Penn Furniture Co. v. Lumbermen's Mutual Fire Insurance

Citations

• 47 Pa. Super. 77
• 1911 Pa. Super. LEXIS 114

Syllabus

<p>Insurance — Fire insurance — Reduced rate average clause — Mistake— Equity.</p> <p>1. Where a policy of fire insurance contains a reduced rate average clause, and a policy on the same premises in another company provides that the company issuing the policy shall have the benefit of any such clause, in other policies, and it appears that the reduced rate average clause had been inserted in the first policy by mistake, and after a fire the policy had been reformed by a court of equity so as to exclude the clause, and it also appears that before such reformation the second company had-settled with the insured under the mutual mistake that the clause in the other policy was valid, the second company cannot rely upon such settlement as conclusive, but will be bound, after the policy has been reformed, to pay to the insured an amount in addition sufficient to make up its full share of the loss.</p> <p>2. A receipt in full is prima facie, but not conclusive evidence of a settlement, and it may be attacked on the ground of fraud, mistake or ignorance of the legal rights of the party who gave it.</p> <p>3. A contract is void if it relates to a subject matter contemplated by the parties as existing at the time the contract was made, but which in fact did not exist.</p> <p>4. Where a court of equity is asked to reform the written evidence of a contract, the mistake must be mutual.</p>