Court Opinion

ID: 9698361
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:48:36.119156+00
Date Added: 2024-06-11T18:20:40.370514
License: Public Domain

REYNOLDSON, Justice
(concurring specially).
I can acquiesce in the judgment of my brothers who hold plaintiff’s evidence is not strong enough to permit him the relief he demands.
I cannot agree with the majority’s statement of the applicable law in two important areas.
I. The majority opinion properly states the general rule requiring evidence to be clear, satisfactory and convincing in order to support reformation. Here, however, we are confronted with an exception, recognized in Iowa and elsewhere, that in reformation cases involving insurance contracts, less actual proof is required than in contract cases generally. Baldwin v. Equitable Life Assurance Society of U. S., 252 Iowa 639, 108 N.W.2d 66 (1961); 43 Am. Jur.2d, Insurance § 356, at p. 405.
II. Neither can I concede there is a basic inconsistency in the rule articulated by the majority requiring “mutual mistake” and the doctrine it calls the “Wisconsin rule.” The latter rule is a rule applied in a specific fact situation where courts generally, including Iowa, have held reformation to be justified.
The Wisconsin decision, Gilbert v. United States Fire Ins. Co., 49 Wis.2d 193, 181 N.W.2d 527 (1970), quoted by majority, does not lay down some esoteric rule, but a recognized standard defined in the treatise, 13 Appleman, Insurance Law & Practice § 7609, at p. 368 (1943). As authority for his statement of law, Appleman relies on an Iowa case, Den Hartog v. Home Mut. Ins. Ass’n, 197 Iowa 143, 196 N.W. 944 (1924).
The facts in Den Hartog are analogous to those in the case at bar. The insured testified he told the agent the policy was to be issued in his name and the name of another. The agent, as here, could not testify to the issue one way or the other. The policy was issued to Den Hartog alone. After destruction of the premises by fire, the insurer denied coverage because the ownership described in the policy did not conform to fact. Our court reformed the contract and entered decree against the insurer. Relevant here is this portion of the decision, 197 Iowa at 146-147, 196 N.W. at 945:
“It is well settled that a policy of insurance, like any other contract, may be reformed to carry out the intention of the parties where there is clear and convincing evidence that a mutual mistake has been made. [Citations.]
“It is also well settled that in case a mistake is made, due to the negligence of the agent of the insurer, acting within the scope of his employment, a satisfactory ground for reformation is present. [Citations.]
*612“Courts have recognized the fact that the insured ordinarily relies upon the agent to properly set out in the application the facts given him. [Citations.]
“It is universally held, so far as we have discovered, that the insurer will not be permitted to avoid the policy by taking advantage of a misstatement in the application, material to the risk which is due to mistake or negligence of its agent, and not to fraud or bad faith on the part of the insured. [Citations.]” (Emphasis added.)
This “Wisconsin” rule is also articulated in Mortenson v. Hawkeye Casualty Co., 234 Iowa 430, 12 N.W.2d 823 (1944) and Norem v. Iowa Implement Mut. Ins. Ass’n, 196 Iowa 983, 195 N.W. 725 (1923); cf. Green v. Phoenix Ins. Co. of Hartford, Conn., 218 Iowa 1131, 253 N.W. 36 (1934); Carey v. Home Ins. Co., 97 Iowa 619, 66 N.W. 920 (1896); 43 Am.Jur.2d, Insurance § 359, at p. 410.
The majority, as an original proposition, rejects the “Wisconsin” rule when it is in fact the general rule in the special situation where the neglect of the agent results in erroneous information fed to the insurer and as a consequence there is issued an erroneous policy. Ignored is the fact the rule has been applied in Iowa for years.
A part of the problem this court and other courts have had in this area is the indiscriminate use, demonstrated here, of the phrase “mutual mistake,” ripped out of context from a different situation and applied as a test to facts which demand reformation and to which the phrase has no application. In none of the many Iowa decisions similar to the case sub judice, where reformation has been decreed, has there been in fact a “mutual” mistake. Ordinarily the insured has made no mistake at all, unless it could be said he did not examine his policy to discover the error. But he was not bound to examine the policy, and would not necessarily have been guilty of negligence for not doing so. No-rem v. Iowa Implement Mut. Ins. Ass’n, supra; 43 Am.Jur.2d, Insurance § 370, pp. 419-20; Annot., 25 A.L.R.3d 1232, 1264-65, at § 9. Even assuming this to be a “mistake” there is no mutuality. The insurance company’s “mistake” is not in failing to examine the policy, but the negligence of its agent (chargeable to it) in transmitting vital information.
Relevant here is what the Vermont Supreme Court said in Travelers Insurance Company v. Bailey, 124 Vt. 114, 120, 197 A.2d 813, 817 (1964) :
“If, in this kind of case, talk of ‘mutuality’ of mistake is unnecessary, much confusion can be avoided. .* * * The concept of .‘mutuality’ adds nothing to the right to a remedy in this type of case. It is important as a concept in other, different, reformation situations. Applying to all the common linguistic label of ‘mutuality’ gives to unlike situations an illusion of similarity. This invites the misapplication of principles, sound for one type of situation, to a different type, for which they are unsound.”
The burden of proof plaintiff must carry should not be, as stated by majority, “to establish the mutuality of mistake” by clear, satisfactory and convincing evidence, but merely to establish (by a lesser degree of proof) that the contract did not express the coverage ordered by plaintiff and accepted by defendant’s agent'.
UHLENHOPP and McCORMICK, JJ., join in this special concurrence.