Chase v. . the Hamilton Insurance Company , 20 N.Y. 52 ( 1859 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] This action is based upon the ground that the defendant had entered into a contract to insure the plaintiff's building against loss or damage by fire to the amount of $1,500, by a proposition upon the part of the defendant which was accepted by the plaintiff. The basis of the proposition made by the defendant was the application signed by the plaintiff. In this the building upon which insurance was requested was declared to be a stone dwelling-house. By the proof it appeared that the building was a stone building with a wooden kitchen, twelve by fourteen feet, one story high, attached. It is insisted by the counsel for the defendant that the insurance was only to be upon the stone building, and not upon the wooden kitchen. The application was for insurance upon a stone dwelling-house. This implies that the policy is to cover an entire dwelling-house. The proposition that where a dwelling-house consists of a building a part of which is stone and a part wood, the owner may procure a policy of insurance upon his stone dwelling-house, and that it shall cover only the part constructed of stone, is I think more ingenious than sound. A dwelling-house is an entire thing. It includes the building and such attachments as are usually occupied and used by the family for the ordinary purposes of a house. A kitchen constructed like the one in this case clearly constitutes a part of the dwelling-house. A policy of insurance upon a dwelling-house, when that is the only description of the subject of insurance, must attach to the whole, or it will not to any portion of it.

It is argued that the application having been filled up by Atwood, the agent of the defendant, and he being aware of the situation of the building and of the kitchen, the defendant cannot defend upon the ground that the kitchen was not embraced in the application. In other words, that anything affecting the risk known to the agent of the company, who forwards the application for insurance, need not be disclosed in the application. This position could not, I think, be sustained upon principle in the absence of authority. The application is signed by the assured, and it is expressly stated therein that the company shall not be bound by any act done or statement made to or by any agent or other person which is not contained in this application. This is the express agreement of the party. Upon what principle the court is to set the provision aside I am unable to perceive. A party signing a paper in reference to an insurance contract is presumed to know its contents, the same as though it related to any other subject. Parties are at liberty to incorporate any provisions in their contracts that they please, provided they do not violate the rules of law. There is no reason why a party contracting with another through an agent may not agree that anything done by or known to the agent shall not affect the contract unless made known to the principal in writing. That is precisely this case; and unless insurance contracts are to be made exceptions to the rule, the plaintiff is bound by the statements in the application, whether he knew them or not, unless prevented by fraud imputable to the defendant from learning what they were. Carelessness of parties, too prevalent in entering into contracts of this description, cannot justify a departure from the settled rules of law. The plaintiff, if he knew the contents of the application, cannot complain of being bound by its provisions. It is his contract. If he did not know, that is not the fault of the defendant. It had a right to presume that he did know, and to act upon that presumption. It probably did so act when making the proposition to insure the plaintiff's dwelling-house at two per cent. Although it may be hard upon the plaintiff thus to lose the benefit of the contract, it would be harder still to hold the defendant bound to insure a dwelling-house composed in part of stone and in part of wood because it had proposed to insure a stone dwelling-house; and thus to hold, upon the ground that the defendant's agent knew the condition of the property, in the face of a positive agreement by the plaintiff that the defendant should not be affected by such knowledge. But this question is conclusively settled by authority. In Jennings v. The ChenangoMutual Insurance Company (2 Denio, 75), the cases are reviewed by JEWETT, J., and it is clearly shown that knowledge by the agent of the insurer of the falsity of a warranty entered into by the assured will not relieve the assured from the consequences of the breach. This case shows that from the earliest time such has been the law of England, of this State and of Massachusetts. The same rule is laid down by the elementary writers, Phillips, Angell and others. Brown v. The Cattaraugus Mutual InsuranceCompany (18 N.Y., 387) holds the same doctrine. I have not been able to find a single adjudication to the contrary. It is supposed that the case of Plumb v. the same defendant (18N.Y., 392) militates against the rule. In that case it was held that when the agent of an insurer was authorized by him to make surveys and fill applications for insurance on his behalf, made a survey of the building proposed to be insured, filled out the application and procured the signature of the assured thereto, without examination or knowledge of its contents, upon his assurance that all was correct and proper, that the insurer was estopped from showing the falsity of the statement contained in the application. It will readily be seen that there is no analogy between the case now under consideration and the case last cited. In this case there was no evidence that Atwood had any authority from the defendant to make surveys; that he had ever made any to the knowledge of the defendant, or that he made any statement to the plaintiff as to the correctness of the application. There is no feature necessary to constitute an estoppel in the case; besides, I am at a loss to discover how an estoppel is to be based upon the acts and declarations of an agent whose acts and declarations it is agreed shall not affect the party against whom the estoppel is claimed.

It is argued by the learned judge who gave the opinion of the Supreme Court that the referee may have found the fact that the kitchen did not increase the risk. The cases above referred to show that had the policy in this case been issued containing the clause (as the defendant's policies did) making the application a part of the contract, this would have been a warranty by the assured that the dwelling-house was stone, and there being a breach by its being in part wood the plaintiff could not recover whether the risk was increased or not. The distinction between a warranty and a representation is that the former is contained in and forms part of the contract and must be complied with whether material to the risk or not, while the latter is outside of the contract and it is immaterial whether it is true or false unless material to the risk. In this case the plaintiff could not have recovered had the policy been issued on account of the breach of the warranty that the house was stone. As it is he cannot recover on the ground that the defendant proposed to insure a stone house. The plaintiff accepted this proposition. The house was part wood and part stone, consequently the proposition did not embrace it, and no contract to insure the house was ever made. There were other exceptions taken upon the trial but it is unnecessary to consider them.

The judgment should be reversed and a new trial ordered.

S.B. STRONG, J., delivered a dissenting opinion, in which ALLEN, J., concurred; SELDEN, J., was absent.

Judgment reversed and new trial ordered.