Hersey v. Merrimack County Mutual Fire Insurance

Woods, J.

The plaintiff, in his application for insurance, represented the property insured to be worth $600. This application was signed by him and delivered to the underwriting party, and is referred to in the policy. It cannot admit of a question that the company were induced by the plaintiff’s representation of the value of the property, to insure it to the amount they did. If that was a false representation and an over valuation, it was, of course, the cause that a larger risk was taken upon the property than would have been taken if a true and just valuation had been ex *155 hibited. By the fraud of the plaintiff, the defendants have been induced to make a different contract from any which, but for that fraud, they would have made. By what precise ulterior steps the plaintiff hoped to make a gain by his fraud, or what would have been the legal consequences if it had remained undetected, the defendants are not bound to point out or we to inquire.

If, as has elsewhere been held, the parties to such a contract as this are concluded by an innocent over-valuation in the adjustment of the loss, as well as in the arrangement of the premium-note and the payments; or even if the plaintiff had reasonable ground to hope that the valuation contained in the policy would not, in fact, be drawn in question upon the adjustment of the loss, a conjecture might be hazarded as to the aim and intent of the supposed fraud.

It is, indeed, suggested by the plaintiff’s counsel, in argument, that the policy provides, in terms, that the company shall not, in the event of a loss, be liable for more than the proper proportion of the value of the property at the time of the loss. If anything more is intended by that clause of the policy than to provide for a re-valuation, in case of a depreciation of the property before the loss, and if it really reserves to the defendants a right to revise the valuation, it certainly was not designed to invite or authorize fraudulent misrepresentations from parties applying for insurance. A revision of innocent and unintentional over-estimates is the most that can have been aimed at.

There is no clearer principle of law than that a party> who has been surprised into making a contract, or into making a different one from that which, but for such surprise, he would have made, may treat his act as a nullity. It is not for the other party to say that he had not an object in some way injurious to the party defrauded, much less that such object has been defeated by the detection of the fraud.

The court instructed the jury that the policy would be void, if the plaintiff fraudulently over-valued the property, *156 with the intent and design of defrauding the company, and of receiving from them more than the building was worth, in case of its destruction by fire.

The jury have, upon that instruction, found a verdict to which the only objection seems to be, that the fraudulent over-valuation was not material, as having no necessary and inevitable tendency to secure the dishonest end attempted. This objection appears to us to proceed upon a false theory, and is besides, perhaps, not well founded in point of fact. We cannot disturb the verdict on such grounds.

We think the evidence of the plaintiff’s offers to sell the property correctly admitted. The plaintiff, in this suit, contends for a high valuation of the property, the defendant for a low one. There seems to be no principle which should exclude these sayings of the plaintiff from the general rule making them evidence against himself. An actual sale would have been evidence that the property was worth the price. An offer to sell is evidence, at least, against the person offering, that it was not worth more than the sum demanded. The offer shows the plaintiff’s estimate of its value, and on the question of fraud, is of great force.

Judgment on the verdict,