National Bank v. Insurance Company - 95 U.S. 673 (1877)
U.S. Supreme Court
National Bank v. Insurance Company, 95 U.S. 673 (1877)
National Bank v. Insurance Company
95 U.S. 673
1. When a party states, in his application for an insurance, that he has made a just, full, and true exposition of all material facts and circumstances in regard to the condition, situation, value, and risk of the property so far as known to him, and the application is expressly made a part of the policy, should it afterwards appear that he overestimated the value of the property, the policy would not be vitiated unless it be shown that the estimate was intentionally excessive.
2. When a policy contains contradictory provisions or is so framed as to render it doubtful whether the parties intended that the exact truth of the applicant's statements should be a condition precedent to any binding contract, that construction which imposes upon the assured the obligations of a warranty should not be favored.
3. The policy having been prepared by the insurers, it should be construed most strongly against them.
This is an action on a policy of insurance issued by the Hartford Fire Insurance Company to W. D. Oldham, on certain mill property, building, and machinery, and by him transferred and assigned to the First National Bank of Kansas City, Mo. The parties, by written stipulation, waived a jury and, upon a special finding of facts, the circuit court gave judgment for the company. The bank thereupon sued out this writ of error.
It appears from the special finding that by the terms of the application, the assured was required to state separately
"the estimated value of personal property and of each building to be insured and the sum to be insured on each; . . . the value of the property being estimated by the applicant."
The applicant was also directed to answer certain questions, and sign the same "as a description of the premises on which the insurance will be predicated." Among the questions to be answered were:
"What is the cash value of the buildings, aside from hand and water power? What is the cash value of the machinery?' The answer was: '$15,000, building; $15,000, machinery."
The application concludes with these words:
"And the said applicant hereby covenants and agrees to and with said company, that the foregoing is a just, full, and true exposition of all the facts and circumstances in regard to the condition, situation, value, and risk of the property to be insured so far as the same are known to the applicant and are material to the risk."
The policy refers to the application in these words: "Special reference being had to assured's application and survey, No. 1462, on file, which is his warranty, and a part hereof."
The policy further recites:
"If an application, survey, plan, or description of the property herein insured is referred to in this policy, such application, survey, plan, or description shall be considered a part of this policy, and a warranty by the assured; and if the assured, in a written or verbal application, makes any erroneous representation or omits to make known any fact material to the risk, . . . then and in any such case this policy shall be void. . . . Any fraud or attempt at fraud, or any false swearing on the part of the assured, shall cause a forfeiture of all claim under this policy."
The policy also declares that it is made and accepted upon the above, among other, express conditions.
It is found by the court that when the policy was issued, as well as at the date of the destruction of the property by fire, the cash value of the building, aside from hand and water power, was $8,000, and no more, and the cash value of the machinery, at the same dates, was $12,000 and no more.
The court also found that
"the answers made by the assured to the questions contained in the application were made by him in good faith, without any intention on his part to commit any fraud on the defendant."
It is further declared in the special finding that
"under the provisions of the policy and application, made part thereof, the court finds as a conclusion of law that the answers of the assured as to the value of the property insured defeat the right to recover on the policy. "