explanations should have been made in the complaint, and in the evidence in chief, and it was too late to attempt them by reply, and by evidence in support thereof.”
The question thus raised was not discussed in the opinion, but the court, by affirming the judgment,
tacitly approved the course of the plaintiff in presenting this issue in his reply.
In
Wright
v.
Fire Ins. Co.,
12 Mont. 474 (31 Pac. 87, 19 L. R. A. 211), where the answer of defendant pleaded concealment of material risk, that defense was met in the reply by alleging preparation of the application for insurance by the agent of the insurer and a plea of estoppel on that account. In these cases such form of pleading would seem logical. A plaintiff should not be compelled to anticipate a defense of fraudulent misrepresentation or concealment of facts material to a risk.
No objection was made, by demurrer or motion, to the order in which the alleged estoppel was pleaded, nor was any objection interposed to the evidence of plaintiff as to his contention that the covering notes were prepared by defendant’s agent pursuant to an inspection made by him of the cars. So that, while the question is not free from difficulty, we are inclined to the opinion that the verdict cured the objection here urged.
But this is not the case in regard to the proofs of loss. It is distinctly charged and abundantly proved that the same representations were made in these proofs, and this is not denied, nor is there any sufficient plea in estoppel as to these. The plaintiff was permitted to introduce testimony tending to show that the proofs of loss were prepared on the form they were in upon the advice and with the consent of defendant’s representatives, and that both plaintiff and these representatives knew that in some respects the statements therein contained were untrue. This is particularly true with reference to a certain Hudson car, and applies in a certain degree to other cars. The defendant objected to this testimony fre
quently and seasonably and the objections were overruled. Under the holding in
Mercer
v.
Germania Ins. Co.,
88 Or. 410 (171 Pac. 412), the admission of this testimony was error and will necessitate a retrial of this case. While we hold that failure seasonably to object to testimony offered under the defective plea of estoppel as to the description and valuation of the cars saved this evidence from the condemnation of incompeteney, we cannot extend a like charity to misstatements in the proofs of loss confessedly untrue, or at least inaccurate — to which no such plea is interposed, even by implication. In a case in which a large majority of the cars are misdescribed, both in the policies and in the proofs of loss, the defendant is. entitled to a fairly clear explanation in the pleadings before proof is offered that such discrepancies are defendant’s fault, or made at its suggestion.
The court erred in permitting the complaint to be amended on the trial so as to include a count for attorneys’ fees. Section 6855, Or. L., provides:
“Whenever any suit or action is brought in any - courts of this state upon any policy of insurance of any kind or nature whatsoever, the plaintiff, in addition to the amount which he may recover, shall also be allowed and shall recover as part of said judgment such sum as the court or jury may adjudge to be -reasonable as attorney’s fees in said suit or action; provided, that settlement is not made within eight months from date proof of loss is filed with the company. * * ”
This action was instituted August 6, 1921, and eight months had not then elapsed since the filing of the proofs of loss, which proofs were filed April 7, 1921. The cause was called for trial on May 22, 1922, and an amendment alleging that $1,000 was a
reasonable sum as attorneys’ fees was offered by plaintiff and taken under advisement by tbe court, and at tbe close of tbe testimony tbe amendment was allowed, over defendant’s objection. This introduced a" new cause of action on tbe covenants of tbe policy, wbicb did not exist when tbe original complaint was filed or when issue was formed thereon. It should bave been introduced by filing a supplemental complaint: 31 Cyc., p. 502.
Numerous objections are made to tbe instructions of tbe court, and they are not entirely free from technical criticism, but, taken as a whole, we think they fairly present tbe case to tbe jury, except in so far as they treat upon the subject of estoppel as to tbe matters wbicb we bave held that estoppel was not properly pleaded. There is a long record, voluminous testimony, and tbe briefs here occupy nearly four hundred pages. In such a case, as hotly contested as tbis was, it can hardly be expected that a judge will be technically accurate in every ruling, and we regret that our view of tbe law requires us to direct a new trial; but it is hoped, now that we bave attempted to blaze tbe path, tbe parties, with perhaps amended pleadings, may be able to make a substantially correct record.
Tbe judgment is reversed and a new trial directed, with leave to either party, if so desired, to apply to tbe court below for leave to file amended pleadings supplemental or otherwise.
Reversed With Directions. Costs Taxed.
Rand and Coshow, JJ., concur.
Burnett, J., concurs in tbe result.