Bridgewater Iron Co. v. Enterprise Insurance

Devens, J.

It is an elementary principle of the law of contracts, that the minds of the two parties assuming to contract must agree, in case of a sale, as to the subject matter of it. If one agrees to buy and the other to sell a tract of land, the cargo of a particular ship, a horse or other chattel, reference being had by them to different objects or animals, no contract is concluded. Spurr v. Benedict, 99 Mass. 463 . Kyle v. Kavanagh, 103. Mass. 356. Harvey v. Harris, 112 Mass. 32 . Similarly, where that which is the subject of the sale has at the time no existence, although both buyer and seller are ignorant of this fact, it is held that the proposed contract has nothing to op- ■ crate upon. Strickland v. Turner, 7 Exch. 208.

The defendant invokes these principles, and contends that, as there was a mutual mistake and misunderstanding as to the existence of a former insurance, which was a material fact, the agreement is to be treated as void; that it is in effect the same as if the parties had made an agreement expressly conditional upon a supposed state of facts which did not exist. But even if an agreement would not have been made except for the supposed existence of certain facts, it is not treated as void when they are found to be non-existent, unless it has been made dependent upon them, or from its very nature must have been so. If parties deal with each other as to a horse, in the mutual belief that he is sound, the contract is not avoided when he is found otherwise, and this even if it should be proved that, but for this belief, the purchaser would not have bought him. There was no mistake as to the subject of the sale, although there was as to some of its attributes, and the parties had bought and sold that which they intended. If a bar of metal were bought and sold, both parties believing it to be gold, the sale might be avoided if it were not gold, as it would be obvious that a sale of that metal was what was intended. But if there were a sale of a specific vessel, as a vase, both parties believing it to be gold when it was not, or believing it to be the workmanship of some celebrated artist when it was otherwise, the sale could not be avoided, as the vase itself would be the subject which was presented to the minds of the parties. . The parties rely *437 upon their own information, belief or views, and enter upon the contract taking the risk whether these shall prove correct or otherwise.

In the present case, the subject matter of the transaction, which was the plaintiff’s property, was fully understood, as well as the contract of insurance which was made in relation thereto. Even if the parties respectively believed that there was at the time no insurance upon it in the defendant company, there was nothing in the nature of the contract which made its validity dependent on the correctness of this belief. They did not see fit to make a contract of insurance conditional upon this. Such was the case in Wilson v. Queens Ins. Co. 5 Fed. Rep. 674, which is relied on by the defendant, where the policy as issued was to be void in case of the existence of other insurance not disclosed.

Nor can the defendant resist the payment of the policy upon the ground that it has been induced to make it by reason of a misrepresentation of the plaintiff. The agent of the plaintiff produced a list of the existing insurance on this property, in which the name of the defendant company did not appear, and in this respect the list was incorrect. He stated only his belief that it was correct, which belief was honestly entertained by him, and the defendant had ready and ample means of ascertaining whether there was any error. Had the plaintiff’s agent positively asserted the correctness of the list shown by him, it may have been that any further inquiry of the defendant company would have been dispensed with. Even if the means of verifying the statement of the plaintiff were in its power, it would have had a right to rely upon this distinct assertion. But the language used was in effect a declination to assert that there was no other insurance on the property, and an invitation to the defendant to make further inquiries. It was on the part of the agent a refusal to state that there was no other insurance, by limiting himself carefully to the expression of his own belief.

The defendant calls our attention to the facts, that the action is not on the verbal contract, and that the declaration is on the policy of insurance. The policy contains an express warranty that all the facts and circumstances have been truly stated in *438 the application for insurance; and it is also made an express condition of the policy, that, “if any material fact or circumstance shall not have been fairly represented, the risk shall cease and determine, and the policy be null and void.” There was no written application such as was apparently here contemplated, and expressions of opinion and belief, made in good faith, as to matters material to the risk, are not to be taken as misrepresentations of fact. National Bank v. Insurance Co. 95 U. S. 673 . Wood v. Firemen’s Ins. Co. 126 Mass. 316 . Misrepresentation is the statement of something as a fact which is untrue, and which the assured states knowing it to be untrue, or without knowing it to be true, which has a tendency to mislead as to a matter material to the risk. Daniels v. Hudson River Ins. Co. 12 Cush. 416 , 425. If the insurance company is content with expressions of belief, if they are honestly made, it has no right to complain that facts or circumstances have not been fairly represented. Especially must this be so, when the means of correcting any error are in its own power, and it fails to avail itself of them.

Judgment for the plaintiff.