
    Michigan Automobile Ins. Co. v. Van Buskirk.
    
      Insurance — Automobile collision — Provision against incumbrance, material to risk — No waiver thereof in absence of knowledge by insurer or agent — Chattel mortgage lien existing when policy issued — Policy voided by failure to give insurer notice thereof — Assured to make disclosure, without oral inquiry by insurer’s agent — Waiver defined — Party’s rights not waived where material facts not known.
    
    1. Waiver consists in the relinquishment of a known right. A party cannot be deemed to have waived a right based upon material facts, the existence of which he did not know.
    2. An insurance policy was issued insuring an automobile against loss or damage arising from collision. It contained a provision that the policy should be void if the automobile be “incumbered by any lien or mortgage without the assured having given immediate written notice of such incumbrance.” At the time of issuance there was an existing chattel mortgage on the automobile, which fact neither the company nor its agent knew.
    
      Held: The mortgage lien was material to the risk and so made by the policy contract, and, in the absence of knowledge thereof on the part of the company or its agent, there was no waiver of the provision relating to said incumbrance.
    3. Said policy contained the following statement, which was made part of the policy and warranted by the assured to be true: “The automobiles herein described * * * are not mortgaged or incumbered except as follows.” No exceptions to that statement were made by the assured. Since the policy was expressly voided by the failure of the assured to give notice to the company of the existence of said chattel mortgage and since the assured had warranted said statement to be true, the failure of . the agent to make oral inquiry as to incumbrances of which he had no knowledge did not absolve the assured from the duty of making disclosure thereof.
    (No. 19653
    Decided January 25, 1927.)
    
      Error to the Court of Appeals of Cuyahoga county.
    On August 27, 1923, the insurance company insured the defendant in error’s automobile for the period of one year against loss or damage arising from certain perils, including that of collision. While the policy was in force, to-wit, on December 14, 1923, the automobile was damaged by colliding with a tree. Proof of loss was duly made. At the time such policy contract was issued, there was a chattel mortgage on the automobile. Alleging these facts in an amended petition, and attaching the insurance policy thereto as an exhibit, plaintiff below brought suit in the common pleas court against the insurance company upon his policy for damages sustained.
    Among other provisions, the policy contained the following clause:
    “(18) This entire policy shall be void if the assured has concealed or misrepresented any material fact or circumstance concerning this insurance, or the subject thereof, or in a case of any fraud, attempted fraud, or false swearing by the assured or his agent touching any matter relating to this insurance or the subject thereof, whether before or after a loss, or if the interests of the assured in the property be other than unconditional and sole ownership, except as given in statement six (6) of the application and policy, or if the automobile^) covered by this policy be or become incumbered by any lien or mortgage without the assured having given the company immediate written notice of snch incumbrance.”
    Various statements were attached to and made a part of the policy, which the assured warranted to be true by the acceptance of the policy. One of these statements was as follows:
    “(6) The automobiles herein described are paid for in full, and are not mortgaged or incumbered except as follows.”
    No exceptions to that statement were noted by the assured. Another clause in the policy contained the following provision:
    “(24) This policy is made and accepted subject to the provisions, exclusions, conditions, and warranties set forth herein or indorsed hereon, and upon acceptance of this policy the assured agrees that its terms embody all agreements then existing between himself and the company, or any of its agents, relating to the insurance described herein and no officer, agent, or other representative of the company shall have power to waive any of the terms of this policy, unless such waiver be written upon or attached hereto and signed by an officer of the company; nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the assured unless so written or attached. ’ ’
    The amended petition further alleges that no formal application for insurance was made out and that a representative of the insurance company himself prepared the policy “by making inquiries of plaintiff regarding numerous matters, which inquiries plaintiff in good faith answered truthfully and fully, and which answers said representative wrote down in the proper blank spaces in said policy. Plaintiff says that said representative failed and neglected to make any inquiry of plaintiff regarding the existence or nonexistence of mortgages or incumbrances on said automobile, and that plaintiff accordingly made no statement whatever regarding the said chattel mortgage.”
    Plaintiff, in his petition, further avers that he relied upon the defendant’s agent as having made full inquiries of all material matters, and that he received the policy of insurance when issued, but did not read the same, and had no knowledge that any inaccurate or incomplete statements regarding incumbrances on the automobile were made in the policy; and he further avers that when the company issued its policy contract it had no information on its part or on the part of its agent of any existing chattel mortgage.
    In the trial court a general demurrer was interposed to the amended petition by the insurance eompany. This demurrer was sustained, and, plaintiff failing to plead further, as ordered by the court, the action was dismissed and judgment rendered for the defendant below. The Court of Appeals reversed the judgment of the trial court for error in sustaining the demurrer, whereupon error was prosecuted to this court.
    
      Mr. John H. McNeal, and Mr. Henry J. Reed, for plaintiff in error.
    
      Messrs. Holding, Duncan & Lechie, and Mr. J. Harold Traverse, for defendant in error.
   Jones, J.

The written application for the policy of insurance expressly provided that the statements therein contained were made a part of the policy and that the assured warranted the same to he true by acceptance. Such statements therefore became a part of the contract of insurance as if fully embodied therein. Byers v. Farmers’ Ins. Co., 35 Ohio St., 606, 35 Am. Rep., 623; Hutchins v. Cleveland Mut. Ins. Co., 11 Ohio St., 477.

The policy further provided that it should be void in case the assured concealed any material fact or circumstance concerning the insurance, or if the automobile should be incumbered by “lien or mortgage without the assured having given the company immediate written notice of such incumbrance.” It is conceded that there was a chattel mortgage on the automobile at the time said policy contract was issued. One of the statements contained in the application, which under the express terms of the policy was warranted by the insured to be true, was as follows:

“The automobiles herein described are paid for in full, and are not mortgaged or incumbered except as follows.”

There was no qualification of that statement, and since no exceptions were made thereto there is no question but that this clause contained an affirmative statement that the automobile covered by the policy was neither mortgaged nor incumbered. The extent of the chattel mortgage incumbrance does not appear, nor is it of consequence in view of the clause against mortgage incumbrances contained in the policy. Its amount may have been such as to render the insurable interest of the assured nil, or almost so. The clause in question was not only material to the risk, but was specifically made so by the terms of the policy contract. Hutchins v. Ins. Co., supra. However, the insured endeavors to escape the contractual obligations of the policy by pleading in his amended petition facts which he claims operate as an estoppel or waiver upon the part of the insurance company. It is contended that there was an affirmative duty upon the part of the company to make an inquiry concerning incumbrances, and that failure to so inquire constitutes such waiver, although the fact is conceded that the “insurance company issued its said policy contract without information, either affirmative or negative, on its part, or that of its agent, of an existing chattel mortgage.”

While there is disharmony in the decisions of various courts upon the question of waiver by insurance agents, our own court has been fully committed to the rule that should apply to the facts conceded in the instant case. The policy contract not only contained a clause that it was made and accepted subject to the provisions and warranties contained therein, but also provided (condition 24) that:

“No officer, agent, or other representative of the company shall have power to waive any of the terms of this policy, unless such waiver be written upon or attached hereto and signed by an officer of the company.”

It is not claimed that any such waiver was written or signed, as required by this clause. The foregoing provision in the policy was designed to exclude the operation of the principle that notice to the agent is notice to the principal, especially as to material warranties affecting the risk contained in the policy contract and application; for, had the incumbrance been made known to the company, the policy might not have been issued. In Ohio Farmers’ Ins. Co. v. Titus, 82 Ohio St., 161, 92 N. E., 82, this court held that a clause in an insurance policy substantially similar to the above was valid, and that the insurance company could not be deemed to have waived a mortgage incumbrance upon the property simply because its agents had notice or knowledge of the existence of the incumbrance. In a per curiam, concurred in by all the judges, this court in that case said at page 171 (92 N. E., 84):

“The insured had the policy in his possession and is presumed to know its provisions. These provisions are valid, they are usually found in such contracts, and are considered necessary for the protection of the company. They cannot be waived by the agent, excepting in the manner stipulated in the policy, and would afford very little protection to the company if they could be.”

In support of the principle so announced, the per curiam cites the cases of Union Central Life Ins. Co. v. Hook, 62 Ohio St., 256, 56 N. E., 906; Eureka Fire & Marine Ins. Co. v. Baldwin, 62 Ohio St., 368, 57 N. E., 57; Northern Assurance Co. v. Grand View Building Assn., 183 U. S., 308, 22 S. Ct., 133, 46 L. Ed., 213. In the federal case cited, Mr. Justice Shiras admits the contrariety of decisions upon the legal point involved, but states that the decided weight of authority supports the foregoing principle. There is no doubt that in the Ohio cases cited this court has been definitely committed to that principle, unless it has been modified by the rule announced by a majority of this court in Foster v. Scottish Union & National Ins. Co., 101 Ohio St., 180, 127 N. E., 865. I did not concur in the judgment in the latter case for the reason that I conceived the case should have been decided upon the authority of Insurance Co. v. Titus, supra. However, the instant case may be easily distinguished from the Foster case, supra. In the Foster case the facts concerning the title to the property were within the knowledge of the agent. Here it is conceded that they were not. The doctrine of estoppel or waiver is usually applied to a party, who, with knowledge of certain facts, acts to the prejudice of the other. The generally accepted definition of waiver is “intentional relinquishment of a known right.” 27 Ruling Case Law, 904-908; Bennecke v. Connecticut Mutual Life Ins. Co., 105 U. S., 355, 26 L. Ed., 990. It would be an anomalous principle were we to hold that a party could be deemed to have waived material facts, the existence of which he did not know.

From the allegations contained in the amended petition the fact must be admitted that the agent neglected to inquire orally as to mortgages or incumbrances; if none were made, this may have resulted from the fact that the attached statement contained a clause disclosing there were none; for the printed statement (No. 6) read, “The automobiles herein described are * * * not mortgaged or incumbered except as follows,” and no exceptions were noted. It therefore left the statement as declaring affirmatively that the automobile was not mortgaged or incumbered. Having made that statement, there was no need of making special inquiry relating to that feature.

It is contended that an affirmative duty arose upon the part of the insurance agent to make inquiry as to the character of the title, and especially, as to incumbrances on the property. A policy contract is not unilateral in its obligation. If it be the duty of the agent to make such an inquiry, it is likewise the duty of the insured to make disclosure of incumbrances upon his title, especially where a statement definitely relating thereto is made part of the policy and the insured warrants the statement to be true. As stated by the court in the Titus case, supra: “The insured had the policy in his possession and is presumed to know its provisions.”

The loss occurred 3% months after the policy was issued. The face of the policy contained the following, “Please read your policy.” This clause, together with others similar to those in the case at bar, featured in the case of Satz v. Massachusetts Bonding & Ins. Co., decided by the Court of Appeals of New York in October last, to be reported in 243 N. Y., 385, 153 N. E., 844, where the principles here announced were sustained.

There was no error in the sustention of the demurrer to the amended petition by the trial court. The judgment of the Court of Appeals is reversed and that of the trial court affirmed.

Judgment of the Court of Appeals reversed and that of the common pleas affirmed.

Marshall, C. J., Day, Kinkade and Matthias, JJ., concur.  