Story Case

Mr. Joseph Lippencott of Virginia had established the custom of giving each of his children a valuable farm as a wedding gift. When his daughter Sarah was married to Levi Hendrickson, she and her husband moved to an estate worth $30,000. John Hendrickson was the only child of this marriage. After the death of Sarah Hendrickson and of Levi, the son, John, insured the estate, in the Hartford Fire Insurance Company, as his own. When the residence burned, the company refused payment, on the ground that John Hendrickson was not the legal owner of the property as he stated in his application for a policy, as the records of deeds had been lost when the court house was destroyed, and no one could be found who could swear that he absolutely knew that Joseph Lippincott gave title to his daughter Sarah. Is it possible for John Hendrickson to recover from the Hartford Fire Insurance Company!

Ruling Court Case No. 1. Fagelman Vs. Farmers' Fire Insurance Company, Volume 35 Michigan Reports, Page 481

Fagelman took a policy from the Farmers' Fire Insurance Company on a barn and other property situated on a farm in St. Joseph county. The barn was destroyed by fire. Fagelman then sued for the resulting loss. The company insisted that he was not entitled to recover, because he had stated in his application that he was the owner of the property, when, as a matter of fact, the property belonged to his wife. But Fagelman contended that his statements were substantially true. He proved that his father-in-law had conveyed it to his wife, and that they all had agreed that the property should be conveyed to Fagelman if he would move on it, cultivate it, pay the taxes and encumbrances, and keep up repairs, all of which he had done. Mr. Justice Groves said: "The three were looking at the farm in question as the future home of the two. The arrangement was a domestic arrangement - an affair in the family. The daughter and son-in-law were to be settled and the father was aiding. Through the father, the daughter held legal title to a farm worth six thousand dollars, but subject to a mortgage of four thousand dollars. It was thought best that the son-in-law should carry on the place and pay up this mortgage and have the legal title. Fagelman at once repaired with his wife to the farm. He proceeded to pay the mortgage. He paid the taxes, he made improvements and repairs, and acted precisely as though he was purchaser. That he was then owner by equitable title seems hardly open to discussion, and it is not claimed that he must have been vested with the legal title also." Judgment was given for Fagelman.

Ruling Court Case No. 2. Beecham Vs. Grand Lodge, Volume 145 Illinois Reports, Page 308

Beecham was insured by the Grand Lodge, Ancient Order of United Workmen. In the application the question was asked: " To what extent does the person use alcoholic stimulants?" To which the following answer was made: "None." This was an action by his wife upon the policy.

The company showed that he did drink occasionally, and hence contended that the policy was avoided; it claimed that if the insurer at the time the contract of insurance was made, used alcoholic stimulants to any extent whatever, such use rendered his answer false.

Mr. Justice Craig said: "It is said in the argument of counsel: 'We insist that his answer "none" as to intoxicants, meant none at all, to no extent whatever.' We do not think this is a correct view of the language used. The language embodied in the application must receive a reasonable construction, one within the contemplation of the parties at the time the contract of insurance was consummated. What was the purpose of requiring the insured to state in the application to what extent he used alcoholic stimulants'? But one object can be conceived - and that was to guard against the risk which might arise from insuring the life of one who was in the habit of using the articles to such an extent as to imperil the health and life of the individual." Judgment was given for.Maggie_BeechamJ

Ruling Law. Story Case Answer

The courts are liberal with applicants for insurance" in reference to the information by them given to the insurance companies. The courts do not require that the information given, or the answers to the questions propounded shall be literally and absolutely accurate; they require only that the information and answers shall be substantially correct. The courts indulge in this liberality, because of the decided advantage which the company has over the average applicant; the company is always guided by legal advice in every step taken, whereas the average applicant must rely upon the insurance company and its agents. For this reason, the courts require only substantially correct answers. This rule applies to applicants for life and fire insurance.

In the Story Case, recovery on the policy is assured, since the company must show that the property did not belong to the insurer. This they have not done. The property may belong to John Hendrickson even though no records or paper titles can be found. But in any event the statement made was substantially true, even though the grandfather had failed to observe the legal form in making the gift.