Case Name: Nathan Harris v. The Columbiana County Mutual Insurance Company
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1849-12
Citations: 18 Ohio 116
Docket Number: 
Parties: Nathan Harris v. The Columbiana County Mutual Insurance Company.
Judges: 
Reporter: Cases decided in the supreme court of ohio : upon the circuit at the special sessions in Columbus
Volume: 18
Pages: 116–122

Head Matter:
Nathan Harris v. The Columbiana County Mutual Insurance Company.
Where, in a written application for a policy of insurance, the applicant committed a mistake in describing the incumbrance upon his property, in oonsequence of the representations of the agent of the company who drew up the application, and the property insured was afterwards destroyed by fire : Held, that a court of chancery had power to reform the contract and grant relief.
This is a bill of review, reserved in Columbiana county.
The original bill was filed by Harris, in the court of common pleas, taken to the Supreme Court by appeal, and at the September term, 1847, of that court, was dismissed. The bill of review alleges newly discovered matter, and also claims there was error in the decree in the original case.
The material allegations of the original bill are as follows:
On the 25th of March, A. D. 1845, Harris, the complainant, held a lot of land in Wellsville, on which was situated a steam flouring mill. He held the lot by an equitable title, having purchased it in partnership with one James Kelly from G. & A. Wells, for $4,000, all of which, except $800, had been paid. Kelly had assigned his interest to Harris, who had the sole possession and control of the property, and would be entitled to a deed on the payment of the balance due of $800. On the 25th of March, Harris applied to Henry Cope, who was agent for the Columbiana Mutual Insurance Company, to effect an insurance on the mill. An insurance was made, and a policy issued on that day by Cope, as agent for said company. A blank application was produced by Cope to be signed by complainant, as well as by himself as agent. The same was filled up by Cope and signed by both parties, the premises were examined, valued and surveyed by Cope, and were described by him in the application.
Harris, at the time the application was filled up, informed Cope of the situation of the title, that no deed had been made to him, that $800 -was due on the contract, and informed him fully and correctly of the situation of his title. Cope being so informed, considered that, notwithstanding the claim of G. & A. Wells, the premises were not incumbered, and that Harris was the owner of the same, and so advised Harris, and wrote in the application that the same was owned by Harris, and was not incumbered. No misrepresentation was, in fact, made by Harris. If any error exists in the application, it was made through the mistake or fraud of the company’s agent. The agent did not correctly write, in the application, the representations which were made to him.
The terms on which the property was to be and was insured, were, that Harris should give his premium note for $216, pay cash $9.50, and for the policy, 5( cents; the property to be insured for five years, at one and a half per cent, per annum Harris paid the money, gave his note, and the policy was issued. Harris paid up all the assessments, which thereafter accrued, and was called upon by the company for the same. Although there was $800 due to Wells, the property was ample security for all assessment which could -be made upon the premium note, being worth about $4,000. On the 20th of July, A. D. 1845, the flouring mill was destroyed by fire.
The company refuse to pay the damages sustained, because it is inserted in the application that Harris is owner, and that the property is not incumbered.
The bill prayed that the policy might be .reformed, that the mistake might be corrected, and the actual representations made by Harris might be inserted, that the company should be decreed to make assessments in accordance with the provisions of the policy and their charter, and pay the damages sustained.
The allegations of newly discovered matter, in the bill of review, are as follows:
Soon after the policy was issued, the application and premium note were returned to the company by the agent Cope, who then informed them of the state of the title, and that the legal title to the premises was in G. & A. Wells, in trust for Harris, on the .payment of the remainder of the purchase money of $800. The company knowing the situation of the title and the amount of purchase money unpaid, made assessments and collected them from complainant. It is the custom of the company to place in the hands of their agents, blank policies signed by the president, and to clothe, him with full power to insure any property which he may see proper, and upon such terms as he may see fit, within the powers conferred- upon the company by their charter.
The company had, previous to the issuing of the policy, instructed their agent that policies might be issued upon buildings where the title was thus held, and that property thus situated was not incumbered, within the meaning of the appli cation and policy.
The defendant demurred to the original bill, and now demurs to the bill of review.
Mason Potter, for complainant,
argued these propositions i
1st. Cope had the power, as agent of the company, to issue a valid policy on property thus held as to title.
2d. The acts of Cope in making the contract for an insurance with Harris, and in carrying or attempting to carry the same into execution, were the acts of the company.
3d. The court have power to correct a mistake made by the defendant or their agent, or by both parties to the contract, and to reform the contract- or policy of insurance, and to decree that the same be carried into execution when reformed, whether the mistake is a matter of fact or of law.
4th. The undertaking of Cope, when applied to for that purpose, to insure the property, knowing as he did the situation of the title, and the consideration having been paid to him by Harris, is tantamount to an agreement on the part of the company by their agent, to issue a good and valid policy on the flouring mill, which the court have power to compel the defendant especially to perform.
5th. The misdescription of the title of Harris is a mistake of both parties, caused by the advice and acts of the company and their agent, as to matter of either law or fact inserted in the policy, which the court have power to correct and reform.
6th. The newly discovered evidence, showing that the agent acted under the express directions of the company in insuring property thus situated, and in not regarding the same as incumbered, and in adopting the contract and in collecting assessments from Harris, with full knowledge of all the facts, establishes the liability of the company on the ground of fraud.
They cited the following authorities:
Columbia Insurance Company v. Lawrence, 2 Peters’s Rep. 25; 11 Ohio Rep. 480; Hewett et al. v. Franklin Fire In surance Company, 1 Law Jour. 342; 1 Peters’s Rep. 13; McNaughton v. Partridge, 11 Ohio Rep. 223; Hilliard’s Ab. 146; Cook’s Rep. 374; 1 Mad. Ch. 323; 1 Story’s Eq. 209; Hobb v. Norton, 1 Vernon 136; 10 Vesey 470; Bacon v. Bronson, 7 Johns. Ch. Rep. 194.
Umbstcetter, Stanton Wallace, for defendant,
■Contended that the proposal or application signed by Harris, formed the basis of the contract between the parties, and the statements it contained were warranties, upon the truth of which the right of the assured depended. That a warranty is a part of the contract which must be strictly complied with, and this was a warranty that Harris was the owner of the property, and that it was unincumbered. That though the representation of ownership was by mistake, it equally avoided the policy, for the reason that a warranty being in the nature of a condition precedent, it must be fulfilled by the insured, before performance can be enforced against the insurer. They cited the following authorities:
Duncan v. Sun Fire Insurance Company, 6 Wend. Rep. 494; Bennett v. Saratoga Insurance Company, 5 Hill’s Rep. 188; 1 Phil. Ins. 127; Duer on Ins. 44, 45, 77; 7 Wend. Rep. 274; 6 Cowen’s Rep. 673; 6 Term Rep. 710; 1 Taun. Rep. 345; 3 Dowl. Parl. cases, 255; Jennings v. Chenango Insurance Company, 2 Denio’s Rep. 75; Columbia Insurance Company v. Lawrence, 2 Peters’s Rep. 25; 10 Peters’s Rep. 507; Mutual Fire Insurance Company v. Marseils Man. Company, 1 Gilm. Rep. 236; Stetson v. Mass. Mutual Insurance Company, 4 Mass. Rep. 337; Marshall on Ins. 339, 347; 4 Hill’s Rep. 334.

Opinion:
Caldwell, J.
Do the facts contained in the bill entitle the complainant to the aid of a court of chancery, to obtain the relief sought ? It is contended on the part of defendants that the application being made a jart of the policy, the represent ationS there contained amount to a warranty; and that it mat ters not that the company, or their agent, might have known the true situation of the title; if the representations in the applica tion are untrue the policy is void. And that this is true although the assured may have informed the insurer, verbally, of the true .situation of the property. It is also said that such verbal representations cannot be given in evidence for the purpose of explaining or contradicting the written application; and that it matters not whether such variation from the truth in the application, be material to the risk or not. When there is no mistake on the part of the assured, and no misrepresentation is proved on the part of the insurer, these propositions are no doubt true. They are all decided in the case of Jennings v. The Chenango County Mutual Insurance Company, 2 Denio 75, to which counsel have called our attention. But these principles we think will not apply to the present case. Now if Harris in this instance had chosen to put down his property as unincumbered, when it was not, of his own free will, without any mistake on his part, or any inducement on the part of the company, or their agents, to do so, the policy would have been void, although the company were acquainted with the true situation of the property. But how is the case presented by the bill ? Harris applies to the agent of the company to effect an insurance on his mill; he tells him the true situation of his title ; the agent (the company having previously instructed him to that effect) informs him that he considers such property unincumbered ; he writes it down as such in the application, and hands it to Harris to sign, who signs it as it had been drawn up by the agent. The application is handed over to the company, who are informed of the situation of the title, and they afterwards treat the policy as valid, by making and collecting assessments on it.
The agent gave the terms to Harris, which (in accordance with the instructions of the company) he considered as properly describing the property to be insured, and because Harris adopted these terms, they claim that they are freed from all lia bility on the contract. To sustain this claim of the company,, would be permitting them to commit a fraud on Harris.
Although verbal representations, made at the time the policy is effected, cannot be received to vary or contradict it, yet when a question of fraud or mistake «rises, such representations-become legitimate evidence to prove such fact; indeed they are generally the principal evidence in proving either of those facts.
The law is .very strict in requiring of the insured the utmost good faith as well as the greatest accuracy, in his written application. The insurer should be held to an equally strict account on his part, and when he misleads the insured, and causes him to fall short of making a valid representation, he should bear the loss occasioned by his own conduct.
And although we would not infer, from the facts stated in the bill, that the company or their agent intended to mislead or defraud the complainant; yet they have led him into a mistake, which would operate as a fraud on his rights if he were thereby deprived of the benefit intended by the policy. And the complainant being by such mistake deprived of his remedy at law, we think he has a right to resort to a court of chancery for relief.
The demurrer will be overruled.