the policy sued on that the applicant represented and warranted that the property was of the value of $2,500; that "said barn in truth and in fact was not at the time of making the application worth more than $1,300, as the plaintiff well knew." This answer is bad. Where no fraud is averred an answer alleging that the assured made an over-valuation of his property and thus forfeited his policy is insufficient. It may be true that an over-valuation so gross as to authorize the inference, taken in connection with other circumstances of an intention to mislead would avoid the policy, but the answer before us does not make such a case for nothing more is alleged than that the value was placed at $2,500 when the applicant knew that it was only $1,300. Phenix Ins. Co. v. Pickel, 119 Ind. 155; Pickel v. Phenix Ins. Co. of Brooklyn, 119 Ind. 295; Rogers ▼. Phenix Ins. Co. of Brooklyn, 121 Ind. 570-579.

The reason for the rule is that the question of value is ordinarily one upon which a statement must necessarily be largely a mere matter of opinion and representations embodying opinions can seldom be regarded as fraudulent. An insurer cannot be ignorant of the rule of law upon the subject, nor can he be ignorant of the fact that statements of value are generally nothing more than expressions of opinion, and hence he cannot be misled to his prejudice.

66

fraud in embodying false statements in the application he undertakes to prepare accord⚫ ing to the information given him. We cannot believe that the law will sanction such limitations. But, however this may be, it is at all events quite clear that the mere fact that the agent is not authorized to issue policies does not relieve the company from liability where, as here. the agent is authorized to receive applications, and with correct information given him inserts false statements in the application he undertakes to prepare, and there is no limitation upon his authority to fill out the applications made known to the assured. It is one thing for an assured to have knowledge that an agent cannot issue a policy and quite another thing for him to have knowledge that the agent has no authority to prepare or direct the preparation of applications. We are well satisfied that the seventh paragraph of the answer is bad.

The decisions in the cases of Phoenix Ins. Co. v. Benton, 87 Ind. 136, and Continental Ins. Co. v. Munns, 120 Ind. 30, 5 L. R. A. 430, are not in conflict with the cases we have cited, nor are they opposed to the conclusion here reached. We have already declared that if there is an existing incumbrance in a case where there is a warranty against incumbrances, the policy may be avoided if there is an existing incumbrance, and we now deThe seventh paragraph of the answer al- clare that where there is a warranty against leges that the application of the plaintiff was subsequent incumbrances the policy will, as taken by the appellee's agent through his a general rule, be vitiated if a subsequent sub-agent Pilcher, that the applicant knew incumbrance is created, but, as we have that neither the agent nor the sub-agent had shown, the general rule has no application 'power or authority to issue policies or make to such a case as the present. The decisions contracts of insurance," that it was stated and to which we have referred do no more than warranted in the application that the prop-assert the general rule and apply it to cases erty was not incumbered; that the statement which it governs. Those decisions do not by was not true and that the property was in the remotest implication extend the general cumbered by a mortgage executed by the as-rule to such a case as this, nor could they do sured to Samuel F. Messner. This paragraph so without going counter to settled and is subject to the same objections as the first. salutary principles. The averment that the agent had no authority to make contracts of insurance and that the assured had knowledge of that fact does not rescue the answer from condemnation. An agent authorized to receive applications represents the insurance company and if he receives truthful information from the assured and undertakes to correctly fill the application, but instead of doing so inserts false statements, the assured will not be made to suffer from his wrongful act. Germania L. Ins. Co. of N. Y. v. Lunkenheimer, 127 Ind. 536; Phoenix Ins. Co. of Brooklyn v. Golden, 121 Ind. 524; Commercial U. Assur. Co. v. State, 113 Ind. 331; Geiss v. Franklin Ins. Co. 123 Ind. 172; Indiana Ins. Co. v. Hartwell, 123 Ind. 177; Phoenix Ins. Co. of Brooklyn v. Stark, 120 Ind. 444; Union Mut. L. Ins. Co. v. Wilkinson, 80 U. S. 13 Wall. 222, 20 L. ed. 617; American L. Ins. Co. v. Mahone, 88 U. S. 21 Wall. 152, 22 L. ed. 593.

We doubt whether an insurance company can send out an agent to solicit and take applications and yet effectively so limit his authority that an assured who relies upon his undertaking to correctly fill the blanks in an application shall lose the benefit of a policy issued upon it solely because of the agent's

It is insisted that the errors in ruling on the demurrers to the answers are rendered harmless because the special verdict shows that there can be no recovery for the reason that there was no notice of the loss. The special verdict does not, however, cure the error, even if it be conceded that no notice is shown, for that is a point entirely dif ferent from the points to which the bad answers are addressed. There is a clear and important difference between overruling a demurrer to a bad answer and sustaining a demurrer to a good answer. In the former case

the court holds that to be a valid defense which in truth is no defense at all, and thus establishes a theory, (to which it is presumed to adhere) cutting off the plaintiff from his rights. Messick v. Midland R. Co. 128 Ind. 81; Scott v. Stetler, 128 Ind. 385, and cases cited. See also authorities cited in Elliott, Appellate Procedure, § 591, note 1; $ 669, note 1.

But we are by no means persuaded that the appellee would be entitled to judgment on the special verdict, even if there were no intermediate material errors. The verdict does not show notice of loss; on the contrary, it states that, "immediately after the loss by fire

the plaintiff mailed a letter to J. T. R. Burch, general agent of defendant at Chicago, Illinois. This letter was sealed and directed to T. R. Burch, at Chicago, Illinois, and placed in the office at Williamsport on the 8th day of June, 1885, properly stamped. There is at least the imperfect statement of a. fact, and it is quite doubtful whether the only remedy of the defendant was not a motion for a venire de novo. Cook v. McNaughton, 128 Ind. 410.

We have given full consideration to the argument of the appellee's counsel that the facts relating to the waiver are outside of the issues and to the cases of Purdue v. Noffsinger, 15 Ind. 386; Newby v. Rogers, 40 Ind. "12, and Continental Ins. Co. v. Vanlue, 126 Ind. 410, 10 L. R. A. 843,-and we are not inclined to dissent from the proposition that facts outside of the issues add no force to the verdict. See authorities cited in Elliott, Appellate Procedure, $$ 766, 767.

But whatever may be the true rule where But granting, what is doubtful, that the there are no grave intermediate errors, we re- facts relative to a waiver are outside of the gard it as entirely clear that where there are issues, still, it cannot be concluded that the palpable and influential errors, often repeat- verdict cures material and influential errors ed, a special verdict stating facts imperfectly committed in the rulings on the pleadings, or inadequately does not render the previous for, as we have already substantially said, a wrong rulings harmless. We might grant special verdict does not cure such errors unthat the appellant was not entitled to judg-less it affirmatively shows with decisive ment on the verdict, and yet it would not clearness that the errors did no harm. This, necessarily follow that the appellee was en- it must be plain to every one, is not shown titled to a judgment, much less that it is en- by a verdict stating facts outside the issue, titled to a decision that the verdict cured since it must affirmatively appear, in order to prior prejudicial errors. We give full and heal such errors, that the merits are wholly explicit recognition to such cases as Lake with the party who relies upon a special verShore & M. S. R. Co. v. Stupak, 123 Ind. 228; dict as obviating the effect of prior influenDixon v. Duke, 85 Ind. 434, and similar cases tial errors. It is not to be forgotten that the cited by the appellee's counsel, but we deny insurance company is here seeking the benefit that they authorize the conclusion that the of a harsh rule and insisting that the courts failure to fully state a fact in a special ver- declare a forfeiture although it retains the dict renders material errors in ruling upon benefit conferred upon it by the contract it demurrers harmless. It seems clear to us, asks the court to declare forfeited. Courts, clear beyond controversy, that where there as has been again and again decided, refuse are palpable and influential errors the mere to declare forfeitures except in very clear failure to fully state facts essential to a re-cases, and the verdict before us certainly does covery does not avoid the effect of prior er- not make a clear case, much less will it roneous rulings. If there had been a state-justify us in disregarding such errors as we ment in the verdict that no notice was given we should have a very different case, but there is no such statement, nor anything resembling it; on the contrary, so far as the verdict goes, it tends to show notice.

Facts are stated in the special verdict which probably authorize the conclusion that there was a waiver of notice. There are cases which go very far towards sustaining the appellant's position that notice and proof of loss were waived. Etna Ins. Co. v. Shryer, 85 Ind. 362: Byrne v. Rising Sun Ins. Co. 20 Ind. 103; Harris v. Phonix Ins. Co. 35 Conn. 310; Farmers Mut. F. Ins. Co. v. Moyer, 97 Pa. 441; Farmers Mut. Ins. Co. v. Taylor, 73 Pa. 342; Pennsylvania F. Ins. Co. v. tle, 39 Mich. 51.

have pointed out in order to relieve the insurance company by declaring a forfeiture. It is our duty to avert a forfeiture if it can be justly done. Franklin L. Ins. Co. v. Wallace, 93 Ind. 7; Northwestern Mut. L. Ins. Co. v. Hazelett, 105 Ind. 212, 55 Am. Rep. 192; Etna L. Ins. Co. v. Deming, 123 Ind. 384.

Here, the appellee asks us to reverse this rule by disregarding material intermediate errors and giving it the benefit of all intendments that ingenuity can suggest, in order to open the way to a declaration of forfeiture. This we cannot do.

We have not, we may add, considered the Kit-point made by the appellant's counsel that a failure to give notice or to make proof of loss does not, under the contract sued on, work a forfeiture.

For the errors in rulings on the demurrers the answers the judgment must be, and is, reversed.

The entire theory of the defense, indeed, implies that notice and proof of loss would have been unavailing, for the insurer repudiates the contract and denies all liabil-to ity. The elementary principle that where a contract is repudiated, or where a party absolutely denies liability under it, performance of stipulations requiring notice, demand or the like are waived, fully applies to contracts of insurance. Little v. Phonix Ins. Co. 123 Mass. 380, 25 Am. Rep. 96.

We have very much more doubt whether the appellant was not entitled to judgment on the special verdict than upon any of the questions we have hitherto considered, and hence we cannot accept as correct the appellee's theory that the many errors in rulings on the pleadings were rendered harmless by the verdict.

20 L. R. A.

PHENIX INSURANCE CO., Appt.,

v.

PENNSYLVANIA CO.

(........Ind.........)

1. An allegation in a complaint that NOTE.-The effect on insurance where the statutes regulating the business of foreign insurance companies has not been complied with.

As to recovery on the policy.

It seems well settled that an insurance company, when sued on a policy issued by it will not be per

2. An allegation that hay was de- APPEAL by plaintiff from a judgment of the

Circuit Court for Kosciusko County in fastroyed by fire from a locomotive, without vor of defendant in an action brought to recover fault or negligence of the owner, while stacked for the alleged negligent destruction by fire of near the railroad, sufficiently denies his contrib-certain hay stacked near defendant's track. utory negligence.

3. An insurer on payment of a loss may
be subrogated to the rights of the owner
against a wrongdoer who caused the loss.
4. The failure of a foreign insurance
company to comply with a statute in
order to entitle it to do business within the state

will not avoid a policy issued by it to a citizen of

It is not necessary for the plaintiff in an action in Michigan against a Kentucky insurance company, on a policy purporting to have been made in Illinois, to show that such company had complied with the statutes of Michigan prior to such contract. It will be presumed that the act of the com- A carrier cannot defeat a suit for libel in case of pany is legal and it is not admissible for the insur-loss brought by the insurer that has paid for the ance company to insist on a showing that it acted same, by showing that the insurance company has honestly. Clay F. & M. Ins. Co. v. Huron S. & L. not complied with the statute in regard to foreign Mfg. Co. 31 Mich. 346. insurance companies. The statutes of Illinois where the policy was issued do not make void such policies. The Manistee, 5 Biss. 382.

not subrogated to any claim that Warnes may have had against the appellee. There were no legal or contractual relations between Warnes and the appellant which would entitle the latter to be subrogated to the rights of the former.

in relation to the manner in which foreign cor- | any legal duty or obligation to do so, he was porations may do business in this state. Said contract of insurance was therefore void. Rev. Stat. §3765; State v. Briggs, 116 Ind. 55; Rising Sun Ins. Co. v. Slaughter, 20 Ind. 520; Union Cent. L. Ins. Co. v. Thomas, 46 Ind. 44; Behler v. German Mut. F. Ins. Co. 68 Ind. 347; Cassaday v. American Ins. Co. 72 Ind. 95. An act agreed to be performed which is forbidden by a statute is illegal and void.

White v. Franklin Bank, 22 Pick. 181; Parker v. Rochester, 4 Johns. Ch. 339, 1 L. ed. 856; Utica Ins. Co. v. Scott, 19 Johns. 1; Utica Ins. Co. v. Bloodgood, 4 Wend. 652.

The second paragraph of the answer shows that the contract of insurance of the hay was invalid.

Doyle v. Continental Ins. Co. 94 U. S. 535, 24 L. ed. 148; Paul v. Virginia, 75 U. S. 8 Wall. 168, 19 L. ed. 357; Scott v. King, 12 Ind. 204, and cases cited.

If the appellant voluntarily paid Warnes $300 for his burnt hay without being under

ignorantly paid by a company on a policy void by reason of double insurance, although the company paying and seeking to recover back, has not complied with the Missouri statutes, by reason of not having taken out a license nor furnished the county court with the resolution of the board of directors, the statute making them liable to a penalty but not making the contract void. Columbus Ins. Co. v. Walsh, 18 Mo. 229.

The failure to comply with the Arkansas Act of April 4, 1887, does not affect a suit to recover back money paid by a foreign insurance company on a policy, as such statute applies to corporations and not to insurance companies. And insurance companies are governed by the Act of March 26, 1887, as to filing stipulation for service with the state auditor. St. Louis, I. M. & S. R. Co. v. Commercial U. Ins. Co. 139 U. S. 233, 35 L. ed. 156.

McClure v. Andrews, 68 Ind. 97; Binford v. Adams, 104 Ind. 41.

In this case the value of the hay was the measure of the damages to be recovered. It should therefore, in order to make the complaint good, have been alleged.

Edwards v. Beebe, 48 Barb. 106; Gere v. Council Bluffs Ins. Co. 67 Iowa, 272; Safely v. Gilmore, 21 Iowa, 588; Blydenburgh v. Welsh, 1 Baldw. 331: Anthony v. Gilbert, 4 Blackf. 348.

If the appellant was, upon the facts alleged in the complaint, entitled to nominal damages the court will not for that reason reverse the judgment below.

Patton v. Hamilton, 12 Ind. 256; Hacker v. Blake, 17 Ind. 97; Black v. Coan, 48 Ind. 385;

(See, further, as to the effect of place of contract on premium notes, infra.)

As to agent's liability.

The omission of an agent of a foreign insurance company to file the proper papers in his county, will not prevent a recovery by the insurance company on his bond. United States L. Ins. Co. v. Adams, 7 Biss. 30.

The failure of an insurance agent of a foreign company to comply with the Ohio Statute (Swan & S. 222), making it unlawful to insure unless the agent obtains from the auditor of state a certificate, etc., is no defense to an action on the agent's bond by the company to recover money collected by him, and cannot be taken advantage of by his sureties. Manhattan Ins. Co. v. Ellis, 32 Ohio St.388.

In a suit in Connecticut by a New York insur

A contract of insurance finally executed and de-ance company on an agent's bond who did business livered in Massachusetts is to be construed by the law of that state, although made by a company of another state. Heebner v. Eagle Ins. Co. 10 Gray, 131, 69 Am. Dec. 308.

A policy on property in Arkansas is not avoided by Arkansas Acts 1887, p. 234, providing that contracts by foreign corporations failing to comply with the act are void, where the contract of insurance was made in New York and the policy issued there. Marine Ins. Co. v. St. Louis, I. M. & S. R. Co. 41 Fed. Rep. 643.

The failure to comply with the Indiana statute, by a foreign insurance company, will not avoid its policy, and an approval and an acceptance of the application received by the company in Illinois makes it an Illinois contract. Lamb v. Bowser, 7 Biss. 315, 372.

There is nothing in the objection to a foreign corporation, suing on a policy of insurance of which it is the beneficiary, that it cannot maintain the suit and recover because it has not complied with the statutes relating to corporations, where the only business transacted is the suit. Tabor v. Goss & P. Mfg. Co. 11 Colo. 419.

in Pennsylvania, the failure of the agent to file a copy of his appointment in the office of the secretary of state of Pennsylvania, as required by the statutes of that state, is no defense as he cannot profit by his own wrong. And the failure of the company to publish its annual report there being directory is not a defense. Washington County Ins. Co. v. Colton, 26 Conn. 46.

An agent of a foreign insurance company who takes a risk without complying with the Tennessee statutes (Mill. & V. Code, § 2565) making it unlawful to insure unless statement is filed and assets amount to a required sum, is personally liable for the value of the property insured in case of its destruction by fire. Morton v. Hart, 88 Tenn. 427, 19 Ins. L. J. 347.

Premium paid to an agent of a foreign insurance company after the authority to insure has been revoked by the state officers, may be recovered by the assured from such agent. McCutcheon v. Rivers, 68 Mo. 122.

But to the contrary the non-compliance with the Massachusetts statute will not authorize a recovery back by the assured of premium paid by him to an

such contract of insurance to be valid, and does not contemplate a recovery back of such sum paid to the agent. Leonard v. Washburn, 100 Mass. 251.

Suits on premium notes.

The courts of Massachusetts will refuse to enter-agent of a foreign company. The statute declares tain jurisdiction of a suit by a citizen of Alabama against a New York insurance company, to revive a policy and reinstate him as to his rights, where he allowed the same to lapse by non-payment of premiums during the war, although the company has the right to transact business in Massachusetts. The courts of Massachusetts have not jurisdiction of the subject-matter of the suit. Smith v. Mutual L. Ins. Co. of N. Y. 14 Allen 336.

Foreign insurance companies that have not complied with the statutes of the state where the risk is situated and the contract is made, cannot recover in the courts of such state on premium or assessment