To the general rule that misrepresentations not amounting to fraud, and not forming a term of the contract, do not affect its validity, there are exceptions in case of certain special contracts sometimes said to be uberrimę fidei; that is, contracts of such a character that one of the parties must rely on the other for his knowledge of the facts. As the term implies, the most perfect good faith is required in such cases, and any material misstatement or concealment of facts, even though innocent, will avoid the contract.
Among these excepted contracts are contracts of insurance. In the case of a contract of marine insurance the assured is bound to give the insurer all such information as would be likely to affect his judgment in accepting the risk, and misrepresentation or nondisclosure of any such matter, though perfectly innocent, will vitiate the policy.66 As said by the Ohio court: "The assured is bound to communicate every material fact within his knowledge not known, or presumed to be known, to the underwriter, whether inquired for or not; and a failure in either particular, although it might have arisen from mistake, accident, or forgetfulness, is attended with the rigorous consequence that the policy never attaches, and is void, for the reason that the risk assumed is not the one intended to be assumed by the parties." 67 Thus, a policy of marine insurance has been avoided because the goods were insured for an amount considerably in excess of their value, though the fact of overvaluation did not affect the risks of the voyage, simply because the valuation is a fact usually taken into consideration by underwriters.68
64 Bannerman v. White, 10 C. B. (N. S.) 8G0. See "Sales," Dec. Dig. (Key-No.) §§ 248-251; Cent. Dig. §§ 707-710.
65 GLOBE MUT. LIFE INS. ASS'N v. WAGNER. 188 I11. 133, 58 N. E. 970, 52 L. R. A. 649, SO Am. St. Rep. 1(59, Throckmorton Cas. Contracts, 184. See "Contracts," Dec. Dig. (Key-No.) $ 94; Cent. Dig. §§ 42O-430.
It is said that the doctrine applicable to marine insurance does not apply, to the full extent, to other contracts of insurance.69 It is settled, however, that any false representation of a material fact, however innocently made, will avoid the policy.70 It has even been held, in cases where the fact undisclosed was peculiarly within the knowledge of the insured, and not such as to be patent on examination, that the innocent nondisclosure of a material fact will vitiate the policy. Where, for instance, one fire insurance company reinsured a risk in another company without informing the latter that it had heard that the assured, or at least some one of the same name, had been so unlucky as to have had several fires, in each of which he was heavily insured, it was held that such nondisclosure, though unintentional, vitiated the contract of reinsurance.71 Where, however,
66 McLanahan v. Insurance Co., 1 Pet. 170, 7 L. Ed. 9S; Lewis v. Insurance Co., 10 Gray (Mass.) 508; Ely v. Hallett, 2 Caines (N. Y.) 57; Stoney v. Insurance Co., Harp. (S. C.) 235; Lexington Fire, Life & Marine Ins. Co. v. Paver, 16 Ohio, 324; Vale v. Insurance Co., 1 Wash. C. C. 283, Fed. Cas. No. 16,811; Augusta Ins. & Banking Co. v. Abbott, 12 Md. 348. See "Insurance," Dec. Dig. (Key-No.) §§ 256, 272; Cent. Dig. §§ 540, 549, 572-5S2.
67 Hartford Protection Ins. Co. v. Harmer, 2 Ohio St. 452, at page 462, 59 Am. Dec. 684. See "Insurance," Dec. Dig. (Key-No.) §§ 25k, 256; Cent. Dig. §§ 513-549.
68 Ionides v. Pender, L. R. 9 Q. B. 537. See "Insurance," Dec. Dig. (Key-No.) § 281; Cent. Dig. §§ 597-600.
69 Hartford Protection Ins. Co. v. Hariner, 2 Ohio St., at page 463, 59 Am. Dec. 684. And see Burritt v. Insurance Co., 5 Hill (N. Y.) 188, 40 Am. Dec. 345; Wineland v. Insurance Co., 53 Md. 276; United States Fire & Marine Ins. Co. v. Kimberly, 34 Md. 224, 6 Am. Rep. 325. See "Insurance," Dec. Dig. (Key-No.) § 256; Cent. Dig. §§ 51,0, 51,9.
70 Armour v. Insurance Co., 90 N. Y. 450. See "Insurance," Dec. Dig. (Key-No.) § 256; Cent. Dig. §§ 540, 549.
71 New York Bowery Fire Ins. Co. v. Insurance Co., 17 Wend. (N. Y.) 359.
as is now generally the practice, written applications for insurance are required, in which specific questions are asked and answered, an innocent failure to disclose facts about which no inquiry is made will not avoid the policy, though it is otherwise where there is an innocent failure to disclose a fact where inquiry is made.72
In England and in some of our states a distinction has been drawn between life insurance and marine and fire insurance, and life insurance has been said not to be within the exception to the rule that innocent misrepresentation does not avoid a contract.73 In most of our states, however, no distinction is made in this respect between life and fire insurance, misrepresentation of a material fact, whether innocent or fraudulent, avoiding the policy.74
Even in England the tendency of the modern adjudications is towards applying the doctrine that innocent misrepresentation, including nondisclosure, vitiates a contract of fire or life, as well as marine, insurance, without any practical distinction.78