Court Opinion

ID: 9711710
Source: CourtListenerOpinion
Date Created: 2023-08-26 04:37:31.525609+00
Date Added: 2024-06-11T18:23:06.997472
License: Public Domain

*572Gehl, J.
(dissenting). We of the minority consider it unnecessary to labor through texts and the opinions of courts of other jurisdictions in search of the answer to the question presented upon this appeal. It is found in the policy which provides:
“This policy does not apply: . . .
“(b) Under any of the coverages, while the automobile is subject to any bailment lease, conditional sale, mortgage or other incumbrance not specifically declared and described in this policy;”
and in Moe v. Allemannia Fire Ins. Co. 209 Wis. 526, 244 N. W. 593. The essential facts in the Moe Case are identical with those with which we have to deal. This court rejected the same contentions as are made here and said (p. 528) :
“It is to be noted that sec. 209.06 applies only to statements, representations, or warranties made by the insured. No warranty or representation was made by the insured. He did not represent that the property was free from incum-brance. He did not warrant that it would remain so. He agreed that no property should be covered by the policy of insurance when in force which was incumbered by a chattel mortgage. This clause clearly relates to the extent of the coverage and not to the title of the property either at the time of the execution and delivery of the policy or thereafter. The insured simply agreed that any incumbered property shall not be within the terms of the policy. Prentiss-Wabers S. Co. v. Millers Mut. Fire Ins. Asso. (1927), 192 Wis. 623, 211 N. W. 776, 213 N. W. 632. The case of Collum v. National Fire Ins. Co. (1923), 181 Wis. 425, 195 N. W. 333, dealt with a warranty, not with a coverage clause of the contract. Olson v. Herman Farmers Mut. Ins. Co. 187 Wis. 15, 203 N. W. 743, dealt with a warranty and sec. 209.06 (1) was held to apply’. It does not appear that sec. 209.06 has been overlooked in any case where applicable. Confusion arises because of the failure to distinguish between representations and warranties and agreements as to what *573is covered. If there be a chattel mortgage upon the property or the property be subsequently incumbered, under the terms of the standard fire insurance policy that operates to remove the incumbered property from the protection afforded by the policy.”
The rule of that case has not been abandoned until today; it has been consistently adhered to. Fountain v. Importers & Exporters Ins. Co. 214 Wis. 556, 252 N. W. 569; Estreen v. Fire Asso. of Philadelphia, 229 Wis. 494, 282 N. W. 573; Straw v. Integrity Mut. Ins. Co. 248 Wis. 96, 20 N. W. (2d) 707.
The assured in the Fountain and Straw Cases sought application of the doctrine of estoppel with respect to which more is said later. Apparently the court in its study of the four cases and the plaintiff in its effort in this case considered the doctrine of estoppel so beside the point as not to require treatment.
Each of the cases cited by the majority as authority for its conclusion on the main issue was decided before the Moe Case. The Collum Case upon which they rely principally did not escape the attention of the court when it considered the Moe Case. That appears from the foregoing quotation.
The majority also cite Taluc v. Fall Creek Farmers Mut. F. Ins. Co. 203 Wis. 319, 234 N. W. 364. The case is not in point. The only point decided there was that the trial court had erred in rejecting the assured’s offer to prove that the insurer’s agent had knowledge of the existence of an undeclared mortgage upon the property insured. In the instant case it is undisputed that the agent knew nothing of the existence of a mortgage on the car. If he had been shown to have had such knowledge the result would, of course, be different. What is said in the opinion in the Taluc Case with respect to the insured’s duty or absence of duty to read his policy is pure dictum and is not the rule in this state as will be pointed out later in this opinion. It is worthy of note *574that the court was made up of the same membership when the Taluc and the Moe Cases were considered.
It should be observed that Vankirk v. Citizens’ Ins. Co. 79 Wis. 627, 48 N. W. 798, upon which the majority also rely was called to the attention of the court in the Moe Case in the brief of the appellant and, of course, we must assume that the court did not overlook it.
No reference is made in the opinion of the majority to the Moe Case except what is said in an effort to distinguish it upon the ground that “the instant case is one in which a false answer was inserted in the policy through the sole fault of the defendant insurance company’s agent.” The sole fault of the agent who knew nothing about the chattel mortgage and who was asked by Frese to transfer the policy from an unincumbered car to another which had been incumbered and to whom nothing was said by Frese as to the existence of a chattel mortgage upon the new car? The sole fault of the agent who, without notice from the only person who knew of the real fact, undoubtedly assumed when the transfer was applied for that, except for the description of the car, the new policy should contain provisions and recitals similar to those contained in that previously issued ? After Frese bought the new car he called the defendant’s agent on the telephone and “told him to transfer the insurance from the old car to the one I had just bought and he said he would do that.” Was the defendant at fault when it issued the new policy in giving Frese just what he asked for, — either a rider or a new policy with no change in the policy provisions or its recitals except those which describe the car to be covered ?
The majority also observe that no question of waiver or estoppel is discussed in the Moe Case. We believe that we have explained the reason for the omission.
We should not be required to continue discussion. The law applicable has been once declared and thrice affirmed. The *575opinion of the majority closes with an attempt to invoke the principles of equity and fair dealing. To that we reply by quoting from the concurring opinion of Mr. Justice Currie in Flamingo v. Waukesha, 262 Wis. 219, 228, 55 N. W. (2d) 24:
“While this court has on a number of occasions criticized this rule of immunity applicable to municipal corporations as being archaic and not consistent with the principles of fundamental justice, nevertheless, we also have repeatedly declared that it is the function of the legislature and not of this court to abolish the rule.”
There is stated a good rule to which we should adhere.
More must be said, however, because the majority reach for the doctrines of waiver and estoppel. Both the policy and a statute prescribe the exclusive method to be pursued to effectuate a waiver. ‘The policy provides, “. . . nor shall the terms of this policy be waived or changed, except by indorsement issued to form a part of this policy.” Sec. 203.01, Stats., requires that certain provisions be written into fire insurance policies. One provision required is that “No permission affecting this insurance shall exist, or waiver of any provision be valid, unless granted herein or expressed in writing added hereto. . . .” This court has had occasion to consider a similar statutory provision. In Spohn v. National Fire Ins. Co. 190 Wis. 446, 451, 209 N. W. 725, it said:
“These provisions are plain and explicit. They cover the subject of waiver and prescribe the method which must be pursued in order to effectuate a waiver. ... A policy of insurance is a contract between the insurer and the insured, and the provisions thereof are binding upon both parties unless such provisions are legally waived or the contract is modified in the manner provided by the terms of the policy. Under these provisions of the standard policy, the policy becomes void if any change takes place in the interest, title, or possession of the subject of the insurance, unless such *576change is contained in a written agreement added to the policy. ...”
In considering a similar policy provision, the court in Stillman v. North River Ins. Co. 192 Wis. 204, 206, 212 N. W. 67, said:
“According to the terms of the policy this [forfeiture] provision could not be waived by anyone unless the waiver be in writing and added to the policy. It is well settled in this state that such a provision cannot be waived except in. the manner expressly provided.”
In Frozine v. St. Paul F. & M. Ins. Co. 195 Wis. 494, 496, 218 N. W. 845, the court, quoting from several earlier cases, said:
“It has been ruled many times that policies of insurance are to be liberally construed in favor of the insured because the insurer has prepared the contract. This reason for such construction would seem to drop out in case of a contract prescribed in its details by statute, at least so far as the statute covered such details. . . .
“While every reasonable inference should be made to sustain insurance written and accepted in good faith, that does not mean that facts should be distorted and unnatural and unreasonable inferences resorted to.” See also Straw v. Integrity Mut. Ins. Co., supra.
The majority seeks to avoid the provisions of the policy and the statute by construing them as not applying to the act of the agent. This action is based upon contract. The ■obligation of the defendant is determined by its terms and by the provisions of the statute, both of which provide that the terms of the policy may be waived in only one way. Neither contemplates that waiver of its terms may be accomplished by the act or omission, lacking fraud, of course, of either of the parties to the contract or their agents.
But, say the majority, regardless of whether the doctrine of waiver may be invoked, that of estoppel is applicable. *577True, there are circumstances under which it has been held that while the provisions of a policy prescribe the exclusive method by which waiver may be effected, yet the doctrine of equitable estoppel is available to the assured. Welch v. Fire Asso. 120 Wis. 456, 98 N. W. 227, so indicated. The court discussed the distinction between waiver and estoppel as applied to insurance contracts. But it was careful to point out that for the application of the doctrine of estoppel it must appear that at the inception of the contract the insurer had knowledge of the circumstances affecting the force of the applicable provisions of the contract. There are numerous cases in which the court has held that the insurer is, under the circumstances there appearing, estopped to assert the defense of forfeiture. But we find none in which it has been held that estoppel may be asserted by the assured where the insurer had no knowledge of the facts or circumstances which would operate as a forfeiture. None of them dealing with the subject can be construed as in conflict with the rule that “it is essential that the acts relied on as indicative of a waiver shall have been done by the insurer with full knowledge of the facts giving it a right to treat the policy as unenforceable.” 29 Am. Jur., Insurance, p. 610, sec. 806.
No one concerned with the transaction involving the issuance of the policy in question had knowledge of the fact that the automobile was incumbered except the assured. No one except he knew that the statement in the policy that the car was unincumbered was erroneous.
It is, of course, true that he did not actually know of the erroneous statement; he was, however, charged'with knowledge of the fact, he was bound to know of the error and of the policy and statutory provisions that the forfeiture by the insurer could be effectuated in only one way. He cannot rely upon defendant’s error.
From Bostwick v. Mutual Life Ins. Co. 116 Wis. 392, 89 N. W. 538, 92 N. W. 246, down to Bradach v. New *578York Life Ins. Co. 260 Wis. 451, 51 N. W. (2d) 13, this court has consistently held that an insured must read his policy within a reasonable time after it is received- by him, and that he is bound by its terms. If he had read the policy before the car was destroyed by fire Frese would have discovered the erroneous statement as well as the provision which precludes recovery in the event the car be incumbered by an undeclared mortgage.
It is suggested that Barly v. Public Fire Ins. Co. 203 Wis. 338, 234 N. W. 361, is authority for the proposition that the doctrine of estoppel might operate against the claim of the defendant insurance company. The distinction between the Barly Case and the instant case is that the former was an action for reformation of the policy. That distinction and the reason therefore are pointed out in the opinion written by Mr. Justice Currie in the Bradach Case. An entirely different situation might exist here if this were an action for reformation of the policy. In such an action reformation might be granted upon the ground that a mutual mistake was made by Frese and the company’s agent which resulted in the insertion in the policy of the erroneous statement. This is not an action for reformation, however, and the rule of the Bostwick Case, which has been cited with approval many times by this court, must be held to apply so as to estop Frese to assert the claim that his insurer is estopped to deny recovery.
It is true as the majority say: “We did not state in our opinion in the Bradach Case that it was negligence for the plaintiff not to have read the policy.” We did say, however, at page 455, that the assured “is bound as a matter of law to examine the policy within a reasonable time after it is received by him.” If it be conceded that such failure does not constitute negligence, certainly it does not follow that the assured is in better position because he has violated the duty which he owes as a matter of law to read his policy.
*579Assuming that upon some theory as, for instance, because the agent did not inquire of Frese as to the existence of incumbrances, it might be claimed that the defendant is estopped to assert the defense of forfeiture, still Frese is met with the rule that—
“. . . one party to a transaction may be denied the right to assert an estoppel against the other party by reason of certain facts which create an estoppel against himself. The doctrine applied in this situation is characterized as one of counterestoppel or estoppel against estoppel. The effects of such doctrine are that two estoppels may destroy each other or, as otherwise expressed, one estoppel.may set another at large, and that one party cannot rely on an estoppel when he, and he alone, is responsible for facts which constitute the estoppel.” 19 Am. Jur., Estoppel, p. 810, sec. 154.
Frese’s old automobile was unincumbered and the insurance policy on it so described it. He testified, “I had insurance on the old Cadillac and when I bought the new car I called Mr. Cundy and told him to transfer the insurance from the old car to the one I had just bought and he said he would do that.”
It appears to me that if the circumstances of ownership were not the same in the new car as in the old so as to affect the coverage, Frese alone knew it and it was his responsibility to inform the agent. Without such information neither the agent nor the principal can be charged with the knowledge or with acting recklessly without knowledge in obeying Frese’s instructions. It was Frese, in ordering a transfer, who took upon himself the responsibility of determining that the terms of his old policy met his new needs. He may not complain .because the agent filled his order. Frese’s mistake was an innocent one but its unfortunate result may not be shifted to the agent (or his principal) who did as Frese directed.
I would affirm. I am authorized to state that Mr. Justice Brown joins in this dissent.