APPEAL by the defendant, The Commerce Insurance Company of Albany, N.Y. , from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Erie on the 5th day of May, 1910, upon the decision of the court rendered after a trial at the Erie Special Term.
Vernon Cole [Shire & Jellinek], for the appellant.
Francis E. Bagot [Brendel, Standart & Bagot], for the respondent.
This action is in equity to reform a policy of insurance issued by the defendant to A. M. Lorenz on the 25th of November, 1907, and to recover upon the policy when reformed.
In the spring of 1906 Lorenz owned and occupied the premises insured, which consisted of a saloon and dwelling house in the village of Depew, county of Erie, and they were subject to a mortgage held by one Wertheimer. While Lorenz was the owner, the plaintiff, a brewing corporation of the city of Buffalo, loaned to him the sum of $1,500 and again $300, which money was expended by him in the erection of a building on the premises. As security for these loans Lorenz executed and delivered to the plaintiff two bonds secured by two mortgages on the property, one of $1,500 and one of $300. On the 9th of May, 1906, a policy of insurance for the sum of $1,500 was issued to Lorenz on the building, 'loss, if any, payable first, to Clara Wertheimer and second to the Lake View Brewing Company.' This policy expired May 9, 1907.
The Wertheimer mortgage was foreclosed, and at the foreclosure sale the plaintiff purchased the property, obtaining a referee's deed April 3, 1907, and went into possession and made improvements thereon. On the 9th day of May, 1907, the president of the plaintiff applied to an insurance broker named Trapp to secure the renewal of the policy expiring on that day, which he did from the company which first issued it, and to A. M. Lorenz, the same as the first policy. A year later there was a like renewal in precisely the same form, and each policy was delivered to Mr. Trapp and by him to the plaintiff.
On the 25th of November, 1907, the president of the plaintiff, over the telephone, requested Mr. Trapp, the insurance broker, 'to put another thousand dollars on the Lorenz property.' In response to this direction Trapp communicated over the telephone with an agent of the Union Fire Insurance Company, which was also an agent of the defendant, and the policy in suit was issued, conforming
in form to those theretofore issued. This policy was delivered to Mr. Trapp, who examined the same and delivered it to the plaintiff, by whom it was retained and without examination until after the building was wholly destroyed by fire July 21, 1908. None of the policies referred to is in the record. The entries of the Union Fire Insurance Company show that the mortgagee clause in the policy issued by it after the plaintiff became vested with the title was erased and also in the renewal of the same, but the reason for these erasures does not appear.
The secretary of the company issuing these policies testified on this subject as follows: 'I have no personal knowledge whether it was erased prior to the delivery of the policy or not, but I should say it was erased by some of the employees of the office. The striking out of that clause indicates in this instance that either there was an error made in the writing of the policy, or else the policy was returned to have the clause taken off.' The same clause was attached to the contract in suit and then erased, as the records of the company disclose.
Trapp was the agent of the plaintiff and not of the defendant. The president of the plaintiff was in the habit of advising Trapp when he wished insurance issued on any of the property of the plaintiff, specifying the amount desired, but not mentioning the company where the insurance was to be procured. That matter was left to the discretion of Trapp. The latter did not know at the time any of these policies was issued that the plaintiff was the owner of this property. He assumed that the title was still in Lorenz, and when he applied for the policy in suit he simply asked for an additional $1,000 insurance on the Lorenz property. The first policy issued at the instance of the plaintiff on this property was correctly issued to Lorenz and the loss payable to plaintiff as mortgagee. The subsequent policies were in the same form. The premium was paid by Trapp, and he rendered a statement therefor to plaintiff, and there was no communication between the plaintiff and the defendant except through Trapp, and the only knowledge the agent ...