is clear, therefore, that defendants did not | 3. INSURANCE (§§ 146, 328*)—Policy—VALIDITY-MORTGAGED PROPERTY. pay the taxes for seven successive years under color of title, which was only obtained upon recording of the deed on April 22, 1901, and that the defense failed of proof.

For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes

it is not bound by the act of one who in try-1 property owner contracted with an agent reping to serve two masters could in law serve neither; also, that in view of the conditions of the policy and the mortgage clause the institution of foreclosure proceedings avoided the policy.

The plaintiff argues that, as the agreed statement of fact shows that the adjuster denied liability upon the ground that the policy had become void by reason of the mort-repugnant to his duty to the company, there gage and the foreclosure proceedings, this amounted to a waiver by the company of the defense that its agent acted without authority. As to the second defense, the plaintiff insists that the retention of premiums by the company and its failure to cancel the policy amounted to a waiver of its rights under the mortgage clause.

made to him. It seems that the mortgagee purchased at his own foreclosure, and the company defended on the ground that he had failed to notify it of this change of ownership; but the court said this was not such change as was contemplated by the subrogation contract, and that it in no manner increased the risk, and the title had not vested in some one not insured, and Continental Ins. Co. v. Ward, 50 Kan. 346, 31 Pac. 1079 was followed, holding that a change of title which increases the interest of the insured, whether by judicial sale or voluntary conveyance, will not defeat the insurance.

policy avoided the latter. It is urged with clause making the loss, if any, payable to force that the mention in the clause of a the mortgagee or his assigns, as his interest mortgage presupposed a possible or probable may appear, insures the owner of the mortforeclosure, and that under the former de- gage to the extent of his interest, and that a cisions it was for the benefit of the mortgagee, change of title which increases his interest, who is not to be denied a recovery because even to absolute ownership, will not release of certain conditions in the policy. It is well the insurer from liability. Further that no settled that, whatever distinction may be notice need be given of such increase. There drawn between the "open mortgage clause" the mortgage clause was very long and proand the "union mortgage clause," a policy vided that notice should be given by the with either attached inures to the benefit mortgagee of any change of ownership or of the mortgagee to the extent of his in- increase of hazard which should come to his terest. Insurance Co. v. Coverdale, 48 Kan. knowledge, and all of its many provisions 446, 29 Pac. 682; Insurance Co. v. Boardman, were expressly made to take precedence over 58 Kan. 339, 49 Pac. 92; Dodge v. Hamburg- any conflicting provision or condition conBremen Fire Ins. Co., 4 Kan. App. 415, 46 tained in the policy, and it was held that it Pac. 25; Delaware Insurance Co. v. Truskett, must be construed as if it read "loss, if any, 65 Kan. 861, 70 Pac. 1131.1 In the Cover- payable to the mortgagee." Also, that a comdale Case the loss, if any, was made payable pany insuring a mortgage lien must anticito the mortgagee in general terms, not mere- pate foreclosure; that the mortgagee is proly as its interest should appear. The mort-tected until a foreclosure, confirmation of a gage clause also provided, among other sale, and payment of the money ordered things, that the insurance as to the interest of the mortgagee should not be invalidated by any act or neglect of the mortgagee or owner. It was held the owner could not maintain an action on the policy unless the mortgage was paid, without obtaining authority from the mortgagee, and that the mortgage clause created an independent and new contract with the mortgagee and did not merely appoint it as the party authorized to receive the proceeds of the policy. In the Boardman Case a similar clause was attached, which also contained a provision that it should take precedence over the provisions of the policy.. The ruling very naturally followed that with such a clause a provision in the policy that commencement of foreclosure should avoid it could not defeat the mortgagee. It was said, at page 343 of 58 Kan., page 93 of 49 Pac.: "The commencement by the mortgagee of proceedings to foreclose a mortgage is not prohibited by the express terms of the mortgage clause, nor by any fair implication therein contained. If prohibited at all, it must be by reason of the provisions of the policy quoted. Construing both the original policy and the mortgage clause together, in the light of the plain purpose to insure the interest of the mortgagee, the commencement of the foreclosure proceedings cannot be held to be a violation of any stipulation forbidding the mortgagee. The insurer must have known when attaching the mortgage clause that it might become necessary for the mortgagee, in order to protect his interest under the mortgage, to commence foreclosure proceedings; that this would not have a tendency to diminish the interest of the mortgagee in the property, but rather to increase it."

The case of Dodge v. Insurance Co., 4. Kan. App. 415, 46 Pac. 25, is referred to with apparent approval, wherein it was held that a

1 Reported in full in the Pacific Reporter: rein the Kansas Reports.

It appears that the mortgagee foreclosed and caused the property to be sold and was holding a certificate of purchase, the period of redemption having expired since the fire. But under the rule announced in the cases already referred to, this would not of itself avoid the insurance.

No such clause as the one now under consideration was found in any of the foregoing cases nor in any cited by either party. So that the real question is whether the words "subject, however, to all the terms and conditions of this policy," mean what they say, or mean anything. There is a seeming inconsistency in insuring a mortgage lien and at the same time contracting that a foreclosure shall destroy or avoid the insurance, but to the writer it seems clear that, when those competent to contract have settled upon the terms by which they are to be bound, neither can call upon the courts to make different terms. Such appears to him to be the unmistakable force of the rule announced in Insurance Co. v. Thorp, 48 Kan. 239, Syl. 1, 28 Pac. 991; Insurance Co. v. Russell, 65 Kan. 373, 69 Pac. 345, 58 L. R. A. 234; Insurance Co. v. Knerr, 72 Kan. 385, 83 Pac. 611; Bank v. McIntosh, 72 Kan. 603, page 611, 84 Pac. 535.

But the court is of the opinion that the clause in question does not differ essentially

ported as a memorandum decision without opinion from the ones considered in the previous

might well be construed to mean that such last ducements rather than the sole operating inrepetition was the climax of the fraudulent influence.

decisions referred to, and that no different | duced him to make the trade. Held, that this rule of construction should apply. This holding is in accord with the practical doctrine that the province of insurance companies is to insure, and is consonant with the theory that by a contrary ruling an unsuspecting mortgagee might lose an indemnity for which he had paid in good faith believing he was secure.

Appeal from District Court, Shawnee County.

Action by Dennis P. Hinchey against William Starrett and another. From judgment The judgment is affirmed. All the Justices and order granting a new trial, defendants concurring. appeal. Affirmed.

(91 Kan. 181)

HINCHEY v. STARRETT et al. (Supreme Court of Kansas. Dec. 6, 1913.)

(Syllabus by the Court.)

1. NEW TRIAL (§ 155*)-TIME FOR GRANTING -DEMURRER TO EVIDENCE.

C. W. Burch and B. I. Litowich, both of Salina, for appellants. Lee Monroe and W. S. Roark, both of Topeka, for appellee.

WEST, J. Action for damages. The second amended petition alleged in substance: That the plaintiff received a letter from the defendant Starrett inquiring whether he would trade an automobile which he then owned for land in Oklahoma, and requested a conference with him, and later Starrett orally offered to exchange a quarter section near Monroe; said that he owned a quarter near that town and that the defendant Wharton stood ready to purchase it for $1,600 cash. [Ed. Note.-For other cases, see New Trial, Starrett requested him to write Wharton, That upon the plaintiff's refusal to trade Cent. Dig. § 315; Dec. Dig. § 155.*]

The pleading, while open to criticism for confusion of theories, stated a cause of action. The evidence, if undisputed, showed a right to recover in some amount. The court sustained a demurrer to the evidence and rendered judgment for costs. Within three days a motion for a new trial was filed, which was taken under advisement until the next term and then granted. Held, that the latter order proper.

was

It was alleged that by falsely and fraudulently pretending that one of the defendants was ready and anxious and financially able to take a certain tract of land at $1,600 cash, although worth more, the plaintiff was defrauded into trading to the other for such land an automobile worth that sum. Held, that such .pretense concerned an existing condition and was not a mere promise or opinion.

[Ed. Note.-For other cases, see Fraud, Cent. Dig. 14; Dec. Dig. § 12.*]

3. FRAUD ($ 59*)-MEASURE OF DAMAGES.

In such situation the measure of damages is the difference between the value of the automobile and the value of the land taken in exchange therefor.

[Ed. Note.-For other cases, see Fraud, Cent. Dig. §§ 60-62, 64; Dec. Dig. § 59.*]

4. PLEADING (§ 369*)-ELECTION-WHAT CON

STITUTES-RECITALS ON MOTION.

After extended pleadings had been filed and amended, a motion to strike a certain allegation from the answer recited that the petition showed that the action was one to recover damages for misrepresentation of the character and value of the land, which motion was overruled. Held, that such expression thus used cannot rightfully be regarded as an election to proceed upon the basis of the represented value of the land instead of the sum agreed to be paid therefor.

which was done. Shortly thereafter Starrett telephoned the plaintiff from Salina repeating the offer and request, and again repeated both in a conversation held at Junction City within a few days. That, thus induced, the plaintiff wrote Wharton and promptly received a reply that he had offered Starrett $1,600 for the land but would prefer another quarter ten miles from Stringtown as it was covered by an oil lease which included other land adjoining which he was buying, and if the plaintiff could get this quarter he (Wharton) would take it. Replying to a written inquiry as to what he would give for the quarter last mentioned, he wired "$1,600." That about this time Starrett represented to plaintiff that the quarter near Stringtown was good, level, fertile farm land, with a

large amount of valuable timber growing thereon, and was located in an oil-producing territory, and reasonably worth between $1,800 and $2,000. That he was the owner there of, and that Wharton was well acquainted therewith, was willing, able and anxious to purchase it for $1,600 cash, and was a thoroughly reputable, reliable, and financially responsible business man. That on account of some former trouble Starrett's wife would not join in a deed to Wharton. That by these statements the plaintiff was induced to meet the defendants at McCracken, Rush county, where Starrett verbally reiterated his statements and Wharton corroborated them; the latter stating that he owned several othThe plaintiff testified to the reiteration by er tracts adjoining the Stringtown quarter both defendants of certain fraudulent representations, but on cross-examination stated that and had considered oil drilling in the neighthe last repetition by one of them was what in-borhood, and that if plaintiff would exchange

[Ed. Note.-For other cases, see Pleading, Cent. Dig. §§ 1199-1209; Dec. Dig. § 369.*] 5. FRAUDULENT REPRESENTATIONS-CONSTRUC

TION.

For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes 137 P.-6

at the January term, the court could not at the April term grant a new trial and reinstate the action. Whatever confusion or uncertainty may be shown in the second amended petition, we have no difficulty in holding that it stated a cause of action, for, if the plaintiff's allegations be taken as true, certainly the defendants were liable to him in some amount.

his automobile for the land he (Wharton) | and that, the demurrer to the evidence havwould pay him therefor $1,600, and he en- ing been sustained and the action dismissed tered into writing to that effect and gave a check for $25 as earnest money. That thereafter Starrett reiterated his statements and the plaintiff entered into a written agreement to exchange his automobile for the land and delivered the former to Starrett, who later turned over the deed from one Ringland for the land. After this was done plaintiff executed and tendered to Wharton a deed and abstract showing proper title and demanded payment of the purchase price without avail; Wharton being financially worthless. That all of these statements and representations were false and known to both of the defendants to be false at the time they were made. That the land was rough, sterile, and unfit for farming, the timber thereon worthless. That it was not underlaid with oil or in any oil-producing territory and was not worth to exceed 50 cents an acre. That the car was worth $1,600. A demurrer to this pleading was overruled, and Starrett answered by a general denial, expressly disclaiming any authority for any acts or statements made by Wharton, and alleging that the plaintiff had expressed satisfaction with the exchange of property which was made after an independent investigation of the facts by him and upon advice of counsel. Wharton made default. The motion to strike out certain portions of this answer was overruled, and a reply by way of general denial was filed. A trial was had, a demurrer to the evidence overruled, likewise a motion to instruct a verdict for the defendant Starrett, and, after the latter had introduced a part of the testimony of one witness, the court reconsidered and sustained the demurrer to the plaintiff's evidence. Within three days thereafter the plaintiff moved for a new trial and to set aside the order sustaining a demurrer, which motion was taken under advisement until the next term and then sustained. From this order the defendant Starrett appeals.

In plaintiff's motion attacking the answer he asked that the allegation that he had not tendered a conveyance to the defendant be stricken out for the reason that it was not a matter of defense or responsive to any issue in the case; "this being an action in which plaintiff's amended petition shows that he has elected to affirm the exchange for the land in question and sues for damages for fraudulent misrepresentation of the character and value of said land." It is contended that the plaintiff's pleadings were so indefinite that his theory of the case could not be determined therefrom; that they contained no allegation of the value of the land, if it had been as represented, and therefore no basis for proof of the proper measure of damages; that no such proof was offered; that, if the claim be against Starrett for Wharton's failure to pay, the record does not disclose Wharton's

[3] Counsel argue that it was essential to state what the land would have been worth if as represented, while the plaintiff contends that as both defendants represented that it was worth and Wharton stood ready to pay at once $1,600 cash, which was the sum asked for the machine, and which both defendants pretended the plaintiff would receive therefor by the operation of buying this land from Starrett and at once conveying it to Wharton, all he need to do is to show how much less than $1,600 it was in fact worth. We agree with the latter contention. The evidence disclosed that the land was not worth much above $1.50 an acre; that it was not even owned by Starrett or desired by Wharton who had no intention of taking it. From so much of the evidence as appears in the record presented, one would have to be blind not to see that the defendants co-operated in a fraudulent scheme whereby they procured the plaintiff's car, and it would serve no purpose for the latter to show what the land woud have been worth had the representations of either borne the remotest semblance of truth. Hence the rule in Speed v. Hollingsworth, 54 Kan. 436, 38 Pac. 496, relied on by the defendant, that the measure of damages is the difference between the actual and represented value of the land does not so directly apply as to be controlling.

[2] Here the fraud consisted largely, if not entirely, in making the plaintiff believe that, by using the land as an instrument of the transfer, he would really be selling his car for $1,600 cash. The important thing stated and believed was not that the land was worth $1,600 but that Wharton actually stood ready, able, and anxious to pay that sum for it; and the land passing from Starrett through Hinchey to Wharton was a mere medium of exchange used to accomplish the supposed bona fide plan of buying Starrett's car for $1,600 but the real mala fide purpose of getting it for practically nothing. The assurance made by both defendants of the ability and intention of Wharton to take the land at once at the cash sum named was a statement touching an existing condition and not a mere promise or opinion. State v. Cowdin, 28 Kan. 269; State v. Briggs, 74 Kan. 377, 86 Pac. 447, 7 L. R. A. (N. S.) 278, 10 Ann. Cas. 904; Smith v. State, 116 Ga. 587, 42 S. E. 766; Commonwealth v. Drew, 153 Mass. 588, 27 N. E. 593; People v. Hug