
    The Ætna Insurance Co. v. Reed.
    1. One seeking to be relieved from a contract, on tbe ground of alleged' false representations, must show that there were, in fact, false representations of a material fact, upon which he relied, and upon which, from the circumstances of the case, he had a right to rely, and, in doing,so, was mislead to his injury.
    2. An action will lie for a false representation of a material fact, whether-the party making it knew it to be false or not, if he had no reason to. believe it to be true, when made, and it was done with the intention, of inducing the person to whom made to act upon it, and the latter does so, sustaining a damage in consequence.
    3. Where an agent of an insurance company makes representations to one having a claim for a loss against the company, the parties standing in antagonistic relations to each other, that the latter had no claim or riglits that he could enforce by legal proceedings, such representations are only opinion — representations upon which he had no right to rely; and if he does so rely, it must be at his own risk, because the truth ov . falsehood of such representations could be ascertained by ordinary diligence.
    4. The charge to a jury should not only be correct, but be so distinctly-adapted to the case made by the proofs, and so explicit, as not to be misconstrued or misunderstood by the jury, in the application of the law to the facts proven. 'Where, however, the charge, for want of such certainty and explicitness, is calculated to confuse and mislead the jury, that is error for which a judgment may be reversed.
    5. Where, in a charge in relation to false representations, upon which a complaining party has a right to rely, the court enumerates, as a ground for false representations, upon which the plaintiff might rely, a matter which should not be considered by the jury in- that relation, and, but for such misdirection, the jury might have arrived at a different conclusion, such a charge is erroneous, because misleading.
    6. A charge, requested by defendant, consisted of two legal propositions— one sound, and the other unsound. A modification to the request, by the court, when applied to tbe sound proposition, rendered it unsound,, and, when applied alone to the unsound one, cured the defect in it, and, when applied to the request generally, rendered the whole uncertain» and ambiguous: Held, Brror. Charges that are uncertain and ambiguous are misleading.
    
      Error to the District Court of Paulding county.
    Uriah W. Reed, defendant in error, plaintiff below, filed his petition in the Court of Common Pleas of Paulding ■county, against the .Etna Insurance Company, defendant below, plaintiff in error, to recover for a loss by fire, on two policies of insurance, delivered to him by plaintiff in error, •on a stock of goods. One policy was issued in June, and the other, styled an addenda, in November, 1872 — each for one year. The first covered a valuation of $1,750, and the second, on an increased stock, a valuation of $1,000. In February, 1873, the entire stock of- goods insured, together with the building in which the goods were stored, was destroyed by fire.
    The plaintiff in error refusing to pay the insurance, Reed ■commenced this action, to recover for the loss. The policies are made a part of the petition. Reed alleged performance of all the conditions of the policies, except such parts thereof as the insurance company had waived; that he gave due notice of his loss, and made proof thereof, as required by the policies, except so much thereof as was waived by the duly authorized agent of defendant; that, on the 21st day of February, 1873, he made demand of the defendant for $2,750, the amount of his insurance, covered by the policies, which it refused to pay.
    The policies are, in form and legal effect, substantially .alike, each containing many conditions that, if not complied with by the insured, are calculated to work a forfeiture of the policy. On some of the conditions in the policies, questions are raised in the case; but, as they are not specially considered in the opinion, a statement of facts out of which they arise need not be made.
    The answer sets forth a number of defenses, only one of wnich is material to the question considered at large by the •court. It is as follows:
    “ Tenth defense. — The defendant, for further answer to petition of plaintiff, says that, before the commencement of ■this suit, and after said alleged cause of action set forth in plaintiff’s petition had accrued, to wit, on the 21st day of February, a. d. 1873, desiring to avoid litigation and trouble, and for no other reason or consideration, this defendant paid to plaintiff, who accepted and received the same, the sum of $100, in full satisfaction and discharge of all claim or claims for damage and loss resulting to him by reason of the issuing of said policy of insurance and addenda thereto, and the burning of said stock of goods, as set forth in plaintiff’s petition. And the said plaintiff then and there executed and delivered to defendant his certain release in wi’iting of that date, duly signed and sealed by him, which said release was, and is, in words and figures as’follows, to wit:
    “ $100. Paulding Center, Ohio, February 21, 1873.
    
      “ Received of kEtna Insurance Company, of Hartford,. Connecticut, the sum of $100, in full of all claims and demands on said company, for loss or damage which occurred on the 10th day of February, 1873, to property insured by said company, under policy No. 113,120, issued at the general agency, at Cincinnati, Ohio; and the said company, in consideration thereof, is hereby forever released and discharged from all further claim by reason of said accident’ and loss or damage to said property.
    “ Witness my hand and seal.
    “ Witness: (Signed.) U. W. Reed. [l. s.]
    “ Geo. W. Potter, Edward F. Rice.”
    On this defense, plaintiff' took issue by reply, as follows :• “ In reply to the tenth defense of said answer, as his first-cause of reply thereto, the plaintiff admits the signing and sealing of the alleged release, set forth therein, and alleges that such signing and sealing was procured through the fraud and deceit of defendant’s agent, in this:
    “ That said agent, fraudulently and falsely, and with intent to deceive the plaintiff, and induce him to release the defendant from its obligations to him, by reason of his said loss, represented to the plaintiff that said policy and addenda were of no binding force, and not obligatory upon the defendant by reason of plaintiff’s said loss, well knownng, at the time, his said statements to be false, and intending thereby falsely to deceive the plaintiff, and induce him, without any just or adequate consideration therefor, to can•cel said policy and addenda, and release-the defendant from all liability thereon. That this plaintiff, being ignorant in the premises, and relying, and having a right to rely, upon said statements, Avas thereby, deceived, and induced to ¡■sign and seal said alleged release.”
    The defendant requested the court to give certain charges to the jury. Some the court gave in the form requested, •others were given with modifications. The defendant ex-cepted at the time to the several modifications and charges as modified. The fifth request was as follows:
    “ There is no fraud, in ordinary cases, in refusing to pay •or settle without litigation; and if the adjuster disputed the claim, and told the plaintiff that he (Reed) could not recover against the insurance company, defendant in this ■case, and gave it as his opinion that he (the plaintiff) had ■■no legal rights, as against the company, on which he could recover, and the plaintiff had the same means of knowledge ■with the adjuster, and he believed the agent of the company, and relied upon the representations thus made by the agent of the company, and then and there made a hasty settlement with the agent of the company, and although-made under threat that no payment Avould ever be made without long and costly litigation, is not fraud of such a •character as would avoid a settlement thus made, although the amount received by Reed was but nominal. Reed was ’bound by his own interest to inform himself of his rights, before acting, and to stand upon those rights, and if he ■failed to do so, and settled at a much smaller sum than he was entitled to, he himself is responsible for his loss, and •can not recover an additional sum over and above the sum ■.already received. It makes no difference that the payment ■was made by draft on the company; if Reed took the draft, ■and never presented it for payment, it is his fault, and not 'the fault of the defendant, that the draft is not paid.”
    This request was given -with this modification:
    
      “ Yet, if the adjuster, the defendant's agent, intending thereby to deceive and defraud the plaintiff' in making such settlement, then and there, and for that purpose, stated to the plaintiff that, from his (the said adjuster’s) knowledge of the law, and the material facts of the case as they then were, and in fact existed, the plaintiff could not recover for any of the loss or damage which resulted to his property on account of its destruction by said fire, and that the plaintiff was then and there ignorant of the true state of the facts of the' case, and the law applicable thereto, and, from his situation and circumstances at the time, he then and there had a reasonable right to rely upon such statements and representations of said agent, and did then and there rely upon them, and was thereby deceived, and settled his claim, and that he would not have settled such claim, or made said compromise, if said statements had not been made to him by said agent, in procuring such settlement, the same would, at law, render said settlement voidable, and the same would not, therefore, now be a bar to the pi’esent action.”
    The eighth, as follows : “ A misrepresentation of the law in the case or of the legal right of the plaintiff to recover against the defendant, made by the agent of the defendant to plaiutiff, is no fraud, and if you fiud that a settlement was made between plaintiff and defendant, of the plaintiff’s loss and damage, as alleged in the answer of the defendant, such misrepresentations of the law in the case, or of the legal right of the plaintiff to recover, would not avoid or set aside the settlement so made.
    “ Statements are only fraudulently made, when they are untrue, and when the party making them knew them to be untrue at the time he made them, and so knowing them to be untrue made such statements with intent to deceive the party to whom they were spoken or made.”
    It was given with this modification : “Unless intentionally made by Rice for the purpose of deceiving Reed, and thereby procuring from him, and at his (Reed’s) expense, a more favorable settlement for defendant than he otherwise-would have made, or defendants were legally entitled to.”
    The verdict being for plaintiff, defendant made a motion for a new trial, which was overruled, and a judgment en~ entered upon the verdict. A bill of exceptions, embodying all the testimony, the special instructions requested by defendant, and the modifications thereto of the court, was made part of the record. On a petition in error, in the district court, it was adjudged there was no error in the-record made by the court of common pleas. A petition in error is prosecuted in the Supreme Court, praying for a reversal of the judgments of the lower courts.
    The assignment of errors material here are:
    1. That the court of common pleas erred in refusing to-give the instructions as the .¿Etna Insurance Company requested.
    2. That court erred in modifying the instructions which the .¿Etna Insurance Company requested.
    3. The court erred in overruling the motion for a new trial.
    4. The district court erred in affirming the judgment of the court of common pleas.
    
      B. D. Marshall, for plaintiff in error.
    
      Selwin N. Owen and Henry Newbegin, for defendant in error.
   Ashburn, J.

After a careful examination and consideration of the questions made in the progress of the trial, and assigned for error, a majority of the court are of opinion no error in the proceeding intervened to the substantial prejudice of the plaintiff in error. A majority of the court are of opinion that, in the fifth and eighth special charges, as requested by plaintiff in error and as modified by the court, there was error.

No question made in the case, except such as arise upon the aforesaid instructions, and incident thereto, will be considered at length in the opinion.

To a proper understanding of the questions for consideration on the requests to charge, and the modifications thereto, we must understand the relation of the parties to the facts, and their knowledge in regard to them at and just before the time the release was executed. Touching these relations, the facts and situation of the acting parties, Reed, the plaintiff, and Rice, the agent, do not substantially disagree.

It should be stated the policies contained a warranty that no incendiary danger was either threatened or apprehended, and against keeping gunpowder by the insured:

After the loss Reed, and Rice the company’s adjuster, met in St. Andrews, where the loss occurred. They discussed the matter without apparent reserve. The adjuster obtaining from Reed and other sources what information he could in regard to the fire and the loss. On February 21, 1873, they went to Paulding. There Reed’s statement in writing under oath was taken, he making answers to all questions asked and upon which the company desired, from him, information. Upon its completion, Rice told Reed he had been very fair in his answers to questions, but that, according to the policies and his examination, he had,, no claim on the AEtna Insurance Company ; that his loss wras a dead loss to him. Rice gave as his reasons that the company did not insure against incendiary dangers, and- they had been informed the fire was the work of an incendiary, and that Reed had kept gunpowder contrary to the policy. He read to Reed some decisions from Littleton’s Digest to. show him he had no legal claim against the company. The points of two decisions were read — one" that the warranty must be true, and that the application must be like the policy. Rice read to him “ those decisions in favor of the company to let him see if he had a claim or not, and to enable him to judge on both sides of the question, and Rice says I told him that if he brought suit we should ask for a removal into the federal court, and that eventually we should, beat him.” . . “I read the decisions for the purpose of getting him to sign the release.” . . “I told him that in my judgment he had no claim; that he might go out and see an attorney who would differ with me, and that to buy the peace of the company I would rather give him a hundred dollars than to have trouble. I told him this as an inducement for him to sign the release.” The draft is a conditional draft. Reed did not give up the policy. The draft is as follows :

“ $100. Paulding, Ohio, February 21, 1873.

“At sight, pay to the order of Uriah W. Reed, one hundred dollars, and charge to account of loss under general agency policy, 113,120. This draft to be paid only when accompanied by the policy.

“ E. F. Rice, Special Agent.

“ To Branch Office, 171 Vine street, .¿Etna Insurance Company, Cincinnati, Ohio.”

Reed testified that “ Rice said that if I went to law they would beat me in any court, but that it would not be tried here. He said I might go and see some attorney about it, and that they would tell me that I could get the money, and in order to get a fee the attorney would commence suit. That I had no recourses on the company, but as it would cost the company something to run it through the court, they would pay me back my premiums. He told me that he would give me back my premiums with good interest; would give me one hundred dollars. I told him if I could not recover, as according to his statement I could not, then there was no use in my seeing an attorney.

“ He told me that I had better take a hundred dollars, and said I could get nothing by law, and referred me to the decisions. I have no recollection of what the books were that he read to me; in fact I had forgotten all about it until he spoke about it at the last term of court. At that time I was very much excited, thinking I was ruined and had lost everything. Taking his word for the matter, and believing what he said to me, I scarcely remember what he read to me. I believed his statements in the matter, and acted on them, and signed that release. I do n’t remember that Mr. Rice told me wliat the papers were, nor whether ■ he did say anything. Do n’t know how many papers I : signed. This release was to be left at Mr. Potter’s until I - should bring over the policy, which T was to bring back in ■ a few days, and when I should bring back the policy I was ■ to get a release or copy and a draft, and give up the policy. I was to get the draft cash ed at Mr. Potter’s. 11 eft the release . lying on the table when I left there. I kept the draft; I - never gave it up to the company; I never gave any authority to give it up to the company ; never received any ■ money for signing the release.

“After going home from Paulding, I concluded to see an ■ attorney before bringing back my policy to Mr. Potter, to : ascertain whether or not my case was really lost. I went to Mr. Newbegin and gave to him my policy.

The personal relation of the parties was not one calculated to beget confidence or reliance, but the contrary. . Rice was acting avowedly as the agent of a party whose ■ interests were averse to Reed, and common intelligence would have caused Reed to know he was not .acting as his friend or advising his interests. Presumptively he would not be likely to stand in a relation different from other •. persons representing adverse interests. From the time the ■ within statement was completed, Rice acted in a hostile' rather than a friendly spirit, and with a strong assertion- ¡ of opinion claimed the loss was a dead loss to Reed, and ■ thus endeavored to induce Reed to think he could do no ' better than take his offer of one hundred dollars. It was not done with the thought on either side that he was a friendly adviser, but rather as one driving the best bargain he could for his employer. In this Reed could scarcely be deceived. All this time Reed was apparently as fully conversant with the facts of the case as Rice, and at liberty to ascertain the law of his case if he desired to do so. It . was even suggested to him to do so with the probable re suit.

The issue made on the tenth defense, and upon which the court was requested to give the law, was in reference • to a state of facts upon which plaintiff below claimed he had been induced by fraudulent representations made by the company’s agent upon which he had a right to rely, and did rely, to make a settlement and release his rights under the policies. The instruction to be given was to be the law in relation to the state of facts before stated. The rule of the law is, that where fraud enters into a transaction to the injury of the party upon whom it operates, it will be his excuse for avoiding the apparent obligations of the contract. But it is not every erroneous representation that will avoid a contract. To have that effect it must be as to a fact material in the transaction, not mere opinion. It must be a representation of a material matter upon which the party, whom it affects injuriously, had a right to rely and did rely. If the representation be mere matter of opinion, or of a fact equally within the knowledge of both parties, or one upon which the party had no right to rely, the representations, though acted on, will not vitiate the transaction.

This is always the ease where the parties are mutually cognizant of the facts acted on, or stand on an equal footing in relation to them, and there exists no fiduciary relation between them. The law will not lend its aid to help one thus situated and advised, if he voluntarily neglects to protect himself by the exercise of his common sense. See the following cases, more or less strongly maintaining these principles: Foley v. Cowgul, 5 Blackf. 18; Galling v. Newall, 9 Ind. 572; Bigelow on Fraud, 18, 66; Mayhew v. Phœnix Ins. Co., 23 Mich. 105; Moore v. Turberville, 2 Bibb, 602; Saunders v. Halterman, 2 Iredell, 32; Farrar v. Alston, 1 Dev. 69; Fulton v. Hood., 34 Penn. St. 365 ; Anderson v. Burnett, 5 How. (Miss.) 165; Salem India Rubber Co. v. Adams, 23 Pick. 256; Hall v. Thompson, 1 S. & M. 443; 1 Story’s Equity, § 207 (10 ed.); 1 Story on Contracts, § 636 (5 ed.)

With this understanding of the facts and the general principle applicable to such state of facts, we will consider the requests and their modifications.

The legal principle embodied in the modification to the fifth request is antagonistic to the principle of that request and destructive of it. Of this the jury were not instructed. Both were given to the jury. This left the state of the law before the jury in au uncertain condition, and one well calculated to confuse and mislead.

Again, if the jury understood the modification to be destructive of the fifth charge as requested, the words “ and' the law applicable thereto” should have been stricken out, and the converse of the proposition in the modification given to the jury. This to the end that if the jury should find that Reed was as well informed in relation to the facts on which he acted as the adjuster, he was not in a condition to claim the right to rely upon the representations of the adjuster. As the modification was given, the jury were' liable to be misled by a consideration of a matter not properly for their consideration on the state of facts in the case.

Again, by the modification the jury was instructed to consider as an element of fraud in the transaction Reed’s-ignorance of the law of his case, and his right to rely upon the representations of defendant’s agent in regard to his legal rights. In this the modification was misleading, for the reason that it was not a correct statement of the law on the question. The agent’s opinion as to Reed’s legal rights, however strongly stated, was not a misrepresentation of a fact for the consideration of the jury. In Upton) Assignee, v. Tribelcock, 1 Otto, Hunt, J., on page 50, says, “ That a misrepresentation or misunderstanding of the law will not vitiate a contract when there is no misunderstanding of the facts, is well settled.”

In the case of Fish v. Clelland, 83 Ill. 243, this principle is clearly stated in his opinion by Justice Beckwith as follows : “A representation of what the law will or will not permit to be done is one on which the party to whom it is made has no right to rely; and if he does so rely, it is his folly, and he can not ask the law to relieve him from the consequences. The truth or falsehood of such a representation can be tested by ordinary vigilance and attention. It is an opinion in regard to the law, and is always understood as such.” See 5 Hill, 303.

The law is presumed to be equally within the knowledge of all parties.

Applying this doctrine practically, the representations of Rice to Reed as to the law of the case was but an opinion as to his legal, rights, and, though erroneous, should not have been treated and submitted, as it was in the modification, to the jury as an element of fraudulent representations upon which Reed had a right to rely. It was not ■a fact in the case for the consideration of the jury, and the court should have so told them.

The modification to defendant’s eighth request is claimed ■to be erroneous.

,This modification, if applied to the-second clause alone of the request, and that clause is applied to a misrepresentation of facts only, would not be objectionable. In that case, the modification would so amend the second clause as to make it a true declaration of the law. “ If the party made the representation not knowing whether it was true or false, he can not be considered as innocent; since.a positive assertion of a fact is, by plain implication, an assertion ■of knowledge concerning the fact. Hence, if a party have ,no knowledge, he has asserted for true what he knew’to be false.” Bigelow on Fraud, 61; Stone v. Covill, 29 Mich. 359, and cases cited; Woodruff v. Garner, 27 Ind. 4; Fisher v. Millen, 103 Mass. 503 ; Taylor v. Ashton, 11 M. & W. 400; Foardy. McComb, 12 Bush, 723 ; 1 Story’s Equity Juris. § 193 ; Nugent v. C., H. & I. Street R. R. Co., 2 Dis. 302.

This modification, however, if applied only to the first clause of the request, in which the court is asked to charge on the effect of misrepresentations as to plaintiff’s legal rights, is unsoimd. We have already seen that misrepresentations, touching a party’s legal rights, will generally afford no sufficient reason on which to avoid a contract. Such representations, however erroneous and strongly asserted, are to be treated, when made to a party free to inform himself of his legal rights, as mere statements of opinion. The exceptions to the operation of this rule are cases in which some fiduciary relation is found to exist, or such circumstances as show a confidential relation which gives the injured party good right to rely upon such representations, and he does so to his injury. When this modification is applied to the whole request, the same trouble remains. As it' is left uncertain whether the fraudulent statements alluded to by the court, and to which the modification was to apply, was of facts, of law, or both, the instruction as given was calculated to mislead. It is obnoxious to the rule, that, “ the charge ought not only to be correct, but be so adapted to the case and so explicit as not to be misunderstood or misconstrued by the jury.” Graham & Waterman on New Trials, 774; L. M. R. R. Co. v. Witmore, 19 Ohio St. 111.

Judgment reversed and cause remanded to the court of common pleas for new trial.  