A person applied in St. Louis to an agent of a New York
Insurance Company, for insurance on his life. The agent, under
general instructions, questioned him on subjects material to the
risk. He made answers which, if correctly written down and
transmitted to the company, would have probably caused it to
decline the risk. The agent, without the knowledge of the
applicant, wrote down false answers, concealing the truth, which
were signed by the applicant without reading, and by the agent
transmitted to the company, and the company thereupon assumed the
risk. It was conditioned in the policy that the answers were part
of it, and that no statement to the agent not thus transmitted
should be binding on his principal, and a copy of the answers with
these conditions conspicuously printed upon it, accompanied the
policy.
Held that the policy was void.
Insurance Co. v.
Wilkinson, 13 Wall. 222, and
Insurance Co. v.
Mahone, 21 Wall. 152, distinguished.
If an applicant for life insurance is required to answer
questions relating to material facts in writing and to subscribe
his name thereto as part of the application upon which the policy
is issued, it is his duty to read the answers before signing them,
and it will be presumed that he did read them.
If a policy for life insurance on which premiums have been paid
is void by reason of untrue representations as to material facts in
the application, made without design on the part of the applicant,
the only recovery which can be had on the policy after the
assured's death is for the premiums paid on it.
The New York Life Insurance Company, on the 22d of December,
1877, issued at its home office in the City of New York, to
Chinonda S. Alford, a policy of insurance upon his life for the sum
of $10,000. The consideration was $263.80 paid at the time, and the
promise to pay a like sum on the 22d of December each year. The
company is a corporation under the laws of New York, but it also
transacts business in Missouri through agents residing there, and,
of course, with reference to the business done in that state, is
subject to its laws. The assured was a resident of Missouri, and in
December, 1877, he applied to an agent of the company there for
Page 117 U. S. 520
such a policy, and submitted to an examination. He also made
certain statements and representations respecting himself, his
life, and his past and present health, to which he appended a
declaration warranting their truthfulness and agreeing that they
should be the basis of any contract between him and the company and
that if they or any of them were in any respect untrue, the policy
which might be issued thereon should be void, and that all moneys
paid on account of the insurance should be forfeited, and further
agreeing that inasmuch as only the officers at the home office had
authority to determine whether or not a policy should issue on any
application, and as they acted only on the written statements and
representations referred to, no statements or representations made
or information given to the persons soliciting or taking the
application for the policy should be binding on the company or in
any manner affect its rights unless they were reduced to writing
and presented at the home office in the application. The statements
and representations, with this declaration accompanying the
application and forming a part of it, were forwarded to the home
office. The policy was thereupon issued and sent to its agent at
St. Louis for delivery to the assured. It recited that it was
issued in consideration and upon the faith of the statements and
representations contained in his application, all of which had been
warranted by him to be true, and also in consideration of the cash
payment and the annual premiums to be paid. It stipulated for the
payment of the amount of the insurance within sixty days after due
notice and satisfactory proof of his death, subject to the
conditions specified therein. To the policy was annexed a copy of
the application, and upon it was endorsed the following notice in
red type, and conspicuously printed:
"For the information of the assured and in order that any
unintentional errors or omissions which hereafter may be found to
exist may be corrected, an abstract of the application upon which
this policy is based may be found in the third page within. If
corrections are desired, when satisfactory to the company,
certificate to that effect will be issued over the signature of the
president and actuary. "
Page 117 U. S. 521
The cash payment was made by the assured on the receipt of the
policy, and the subsequent annual premiums were regularly paid to
the agents of the company in Missouri until his death, which
occurred September 24, 1880. The plaintiff was appointed his
executor. Due notice and proof of his death were given to the
company. Among the documents furnished was the affidavit of a
witness, who testified that he had been the physician of the
assured for ten years, and had attended him at one time for
diabetes, and that he died of that disease. Payment of the
insurance money was refused on the alleged ground of false
statements and representations in the application. Thereupon the
executor brought this action in a court of Missouri, and upon the
petition of the company it was removed to the circuit court of the
United States.
The petition, which is the designation given to the first
pleading in an action under the system of procedure in Missouri,
alleges the incorporation of the defendant under the laws of New
York and its license to do business in Missouri, the issue of the
policy, the payment of the premiums, the death of the assured, the
appointment of the plaintiff as executor, the giving of notice and
furnishing of proof of the death, and the nonpayment of the
insurance money, and prays for judgment for the amount, with
interest. The company answered, admitting its incorporation under
the laws of New York and the issue of the policy, but set up that
it was executed at the home office upon the faith of the answers
and statements contained in the assured's written application,
which were warranted to be true; that it was stated in the
application that he never had a disease of the kidneys or any
serious disease, and had never been seriously ill, and had no
regular medical attendant, whereas he had been afflicted with
diabetes, which is a serious disease of the kidneys, and had been
under medical treatment for it; that such statement was not only
false but was material to the risk; that he actually died of the
disease which he thus concealed, and that the policy was void by
reason of these false statements.
The plaintiff replied that two agents of the company at St.
Louis, who were personally acquainted with the assured, and
Page 117 U. S. 522
knew his past and then physical condition, had solicited him on
different occasions to take out a policy in the company; that he
told each of them on those occasions that he did not believe he was
insurable; that they knew he had been in bad health, and had been
under medical treatment for diabetes, though he thought he was then
well; that they assured him that he was insurable; that the fact
that he had had the disease made no difference, and that if he
would take out a policy and pay the premiums required, he would
have no trouble; that finally, about the 18th of December, 1877, he
consented to take a policy; that they then told him it would be
necessary for him to answer certain questions as a matter of form;
that one of them thereupon read to him certain questions from a
printed blank, and, as he answered them, the other pretended to
take down and write in the blank the substance of the answers as
given, not reading over to the assured what he had written nor
consulting him about it nor informing him what it was, but saying
that what he did was a mere formality; that when he was asked with
respect to his having had any disease of the kidneys, he replied
that his condition was well known to the agents, who were aware
that he had been sick and under treatment by Dr. Brokaw for
diabetes, and that the doctor's office was opposite, and they could
go there and find out everything they wanted to know; that the
assured had faithfully answered all the questions, but the agents
inserted in the blank false answers; that he had no reason to
suppose that the answers were taken down differently from those
given; that after answering all their questions, he was asked to
sign his name to the paper to identify him as the party for whose
benefit the policy was to be issued, and for that purpose he signed
the paper twice, without reading it or the written answers; that
the agents did not read to him any part of the application except
the questions, and did not read the clause set forth in the
defendant's answer, nor call attention to the fact that his
signatures were intended as an acceptance or assent to that clause;
that when the policy was delivered to him, he neither read it nor
the copy of the application attached to it; that the agent who
delivered it informed him that it was
Page 117 U. S. 523
all right and he was insured, and he gave no further attention
to the matter; that the annual premiums, as they fell due, were
paid to said agent, who received them with full knowledge of all
the facts, and that therefore the company was estopped from
pretending that any of the answers as written rendered the policy
void. The company demurred to this reply as constituting in law no
cause of action, and no reply to the facts set forth in the answer,
but the demurrer was overruled.
On the trial, it was proved by the company that the assured was
a resident of St. Louis, and that Dr. Brokaw had been his regular
physician for ten years, and had treated him some years before his
death for diabetes, of which disease he died. It was also proved
that on the day he made application to the defendant, he also
applied to the Penn Mutual Life Insurance Company, of Pennsylvania,
for insurance on his life, and stated that he had had diabetes in
1875, and that Dr. Brokaw was his physician. That company refused
to issue a life policy, but granted a fifteen-year endowment policy
at a largely increased premium. It was also proved that diabetes is
commonly known as a disease of the kidneys, though primarily a
disease of nutrition, and not necessarily affecting their structure
in its early stages; that it is a very serious disease and of
doubtful curability; that the policy was issued solely upon the
written application, and that no other application, statement, or
representation was received from the applicant.
The law of Missouri provides that
"No misrepresentation made in obtaining or securing a policy of
insurance on the life of lives of any person or persons shall be
deemed material or render the policy void unless the matter
misrepresented shall have actually contributed to the contingency
or event on which the policy is to become due and payable, and
whether it so contributed in any case shall be a question for the
jury."
Rev.Stat.Missouri § 5976, and that in suits brought upon life
policies,
"No defense based upon misrepresentation in obtaining or
securing the same shall be valid unless the defendant shall at or
before the trial, deposit in court, for the benefit
Page 117 U. S. 524
of the plaintiffs the premiums received on such policies."
Id., § 5977.
Under this last section, the defendant tendered in court to the
plaintiff $888.26, the premiums received, with interest to the date
of trial, but the plaintiff declined to receive the amount in full
payment.
On the part of the plaintiff, a witness was allowed, against the
objection of the defendant, to testify to statements, made by the
assured and the agent at the time of the application, tending to
establish some of the matters alleged in reply to the answer. He
could not give the specific words used, but he remembered that in
one part of the conversation Alford stood up at the time he was
asked as to his having had kidney disease, and pointed through the
window and said:
"My medical examiner has an office across the way; you can go
there and find out from him. I have been afflicted in the kidneys,
but he says I am well, and I feel well now."
He also testified that at one time he heard the assured say to
the agent: "Your company ought not to insure me; you know I have
been afflicted with kidney disease," and that the agent replied:
"Just give me your application, and I will see if I can get it
through." The witness was also permitted to testify that he did not
think the paper was read over to the assured. He did not hear it
read, nor did he remember the questions asked, except the specific
one as to the kidneys, and he remembered that because the assured
stood up and pointed across the street. There was no evidence that
the application was not read by the assured before he signed it or
that there was any imposition practiced upon him, or that, after
receiving the policy, he applied to correct his answers, which, as
written down, are conceded to be false.
Upon the conclusion of the testimony, the defendant requested
the court to charge the jury, among other things, substantially as
follows:
1. That it is competent for any party, corporation, or
individual, employing an agent in the negotiation of a contract,
whether of insurance or otherwise, to limit his powers,
provided
Page 117 U. S. 525
the limitation is brought home to the knowledge of the other
contracting party; otherwise the principal will be bound by the
apparent as well as the actual powers of the agent, and as, in this
case, the limitation was made a part of the contract between the
parties, it was binding upon them.
2. That the stipulation between the parties limiting the powers
of the soliciting agent and providing that the contract should be
based upon the written application was binding upon the parties,
and it was therefore immaterial what may have been said by or to
the agent at the time of making the application, which was not
reduced to writing and presented to the officers of the company at
the home office in New York.
3. That whether the statements and answers contained in the
application of the assured were made by him or not, yet when he
afterwards received the policy, with a copy of the application
attached and a memorandum endorsed thereon, calling his attention
to the copy thus attached, with a request that any errors in the
application be reported to the company for correction, it was his
duty to report any answers incorrectly written down, and thus
enable the company to correct them, and that by his failure to do
so, he must be presumed to have accepted the policy upon the faith
of the answers and to have acquiesced and agreed that it should
remain as the basis of the contract of insurance. But the court
refused to give any of these instructions, and the defendant
excepted. It recognized, however, in its charge the competency of
the company to limit the powers of the agent and the binding force
of the limitation if brought home to the other contracting party,
and instructed the jury that there was such limitation in the
present case; that the company was not bound by any representations
to or by the assured unless they were put in writing and submitted
to the company; that therefore what was contained in the
application must be regarded as constituting the basis of the
contract unless it could be avoided for fraud; that if the jury
found that at the time of making the application he told the agent
that he had had diabetes and referred him to his physician
concerning it, and that such agent committed a fraud upon the
assured by inserting false answers in the application,
Page 117 U. S. 526
and by suppressing the answers actually given, and by concealing
from the assured what he had written in the application, and
thereby induced him to sign it without knowing what it contained,
then the plaintiff was not estopped to recover. The court also
charged that if the assured ascertained, before the contract was
consummated -- that is, before the policy was delivered to him and
the first premium paid -- that the agent had committed a fraud upon
him and upon the company, it was his duty to stop and decline to go
any further with the transaction; but if he did not discover this
before the policy was delivered and the first premium paid, he was
not called upon afterwards to take any steps for the cancellation
of the contract. To this the defendant excepted. The plaintiff
obtained a verdict for the full amount of the insurance money, with
interest, upon which judgment was rendered.
Page 117 U. S. 528
MR. JUSTICE FIELD, after stating the case as above reported,
delivered the opinion of the Court.
It is conceded that the statements and representations contained
in the answers, as written, of the assured to the questions
propounded to him in his application respecting his past and
present health were material to the risk to be assumed by the
company, and that the insurance was made upon the faith of them,
and upon his agreement accompanying them that, if they were false
in any respect, the policy to be issued upon them should be void.
It is sought to meet and overcome the force of this conceded fact
by proof that he never made the statements and representations to
which his name is signed; that he truthfully answered those
questions; that false answers, written by an agent of the company,
were inserted in place of those actually given, and were forwarded
with the application to the home office, and it is contended that,
such proof being made, the plaintiff is not estopped from
recovering. But on the assumption that the fact as to the answers
was as stated, and that no further obligation rested upon the
assured in connection with the policy, it is not easy to perceive
how the company
Page 117 U. S. 529
can be precluded from setting up their falsity, or how any
rights upon the policy ever accrued to him. It is, of course, not
necessary to argue that the agent had no authority from the company
to falsify the answers or that the assured could acquire no right
by virtue of his falsified answers. Both he and the company were
deceived by the fraudulent conduct of the agent. The assured was
placed in the position of making false representations in order to
secure a valuable contract, which, upon a truthful report of his
condition, could not have been obtained. By them the company was
imposed upon and induced to enter into the contract. In such a
case, assuming that both parties acted in good faith, justice would
require that the contract be cancelled and the premiums returned.
As the present action is not for such a cancellation, the only
recovery which the plaintiff could properly have upon the facts he
asserts, taken in connection with the limitation upon the powers of
the agent, is for the amount of the premiums paid, and to that only
would he be entitled by virtue of the statute of Missouri.
But the case as presented by the record is by no means as
favorable to him as we have assumed. It was his duty to read the
application he signed. He knew that upon it the policy would be
issued, if issued at all. It would introduce great uncertainty in
all business transactions if a party making written proposals for a
contract, with representations to induce its execution, should be
allowed to show after it had been obtained that he did not know the
contents of his proposals, and to enforce it notwithstanding their
falsity as to matters essential to its obligation and validity.
Contracts could not be made or business fairly conducted if such a
rule should prevail, and there is no reason why it should be
applied merely to contracts of insurance. There is nothing in their
nature which distinguishes them in this particular from others. But
here the right is asserted to prove not only that the assured did
not make the statements contained in his answers, but that he never
read the application, and to recover upon a contract obtained by
representations admitted to be false just as though they were true.
If he had read even the printed lines of his
Page 117 U. S. 530
application, he would have seen that it stipulated that the
rights of the company could in no respect be affected by his verbal
statements, or by those of its agents, unless the same were reduced
to writing and forwarded with his application to the home office.
The company, like any other principal, could limit the authority of
its agents, and thus bind all parties dealing with them with
knowledge of the limitation. It must be presumed that he read the
application, and was cognizant of the limitations therein
expressed.
In
Globe Insurance Co. v. Wolff, 95 U.
S. 329, the policy declared that the agents of the
company were not authorized to waive forfeitures, and this Court
held that effect must be given to the provision except so far as
the subsequent acts of the company permitted it to be
disregarded.
In
Insurance Co. v. Norton, 96 U.
S. 240, the policy contained an express declaration that
the agents of the company were not authorized to make, alter, or
abrogate contracts or waive forfeitures, and this Court held that
the company could have insisted upon those terms had it so
chosen.
In
Loehner v. Home Mutual Insurance Co., the Supreme
Court of Missouri passed upon this point. 17 Mo. 256. The charter
of that company provided that if the assured failed to state in his
application, which was made a part of the policy, any encumbrance
that existed on the insured premises, his policy should be void.
There was also endorsed on the policy a memorandum that the company
would not be bound by any statement of the agent unless contained
in the application. The answer to the action on the policy set up
that the application did not truly state the encumbrances. A small
encumbrance upon the premises was not stated, and on the trial
evidence was offered that its existence was made known to the agent
of the company at the time of the application, but that he refused
to write it down, saying that the amount was too trifling. The
evidence was excluded, and the supreme court sustained the ruling,
holding that the objection that the encumbrance was not stated
could not be obviated in that way. "Independently of the statute of
the state," said the court,
"which requires the encumbrance to be expressed in
Page 117 U. S. 531
the policy at the peril of its being void, there was a
memorandum endorsed on it which made known that the company would
be bound by no statement made by the agent not contained in the
application. The facts being as represented, they could not give
the plaintiff a right of action on the policy in the teeth of the
statute and against the terms of the contract. If the conduct of
the agent was such as is alleged, he was guilty of a gross fraud,
as is shown by his setting up this defense, which would avoid the
policy and give a right of action for the recovery of the premium,
but could not, for the reason given, entitle the plaintiff to an
action on the policy."
The present case is very different from
Insurance
Co. v. Wilkinson, 13 Wall. 222, and from
Insurance Co. v.
Mahone, 21 Wall. 152. In neither of these cases was
any limitation upon the power of the agent brought to the notice of
the assured. Reference was made to the interested and officious
zeal of insurance agents to procure contracts, and to the fact that
parties who were induced to take out policies rarely knew anything
concerning the company or its officers, but relied upon the agent
who had persuaded them to effect insurance "as the full and
complete representative of the company in all that is said or done
in making the contract," and the court held that the powers of the
agent are
prima facie coextensive with the business
entrusted to his care, and would not be narrowed by limitations not
communicated to the person with whom he dealt. Where such agents,
not limited in their authority, undertake to prepare applications,
and take down answers, they will be deemed as acting for the
companies. In such cases, it may well be held that the description
of the risk, though nominally proceeding from the assured, should
be regarded as the act of the company. Nothing in these views has
any bearing upon the present case. Here, the power of the agent was
limited, and notice of such limitation given by being embodied in
the application, which the assured was required to make and sign,
and which, as we have stated, he must be presumed to have read. He
is therefore bound by its statements.
The case of
Ryan v. World Mutual Life Ins. Co. is in
some respects similar to the one before us. There, a
Page 117 U. S. 532
policy obtained on the life of Patrick Ryan for the benefit of
his wife declared that it was issued and accepted on the condition
and agreement that the statements and declarations made in the
application therefor, and on the faith of which it was issued, were
in all respects true. The application was a part of the policy. It
appeared that when the application was made, he was asked whether
he had had any of the following diseases: bronchitis, consumption,
spitting of blood, or any serious disease, and the answer as
written was that he had had "none of them." To the inquiry whether,
during the previous seven years, he had had any severe sickness or
disease or had employed or consulted any physician, the answer as
written was "no." The authority of the agent was limited to
receiving the application, forwarding it to the home office,
receiving, countersigning, and delivering the policy and collecting
the premiums. The insured having died, action upon the policy was
brought by his widow. On the trial, she offered to prove not that
the answers were true, but that different answers were in fact
given, both by her and him, and that the answers were wrongly
written by the local agent of the company without the knowledge or
consent of herself or her husband. The application was signed
without being read. It was held that the company was not bound by
the policy; that the power of the agent would not be extended to an
act done by him in fraud of the company and for the benefit of the
insured, especially where it was in the power of the assured, by
reasonable diligence, to defeat the fraudulent intent; that the
signing of the application without reading it or hearing it read
was inexcusable negligence, and that a party is bound to know what
he signs. After observing that the courts of the state had
construed the powers of an insurance agent liberally, and held that
in writing the application and explaining interrogatories and the
meaning of the terms used, he was to be regarded as the agent of
the company, and, referring to the case of
Insurance
Co. v. Wilkinson, 13 Wall. 222, the court said:
"But it cannot be supposed that these defendants intended to
clothe this agent with authority to perpetrate a fraud upon
themselves. That he deliberately intended to defraud them is
Page 117 U. S. 533
manifest. He well knew that if correct answers were given no
policy would issue. Prompted by some motive, he sought to obtain a
policy by means of false answers. His duty required him not only to
write the answers truly as given by the applicant, but also to
communicate to his principal any other fact material to the risk
which might come to his knowledge from any other source. His
conduct in this case was a gross violation of duty, in fraud of his
principal and in the interest of the other party. To hold the
principal responsible for his acts and assist in the consummation
of the fraud would be monstrous injustice. When an agent is
apparently acting for his principal but is really acting for
himself or third persons and against his principal, there is no
agency in respect to that transaction at least as between the agent
himself, or the person for whom he is really acting, and the
principal. . . . The fraud could not be perpetrated by the agent
alone. The aid of the plaintiff or the insured, either as an
accomplice or as an instrument, was essential. If she was an
accomplice, then she participated in the fraud, and the case falls
within the principle of
Lewis v. Phoenix Mutual Life Ins.
Co., 39 Conn. 100. If she was an instrument, she was so
because of her own negligence, and that is equally a bar to her
right to recover. She says that she and her husband signed the
application without reading it and without its being read to them.
That of itself was inexcusable negligence. The application
contained her agreements and representations in an important
contract. When she signed it, she was bound to know what she
signed. The law requires that the insured shall not only in good
faith answer all the interrogatories correctly, but shall use
reasonable diligence to see that the answers are correctly written.
It is for his interest to do so, and the insurer has the right to
presume that he will do it. He has it in his power to prevent this
species of fraud, and the insurer has not."
41 Conn. 168-172. With these views we fully agree.
The instruction given to the jury in the case before us is in
effect that the assured was bound by his application if it was not
avoided for fraud, and that it was so avoided by reason of the
false statements contained in it, and that therefore the
Page 117 U. S. 534
plaintiff, as his representative, could recover. But if the
application was avoided, it would seem to be a necessary
consequence that the policy itself was also avoided, and his right
limited to recovering the premiums paid. But such was not the
conclusion of the court. It directed the jury that if the
application was avoided for fraud, he could recover. It does not
seem to have occurred to the court that had the answers been
truthfully reported and the fact of the assured having had diabetes
within a recent period been thus disclosed, the insurance would in
all probability have been refused. If the policy can stand with the
application avoided, it must stand upon parol statements not
communicated to the company. This, of course, cannot be seriously
maintained in the face of its notice that only statements in
writing forwarded to its officers would be considered. A curious
result is the outcome of the instruction. If the agents committed
no fraud, the plaintiff cannot recover, for the answers reported
are not true; but if they did commit the imputed fraud he may
recover, although, upon the answers actually given, if truly
reported, no policy would have issued. Such anomalous conclusions
cannot be maintained.
There is another view of this case equally fatal to a recovery.
Assuming that the answers of the assured were falsified, as
alleged, the fact would be at once disclosed by the copy of the
application, annexed to the policy, to which his attention was
called. He would have discovered by inspection that a fraud had
been perpetrated not only upon himself but upon the company, and it
would have been his duty to make the fact known to the company. He
could not hold the policy without approving the action of the
agents and thus becoming a participant in the fraud committed. The
retention of the policy was an approval of the application and of
its statements. The consequences of that approval cannot, after his
death, be avoided.
The court charged the jury that if the assured had discovered
the fraud before the policy was delivered and the first premium
paid, it would have been his duty to decline to go any further with
the transaction, but if he did not discover the fraud until after
such delivery and payment, he was not called upon to take any steps
for the cancellation of the contract.
Page 117 U. S. 535
In other words, the jury were told that the assured might take
to himself the benefit of the fraud without responsibility for it
if he did not discover it until after it was consummated -- a
doctrine without authority and wholly indefensible. No one can
claim the benefit of an executory contract fraudulently obtained,
after the discovery of the fraud, without approving and sanctioning
it.
In
American Ins. Co. v. Neiberger, 74 Mo. 167, the
assured agreed with the agent of the company that the policy to be
issued should contain a clause giving him a right to cancel it at
the end of the year. The policy issued contained no such clause,
but he retained it several months before he returned it. The court,
after observing that when the application does not attempt to set
forth all the provisions which the policy to be issued must contain
and the agent represents that the policy will contain certain
stipulations which are not unlawful, then the policy must contain
them or the assured would not be bound to accept it. "But in such
case," said the court,
"it will be the duty of the insured, when he receives the
policy, promptly to examine the same, and if it does not contain
the stipulations agreed upon, to at once notify the company of such
fact and of his refusal to accept said policy. The policy in this
case was issued on the 25th day of January, 1875, and was not
rejected by the defendant until May 10, 1875. If the policy was
received by the defendant soon after the date on which it purports
to have been issued, we think he waited too long to elect whether
he would receive the policy without the stipulation in regard to
cancellation or refuse to accept it because it did not contain such
stipulation. After such delay, he will be deemed to have accepted
the policy as issued."
The case of
Richardson v. Maine Ins. Co., 46 Me. 394,
is a stronger one in illustration of this doctrine of acceptance.
There, an application for insurance was made to an agent of the
company. He thereupon filled one containing a statement that there
was no mortgage on the property to be insured, and, without the
knowledge of the applicant, signed his name thereto. A policy was
accordingly issued which declared that it was made and accepted in
reference to the application,
Page 117 U. S. 536
and that the assured, by accepting it, covenanted that the
application contained a just, full, and true statement of all the
facts and circumstances in regard to the condition, situation,
value and risk of the property insured, and that if any fact or
circumstance were not fairly represented, the policy should be
void. Action having been brought upon the policy, the company
denied its liability on the ground that the application had
represented that there was no such mortgage when in fact one
existed. The court held that the assured, by accepting the policy,
was bound by its covenants, and that he ratified the
application.
It is unnecessary to pursue the subject further. We are clear
that the court below erred both in refusing the instructions asked
and in its charge to the jury in the particulars mentioned.
Its judgment must therefore be reversed and the cause
remanded for a new trial.
