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HOSLEY V. HOLMES.

land) gives to the transaction the effect only of a mortgage, whatever the intent of the parties might have been; and so the complainant has properly treated it. He had the deed and bond both recorded after he received them of Manzer, and now asks to have the same foreclosed as a mortgage for all the matters of indebtedness secured by it, except the original mortgage, which has been paid. To this decree he is clearly entitled against all of the defendants, unless White is a bona fide purchaser for a valuable consideration without notice. Upon the point of actual notice the evidence is directly in conflict: while that on the part of the complainant is direct and positive to actual notice to White, prior to his purchase. White as positively denies it. He however admits that about the last of June or first of July, which was prior to his purchase from Holmes, he had a conversation with complainant in which the latter spoke of his claim on the mill property, but says he did not inquire of complainant what claim he had. He represents that this conversation was introduced by complainant, and that he, White, supposed it to relate to the original mortgage only, and says, in effect, that complainant did not mention to him the claim upon the note; while the evidence on the part of complainant is that he did mention this. We think the weight of the evidence is in the affirmative, that such actual notice was given. We think it entirely clear, upon his own evidence and that of other witnesses on the defense, that he had such notice at least, of the existence of these papers in the hands of Manzer, as to make it his duty to inquire particularly of complainant before making his purchase. To say nothing of the admission in his answer, that before he had paid said original mortgage, or the judgment on the attachment suit, he heard rumors of certain papers between Holmes and complainant, relating to the property, in possession of Manzer; and his duty, if he failed to see the papers, or to get information of Manzer concerning their contents, was to inquire of complainant, before making such payments. He admits in his testimony that

HOSLEY v. HOLMES.

before the purchase was made by him of Holmes and wife, they told him, not only of the original mortgage which was recorded, but, as he understood them, that there was a kind of contract and bond in Manzer's hands; that in case Holmes failed to pay the mortgage, Hosley was to take possession of Holmes' interest in the mill, by paying him. back the amount stated in the bond, which was two thousand dollars or thereabouts. Even this was enough to put any prudent man on his guard against purchasing until he should ascertain what these papers were, or till he should have inquired of the complainant as to the nature and amount of the incumbrance.

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And Mrs. Holmes testifies: "I was present at the time Mr. White came to buy the property of my husband. then told him there were some sealed papers in the hands of Mr. Manzer. I told him there was a mortgage to be paid, of about two thousand one hundred dollars. I told him if that was not paid by the 9th of January, and they took the property, they were to pay us two thousand five hundred dollars." Again: "At the time of the talk with

Mr. White, I told him there was a contract in the hands of Mr. Manzer. I told him all I could recollect about the bond." Defendant Holmes testifies to telling White substantially the same things.

It was therefore clearly the duty of White, as an honest, prudent man, before venturing on this purchase on the mere verbal representations of the vendor, either to learn the actual contents of the papers in Manzer's hands, or to inquire of the complainant as to the extent of his rights in the property under those papers. He had sufficient notice to put him upon inquiry, and we are entirely satisfied that complainant, in the conversation White admits he had with him, said nothing which would relieve him from the duty to make such inquiries.

He therefore can not be considered a bona fide purchaser without notice, and the property in his hands is liable to the complainant to the same extent as if it had remained in the hands of Holmes.

HOSLEY V. HOLMES.

The decree of the court below, dismissing the bill, must be reversed, with costs to complainant in both courts, and a decree entered in this court for a foreclosure and sale, as prayed by the bill, for the one-half of said note of six hun-dred and sixty-two dollars and seventy-nine cents, with interest thereon at the rate of ten per cent., and such amount of the taxes and insurance stated in the bill as complainant may prove upon a reference; and the record must be remitted to the court below for the purpose of executing this decree.

The other Justices concurred.

The American Insurance Company v. Orin F. Gilbert.. Insurance: Policy: Application: Warranty: Materiality to the risk. A policy of insurance, referring to an application and making it a part of the policy and a warranty by the assured, which provides that "false representations by the assured of the condition, situation, or occupancy of the property, or any omission to make known any fact material to the risk, or an over-valuation, or any misrepresentation whatever, either in the written application or otherwise, shall render the policy void," is construed to make warranties of the representations and statements referred to, whether material to the risk or not; and materiality to the risk is held to be a limitation attached only to the omission to state facts.

Over-valuation: Warranty. It appeared in this case, by the plaintiff's own showing, that there was a clear over-valuation, known at the time to be so, of the property insured; and also a known violation of the by-laws of the company (which were made a part of the policy), such as to amount to a clear breach of the warranty, and to render the policy void. Application: Valuation: Responsibility of the insured for statements of value. The circumstances under which the application is claimed in this case to have been made out, with the assistance and according to the suggestions of an agent of the company, were held not to be such as to make the statement of value the act of the company by such agent, instead of that of the insured.

An applicant for insurance cannot escape responsibility for the statement of facts which he inserts himself in the application, or permits an agent of the insurer to insert as his, upon which he is just as well informed as the agent himself, such as the condition, situation, and value of his own property to be insured, by showing that he was induced by such agent, knowingly and against his own judgment, to state them falsely.

AMERICAN INSURANCE COMPANY . GILBERT.

Statement of value: Evidence: Charge to the jury. The evidence in this case did not warrant any charge to the jury upon the hypothesis that "the plaintiff was induced by the agent of the company to sign the application for insurance, under the honest belief that it was right" in respect to the statement of values.

Policy of insurance: Notice. The form of the policy in this case was such as to notify one accepting it that he was himself responsible for the statement of values, by whomsoever made, in the application.

Over-valuation: Statement of value: Warranty: Intent. Under such a policy, the question of over-valuation in the application is not one to be submitted to the jury as a question of fraud or good faith simply; but the statement of value is to be treated as a warranty, of which any substantial over-estimate is a breach, whatever the intent.

Omissions: Materiality to the risk. The omission to state, in the application, a small mortgage upon the property, which, by the terms of plaintiff's contract of purchase, his vendor was bound to pay, and which was less than the amount unpaid on said contract, was one not material to the risk, and therefore, under the terms of the policy, unimportant.

Error to Washtenaw Circuit.

Heard May 2. Decided July 15.

W. K. Gibson, for plaintiff in error.

S. E. Engle and H. J. Beakes, for defendant in error.

CHRISTIANCY, CH. J.

This was an action brought by Gilbert, the defendant in error, against the insurance company, upon a policy of insurance upon a dwelling house, and barn and shed, and the personal property in each, as well as certain personal property on the farm of plaintiff. The policy was dated September 26, 1871, and was for five years from the 19th day of August 1871. The house with the barn and its adjoining shed were burned on the 11th of November, 1871, with some of the personal property in each, and the action was brought for this loss.

The policy was issued upon a written (and printed) application, signed by the plaintiff, the printed form for which seems to have been furnished by the company, with blanks to be filled, and printed questions to be answered thereon in writing by the applicant. The plaintiff had no legal title to the buildings insured, but had, in April pre

AMERICAN INSURANCE COMPANY V. GILBERT.

vious, obtained a contract from one Prentice for the purchase of the farm of eighty acres, including the buildings, for the price of four thousand dollars, upon which he had paid Prentice only fifty dollars; and the balance was to be paid in instalments, the first being for two thousand dollars payable April, 1872, upon payment of which he was to receive a deed and give a mortgage back to Prentice for the balance. Prentice covenanted to convey a good title, free of incumbrances. At the time of this contract, and at the time of the loss, there was an outstanding mortgage to one Smally on the land, upon which there was a balance of some three hundred dollars or more unpaid. The principal questions involved are: 1st. Whether there was not an overvaluation of the house and barn by the plaintiff in his application; and, 2d. Whether the plaintiff did not fail truly to state the incumbrances in answer to a question upon that subject contained in the application. The policy refers to the application, and expressly makes it "a part of the policy, and a warranty by the assured," and it further, in this immediate connection, provides that "false representation by the assured, of the condition, situation or occupancy of the property, or any omission to make known any fact material to the risk, or an over-valuation, or any misrepresentation whatever, either in the written application or otherwise, shall render the policy void." By this provision, it is true, that, to render the policy void on account of an omission to state a fact, the fact omitted must be one material to the risk. But the provision in reference to false representation, or misrepresentation, which shall render the policy void, is not thus limited by the language used, and cannot be so limited without doing violence to that language. Nor does it follow, as argued by the counsel for the defendant in error, that the use of these terms, "false representations," and "misrepresentations," indicates an intent to reduce the object of all the statements of the assured contained in his application to that of representations, instead of warranties. On the contrary, the plain

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