Citizens Mutual Fire Insurance v. Conowingo Bridge Co.

Thomas, J., delivered the opinion of the Court. This is the second'appeal in this case. The suit is on a fire insurance policy for three thousand dollars, and the ⁴²⁹ property described in the policy is “that part of main Conowdngo Bridge across the Susquehanna River located in Cecil county.” It appears from the record in this ease, as it did on the former appeal, that the Conowingo Bridge extended from Harford county across the Susquehanna River to Cecil county, and consisted of what was called the main bridge, which was 1,328 feet long and extended from the Harford county side of the river to a causeway, about 100 feet long, constructed on an island, and another bridge called the short bridge, which was 500 feet long and extended from the other end of said causeway to the Cecil county shore. 799 feet of the main bridge was in Harford county, and the remaining 529 feet of the main bridge and the short .bridge were in Cecil county. Thc> main bridge was totally destroyed by fire on the 5th of June, 1907, and on the 8th of June the secretary of the appellee, the Oonowiugo Bridge Company, wrote to the secretary of the appellant, [he Citizens’ Mutual Fire Insuance Company, notifying him that “the main structure of the Conowingo Bridge located in Cecil and Harford Counties” had been entirely consumed by lire, and that the loss was only partially covered by the insurance set out in the letter, amounting to $21,000.00, including the policy sued on.

Ho reply to said notice was received by the appellee. On the 30th of July, 1907, Thomas H. Robinson, Esq., in whose hands the appellee had placed all of the policies for collection, wrote the president of the appellant, W. T. Warhurton, Esq., stating that the several stock companies interested in said loss desired “to arbitrate the question of the value of the bridge,” and asking Mr. Warburton to advise him “whether or not,” his company desired to participate in the arbitration, but there does not appear that there was any reply to that letter. Proof of loss was mailed to the appellant on the 5th of August, 1907, and received by it on the 6th of August, and on the 14th of October, 1907, Mr. Robinson wrote to the president of the appellant again, as follows: ⁴³⁰ “My Dear Sir: The directors of the Conowingo Bridge Co. requested me to ask you when the can expect an adjustment of the insurance amounting to $3,000.00 in your company on the bridge that was recently destroyed by fire. Kindly let me hear from you and oblige, Very truly yours,” etc. To this letter the president of the appellant, on the 26th of October, 1907, replied: “My Dear Sir: Tour letter of the 14th inst., in reference to the insurance on Conowingo Bridge, was duly received at my office.

I have been almost constantly away from home, and I will not be able to take this matter up with you until after the election, at that time I will write you fully upon the subject. Tours truly,” etc. On the 2nd of January, 1908, Mr. Robinson wrote the president of the appellant stating that he had forgotten until again reminded by the directors of the Bridge Company to take up with him the matter of the adjustment of the insurance in his company, and asking him when he could expect a settlement, and in reply the president of the appellant wrote him, January 3rd, 1908, as follows: “Tour letter has just been received in regard to the claim of the Conowingo Bridge Company for insurance. There is no proof of loss submitted by the company according to the terms of its policy, and the directors have nothing to act upon.” etc. Mr. Robinson immediately replied to this letter, expressing surprise that the appellant should take such a position, and stating that if the appellant intended to stand upon such a technical point it should have notified him before, as he “had relied upon the matter being adjusted without difficulty,” and that he was the cause of any delay in furnishing proof of loss. The appellant having refused to pay the insurance, suit was brought and the case was finally moved to the Court of Common Pleas of Baltimore City where the first trial resulted in a verdict for the plaintiff, appellee-, for the amount- of the policy and interest.

On appeal this Court sustained' the rulings of the Court below on the pleadings, and held that there was no error in its rulings admitting in evidence the policy sued on, proof of loss and the letters to ⁴³¹ which we have just referred, or in the granting of plaintiffs first and third prayers and the rejection of defendant’s prayers, hut because of the error in the granting of plaintiffs second prayer the judgment was reversed and the case was remanded for a new trial. At the second' trial the defendant, on the 7th of February, 1911, filed its tenth plea for defence upon equitable grounds, to which, the plaintiff demurred and the demurrer was sustained. During the trial the defendant reserved twenty-eight exceptions, the first twenty-six of which were to the rulings of the Court below on the evidence; the twenty-seventh to the granting of the plaintiff’s three prayers and the rejection of the first, third, fifth, sixth, seventh, eighth, ninth, tenth, eleventh and twelfth prayers of the defendant, and the twenty-eighth is to the refusal of the Court below to rule that a certain part of the argument of counsel for the plaintiff before the jury was improper. The verdict and judgment being for the plaintiff, the defendant has again appealed.

Defendant’s tenth plea alleges that the defendant was a mutual company, and that under its by-laws policies could only he issued upon applications in writing, on forms provided by the company, containing a description of the property. That on the 10th of February, 1907, the plaintiff, by its president, C. C. Caldwell, applied in writing, on an authorized form, “for insurance on the following described property: $3,000 on tbeir single track, wooden bridge about 500 feet long, covered with shingles, set 100 feet distant from main bridge, on the east side of the Susquehanna river, Cecil County, Maryland. Privilege to make repairs and to carry over, attach and maintain telegraph wires on said bridge. Other insurance permitted,” and that said application further provided that the applicant agreed that the statements made therein were time, and that the application should “constitute a part of the policy to he issued thereon and a warranty by the insured, and that the insured” would ⁴³² “accept said policy subject to the provisions of” the “charter, by-laws, rules and regulations” of the company.

The plea further alleges that “said application was number ‘1376’ and an insurance policy was issued on or about said February 10th, 1907, to run for a period of five years thereafter by the secretary of the company in exact accordance with said application. And thereafter, on or about the 28th day of March, 1907, the president of the plaintiff company called at the office of the defendant company, inquired for the secretary (who was then confined to his room with typhoid fever), and met Mr. Henry A. Warburton, an attorney-at-law having hi* office in the same room as that of the Fire Insurance Company, who then informed the said Caldwell that the secretan' was sick and absent, and Caldwell stated that he had come to see about some insurance on the Oonowingo bridge; the said Warburton replied that he could not issue insurance, but that application would have to be made to the directors, and then Caldwell stated that he did not wish a new policy, but that he had lost or mislaid a policy which had been issued and desired to obtain a copy or duplicate; and thereupon, the said Warburton, having access to the policy forms in the same room, and desiring to accommodate Mr. Caldwell, undertook to make up and issue a duplicate policy, being the paper referred to in the declaration as ‘Policy Ho. 1392,’ wherein the property was described as follows: ‘To the following-property herein described (and also described in application Ho. 1376)? But that on the typewritten form pasted on said policy so delivered by the said Warburton to the said Caldwell, by mistake, the property was described as follows: ‘$3,000 on the part of main' Oonowingo bridge, across the Susquehanna river located in Cecil County, Maryland? And by the printed conditions of said policy so made up and delivered by the said' Warburton it was further provided: ‘If any application, survey, plan or description of property be referred to in this policy, it shall be a part of this contract and a warranty by the insured? ” ⁴³³ Said plea further alleges “that the said Henry A. Warburton was not an officer or agent of the defendant and had no authority whatever to make or change the contract oí insurance existing between the parties, and intended only to deliver a copy or duplicate of the original policy stated by the said Caldwell to have been lost or mislaid, to cover the unexpired portion of the term of five years for whidi the policy had originally been written, the said Warburton then and there stamped the policy register of the company on the page showing its issuance with the following note ‘Duplicate.’ ” That “at the time of issuing said writing the names of the president and secretary of the company were affixed thereto1 by a stamp, and were not signed by these officers; and1 no new application was filed' by the plaintiff, or the said Caldwell for it, and no new premium was paid; and it was-not the intention of the parties to make a new contract, hut the description on the policy form above referred to was ar mistake, which was occasioned by reason of the said Warbnrton’s nnfamiliarity with the original transaction, and the-plaintiff did not intend to change the contract; and the mistake was, therefore, mutual, or the plaintiff’s conduct, if said mistake was noticed by it, was inequitable in not calling the same to the attention of said Warburton.” That “the said Warburton, regarding his action in the matter as a clerical one only, did not call the same to the attention of the secretary of the company, and such mistake was not discovered by any agent, officer or employee of the defendant company until on or about January 27th, 1911, when on a conference between the president of the company and its counsel preparatory to a second trial of the- case, a request was made by said counsel for the application referred to in the poliey sued on, and the original application, which was then and had long been on deposit in a hank in Elkton, was procured and the mistake then first discovered.” That “said application was not produced at the first trial of the case, and its provisions were not known at that time to the counsel that tried the ease for the defendant.” ⁴³⁴ In so far as the plea attempts to set up the alleged mistake in the description of the property as a defence, it is defective in that, while it charges that the mistake was not known to the defendant until about the 27th of January, 1911, it no where shows that the defendant, in the proper conduct of its business, could not have discovered the mistake before the loss occurred and before the first trial of the case.

The defendant no doubt kept a record of all policies issued by it, indeed, the plea alleges that it had what was called a “policy register” and from that record, as well as from the application,- which, according to the plea, contained a description of the property insured, and which are retained by the Company, the property covered by any policy could have been, readily ascertained. Admitting that Henry A. Warburton did not notify the defendant of the issuing of the duplicate policy, and even if we go further than the plea requires and admit that the record of it made by him did not disclose that the policy sued on covered the main bridge, after the fire, which occurred on the 5th of June, 1907, the defendant knew the plaintiff claimed that its policy covered the property destroyed, and by reference to its papers and records would have at once discovered the alleged mistake upon which it now relies. After a delay of nearly four years with full knowledge of the alleged mistake, or what amounts to the .same thing, with the means of discovery at hand, and after a loss, and after the case has been once tried, and payment has been refused and suit has been defended upon other grounds, the defendant would have no standing in a Court of equity to have the mistake corrected and the policy reformed, and unless a plea of this kind presents a case that would entitle the pleader to relief in a Court of equity it must be bad as a defence on equitable grounds in a Court of law. In order to correct a mistake and reform a contract the application to a Court of equity must be made without unreasonable delay, and the time in which relief should be sought begins to run from the time the mistake was discov ⁴³⁵ ered or could have been discovered by the use of due diligence.

Keedy v. Nally, 63 Md. 311 . So apart from any other consideration the demurrer to the plea, for the reason stated, was properly