XII. REFORMATION.

General rules.

General Rules.

Complete relief in same action.
When reformation granted.
When reformation refused.
Cross references.

1. General rules. Court should not reform a policy by indorsing permission for other insurance without clear and satisfactory proof of an agreement so to do. Fellowes v. Madison Ins. Co., 2 Disney, 128 (Ohio).

2.- A policy may be reformed on parol evidence as to what property the company and its agent undertook to insure at the time of the contract. Spring Garden Ins. Co. v. Scott, 1 Walker, 181 (Pa.)

Co. v. Crane, 16 Md. 260; Tesson v. Atlantic Ins. Co., 40 Mo. 33; Epstein v. State Ins. Co., 21 Ore. 179.

6.- A company can have no relief in equity after a loss, in respect to those matters which by law afford a complete defense in an action upon the policy. Imperial Fire Ins. Co. v. Gunning, 81 Ill. 236.

7.- Suit to reform and collect upon a policy "on dwelling house," on "household furniture therein,” etc., the word therein being alleged to have been inserted by mistake, plaintiff having shown that he understood the bargain otherwise than as written, must show that the defendant understood it the same way that he did, otherwise there being no 3.- A policy issued for a greater length meeting of minds, there would be no conof time than intended by the parties may tract. C, representing himself as the be reformed and canceled in equity after company's general agent, had agreed to a loss in a suit by the company. North | make the insurance in the same way as American Ins. Co. v. Whipple, 2 Biss. 418 (U. S. Cir.)

the M. Ins. Co. made, that is, upon the furniture anywhere about the farm. In filling up the application C. was the applicant's agent; the only evidence of C.'s

4.- The mistake which will warrant a court of equity to reform a contract in writing must be one made by both par-authority was his own statements at the ties to the agreement, so that the intentions of neither are expressed in it; or it must be the mistake of one party by which his intentions have failed of correct expression, and there must be fraud in the other party in taking advantage of the mistake and obtaining a contract with the knowledge that the one dealing with him is in error in regard to what are its terms. Bryce v. Lorillard Fire Ins. Co., 55 N. Y. 240; s. P. Maher v. Hibernia Ins. Co., 67 N. Y. 283.

as

time; this is not sufficient evidence of authority to make his mistake the company's mistake, though if he had authority to make a binding oral agreement, that agreement would not be impaired by the issuance of a policy. Evidence of a mistake must be clear and satisfactory. Guernsey v. Am. Ins. Co., 17 Minn. 104. 8. A merchant doing business agent, applies for insurance as such agent, for the benefit of his principals; but by mistake the policy was issued in his 5.- To justify reformation of a policy name alone, omitting the word "agent." the proof that both parties agreed to Held, equity could reform the policy and something different from what is ex-decree its payment to its beneficiaries. pressed should be so clear and convincing The evidence must be the clearest, and as to leave no room for doubt. Meade v. Westchester Fire Ins. Co., 64 N. Y. 453; S. P. Dean v. Equitable Fire Ins. Co., 8 Ins. L. J. 773; 4 Cliff. 575 (U. S. Cir.); German American Ins. Co. v. Davis, 10 Ins. L. J. 670; 131 Mass. 316; Miaghan v. Hart- 9. When the policy does not contain ford Ins. Co., 12 Hun, 321 (N. Y.); Bishop v. the true contract between the parties and Clay Fire & M. Ins. Co., 11 Ins. L. J. 257; assured depends upon knowledge of com49 Conn. 167; Blake Opera House Co. v. pany's agent to alter its terms, suit canHome Ins. Co., 18 Ins. L. J. 373; 73 Wis. not be maintained upon it in an action 667; Suydam v. Columbus Ins. Co., 18 at law, and a remedy is to be obtained by Ohio, 459; Neville v. Merchants' & Man. a reformation in equity. Crawford v. Ins. Co., 19 Ohio, 452; National Fire Ins. | Western Ins. Co., 23 Up. Can. C. P. 365.

the court must be extremely cautious. The test of sufficiency of evidence must be its capacity to satisfy the mind of the court. Phoenix Fire Ins. Co. v. Hoffheimer, 46 Miss. 645.

General Rules.

11.- Court cannot make a contract which was not in fact made, even where failure to make insurance which assured desired, is owing to company's misappre-285; 22 Fed. Rep. 468. hension of the application. Mead v. Westchester Fire Ins. Co., 64 N. Y.

13.- Where there has been an innocent omission or misstatement of a material stipulation contrary to the inten-cause the agent and the insured did not tion of both parties, equity will reform the contract. Ins. Co. v. Lewis, 48 Tex. 622; Texas Ins. Co. v. Stone, 49 Id. 4.

17. To warrant reformation of policy mistake must be mutual, and the facts necessary to prove such mistake must be 25.- There can be no reformation of a established by clearest and plainest evi- policy on conflicting and undecisive evidence. Farmville Ins., etc., Co. v. But-dence leaving a doubt. Harrison v. Hart

Complete Relief in Same Action - When Reformation Granted.

ford Fire Ins. Co., 16 Ins. L. J. 787; 30 34. When reformation granted. Fed. Rep. 862. Memorandum for policy on “grist mill" 26.- Equity will not reform an insur- handed to company, who executed polance policy by inserting a provision al-icy on "mill house," which insured carleged to have been orally agreed upon, ried off without examination. Policy unless the proof is clear and satisfactory corrected so as to conform to memoranin every way, that such oral provision was dum. Phoenix Fire Ins. Co. v. Gurnee, intended to be incorporated in the policy, 1 Paige, 278 (N. Y.) and that it was left out through inadvertence or mistake. Id.

27.- A policy may be reformed although the insured has held it, until after a loss, in silence and in ignorance, from omission to read the policy or careless reading, of necessity for reformation. Palmer v. Hartford F. Ins. Co., 4 N. Eng. Rep. 470; 54 Conn. 488; 9 Atl. Rep. 248.

28.- Equity has jurisdiction to correct mistakes in policies of insurance. Authorities cited. Id.

29. If by inadvertence, accident, or mistake the terms of the contract are not fully set forth in a policy, it may be reformed so as to express the real agreement. * Thompson v. Phonix Ins. Co., 136 U. S. 287; 34 L. ed. 408; 19 Ins. L. J. 481: 10 Sup. Ct. Rep. 1019; Clem v. German Ins. Co., 29 Mo. App. 666.

35.- An error in the description which crept into the policy through the mutual mistake and misunderstanding of the parties, was held in the supreme court not to be ground for decreeing a correction, the policy in such case correctly representing the understanding of the parties, but the understanding being erroneous. New York Ice Co. v. North Western Ins. Co., 31 Barb. 72 (N. Y.) But on appeal, held, that such a mistake should be corrected. s. c., 23 N. Y. 357.

36.- Where the policy delivered to assured differed in its terms from the agreement for insurance, and it appeared that the clerk received the policy, placed it in the safe, without any examination on the part of the assured, then or afterwards, until the occurrence of the loss; held, that there was no such acceptance of the policy by the assured, as would prove that they 30.- When the facts are such as to had waived the original contract, or taken create an estoppel it is not necessary to this policy as a consummation of it, and have the policy reformed by a bill in as they still held the original agreement equity. * German Ins. Co. v. Miller, 39 in writing, they might enforce it in equity. Ill. App. 633. Franklin Fire Ins. Co. v. Hewitt, 3 B. Monroe, 231 (Ky.)

31.- Notes on reformation of policy. See 2 L. R. A. 64; 5 L. R. A. 712; 6 L. R. A. 200, 838.

37.- Where a mortgagee applied for insurance through the local agent of an 32. Complete relief in same action. insurance company, intending to procure An action may be brought for reformation an insurance of his mortgage interest and of policy, and for a recovery upon it as re-so stating to the agent, but the agent drew formed, at the same time, and it seems it is not irregular to try such action before a judge and jury, and it is immaterial that judgment is for amount of loss only, without in express terms decreeing reformation. Maher v. Hibernia Ins. Co., 67 N. Y. 283, 292; s. P., Ben Franklin Ins. Co. v. Gillett, 9 Ins. L. J. 774; 54 Md. 212.

the application as for an insurance on the property itself, in the name of the mortgagor and as his property, the amount to be payable in case of loss to the mortgagee; and so made the application and had the policy so issued in the belief that such was the proper legal mode of effecting an insurance on the mortgage interest; held, that the mis33.- Prayer for reformation gives ju- take could be corrected by a court of risdiction in equity. If policy is reformed chancery, although it was one of law and court retains jurisdiction for the deter-not of fact. Woodbury Savings Bank v. mination of all issues which may be made upon it; and issues of fact will, if required, be tried by a jury. Hammel v. Queen Ins. Co., 50 Wis. 240.

Charter Oak Ins. Co., 31 Conn. 517.

38. Where application was made to an agent of an insurance company authorized to take risks for a policy upon a me

When Reformation Granted.

the policy so as to make it express the real contract between the parties. Ben Franklin Ins. Co. v. Gillett, 24 Alb. L. J. 518; 54 Md. 212.

chanic's lien interest in real estate, and a defense, and a court of equity will reform policy was issued in which the interest of the assured was described as that of a mortgagee, both parties believing that the description embraced the interests of a mechanic's lien; held, that the contract would be so reformed in equity as to make it express the real intent of the parties. Longhurst v. Star Ins. Co., 19 Iowa, 364. 39. The applicant for insurance stated that he owned the goods jointly with another and wished the interest of both insured; the agent said it was not necessary to put both names in the policy. The policy was issued in the name of one, a premium for the whole being paid. Held, this was such evidence of mistake in the agent that a chancellor could decree a reformation of the policy; that there being no equity court in this state, the corresponding remedy always is to admit the parol evidence, though it may vary the legal effect of the writing, and therefore the whole interest may be recovered in the name of the one insured. Manhattan Ins. Co. v. Webster, 59 Pa. 227. And see Bailey v. American Cent. Ins. Co., 13 Fed. Rep. 250; 4 McCrary, 221; Franklin Fire Ins. Co. v. Hewitt, 3 B. Monroe, 231 (Ky.); Harris v. Columbia County Ins. Co., 18 Ohio, 116; Cox v. Etna Ins. Co., 29 Ind. 586.

40.- Agent of certain companies, on a larger insurance being applied for than his regular companies wished to take, places the surplus amount with defendants, for whom they had previously obtained insurance, receiving a commission therefor, is agent of the latter, and such agent applied to for insurance in the firm name by a partner, agrees to give it, but by mistake the policy is made to the partner alone. The knowledge and notice to the agent is notice to the company, and the policy is to be reformed by a court of equity. Keith v. Globe Ins. Co., 52 Ill. 518.

43.- By agreement between local agent of company and assured risk was to commence when premium was paid, which was on May 12, 1877. The agent subsequently made out a policy on May 14th, and mailed it to the assured. The risk was made to commence from the day it was written, May 14th, 12 o'clock, noon. The lumber insured was destroyed by fire during the forenoon of May 14th. Held, that policy should be reformed to express contract actually made, and that plaintiff was entitled to recover. Knox v. Lycoming Ins. Co., 10 Ins. L. J. 89; 50 Wis. 671. 44.- When insurance is agreed to secure the mortgagee interest, and by mistake policy is made in name of the owner as insured, equity will reform the contract and decree the payment of the loss to the mortgagee as originally intended. Fink v. Queen Ins. Co., 16 Ins. L. J. 314; 24 Fed. Rep. 318.

45.— Bill in equity to reform a policy where through mistake of the agent it was not stated therein that property was on leased ground, will be sustained, notwithstanding insured might have recovered in an action at law. Delaware State Fire and M. Ins. Co. v. Gillett, 54 Md. 219.

46. In insuring a mortgagee's interest a policy was issued in the owner's name, payable to the mortgagee. It was stated to the agent that the title was in dispute, and that the owner had filed a bill to remove a cloud from title. Such bill having been dismissed, a bill to reform the policy was sustained. Balen v. Hanover F. Ins. Co., 11 West. Rep. 158; 34 N. W. Rep. 654; 67 Mich. 179.

47.- Agent was requested to describe as leasehold, but by mistake omitted 41.- Policy containing a mutual mis-same-policy reformed accordingly. Ben take in description will be reformed in equity. Home Ins. Co. v. Myer, 93 Ill. 271. 42.- When agent of company intrusted with power to make and issue policies, and the assured fully and frankly discloses all facts material to the risk, and the agent in making out the policy, through fraud or mistake, fails to state such facts, such error or frand cannot be relied upon as a

Franklin Ins. Co. v. Gillett, 54 Md. 212. 48.- A mortgagee who has accepted a policy in favor of the mortgagor, supposing that it covers his interest, may have the policy reformed. *Esch v. Home Ins. Co., 78 Iowa, 334; 19 Ins. L. J. 113; 43 N. W. Rep. 229.

49.- An insurance policy may be reformed by correcting a mutual mistake in

the description of the premises. *German ville Ins. Co. v. Butler, 55 Md. 233. Ins. Co. v. Gueck, 6 L. R. A. 835; 130 III. 345; 19 Ins. L. J. 228; 23 N. East. Rep. 112.

50. A policy issued by mistake to a man who had no title to the premises insured, which were owned by his wife, will be reformed and enforced in her favor, where the agent who issued it, and who was wholly relied upon by the insured to have the papers in proper form, knew the facts as to the title. Id.

56.- The mere fact that the assured did not know his policy contained a certain provision is not ground for reformation. *McCormick v. Orient Ins. Co., 86 Cal. 260.

57.- Testimony of mortgagees who had taken the mortgage for purchase money on a sale of insured property, that on making an indorsement assigning the policy making the loss payable to them, they requested the agent to put the policy 51.- An insurance policy will be re- in a shape that would fully protect them, formed where it failed to express the real and he agreed to do so, and said, after contract entered into by the parties, be-making the indorsement, that he had incause made payable to another person, sured them, and not the mortgagor,—is instead of the real owner, whose interest insufficient, especially when disputed by was to be protected and who paid the the agent, to warrant a reformation of the premium. *Abraham v. North German contract of indorsement so as to make a Ins. Co., 40 Fed. Rep. 717; 19 Ins. L. J. 511. separate independent contract of insur52.- Where the agent of a fire insurance with them, which would not be ance company by mistake issues a policy to the husband who ordered the insurance upon his wife's house, a court of chancery will correct the policy and enforce it at the suit of the wife. *German Ins. Co. v. Gueck, 31 Ill. App. 151; aff'd 130 Ill. 345; 19 Ins. L. J. 228.

52a.- When agent is correctly informed as to title and interests to be protected but omits to insert same in the application made part of the policy, latter will be reformed in equity to correspond with the intention. *Jemison v. State Ins. Co., 52 N. W. Rep. 185 (Iowa).

53. When reformation refused. Assured cannot sustain an action for reformation after he has failed in an action

at law upon the policy as written. Washburn v. Great Western Ins. Co., 4 Ins. L. J. 112; 114 Mass. 175; s. P. Steinbach v. Relief Ins. Co., 77 N. Y. 498.

54.- A policy of insurance cannot be reformed to cover the interests of children of the insured, merely because she supposed she was insuring their interests as well as her own, when nothing was said at the time of the insurance as to the nature and extent of the interest insured. Hartford F. Ins. Co. v. Haas, 87 Ky., 531; 2 L. R. A. 64; 9 S. W. Rep. 720.

affected by the mortgagor's breach of the conditions contained in the policy. *Meirwinkle v. St. Paul F. & M. Ins. Co., 6 L. R. A. 200; 75 Wis. 147; 19 Ins. L. J. 97; 43 N. W. Rep. 669.

58.- An insured is not entitled to have a policy reformed on the ground that he did not know of a provision therein, where he was not misled by any acts or representations on the part of the company or its agent. *McCormick v. Orient Ins. Co., 86 Cal. 260; 24 Pac. Rep. 1003; McCormick v. Union Ins. Co., 24 Pac. Rep. 1005; McCormick v. Springfield Ins. Co., 24 Pac. Rep. 1005.

59. Cross References. Section one.

Subd. II. Parties or persons insured.
Nos. 5, 70, 92.

Subd. V. Location and description,
Nos. 33, 39.
Section five.

Subd. I. Other insurance. No. 158.
Section nine. Warranty. No. 316.
Section ten. Agent. No. 49.
Section eleven. Renewal. No. 38.
Section thirteen. Mortgagor and mort-
gagee. No. 45.
Section fifteen.

Subd. III. Statement or proofs of loss.
No. 2.

55.- There can be no mistake in omitting to write in the policy a state- Section twenty-one. ment as to the title, when the agent 51, 52.

Limitation. Nos.

who wrote it had no knowledge. Ref- Section twenty-four. Waiver. No. 109 et ormation refused on this ground. Farm-seq.