Case Name: Continental Insurance Company, Respondent, vs. Phillips, Appellant
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1892-11-15
Citations: 83 Wis. 354
Docket Number: 
Parties: Continental Insurance Company, Respondent, vs. Phillips, Appellant.
Judges: 
Reporter: Wisconsin Reports
Volume: 83
Pages: 354–358

Head Matter:
Continental Insurance Company, Respondent, vs. Phillips, Appellant.
October 25
November 15, 1892.
Insurance against fire: Payment induced by fraud: Amendment of pleading.
In an action by an insurance company to recover money paid upon a policy under a misapprehension of facts caused by defendant’s false statements as to his loss, amendments in a verified. amended complaint, alleging that such statements were made with intent to defraud, and further alleging, as a separate cause of action, that defendant had made other false and fraudulent representations to the effect that the loss did not occur through any act, design, or procurement on his part, when in fact he had, with intent to defraud the plaintiff, set the fire -which caused the loss, and that the payment had been made without knowledge of the facts, are held to be material and to have been properly allowed, although there was no affidavit stating why such separate cause of action had not been set up in the original complaint, and no affidavit of merits.
APPEAL from the Circuit Court for Waukesha County.
Action to recover the sum of $924 paid by plaintiff to defendant upon a policy of insurance against fire. The facts are sufficiently stated in tbe opinion.
For the appellant there was a brief by Winkler, Flanders, Smith, Bottum & Vilas, and oral argument by W. K. Gibson.
For the respondent there was a brief by W. A. Pierce, and oral argument by Mr. Pierce and Mr. T. E. Ryan.

Opinion:
Orton, J.
This is an appeal from .an order allowing the plaintiff to amend its complaint on terms, and allowing the verified amended complaint then on file to stand a§ the complaint in the action.
The original complaint, charged " that during the continuance of said policy, namely, on the 30th day of November, 1887, certain property belonging to the defendant, and covered by insurance under said policy, was. alleged in a certain statement made by said defendant to plaintiff to have been destroyed by fire, as hereinafter referred to and set out. That said defendant, in making his statement of the proofs of loss which he had sustained in consequence of said fire as aforesaid, made false representations as to the amount of property he had lost,- by stating a greater number of buShels' of grain than he had lost, and by placing a greater value on the machinery and other property destroyed than the value of such machinery and other property actually was. That in consequence of such false. representations, and relying on defendant's said statement of the amount of loss he had sustained, said plaintiff paid to said defendant the amount of $924, as payment for the amount of loss which said defendant claimed to have sustained as aforesaid, in the proofs of loss then made by defendant, a true copy of which is hereto attached and marked ' Ex. B,' and made a part of this complaint; and that the amount paid by plaintiff to defendant for his alleged, loss was $924, which was paid to him' on the 30th day of March, 1888. That said amount of $921 was not due to defendant, and was paid to him by plaintiff under mistake and misapprehension of facts in consequence of his false representations made as aforesaid, and that said amount is now due from defendant to plaintiff, together with interest," etc.
The amendments, in substance, consisted in charging the representations to have been fraudulent, and in adding other qualifying words, and in charging the defendant with having stated a greater number of articles of machinery than was actually destroyed by such fire, and that said false and fraudulent representations were made with intent to deceive and defraud said plaintiff company, and to obtain from it money not actually due, and that the plaintiff paid said money not then knowing the representations to be false. It is then stated in the amended complaint, as a further and separate cause of action, that the defendant made further false and fraudulent representations in his proofs of loss, as follows: That said loss did not originate by any act, design, or procurement on the part of the assured, nor on the part of any one having any interest whatsoever, either direct or indirect, in the said property or in the policy of insurance, nor in consequence of any fraud or evil practice done or suffered by the assured; and that in truth and fact the defendant did by his own act, design, and procurement set and cause to be ignited said fire, which destroyed said property, with intent to defraud said plaintiff company by obtaining from it the amount of money for which said property so destroyed was insured. It is then added that the said money was paid without knowledge of the fact that the defendant set said fire himself, and under misapprehension of fact in consequence of the defendant's false representations as to the value and amount of property burned, and that the plaintiff had no means of ascertaining the amount of said loss except upon the defendant's state ment, upon which it relied; whereby the defendant has received from the plaintiff the sum of $924, which in law and equity he had no right to retain, and therefore impliedly promised to repay the same to the plaintiff, with interest.
The action was commenced in March, 1891, and an answer to the original complaint was served May 9, 1891. The motion to amend the complaint was made March 8, 1892, and the order allowing the amendment was entered March 15, 1892. In the meantime the action had not been called for trial, and it seems that the delay was caused by the pendency of a criminal prosecution against the defendant for having set fire to the same property mentioned in the complaint, which finally resulted in a verdict of guilty, But no complaint is made of any injury or detriment to the defendant from the delay, and no reason is perceived -why it should affect the question of allowing the amendment of the complaint.
1. It is contended by the learned counsel of the defendant that the amendments are immaterial, and ought not, therefore, to have been allowed. The case of Smith v. Gould, 61 Wis. 31, is cited to this point, but that ease holds only that an amended complaint ought not to be allowed which does not state a cause of action. These amendments are not only material, taken together, but they certainly state a good cause of action against rhe defendant.
2. That some reason should be stated by affidavit why the further and separate cause of action of the defendant having set fire to the insured property was not set up in the original complaint. The statute (sec. 2687, R. S.) cited to this point relates only to supplemental complaints. The case cited of Sweet v. Mitchell, 19 Wis. 526, is not applicable. The amendment proposed was a new causé of action setting up fraud, when the original action was to enforce a parol trust. Neither the original nor amended complaint was verified, and the only affidavit of merits was by the attorneys on information and belief. The same may be said of Dole v. Northrop, 19 Wis. 249. The amendment proposed to the answer was to set up usury to defeat the principal and legal interest of the note, when, under the original answer, the court could do equity between the parties by rendering a judgment for the principal and legal interest, less the usury paid. The leave to so amend was asked after judgment, and a new trial granted. The allowance of the amendment was held an abuse of discretion.
3. That an affidavit of merits should have been made. I know of no rule of practice that requires an affidavit of -merits to accompany a verified amended complaint. The amendments allowed are within sec. 2830, R. S., and were clearly within the discretion of the court. The order will not be reversed unless there was a grave abuse of such discretion, or the violation of some well-settled rule of law. Phœnix M. L. Ins. Co. v. Walrath, 53 Wis. 676; Brown v. Bosworth, 62 Wis. 542. The law favors great liberality in allowing amendments. Sweet v. Mitchell, 15 Wis. 641. The amendments were clearly proper, and appear to have been in furtherance of justice.
By the Court.— The order of the circuit court is affirmed, as also the order in Home Insurance Company v. John Henry Phillips, the next in order on the calendar.