Case Name: Charlotte M. Smith, Resp't, v. The Agricultural Ins. Co. of Watertown, N. Y., App'lt
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1890-02-25
Citations: 29 N.Y. St. Rep. 810
Docket Number: 
Parties: Charlotte M. Smith, Resp’t, v. The Agricultural Ins. Co. of Watertown, N. Y., App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 29
Pages: 810–813

Head Matter:
Charlotte M. Smith, Resp’t, v. The Agricultural Ins. Co. of Watertown, N. Y., App’lt.
(Court of Appeals, Second Division,
Filed February 25, 1890.)
1. INSURANCE (EIRE)—MISSTATEMENT IN APPLICATION AS TO MOBTQAGES.
In making an application for insurance where the policy was to he void if the property was incumbered by mortgages other than as stated, the agent for the company asked if there was $1,000 incumbrance and insured answered ■“ there is over $2,000,” when in fact there was $5,000, and then without reading it signed an application stating that there was $1,000. Held, that there was a material misrepresentation in respect to the liens.
2. Same—When contbaot severable.
Where it is expressly stipulated in a policy that if either the real or personal property, on which different amounts are placed, are incumbered, it must be so stated in application or the entire policy shall be void, the contract is not severable, and a misstatement as to either risk defeats the right of insured to recover.
(Brown, J., dissents.)
Appeal from a judgment of the general term of the fifth judicial department, affirming a judgment entered on a verdict.
Since September 3, 1877, Elton M. Smith has owned a farm of fifty acres in the town of Galen, in this state, upon which there is a farm house and out buildings. The defendant insured one of the barns for $600, and its contents for $500, against any damage, not exceeding the sums specified, that should be caused by fire between October 6, 1881, and October 6, 1884.
On the 1st day of April, 1882, the barn and its contents were destroyed by fire, and this action was brought on the policy by the assignee of the insured to recover the damages, which are alleged to be $600 by the loss of the barn, and $359.15 by the loss of the contents; total, $959.15.
The jury found for the plaintiff on the issue submitted, and assessed the damages at the amount claimed, and added $129.85 for interest, making the total amount of the verdict $1,089.
A. IT. Sawyer, for app’lt; DeL. Stow, for resp’t
Reversing 6 N. Y. State Rep,, 127.

Opinion:
Eollett, Ch. J.
This action was defended on the ground, among others, that the following conditions in the policy were violated by the insured:
1. " If the property, either real or personal, or any part thereof, shall be incumbered by mortgage, judgment or otherwise, it must be so represented to the company in the application, otherwise this entire policy, and every part thereof, shall be void."
2. " This policy of insurance is based upon a written application on file in the company's office, purporting to be signed by the applicant, or by his authority, and all statements contained therein are warranties on the part of the assured."
The application on which the policy was issued was signed by the duly authorized agent of the insured, and contains this question and answer:
" Q. How much is the real estate incumbered ? A. §1,000."
When the policy was issued, and when the loss occurred, there were five mortgages on the fifty acres, the principal sums of which aggregated §4,411.14, with arrears of interest amounting to more than $600, so that the premises were incumbered for upwards of §5,000, and in addition there was a mortgage upon six .acres adjoining the fifty acres, of §500, with interest from July 1, 1877.
Since 1880 Elton M. Smith, the insured, has not resided in this state, and Elijah Smith, his father, has occupied the property and acted as the agent of his son in respect to this insurance. Since some time before the date of the policy Abram Weed has been an agent of the defendant, with powers defined by the following clause in the application: " The powers of the agents of this company are limited to receiving proposals for insurance and collecting premiums, and giving the assent of the company to assignments of policies." The oral negotiations, which resulted in the execution and delivery of the application on which the policy was issued, were conducted by Elijah Smith in behalf of the insured, and Abram Weed in behalf of the defendant. Elijah Smith testified:
Q. What was said (between you and Weed), on the subject of incumbrances ? A. He asked if there was a $1,000 incumbrance .and I told him there was over $2,000 incumbrance on it.
Q. Did you tell him there was $1,000 incumbrance on it? A. 3STo, sir; the application was not read to me and I did not read it; that representation that there was only $1,000 incumbrance was not true; I signed it not knowing that that was there.
Abram Weed testified that Elijah Smith stated that the place was incumbered for §1,000 and that he did not say it was incumbered for over §2,000.
The court instructed the jury that if Elijah Smith stated to Abram Weed that the place was incumbered for $1,000, the plaintiff could not recover; but if Smith told Weed the place was incumbered for over §2,000 that the discrepancy between such statement and the amount of the incumbrances was not a defense to the action. To this instruction the defendant excepted, and asked the court to instruct the jury that if they found that ¡Smith stated to Weed that the property was incumbered for over $2,000 the plaintiff could not recover, which was refused and an exception taken. This question was, also, raised by a motion to nonsuit.
The most favorable view which can be taken by the court for the plaintiff, is to consider the case as though the question and answer testified to by Smith had been inserted in the application, instead of the question and answer appearing therein.
Assuming, then, that the conversation between the agent of the contracting parties about incumbrances was precisely as testified to by the insured's agent, there was 'a material misrepresentation in respect to the amount of the liens. The answer that the place was incumbered "for over $2,000," to the question, "is there a $1,000 incumbrance on it," did not, actually, or approximately, disclose the fact inquired about. The answer, "over $2,000," cannot, by any fair construction, be held to be notice to the defendant, or its agent, that the place was then incumbered for over $5,000. In Hayward v. The N. E. M. Fire Ins. Co., 10 Cush., 444, the question was, " Is the property incumbered; if so, how much? A. About $3,000." The property was incumbered for $4,000. The trial court held that this misstatement did not avoid the policy; but on appeal the judgment was reversed, the court saying : " It seems to us quite too clear to admit of a doubt, that the answer given by the plaintiff in his application to the inquiry respecting incumbrances was materially false. Making all due allowances for the loose manner in which such documents are often prepared, and giving the plaintiff the full benefit of the word ' about,' as qualifying and limiting his answer, it cannot in any view be deemed to be substantially true. To hold so wide a deviation from the fact to be immaterial would be to defeat the very purpose which the questions and answers' in the application were intended to accomplish, and render them but a vain and idle ceremony. We are, therefore, of the opinion that the representation, as to the ¿mount of the incumbrance upon the property, was a material one, which the plaintiff was bound to make substantially true, and that, having failed to do so, he cannot recover upon his policy."
In Brown v. The People's M. Ins. Co., 11 Cush., 280, the application contained the following question and answer:
" Q. State whether or not incumbered, to whom and to what amount ? A. Mortgaged for about $4,000 to General 0. T. James."
The property was mortgaged to James for $3,600, and to one Perkins for $1,100. The answer was held to be a material misstatement, which avoided the policy.
In Abbott v. Shawmut M. Fire Ins. Co., 3 Allen, 213, it was stated in the application that the insured property was mortgaged for $6,600, but it was, in fact, mortgaged for $6,684. It was held that this misstatement avoided the policy. In Falis v. Conway M. Fire Ins. Co., 7 Allen, 46, the application contained this question and answer:
" Q. Is it incumbered by mortgage or otherwise; if so, for what sum? • A. Yes, $1,000 with other property."
It was, in fact, mortgaged for $1,400. This was held a material misstatement, rendering the policy void. In Jacobs v. Eagle M. Fire Ins. Co., 7 Allen, 132, the application contained the following question and answer:
" Q. State whether incumbered, to whom and what amount ? A. There are two mortgages, $2,700 in all. First, of $1,150; second mortgage $1,550."
The principal sums of the two mortgages were correctly stated, but there was $300 accrued interest upon the first mortgage. This was held to be a material misrepresentation, which avoided the policy. In Sentell v. Oswego Co. F. Ins. Co., 16 Hun, 516, it was held that mortgaging the insured property for $1,200 instead of for $1,000, as permitted by the contract of insurance, avoided the policy.
It is urged by the respondent that this contract of insurance is severable. That the insurance on the barn should be deemed one contract, the insurance on its contents another contract, and that a misstatement in respect to the amount for which the realty was incumbered does not invalidate the insurance on the personalty, and that defendant having asked the court to rule that no part of the loss could be recovered, asked for too much in the instruction prayed for and in its motion for a nonsuit, and that the exceptions to these rulings are unavailable. Under forms of policies quite different from the one in the case at bar, insuring specific amounts on separate items of property, contracts have been held severable. The following cases illustrate the rule: Merrill v. Agricultural Ins. Co., 73 N. Y., 452; Herrman v. Adriatic Fire Ins. Co., 85 id., 162; Schuster v. Dutchess Co. Ins. Co., 102 id., 260; 1 N. Y. State Rep., 415; Holmes v. Drew, 16 Hun, 491; Sunderlin v. Æina Ins. Co., 18 id., 522; Dacey v. Agricultural Ins. Co., 21 id., 83; Woodward v. Republic Fire Ins. Co., 32 id., 365; Baldwin v. Hartford Ins Co., 60 N. H., 422.
It is expressly stipulated in this policy that if either the real or personal property, or any part of it, be incumbered it must be so represented to the company in the application, otherwise the entire policy and every part of it shall be void.
This policy is quite different in its legal effect from those considered in the cases cited, it not being expressly provided in those policies, as in this, that a misrepresentation of the situation of one of the subjects insured should invalidate the insurance on all other property covered by the policy.
Begarding the application amended so as to conform to the testimony produced by the plaintiff, and then construing the application and policy together, as the parties have stipulated that we must, there was a breach by the insured of the terms of the contract of insurance which defeats the plaintiff's claim to recover.
• The judgment should be reversed and a new trial granted with costs to abide the event
All concur, except Brown, J., dissenting and Bradley and Haight, JJ., not sitting.