Mutual Life Insurance v. Metzger

Bond, C. J., delivered the opinion of the Court. The suit is one for reformation of a policy of life insurance, on the ground that by a clerk’s mistake it was made out for an amount greater than that applied for and agreed upon, and the complainant appeals from a decree denying the relief. The policy was issued upon an application signed by the insured, Mrs. Julia A. Lomax, and her daughter, Augusta Metzger, the appellee, was named as beneficiary. After the death of Mrs. Lomax, the beneficiary, according to her testimony, found the policy made out for $500.

She knew nothing of the taking out of the policy, assumed that it was correctly made out as it appeared, and, rely ²⁹ ing on the availability of so much money, incurred and paid a bill of $400 for funeral expenses. The insurer, however, contends that a policy of only $50 was applied for, that the premium specified in the application, and subsequently paid, was the premium for a $50 policy, but that a clerk in writing the policy from the specifications in the application of the deceased mistook the $50 for $500. From a photostat copy of the application inserted in the record on appeal, it appears that in a block lined off for the amount of the insurance 50 appears in comparatively large figures, and a smaller, fainter o appears on a somewhat higher level in the same block at the edge, after the 50, while another small o appears on the same higher level farther to the right, outside the block. In this copy the smaller o’s are somewhat obscure, but in the taking of testimony the court below, with the original in hand, seems to have found the facts as here stated.

Questioning the clerk who made the error, it is recited: “The court called her attention to the fact that there were two inserted there and very little, to which the witness replied, ‘Yes, but the other isn’t in this block, it is over further.’ ” And the court continued “There are two naughts there over which * * * there are two besides, and you interpreted one as being in the column of figures and failed to see the right-hand one that was outside of the column, and you interpreted it as $500, when if you could have seen both you would have seen the $50, if it had been more prudently put. * * * In other words you made a mistake?” “Yes, sir.” It was testified for the company that the premium specified and paid was, as stated, the regular premium for a $50 policy. The deceased had two other policies in the same company, one for $120 and one for $55, and there is no dispute on these. The controlling principles are plain. “If parties enter into an agreement, and through an error in the reduction of it to writing, the written agreement fails to express their real intentions or contains terms or stipulations contrary to their common intention, a court of equity will correct and reform the instrument so as to make it conform to the intention of the parties.” Dulany v. Rogers, 50 Md. ³⁰ 524, 532; Boulden v. Wood, 96 Md. 332, 337 , 53 A. 911 ; England v. Gardiner, 154 Md. 510, 514 , 142 A. 625 ; cases reviewed 26 A. L. R. 504; 2 Cooley, Briefs on Insurance (2nd Ed.) 1415. The occurrence of the mistake, and the fact of agreement of both parties as contended, must be made clear beyond reasonable controversy.

This we think has been done in the present case. The insured signed an application for a policy of $50 and paid premiums for so much insurance, yet the policy as drafted appears to give insurance in the amount of $500, and the condition of the writing which would lead to the error has been shown. Showman v. Miller, 6 Md. 479 . A year elapsed between the issuing of the policy and the death of the insured, and the objection on the ground of mistake was not made until the policy was brought back to the company after the death; and a question of laches is raised in defense to the application for reformation.

But, of course, the mistake could not have been discovered earlier by any reasonable effort, and the lapse of time which might serve as a defense on this ground does not begin to run until the discovery. Keedy v. Nally, 63 Md. 311 ; Hunt v. Stuart, 53 Md. 225, 228 ; McDowell v. Goldsmith, 2 Md. Ch. 370, 391 ; Chew v. Farmers’ Bank, 2 Md. Ch. 231 , with Brantly’s note. In the making of the error in the office of the insurer there would seem to have been no such negligence as defeats an application for reformation. There could hardly be a less negligent error, and the existence of negligence in even the slightest degree does not prevent reformation.

If it did, there would have been much less reformation by courts of equity in the past. In many, if not most, of the instances of correction of scrivener’s errors, the scrivener has been the agent of the complainant alone. It was so in Boulden v. Wood, supra, and in Popplein v. Foley, 61 Md.