Opinion
13725
November 27, 1933.
Before WHALEY, J., County Court, Richland, November 1932. Affirmed.
Action by the Central Ice Cream Candy Co. against the Home Insurance Company. Decree for plaintiff, and defendant appeals.
The decree of Judge Whaley, directed to be reported, follows:
This action was commenced by the service of a summons and complaint by the plaintiff, On the defendant, asking for a judgment in the sum of $2,000 by reason of a fire loss under a policy of insurance issued by the defendant to the plaintiff. The defendant answered admitting the issuance of the policy and that it was in force at the time of the loss. The defendant set up, by way of affirmative defense, the following clause in the policy: "This policy does not insure. While the property insured hereunder is located, (a) In or on the premises of the assured."
It also admitted the destruction of the property by fire, but alleged the property was in or on the premises of the assured at the time of the loss.
The plaintiff petitioned this Court that it be allowed to file a reply to the answer of the defendant setting out in the reply that the above-mentioned clause was inserted in the policy by reason of a mutual mistake, and that it was the real intention of the parties and the real contract of the parties that the property was to be insured at all times regardless of location, and that the Court should reform the policy so as to make it conform to the real agreement of the parties.
It was agreed between the plaintiff and the defendant that the Court should dispose of all of the legal issues involved in the case, and that the equitable issue of reformation be reserved for decision, and that the Court take up the matter of reformation after the legal issues had been disposed of.
That after hearing argument from both the attorneys for the plaintiff and the defendant, the Court did pass an order on the 9th day of March, 1933, allowing the plaintiff to file a reply to the answer of the defendant asking for a reformation of the contract on the ground of mutual mistake.
By consent of the parties the matter of the reformation of the policy was heard by me on the 17th day of April, 1933, at which time both the plaintiff and the defendant introduced testimony and made arguments.
Mr. W.H. Caughman, manager, of the plaintiff corporation, testified that at the time of the issuance of the policy he and Mr. A.S. Gaillard, the agent of the defendant, had agreed that for the stipulated premium the defendant would insure the ice cream cabinets of the plaintiff wherever they might be located, and that the cabinets would be covered at all times. He further testified that in the conduct of the plaintiff's business it was absolutely necessary for some of the cabinets to be in the plant of the plaintiff for storage, repair, etc., and that during the winter season of the year more of them would be in the plant of the plaintiff than in the summer season of the year. Mr. Caughman also testified that when the policy was delivered to him, May 27, 1927, he did not read it but placed it in his safe where it remained until the loss, and that the reason he did not read the policy was because he thought that it had been written by the defendant according to the agreement between him and Mr. Gaillard. He further testified that he carried no other insurance on these cabinets while they were in his plant and that Mr. Gaillard was advised of this fact, and that premiums were paid on the total number of cabinets during the entire life of the policy regardless of whether they were in the plant of the plaintiff or not.
Dr. W.E. Caughman testified that he is an officer of the plaintiff corporation, though not present when the original agreement was made, that from conversations had with Mr. Gaillard from time to time he was under the impression that the cabinets were covered at all times without any restriction as to location.
Mr. A.S. Gaillard, the agent of the defendant, testified that his memory was not clear as to the details surrounding the issuance of the policy, but that when the loss occurred (the cabinets having been destroyed in the plant of the plaintiff), he reported the loss to his company, the defendant, as a loss under the policy, and that he thought the cabinets were covered while in the plant of the plaintiff. He also introduced letters in which he had written the home office of the defendant asking for a blanket policy over all of the cabinets of the plaintiff.
The evidence is, to me, clear, unequivocal, and convincing that the real contract between the plaintiff and the defendant was that the cabinets were to be insured at all times regardless of location and that the above-mentioned clause was inserted by mutual mistake of both the plaintiff and the defendant.
The issue present is: Is the plaintiff entitled to have the contract of insurance reformed so as to express the real intention and agreement between the parties?
It is well settled in this State that both legal and equitable issues can be settled in the same action, the legal issues for the jury, and the equitable issues for the Court, and that the order in which the issues are to be tried is discretionary with the Court; however, in this case, it was agreed that the legal issue was to be tried first. W.B. Boyle Co. v. Automobile Ins. Co., 168 S.C. 63, 166 S.E., 886, filed December 13, 1932; Henderson v. Rice, 160 S.C. 307, 158 S.E., 258; Knox v. Campbell, 52 S.C. 461, 30 S.E., 485.
It is a well-settled principle of law that, where there has been a mutual mistake of the parties as to the terms of a written instrument, a Court of Equity will reform the contract so as to make it conform to the real intention of the parties, and this principle is recognized in South Carolina in numerous cases. Groce v. Benson et al., 168 S.C. 145, 167 S.E., 151; W.B. Boyle v. Automobile Ins. Co., cited above; Henderson v. Rice, cited above; Blassingame v. Greenville County, 134 S.C. 324, 132 S.E., 616. Also referred to in the following cases: Etheredge v. AEtna Ins. Co., 102 S.C. 313, 86 S.E., 687, 691; Montgomery v. Ins. Co., 67 S.C. 399, 45 S.E., 934, 935; Pearlstine v. Ins. Co., 74 S.C. 246, 54 S.E., 372.
As to whether or not the plaintiff should be denied the relief sought by reason of its not having read the policy, I think that the general rule in regard to this proposition is clearly stated in the case of Del. Ins. Co. v. Hill (Tex.Civ.App.), 127 S.W. 283, also cited with approval in the case of Dickenson County Bank v. Royal Exc. Assur., 157 Va., 94, 160 S.E., 13, 76 A.L.R., 1216: "Since, if assured accepts a policy without dissent, it is presumed he knows its contents, the burden is on him, in a proceeding to reform it for mistake, to prove that he did not know its contents when it was accepted, as by showing that when he received it he put it away without inspection, or that he relied on the insurer's knowledge and supposed he had drawn it correctly."
It is also generally held that a party is not held to the same degree of care in contracts that are based on forms such as fire insurance contracts, as he would be in other forms of agreements. The cases in support of this proposition are very numerous, and I think the following quotation from Ruling Case Law, Vol. 23, p. 351, par. 47, is applicable: "The fact that insured accepted a policy of fire insurance without noticing a mistake is generally held not to preclude him from having the mistake corrected, even though he failed to read the policy over or carelessly read it. Policies of fire insurance are rarely examined by the insured. The same degree of vigilance and critical examination would not be expected or demanded as in the case of some other instruments. * * * "
I am of the opinion, after taking all of the facts and circumstances of the case into consideration, and in view of the foregoing authorities, that the plaintiff has made out a case that is clear and convincing that the contract of insurance should be reformed so as to make the contract express the real intention of the parties, which was that the property of the plaintiff was to be insured at all times regardless of location, so therefore, it is ordered that the contract of insurance, above-mentioned, between the plaintiff and the defendant be, and is hereby, reformed by striking out the clause, or clauses, restricting the coverage so as to make said policy insure the property of the plaintiff, therein described, regardless of location, and that this reformation shall take effect as of the date of the policy.
Messrs. Benet, Shand McGowan and W.C. Boyd, Jr., for appellant, cite: As to reformation of contract: 115 S.C. 452; 161 S.C. 249; 168 S.C. 150; 35 F.2d 571; 71 A.L.R., 128; 76 A.L.R., 1209; 6 A.L.R., 367; 35 F.2d 675; 32 C.J., 1142; 154 S.W. 32.
Messrs. J.A. Hutto and J. Hughes Cooper, for respondent, cite: As to mutual mistake in contract: 115 S.C. 452; 161 S.C. 249; 168 S.C. 150; 86 S.C. 691; 67 S.C. 400; 74 S.C. 246; 166 S.E., 887; 98 U.S. 79. Fire insurance contracts: 23 R.C.L., 351; 32 C.J., 1142.
November 27, 1933. The opinion of the Court was delivered by
This is a cause in equity. The appellant raises no question as to any legal proposition depended upon by the trial Judge in his decree. The only question raised is that the evidence did not support the conclusion reached.
The burden is on the appellant to show that there was an error below in the findings of fact. Our examination of the record does not convince us that there was such error.
The decree of the county Judge, which will be reported, is affirmed.
MESSRS. JUSTICES STABLER, CARTER and BONHAM and MR. ACTING ASSOCIATE JUSTICE W.C. COTHRAN concur.