Court Opinion

ID: 3591563
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:40:06.546847+00
Date Added: 2024-06-11T13:39:43.291554
License: Public Domain

This action was brought to recover the amount of an assessment imposed on the defendant as the holder of a policy in a mutual insurance company.
The main defense is that the policy of insurance issued to the defendant was not accepted by him and never became a binding contract. At the trial the court directed a verdict against the defendant over plaintiff's request to go to the jury upon questions of fact. The Appellate Division has unanimously affirmed the judgment. The question in this court, therefore, is whether there was any evidence to sustain the defense interposed.
One John A. Nichols testified that in 1907 he went to the defendant and solicited the insurance upon the latter's icehouse. He was, he says, the agent at Hammondsport of the American Underwriters' Fire Insurance Company *Page 454 
of Monroe County. What took place between Nichols and the defendant can best be stated in their own language. Nichols says:
"At the time I saw defendant about this insurance I had a conversation with him in regard to the kind of policy he was to have and as to the kind of insurance that I was writing. * * *. He wanted a policy without any assessment and he wanted it written at a flat rate. * * * I told him at that time that the American Underwriters' Fire Insurance Company did write a flat rate policy and I told him that I would write a flat rate policy for him and I did so."
The defendant testifies:
"I gave Mr. Nichols part of the insurance that is on the icehouse, providing it was not in an assessment company. I told him I did not want an assessment company and a straight line company, and he said he would and I said `I know something about some trouble I have had in insurance companies before, and I want it in an old line company' and he wrote me out a policy and delivered it. He said he would give me a flat rate."
Nichols obtained from the defendant the information necessary to make out a policy, and on the same day, or a day or two after, wrote the policy in suit and forwarded to the company a report thereof signed by himself. The defendant made no written application for the insurance. The policy bore on its face the name of J.A. Nichols, Hammondsport, N.Y., and at the end a provision that it was not to be of force until countersigned by the agent at Hammondsport. It was so countersigned by Nichols, and he subsequently collected the premium from the defendant. The defendant received the policy and without reading it placed it in his desk.
The form of the policy was the New York standard, and it contained the statutory provisions relating to the assessment of policyholders in mutual companies. The defendant's contention is that he made no such contract *Page 455 
with the insurance company as is embodied in the policy. The defendant retained the policy for about six months, and until the insurance company imposed its first assessment, and then returned it to the company.
From the evidence taken the jury could have said that Nichols was the agent of the insurance company. His request to the defendant for the insurance on the icehouse, his power to countersign and deliver policies, the acceptance by the insurance company of his report, and this suit brought upon the policy issued, afford sufficient proof of agency. And this, notwithstanding the provision in the policy that "in any matter relating to this insurance no person, unless duly authorized in writing, shall be deemed the agent of this company." (Angell v.Hartford Fire Ins. Co., 59 N.Y. 171; Devendorf v.Beardsley, 23 Barb. 656; Ellis v. Albany City Fire Ins.Co., 4 Lans. 433; Andes Fire Ins. Co. v. Loehr, 6 Daly, 105;Whited v. Germania Fire Ins. Co., 76 N.Y. 415; Wood v.American Fire Ins. Co., 149 N.Y. 382; Stewart v. UnionMutual Life Ins. Co., 155 N.Y. 257.)
It was through the misrepresentation of Nichols, the insurance company's agent, that the defendant became a party to a contract contrary to his express stipulation. I think he is not bound thereby.
The insurance company, we may assume, intended to issue just such a policy as was delivered, but the defendant intended to accept just such a policy as Nichols represented he would issue. It was, therefore, a case where the minds of the parties did not meet in the contract There was a mistake, either of law or fact, it makes no difference which, on the part of the defendant, as to what the policy provided, and he could rescind the contract because the mistake arose through the misrepresentation of the insurance company's agent, even though the agent acted in perfect good faith.
The law upon the subject has been stated by this court *Page 456 
as follows: "It is equally well settled that where there is a mistake of law on one side, and either positive fraud on the other, or inequitable, unfair and deceptive conduct, which tends to confirm the mistake and conceal the truth, it is the right and duty of a court of equity to award relief." (Haviland v.Willets, 141 N.Y. 35, 50; Greene v. Smith, 160 N.Y. 533.) It is said in Pomeroy's Equity Juris. (Vol. 2 [2d ed.], § 847) that the inequitable conduct referred to need not be intentionally misleading, "it is enough that the misconception of the law was the result of, or even aided or accompanied by incorrect or misleading statements or acts of the other party."
With regard to a mistake of fact made by one party to a contract the law is practically the same. (Smith v. Mackin, 4 Lans. 41; Hammond v. Pennock, 61 N.Y. 145, 152; Carr v.National Bank  Loan Co., 167 N.Y. 375; Daly v. Wise,132 N.Y. 306.) In Hammond v. Pennock the court says: "In equity, the right to relief (i.e., to the rescission of a contract) is derived from the suppression or misrepresentation of a material fact, though there be no intent to defraud." The following is from Smith v. Mackin: "A mistake of a material fact by one of the parties to a contract renders it voidable in equity, and an action lies for its rescission."
In the case under consideration the plaintiff's entire cause of action and recovery rests upon the false representation made by Nichols, and the case comes clearly within the principle of the decisions cited.
The defendant is not precluded from questioning the validity of the policy on the ground that he negligently accepted the document without reading it. (Albany City Savings Institution
v. Burdick, 87 N.Y. 40.) He was misled by Nichols' misrepresentations and in addition the policy was long and its provisions obscure, as shown in Skaneateles Paper Co. v.American Underwriters Fire Ins. Co. (61 Misc. Rep. 457).
The conclusion is that the court erred in directing a *Page 457 
verdict for the plaintiff, and the judgment appealed from should be reversed.
My recommendation is that the judgment be reversed and a new trial granted, with costs to abide the event.
WILLARD BARTLETT, Ch. J., HISCOCK and CHASE, JJ., concur with MILLER, J.; WERNER and COLLIN, JJ., concur with CUDDEBACK, J.
Judgment affirmed.