Opinion
11-12-1895
DOUGHERTY v. GREENWICH INS. CO. OF THE CITY OF NEW YORK.
P. H. Gilhooly, for complainant. A. J. Brunson and R. V. Lindabury, for defendant.
Bill by Charles Dougherty against the Greenwich Insurance Company of the City of New York to reform a policy of fire insurance. Dismissed.
P. H. Gilhooly, for complainant.
A. J. Brunson and R. V. Lindabury, for defendant.
EMERY, V. C. The primary object of the bill in this case is to reform a fire insurance policy. The policy was issued by the defendant to complainant on February 10, 1891, to insure household furniture and like articles of the defendant, for the term of three years. By the terms of the policy, as originally issued, the property was insured "while contained in the two-story and attic, frame, shingle-roof building, and two-story, frame, tin-roof extension, occupied as store and dwelling, situate No. 212 Delaware street, Elizabeth, N. J." The complainant, at the time of issuing the policy, lived on these premises, and also carried on a grocery store therein. The stock in the store was not covered by the policy. A few days before April 23, 1892, the complainant moved the property insured from No. 212 Delaware street to No. 211, on the samestreet, across from No. 212; and, after the transfer, the following indorsement was made on the policy: "The Greenwich Ins. Co. April 23, 1892. This insurance is transferred to cover similar property in the frame dwelling house No. 211 Delaware St., Elizabeth, N. J. [Signed] Wm. Adams, Asst. Secy." No. 211 was also a two-story and attic, frame building, owned by complainant; and, at the time of the transfer, he lived there, and also carried on a grocery store in the building, but in the transfer of April 23, 1892, no special statement is made as to the manner in which the dwelling house is occupied. On December 1, 1892, the property insured was destroyed by fire, and, the company refusing to pay for the loss, suit to recover upon the policy was brought by complainant against defendant, in the Union circuit court. The policy contains a provision that the entire policy, unless otherwise provided by agreement indorsed thereon or added thereto, shall be void "if the hazard be increased by any means within the control or knowledge of the assured," but contains no express provision as to the effect of the use or occupation of the premises as a grocery store or for other purposes. The defendant, among other pleas in the suit, set up the following: "Second. That, before the said fire occurred, the hazard of said insurance had been, and then was, increased by means within the knowledge and control of the plaintiff, and without the permission of the defendant. Third. That, at the time said fire occurred, a portion of the premises in which the insured property was contained was used and occupied by plaintiff as a grocery store, contrary to the terms of said policy." The complainant then filed this bill for the reformation of the policy, by inserting in the indorsement of transfer the words "store and," so that the property will be described "as contained in the frame store and dwelling house, No. 211 Delaware St., Elizabeth, N. J.," and praying that the defendant may be enjoined from claiming or offering proof, in the action at law, that the policy of insurance covered the goods therein mentioned while contained in a dwelling house only, or from presenting any proof or defense to said action that the risk or hazard on said policy was increased or changed by reason of complainant's carrying on the grocery business in the premises described.
The complainant's right to an injunction from this court controlling the proofs or defenses in the court of law depends solely on his right to a reformation of the contract. The basis for this reformation, as stated in the bill, is mistake. The bill alleges that after complainant had removed his grocery business and store from 212 to 211 Delaware street, and shortly prior to April 23, 1892, he inclosed his policy to the company, informing them that he bad removed to No. 211 Delaware street, and requesting the company to make the proper changes upon the policy; that the policy, with the indorsement as made, was returned in due time, but that he did not notice or know that the risk had been changed from store and dwelling to dwelling only, until after his attention was called to it, after the fire; that he was conducting his grocery business in No. 211, at the time of the indorsement of transfer; that no instructions were sent to the company, and that, if a survey had been made by the company or its agents of No. 211, the fact that it was built and used for a store and dwelling would have been apparent. The bill then charges that, in the indorsement of transfer, the agent or clerk who wrote the same inadvertently omitted to follow the language of the original contract, and that the change as made therein was occasioned by mistake or accident. No fraud is charged. The defendant, in its answer, as to the circumstances of the transfer, admits that the complainant sent his policy to the company about April 23, 1892, and says that he gave it notice that he had removed the insured property to the frame dwelling house 211 Delaware street, and requested a transfer of the insurance to cover the property contained in said dwelling house; and that defendant, acting in its general knowledge of the locality, and without a survey, and trusting entirely to the complainant's representation that the property No. 211 was a frame dwelling house, made the transfer by the indorsement referred to. The defendant denies that the omission to follow the language of the original description was due to the inadvertence of the clerk who made the indorsement, or that there was any mistake or accident on its part in making the indorsement in the form in which it was made; and the defendant denies that it knew of the removal of the store, or that the complainant was carrying on the grocery business at No. 211 at the time of the transfer, or until after the fire. The proofs show that the only communication between the complainant and the company in reference to the transfer before it was made was by a letter or note sent by complainant to the company at its New York office, inclosing the policy for transfer. The letter or note has not been produced, having been probably destroyed shortly after making the indorsement, in accordance with the usual practice of the company at that time. The complainant's recollection of the contents of the letter, stated at the trial from memory only, is that it read as follows: "Please transfer this policy from No. 212 Delaware street to No. 211 Delaware street, Elizabeth, N. J., and oblige, yours respectfully, Charles Dougherty." According to this statement, there was no description whatever of the character of the building at No. 211; and in view of the fact that the company had, at its office at that time, no other sources of information as to the character of the building than the complainant's letter, it is difficult to believe that the witness' recollectionof the latter is complete. The insurance map or atlas covering this district, which the company then used, did not show any building at all at No. 211, and this building was erected by complainant in 1890 or 1891. Mr. Adams, the secretary, who made the indorsement, was not called by the defendant, being absent in Florida on account of ill health; but considering the course of business in the office of the defendant in relation to transfers and the other evidence in the case, so far as it could throw any light on the question, my conclusion upon the whole proof is that the complainant has failed to establish that the words which he claims should be inserted in the policy were omitted by any mistake or inadvertence on the part of the defendant or its agents.
In deciding the case, I can place myself upon no proofs which would justify me in finding that the defendant intended, in making the contract of transfer, to insert the description of the original contract, or that the change was made by its inadvertence or mistake. From the proofs, I conjecture—for there is no basis in the evidence for anything but conjecture—that the change occurred by reason of complainant's describing the property No. 211 as a frame dwelling house, it then not occurring to the complainant that a reference to the occupation of any part of it as a store was necessary, or would make any practical difference. That is, as he now swears, his present view, and I am not prepared to say that he is not correct. This, however, Is a question for the court of law, on the construction of the contract. The fact clearly established by the evidence, on which the complainant relies for relief, viz. that by the transfer there was no increase, but rather a lessening, of the hazard, cannot affect the decision of the only question on which I have the right to pass, which is whether the contract relating to the transfer should now be corrected or changed, as claimed by complainant, because it was made in its present form through mistake. The law relating to the reformation of executed contracts is well settled, and it is only a question of the application of the law in each case. The rule in such cases is that proof must be made that there was a mutual mistake, in that the contract was not drawn as both parties intended it should be. Mistake on one side may be ground to rescind a contract; but an executed contract, such as a deed or policy of insurance, cannot be rectified, so as to be changed by a court of equity to another contract than that which the parties have signed, on the ground of mistake, unless it is shown to have been a mistake of both parties. Doniol v. Insurance Co. (1881; Runyon, Ch.) 34 N. J. Eq. 30; Mortimer v. Shortall (1842; Lord Sugden) 2 Dru. & War. 303; Hearne v. Insurance Co., 20 Wall. 488. Applying this rule to the facts of the present case, the reformation of the policy must be refused, and bill must be dismissed.