Appeal from the Circuit Court of Cook county; the Hon. ROBERT
JEROME DUNNE, Judge, presiding. Decree affirmed.
JUDGE SCHWARTZ DELIVERED THE OPINION OF THE COURT.
Rehearing denied March 6, 1956.
Plaintiff as beneficiary brought this suit to reform a policy of insurance issued by defendant Massachusetts Bonding and Insurance Company (Massachusetts) and to recover on the policy as reformed. The policy insured Joseph E. Michaels, Secretary-treasurer of plaintiff, in the sum of $100,000 against injuries and death by aviation accident for a period of one year commencing September 6, 1948. It was limited to accidents occurring while the insured was a passenger on any one of eighteen groups of airlines therein listed. This list included British Overseas Airways Corporation (BOAC) but not British European Airways Corporation (BEA). On February 19, 1949, Joseph Michaels was killed while a passenger on an airplane operated by BEA on a flight from London to Glasgow. Plaintiff asserts that the failure of the coverage to include BEA was the result of a mutual mistake, in that both parties intended that a policy should be issued identical in coverage with that of an expired policy issued by another company. That policy would have covered the insured while a passenger on BEA. A separate count in the complaint set forth an action at law against Associated Agencies, Inc., (Associated) alleged by plaintiff to have been the agent of Massachusetts in this transaction. The chancellor ordered a separate trial on that count and transferred it to the law side of the court. He then proceeded with a trial of the issues between plaintiff and Massachusetts and at the conclusion of the evidence, dismissed the complaint for want of equity.
While there is a sharp and spirited dispute between the parties, it is not because of any important disagreement over the verity of the oral testimony or the written documents put in evidence. Rather, the dispute is over the conclusions to be drawn from the evidence, and requires a somewhat detailed statement of facts in order that the issues may be understood. Plaintiff does a worldwide business in the buying and selling of scrap metal. Its employees take plane trips to Europe, Africa and South America, as well as within the United States. Through one Jacob Weil, an insurance broker not employed by but officing and working with Associated, plaintiff in 1947 took out an aviation accident policy on six of its officers. That policy was issued by Globe Indemnity Company. It insured Joseph Michaels against death by an aviation accident occurring anywhere in the world on any regularly scheduled passenger airline. When that policy was about to expire, Weil informed Sheldon, an officer of plaintiff company in charge of a considerable part of its insurance business, that Globe would no longer write that type of insurance and if plaintiff wanted it "renewed," he, Weil, would have to seek it elsewhere. Upon being advised that plaintiff did desire to continue that type of insurance, Weil took the matter up with Associated for the purpose of finding another insurer.
Associated is an incorporated general insurance agency. For many years it had handled a great deal of plaintiff's insurance business. Its president and some of its other officers for a long period of time had cordial business and social relations with plaintiff's officers. Bernard W. Roos, its vice-president, had charge of aviation accident insurance. He handled the issuance of both the Globe and the Massachusetts policies. He also countersigned the policies on behalf of Associated, as required under the terms of the transaction, before the policies were made effective. Through Roos, Weil obtained application blanks for a new insurance policy to be issued in an underwriting group known as United States Aviation Underwriters (USAU). This was an aggregation of twelve insurance companies, including Massachusetts, sharing ratably in premium receipts and in loss payments. Original applications, premium payments and loss claims were processed through USAU. Late in August, 1948, seven applications were given to Sheldon, one to be signed by the company for group insurance, and one for each of six employees to be insured. These were duly executed and returned to Massachusetts. Policies were then issued together with an "Airsurance Agreement."
The employer's application signed by plaintiff company by J.E. Michaels was entitled "Group Plan Airsurance." The group of twelve insurance companies was listed therein and a check mark placed opposite the name "Massachusetts." It listed the employees to be insured and the amount of coverage for each. The application contained a statement of what Group Plan Airsurance was. From this it appeared that two types of insurance were offered basic and extended coverage. Basic insurance was limited to certain enumerated airlines, including BOAC, but excluding BEA. Extended coverage was defined as all the coverage provided for under basic insurance and, in addition, covered the insured while a passenger on a civil aircraft operated by any scheduled air carrier over its regularly established route. The basic rate was shown as $1.10 per thousand, and extended coverage as $2.70 per thousand.
The employees' applications, including the application of Joseph Michaels, were also signed and returned. These were headed "Group Plan Airsurance" and at the top contained two items, one entitled "Basic Airsurance," and the other, "Passenger Extended Coverage." A definition of the respective coverages was shown in each item, maintaining the distinction we have described. The difference in rate was also shown, that is, $1.10 for basic, and $2.70 for extended coverage. Alongside each definition a square was provided in which the type of coverage selected by plaintiff could be shown by a check mark or an "X." The application signed by Joseph Michaels shows a check mark in the square opposite the item "Basic Airsurance." Plaintiff produced evidence to show that the mark was not placed there by the insured. It is conceded that no mark was placed in the square opposite "Passenger Extended Coverage" by anyone.
The "Airsurance Agreement" is a formal document, duly executed by USAU and by Hyman-Michaels Co., by E.B. Michaels, president. It is plainly written and relatively short. It provides for group insurance and states that plaintiff has agreed to submit applications covering five or more of its employees. The longest paragraph in the instrument is No. 4 which provides for the issuance of insurance on additional employees who make application. In that paragraph it is also stated that a policy issued pursuant to the agreement shall afford only basic airsurance coverage unless the application card referred to specifically indicates that "Passenger Extended Coverage" is desired.
The policy in question contains this legend across its face in capitals: "THIS IS A LIMITED POLICY READ IT CAREFULLY." At the top of page 2 is a heading "Aviation Accident," following which is a statement that the term means an accident occurring anywhere in the world and causing death or bodily injury to the insured while: "(a) A passenger in . . . any civil aircraft . . . operated by: . . ." and under this there are eighteen distinct items outlining in alphabetical order the airlines or groups of airlines covered by the policy. Item 7 is shown thus: "(7) British Overseas Airways Corporation (BOAC)." BEA, if it had been included, would in alphabetical order have been listed immediately before this. This paragraph takes up about half a page of the policy.
In addition to the documents we have described, there were items of correspondence between Weil and plaintiff in which Weil referred to the "renewal" of plaintiff's "Aviation Accident policy," and there is also a letter in evidence in which plaintiff refers to the "employer's application for the renewal of our Aviation Accident policy."
In analyzing the evidence we have in mind that in a suit to reform a written contract, a plaintiff is not merely seeking to rescind or avoid the contract but is seeking to enforce a contract different from that which he has signed. He must therefore be able to point to the contract he intended to make. Moreover, he must prove a like intention on the part of the defendant. In other words, both defendant and plaintiff must have had the intention to make the same contract, but failed to do so by each making the same mistake. These general principles are recognized in our decisions and are not disputed. Harley v. Magnolia Petroleum Co., 378 Ill. 19, 27, 28, 37 N.E.2d 760, 765; Biskupski v. Jaroszewski, 398 Ill. 287, 293, 294, 76 N.E.2d 55, 58, 59; Anderson v. Pettigrew Foundry Co., 297 Ill. App. 14, 23, 17 N.E.2d 60, 63. Since reforming a written contract qualifies the general principle that persons who execute contracts are presumed to know what is contained therein, courts have held that proof of mistake must be "clear and convincing." Biskupski v. Jaroszewski, 398 Ill. 289, 293, 76 N.E.2d 58; Harley v. Magnolia Petroleum Co., 378 Ill. 19, 27, 37 N.E.2d 760, 765; Du Teau Co. v. New Hampshire Fire Ins. Co., 156 Neb. 690, 57 N.W.2d 663.
To make its case plaintiff must prove three propositions: (1) that Associated was the agent of Massachusetts in its dealings with plaintiff; (2) that plaintiff understood and intended to obtain through Associated a policy having coverage identical with that provided in the previous Globe policy; and (3) that Associated likewise understood and intended that such a policy would be issued by Massachusetts. We must also keep in mind that a reviewing court will not reverse on issues of fact unless the decree is against the manifest weight of the evidence. Kinnah v. Kinnah, 184 Ill. 284, 56 N.E. 376; Baker v. Baker, 6 Ill. App.2d 557, 128 N.E.2d 616, and cases there cited.
We will first consider whether Associated was the agent of Massachusetts or, more precisely, whether Associated's knowledge of an alleged intention on the part of plaintiff to procure a given type of policy could be attributed to Massachusetts. The Insurance Act in effect at the time defined an agent as "any person, partnership, association or corporation, who or which solicits, negotiates or effects in this State, on behalf of any company, contracts for insurance of any of the following kinds, namely: Life, Accident, Health, Casualty, Fidelity, Surety, Fire and Marine." (Ill. Rev. Stat. 1947, Ch. 73, Par. 588 [Jones Ill. Stats. Ann. 66.125(2)].) The evidence tended to show that Associated, although regarded as Massachusetts' "general agent" for certain other lines of insurance, was not regarded as having that status with respect to aviation insurance. Associated did not keep blank Massachusetts policies but ordered them from USAU. On the other hand, the evidence was not clear as to what arrangement for commissions existed between Massachusetts and Associated or as to the disposition of the premium check which Associated received from plaintiff. Under some circumstances a broker purporting to represent an insured will be considered an agent of the insurer even though he was not a regular or licensed agent of the insurer. (See Boston Store of Chicago v. Hartford Accident & Indemnity Co., 227 Ill. App. 192; Moone v. Commercial Casualty Ins. Co., 350 Ill. App. 328, 112 N.E.2d 626.) In the instant case the president of Associated testified that he had authority to countersign the policy issued. In our opinion a prima facie case of agency was established. However, we cannot say that the finding of the chancellor to the contrary was against the manifest weight of the evidence. (Cf. MacDonald v. Milwaukee Mechanics' Ins. Co., 167 F.2d 276; Indemnity Ins. Co. of North America v. Midwest Transfer Co., 184 F.2d 633.) Assuming that Associated was the agent of Massachusetts, we will consider the second and third issues involving the mutuality of mistake.
As to the second issue, the documents involved in the transaction unequivocally point to a type of coverage unlike the Globe policy. That policy covered six of plaintiff's named officers, including Joseph Michaels. Three of these were listed under "Group I," covering aviation accidents occurring in the United States and Canada within 150 miles of the United States border while on a regularly scheduled airline holding a certificate of public convenience and necessity from the Civil Aeronautics Board (CAB). Three of the employees were in "Group II," which insured against accidents occurring on flights made on an aircraft operated anywhere in the world on a regularly scheduled passenger trip over its established route. Joseph Michaels was included in Group II. The premium was computed at 80 cents per thousand for Group I, which had a total coverage of $170,000, and $1.10 per thousand for Group II, which had a total coverage of $250,000. The total premium paid was $425.25, being $411 plus $14.25 for certain medical benefits. The Massachusetts policy covered the same six officers. Each was insured in the same amount as under the Globe policy. The Massachusetts policy issued on the life of Joseph Michaels covered accidents occurring anywhere in the world while the insured was a passenger on any civil aircraft operated "by an American flag scheduled air carrier holding a Certificate of Public Convenience and Necessity issued by the USCAB," or by any one of seventeen named foreign flag companies. It is conceded that the policies issued on the other employees of plaintiff were identical. It thus appears that while the Massachusetts policy was more limited than that issued by Globe as to the Group II category, in that it included only a limited number of foreign airlines, it provided a greater coverage for those employees who had formerly been insured under the Globe policy in Group I. The premium on the Massachusetts policy was computed at ...