Opinion
No. 4251.
Argued November 5, 1953.
Decided November 30, 1953.
A joint owner of real estate who through his sole mistake obtained a fire insurance policy issued in his name only, without knowledge on the part of the insurer's agent of his mistake or the fact of joint ownership, is not entitled to reformation of the policy to include the name of the other joint owner. While an individual's interest in property may be effectively insured in a fire policy without a specific description of the extent of his interest it is ordinarily required that he be named or identified in the policy in order to recover. Whether a husband may recover the full loss under a fire insurance policy on property owned jointly with his wife may properly turn on the equities of the particular case.
PETITIONS, for reformation of two fire insurance policies issued by the defendants to the plaintiff Philip (sic) A. Currier on a dwelling owned by the plaintiffs, husband and wife, as joint tenants. Pursuant to an agreed statement of facts the Court (Griffith, J.), transferred without ruling the question whether the two insurance policies may be reformed by the inclusion of the name of the plaintiff Zoya M. Currier as one of the assureds. The agreed statement of facts is as follows:
"Phillip A. Currier and Zoya M. Currier, husband and wife, as joint tenants, acquired a tract of land with the buildings thereon at 183 Clinton Street in Concord, in said County, from Clifton DeGreenia on November 12, 1943, deed recorded Merrimack County Records, Book 603, Page 314.
"In 1948 the petitioner, Phillip A. Currier, went to the Wendell Berman Agency in Concord, a duly authorized agent of both defendants, and requested insurance on his property located at 183 Clinton Street. He did not at that time mention that his wife was a joint tenant of the property. The original policies were then written on the property and delivered to the mortgagee, the Rumford Building Loan Association, and copies were sent to the petitioner, Phillip A. Currier. A total of ten policies, five to each company, including the originals and renewals, have been issued in the name of Phillip A. Currier alone and each time the originals have been sent to the mortgagee and copies have been sent to the petitioner, Phillip A. Currier.
"Phillip A. Currier never examined the policies and had no knowledge that they were written only in the name of Philip (sic) A. Currier. He did not understand the significance of having the policies only in his name and not having his wife's name on the policies, and did not understand the legal result of not having his wife's name on the policies.
"The Berman Agency was never informed and never had any knowledge, aside from the information they received from Phillip A. Currier, as to who were the legal owners of the property.
"No request was ever received by the Berman Agency prior to the bringing of this action for reformation of the policies by the adding of the wife's name."
During oral argument additional facts were agreed to by counsel as follows:
"Although the fact is not included in the agreed statement of facts, Phillip A. Currier brought an action at law against both defendants simultaneously with the bringing of the bills in equity to seek reformation. His actions at law are to recover for the fire loss and the defendants have answered that he is only entitled to half the loss due to the fact that his interest in the real estate as a joint tenant is not sole ownership. These actions are now pending in Merrimack County Superior Court. Counsel for the plaintiffs has agreed to have these statements made a part of this brief and to have them discussed in oral argument."
Herbert W. Rainie (by brief and orally), for the plaintiffs.
Wyman, Starr, Booth, Wadleigh Langdell and Philip G. Peters (Mr. Peters orally), for the defendants.
The rights of persons having limited, fractional or joint interests in property, who are not named in the fire insurance policy, to recover their proportionate interests in the event of loss are uncertain, unsettled and unsatisfactory. Dudley v. Company, 82 N.H. 167; 48 Col. L. Rev. 1162, 1173, 1186. A typical situation, as it existed in 1937, has been described by Goble, The Moral Hazard Clauses of the Standard Fire Insurance Policy. 37 Col. L. Rev. 410, 417, as follows: "When a married man buys property, especially a home, a joint tenancy or a tenancy by the entireties frequently appeals to him because of its characteristic that upon the death of either owner the property will pass by law to the survivor, to the exclusion of children or other heirs. Consequently, he has the deed made out to himself and wife, as joint tenants, or tenants by the entireties, records it and lays it away. Some time later insurance upon the property is effected. The husband has either forgotten that the property is owned by himself and wife jointly, or, if he remembers, believes the fact unimportant in effecting his insurance. Consequently, he says nothing about it to the insurance agent, and almost never does the insurance agent ask him anything about his title. So the policy is issued in the husband's individual name. The almost unanimous authority in the United States is that such a policy is void."
While it is true that such policies are not void in New Hampshire, which omit the "unconditional and sole ownership" clause (Branch, The New Hampshire Standard Fire Insurance Policy, p. 2 (1935)), and are no longer void in those states that have adopted the so-called 1943 New York standard fire policy, the problem persists in other respects as exemplified by the facts of the present case. The customary and increasing practice of husband and wife taking title to their residence and dwelling as joint tenants and the widespread practice of the husband to insure all the property within the family aegis in the husband's name regardless of the exact state of the title accentuates the problem. This is particularly true in those cases where the insurance agent or underwriter fails to inquire about or to check the exact ownership of the property to be insured. That this is not an isolated occurrence is attested by the facts of this case and many others. "The agreed case states specifically that no questions were asked as to the plaintiff's title to the buildings when the insurance was effected, and that he made no representations in regard to his title at any time." Fadden v. Insurance Co., 77 N.H. 392, 394.
It is not necessary that the assured's interest be specifically described and he may effect insurance on his individual interest in general terms but it is usually required that he be named or identified in the policy in order to recover. Hoyt v. Insurance Co., 92 N.H. 242. This is based on the doctrine of indemnity and the rule that insurance is a personal contract which provides coverage only for the interest of the insured, not insurance for the property as such. Spires v. Hanover Fire Ins. Co., 364 Pa. 52. A strict application of this doctrine has resulted in decisions that are difficult to justify on equitable principles. Ritson v. Atlas Assurance Co., 272 Mass. 73; 279 Mass. 385. Cf. Clark v. Insurance Co., 87 N.H. 353.
There has been some tendency to break away from the strict application of the indemnity doctrine where the husband and wife are joint tenants and the insurance is effected in the name of only one joint tenant. In North British Mercantile Ins. Co. v. Sciandra, 256 Ala. 409, decided in 1951, a husband recovered the full damage to a building, although the wife owned an undivided half interest in the property and was not named as an assured. See Conley v. Fidelity-Phenix Fire Ins. Co. of N. Y., 102 F. Supp. 474; 5 Appleman, Insurance Law and Practice, ss. 3361, 3363. "Greater difficulty is presented by the measurement of a joint tenant's recovery where he has insured for his own sole benefit. Since a joint tenant owns the whole estate for some purposes in the law, the courts might on that ground conceivably refuse to limit his recovery to the value of a fractional share of the estate . . . There has been some dictum indicating that the insured's recovery would be limited . . . It has been said that `whether the other joint owner has an interest in law or equity in the insurance money so collected may properly turn on the equities of the particular case.'" Godfrey, Some Limited-Interest Problems. 15 Law and Contemporary Problems, 415, 423 (1950).
Since the right of the husband to recover the full loss "may properly turn on the equities of the particular case" and since that question is pending in the Superior Court we have considered it but not decided it. The reason has been well stated in the defendant's brief as follows: "It is not the duty of this court to decide the question of whether or not one joint tenant is entitled to the entire proceeds. That question will first be decided by the Superior Court and then may be the issue in this court at a later date. Therefore, this court should not take it into consideration on the merits of this case, but should consider that question only as it illustrates the importance of the reformation asked in the case before the court now." The facts of the present case and the unsettled state of the authorities present a strong case for relief. This brings us to the question whether the present law of reformation is broad enough to allow it on the facts of this case.
It is clear that there has been no fraud or misrepresentation on the part of the plaintiff, the insurance agent or the insurance companies. There is therefore no basis for granting relief in equity for a unilateral mistake. Restatement, Contracts, s. 505. Carignan v. Company, 95 N.H. 262. Nor is this a case where it can be said that plaintiff's mistake in not having his wife's name inserted in the fire insurance policy was innocently induced by the defendant as was the case in Rickle v. Mills, 93 N.H. 191. The only remaining basis for reformation would be mutual mistake but that cannot be granted in this case since the company was unaware of the true state of the title at the time of issuing the policy. By-Fi Building and Loan Ass'n v. New York Casualty Co., 116 N. J. Eq. 265; 5 Williston, Contracts, s. 1570A. "Where only the insured is mistaken as to the terms or legal consequences of the policy issued, and the insurer's agent is unaware of such mistake, reformation is almost uniformly denied." Note, Patterson, Cases and Materials on Insurance (1947), 669.
The issue that this case presents has been stated as follows: "If the insured, because of his mistake alone, obtains the wrong form of policy, and the insurer's agent is unaware of his mistake, can the insured obtain reformation to make the insurer issue the form of policy he should have asked for, by showing that the insurer would, without additional charge, have issued the proper form as readily as it issued the improper one?" Patterson, supra, 670. We are constrained to answer this question in the negative. Salomon v. North British Mercantile Ins. Co., 215 N.Y. 214; Commercial Cas. Co. v. Mansfield, 98 N.H. 120, 136. Accordingly reformation must be denied, the law actions remain for trial and the order is
Petition dismissed.
All concurred.