Case Name: John Jacobs, Appellant, v. St. Paul Fire & Marine Insurance Company, Appellee
Court: Iowa Supreme Court
Jurisdiction: Iowa
Decision Date: 1892-10-07
Citations: 86 Iowa 145
Docket Number: 
Parties: John Jacobs, Appellant, v. St. Paul Fire & Marine Insurance Company, Appellee.
Judges: 
Reporter: Iowa Reports
Volume: 86
Pages: 145–152

Head Matter:
John Jacobs, Appellant, v. St. Paul Fire & Marine Insurance Company, Appellee.
1. Fire Insurance: re-formation of policy: .loss: limitation of actions. Where an action to recover upon a fire insurance policy failed because of the discovery upon the trial that the property described therein was not the property intended to be insured, and-for the loss of which recovery was sought, and thereupon the plaintiff commenced an action in equity for the re-formation of the policy so as to make the same apply to the property intended to be insured, and, having obtained a decree, brought another action to recover for the loss under the policy, which action was commenced more than a year after the loss occurred, but within six months after the former action was determined, held, that for the purpose of avoiding a provision in the policy limiting the time for the commencement of action thereon to one year from the date of loss, the second suit to recover for the loss should be deemed a continuation of the first, in accordance with the provisions of section 2537 of the Code.
2. -: PROOFS OF LOSS: waiver. The insufficiency of proofs of loss will be deemed waived' where, with the assent of the insurer, the question of the amount of the loss sustained by the insured has been submitted to arbitrators, and the arbitration conducted to a conclusion.
3. -: TITLE TO PROPERTY: REPRESENTATIONS: KNOWLEDGE OE agent: estoppel. Where a soliciting agent for an. insurance company forwards an application for insurance, and is to receive the policy for delivery, but before its receipt by the agent the applicant, upon further information, notifies the agent of facts which might defeat the policy, and relies upon the representations of the agent that such facts do not change the legal effect of his application, the construction of the agent will be held to be that of the company, and will estop the company from setting up such facts in defense to an action on the policy.
Appeal from Louisa District Court. — Hon. David Ryan, Judge.
Friday, October 7, 1892.
Action on a policy of insurance. There was a judgment for the defendant, and the plaintiff appeals.
Reversed.
Newman é Blalce and L. A. Riley, for appellant.
Gray & Tuclcer and D. N. Sprague, for appellee.

Opinion:
Granger, J.
The policy in suit issued from the defendant company to the plaintiff on the fourth day of May, 1887, and was against loss by fire on a certain frame building. The building was destroyed by fire on the third day of' October, 1887, and this action is to recover for the loss. Several questions are presented by the record.
I. The policy described the building as being situated on the northwest quarter of section twenty-five, township seventy-four, range five. The policy was written or filled out by J. E. Utt, who was the soliciting agent for £he defendant company, and who solicited the insurance in question. By a mutual mistake, the township was numbered in the policy "seventy-four," instead of "seventy-five," as it should have been. On the fourth day of September, 1888, the plaintiff "brought au action on the policy with the' erroneous description it contained. Issue was taken on the averments to the petition. The cause came on for trial January 18, 1889. Later an amendment was made to "the petition, and on the trial the erroneous description was discovered. The plaintiff then, by leave of court, filed a substituted petition in equity, asking a re-formation of the application and policy to conform to the intention of the parties. On the thirty-first day of 'March, a decree was entered re-forming the contract as prayed in the petition. On the twenty-fifth day of April, 1889, the original notice in this suit was delivered for service, and served on the eighteenth day of September thereafter. The petition in this case was filed on the twenty-ninth day of April, 1889, as an equitable action, based upon the policy of insurance as re-formed, ;and recites as reasons for the delay in prosecuting the action the facts as to the mistake in the policy, and the proceeding to re-form it. As has been said, the loss occurred on the third day of October, 1887. The first suit on the policy, resulting in an action for its re-formation, was commenced in September, 1888, and determined on the thirty-first day of March, 1889.
It is said that this action is barred, because of a provision of the policy that no suit or action thereon shall be maintained against the company, unless commenced within one year from' the date of the loss. There was an action on the policy commenced within "the year. In consequence of a mistake in the policy, discovered during the pendency of that suit, the character of the action was changed, and a re-formation of the contract was sought and obtained. The following is section 2537 of. the Code: "If, after the commencement of an action, the plaintiff fail therein for any cause, except negligence in its prosecution, and a new suit be brought within six months thereafter, the second suit shall, for the purposes herein contemplated, be deemed a continuation of tbe first." Tbe discovery of the mistake and the change in the character of the-action caused a failure to obtain judgment in the suit on the policy. We think the provision of the policy and the section of the statute must be construed together. Thus construed, there is little room for doubt that, unless there was negligence in the prosecution of the first suit, this one is not barred.
It is claimed by the appellee that .there was nu necessity for a change of the first action from one at law to one in equity; that full relief could be obtained in the law action, and a reference is made to the case of Eggleston v. The Council Bluffs Insurance Co., 65 Iowa, 308. The cases are quite different in the essential particular to be considered when viewed carefully. It will 'be noticed in this case, that there is an absolute misdescription of the insured property, and that to recover a state of facts must be shown absolutely at variance with the statements- of the policy — a different tract of' land. In the Eggleston case, the description, as far as. it goes, is accurate. It is of one of two lots in the town of Floris; one being in the original plat, and the other-in an addition to the town. It is there held that the original plat and the addition thereto are parts of the town; that the description is merely uncertain, which uncertainty or ambiguity is latent, and can be explained by parol in an ordinary action. It was not a case of re-forming or changing a contract, as was necessary in order to recover on the policy, in suit. See same case-at page 311, and authorities cited. Clearly, then, it cannot be said that there was negligence in the prosecution of the first suit. The plaintiff failed therein because of the mistake in the policy. ' If it should be-said that in the law action the issue of the mistake could have been presented and determined, which we do not decide, we cannot say that it was negligence 'fox* the plaintiff to select the equitable method of procedure, instead of determining it under an issue in a law action. We think, under the facts, that this ease •should he considered as a continuation of the former suit, and that it is not barred.
We are referred to some cases in which no previous suit had been commenced, and facts were pleaded in •excuse for a failure to commence within the limitation period, wherein the court held that the statute does not extend the time for the purpose of bringing into existence the facts without which a suit cannot be maintained. The cases cited are different from this, as one of them will illustrate,—District Township of Spencer v. District Township of Riverton, 62 Iowa, 30. It was an action to recover money from the defendant district. A demand for payment was a condition precedent to a recovery. It was a condition precedent to the right of action, and entirely within the control of the plaintiff. A suit was commenced without a demand, which was abandoned, and a demand made after the bar of the statute had run. It was held, in effect, to be a case of negligence in the prosecution of the first suit. The rule of the eases cited is, in e&eet, that a party cannot neglect to do thatwhich he must do before commencing suit, and thereby suspend the operation of the statute. The law, however, does contemplate that in cases where suit is brought the plaintiff may fail therein without negligence, and then another suit shall be deemed a continuation of the first; and this, we think, is such a case.
II. After the loss there was such a notice to defendant company that it agreed, in writing, with the plaintiff to submit the question of the amount 0£ iossto two arbitrators under a condition in the policy, and such submission was made, and an award returned, fixing the amount of the loss at four hundred and fifty-one dollars and thirty-six cents. The proofs of loss required by the policy were defective in some particulars, and it may be said they were, under the requirements of the policy and the law, insufficient; but it is said by the appellant that they were waived by the acts of the defendant in demanding an arbitration, which was assented to and conducted to a conclusion. We think the claim of a waiver must be sustained. The terms of the submission were "that the arbitration should be to ascertain the amount of the loss. It would certainly be unjust to permit the company, with the' notice and statement furnished it, to ask for an arbitration to learn the amount to be paid, which investigation extended beyond the limitation for making the required proof, and then avoid liability because of defects in the proofs or notice, known before the arbitration took place. See, as bearing on this point, Graves v. Merchants' & Bankers' Insurance Co., 82 Iowa, 637. It is also urged that no waiver has been properly pleaded. A waiver is pleaded in the reply, and properly so. The defense-of a want of notice and proof of loss is made in the answer. It is the office of a reply to show facts in avoidance thereof. Code, section 2665.
III. The insured property was situated on a fifty acre tract of land, which, with other land, had been mortgaged to one Kaufman. The mortgage had been foreclosed, the land sold,, and the application for insurance was. made during the period for redemption. It is now urged that the policy is void for the reason that there was a misrepresentation as to the incumbrance, the plaintiff having represented that he had redeemed the fifty acres from the sale, when in truth he had not. The application for the insurance was-, made about April 30, 1887. On the twenty-eighth of' March, the plaintiff made application to the clerk of' the court to redeem the fifty acres from the sale, and deposited with the clerk for that purpose five hundred dollars, taking his receipt therefor. The plaintiff, at. the time of making the application for insurance, had the receipt with him, and showed it to the agent. It seems that the amount was insufficient to redeem, but the additional amount was afterwards, in October, 1887, paid and full redemption made. On the seventh day of May, 1887, the plaintiff received from the clerk of the court a letter, stating that the judgment creditor, Mr. Kaufman, refused to accept the money until it was all, or some specific part thereof, redeemed. The letter states that the tract sold for five hundred dollars, and that the interest is twenty seven dollars and ten cents, and concludes as follows: "If you would send me twenty seven dollars and ten cents that would be a redemption of the tract above described, and they would have to accept that. At any rate, that would stop interest on five hundred and twenty seven dollars and ten cents." The application was sent by the agent, Utt, to the company, and the policy there made out and returned to Utt for delivery to the plaintiff. This letter was received before the policy was returned to Utt for delivery, and was at once taken by the plaintiff to Utt and read.by him. The plaintiff, in his testimony, then says: "I told him if that would have anything to do with the insurance, I wanted to know it; and he said he did not think it would, He said he did not think it would make any difference. He figured up the interest, and said he couldn't make it that much."
Whatever may have been the knowledge of Utt as to the particular facts before he sent forward the application, he-knew, after reading this letter, of the true situation as to the redemption, and was by the plaintiff pressed to the point of informing him if the facts, as known, would affect his insurance. He had not yet ceased to act for the company in the matter of this application, for he was yet to receive and deliver the policy. It is true that Utt had no authority to waive the condition of the policy as to title; and this, to our minds, is not a question of waiver, hut it was a mutual understanding of the parties from known facts that the title answered the requirements of the policy. We think that where a soliciting agent forwards an application for insurance, and is to receive the policy for delivery, and before its receipt the applicant, upon further information, notifies the agent of facts which might defeat his policy, and in good faith relies upon statements of the agent that the facts do not change the legal effect of his application, the construction of the agent is that of the company. Such a rule, in this case', effectuates justice. If there was a trifling defect in the title, it was without prejudice to the company. Of course, we do not relax the rule as to stipulations in policies as to title, but only say that where, upon known facts, the parties contract upon the assumption that the title is good, the assumption should obtain in fulfillment of the obligations. The evidence convinces us that the plaintiff, when he applied for the insurance, gave to thp agent the facts as he then understoodthem; and from such facts he and the agent understood that the title was sufficient. Afterwards,, and before the policy was received, other facts were known to both, and the title was believed to be good. The facts, as thus understood, should prevail.
IV. The action is brought to recover six hundred dollars as the value of the property destroyed. The answer presents a claim that the amount, if any, must be limited by the finding of the'arbitrators, which was four hundred and fifty-one dollars and thirty-six cents. The reply conceded that the recovery should be thus limited, and the conceded rule will obtain in this case.
There are no other questions presented that could change the legal effect of the conclusions we have announced, and a judgment should be entered for the amount found by the arbitrators. Reversed.