HARLAN F. FECHT, APPELLANT,
v.
EDMUND MAKOWSKI AND MARGARET M. MAKOWSKI, D/B/A HARBOR LIGHTS MOTEL, AND BERSHIRE MUTUAL INSURANCE CO., A MASSACHUSETTS CORPORATION, APPELLEES; EDMUND MAKOWSKI AND MARGARET M. MAKOWSKI, D/B/A HARBOR LIGHTS MOTEL, APPELLANTS, V. HARLAN F. FECHT AND BERKSHIRE MUTUAL INSURANCE CO., A MASSACHUSETTS CORPORATION, APPELLEES
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A motel owner's family was injured while using a motor-powered boat owned by the motel. The insurer denied coverage based on alleged misrepresentation in the insurance application, which failed to disclose the existence of the motorized boat. The court reversed the trial court's judgment voiding the policy, holding that the insurer failed to demonstrate detrimental reliance on the misrepresentation as required by Florida law.
The court held that the policy was not void. The insurer failed to meet the statutory requirement of demonstrating detrimental reliance on the misrepresented facts, as required by Florida Statute § 627.409. The insurer's own inspections of the property constituted independent investigation that should have revealed the boat's existence, and the insurer could not rely on an application it did not actually rely upon in issuing the policy.
“In other words, in order for the company to be able to take advantage of this section of the law, it must appear that the company relied on this application to their detriment. The statute clearly did not read the requirement of detrimental reliance out of the law.”
Establishes the statutory requirement that the insurer must demonstrate detrimental reliance on the misrepresentation to void the policy.
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Join FLexlaw to unlock all legal intelligenceHarlan Fecht, a paying guest at the Makowskis' motel and fishing resort in the Florida Keys, was injured while a passenger in a motor-powered boat own…
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Appellant, Harlan F. Fecht, and his family were paying guests at a Florida Keys motel and fishing resort which was owned and operated by appellants, Edmund Makowski and Margaret M. Makowski, his wife. Appellant, Fecht, was injured in an accident which occurred while he was a passenger in a motor boat owned and operated by the Makowskis in connection with their motel and fishing resort.
An action at law for damages was instituted in the Circuit Court by Fecht against the Makowskis for injuries sustained. . While that action was still in its preliminary stages, the Makowskis instituted this action for a declaratory decree against Fecht and the Berkshire Mutual Insurance Company, .the insurer of Mr. and Mrs. Makowski under a “Special Multi Peril Motel Policy” which provided in pertinent part:
“COVERAGE C — LIABILITY:
“This company will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of bodily injury or property damage to which this Section applies, arising out of the ownership maintenance or use of the premises, and all operations necessary or incidental thereto, and this company shall defend any suit against the Insured alleging such bodily injury or property damage and seeking damages which are payable under the terms of this Section, even if any of the allegations of the suit are groundless, false or fraudulent; but this company may make such investigation and settlement of any claim or suit as it deems expedient.”
******
“DEFINITIONS — D
“ ‘insured’ means (1) the Named Insured, (2)- any partner therein or ex*470ecutive officer, director or stockholder hereof, therein or executive officer, director or stockholder thereof, (3) any organization or proprietor with respect to real estate management for the Named Insured, and (4) any person or orgainzation using or legally responsible for the use of saddle animals and watercraft owned, maintained or used by the Named Insured, provided the actual use is by the Named Insured or with his permission; but this provision (4) does not apply with respect to (a) the use of saddle animals, or watercraft while rented to any person or organization other than guests or (b) watercraft while used to carry persons for a charge.”
The insurance company denied coverage under their policy because of a misrepresentation by the assured in their application for insurance. The relevant portion of the application is set forth below:
“9. Watercraft: Coverage Desired x Yes_No
Complete following whether coverage is desired or not.
a. Outboard Motors Not more than 10 HP 0 : over 10 HP 0 :
b. Sailboats No. 0 : Length_
c. Inboard motorboats and auxiliaries No. 0 :
Rated speed_ MPH: length_ ft:
d. Canoes or rowboats No. 2 .”
At the time of this application, the motel owners had a motor-powered boat, and the injury received by appellant occurred while using a motor-powered boat owned by the Malcowskis. The assured said he never read this application; it was prepared by the insurance agent, and mailed to Mr. and Mrs. Makowski for their signature. Mr. Makowski testified that he “had confidence in Mr. Lund that he drew me up a policy that would stand up”.
Mr. Lund, the agent, testified that he prepared this application based on discussions with the assured, but that he never specifically asked either Mr. or Mrs. Makowski whether they owned a motor-powered boat, and it appears that they never volunteered this information. It is appellee-insurance company’s contention that this policy would not have been issued for the premium charged if they had known of Malcowski’s ownership of this motor-powered boat.
It is apparent from the record that the motel owners intended to obtain insurance for their entire business including their motor-powered boat, and that the insurance agent intended to insure them against loss from the operation of every aspect of their business, but that the agent did not know that an integral part of the motel operation was a motor-powered boat.
The chancellor was of the opinion that this failure on the part of the owners to-affirmatively advise of the existence of this boat in addition to signing the application of insurance which stated that they owned no motor-powered boats amounted to a misrepresentation pursuant to § 627.01081, Fla. Stat., F.S.A., which entitled the insurer to treat the policy as void. As a result of this determination, judgment was entered for the insurance company, and this appeal followed. We can not agree and reverse.
The record further indicates that the insurance agent, Mr. Lund, made two visits to • this property, and that a second representative of the insurance company made two-inspections of the property subsequent to the agent’s visits. As a result of these inspections, certain repairs were required to be made in order to make the property more safe insofar as the insurance company was concerned.
*471The inspection by the company subsequent to the issuance of the policy made the significance of the statement in the application less determinative of the question of the ■company’s reliance on the application. In fact, the company amply demonstrated that it did not rely upon the application by virtue of the fact that it twice conducted its own inspection of the property independent of the agent and the statements attributed to the assured in the application. Section 627.01081, in this situation, affords the insurance company no support because that statute requires that the misrepresented facts should result in or cause the company to charge a higher premium for the unrevealed risk.
In other words, in order for the company to be able to take advantage of this section of the law, it must appear that the company relied on this application to their detriment. The statute clearly did not read the requirement of detrimental reliance out of the law.
The general proposition that the insurer is charged with all knowledge that it might have obtained had it pursued the independent inquiry to the end with reasonable diligence and completeness,1 requires us to attribute knowledge of the ownership of the motor-powered boat to the insurer.
This proposition coupled with the irrelevancy of the application because of the failure of the insurance company to rely upon it, lead to the inescapable conclusion that the chancellor erred in declaring that the policy was void.
Accordingly, the judgment appealed is reversed and remanded for the entry of a judgment decreeing the insurance policy to be in full force and effect.
Reversed and remanded.
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Sec. Life & Tr. Co. v. Jones, 202 So. 2d 906 (Fla. 2d DCA 1967)…dependent inquiry and the circumstances are such that he is in a position to ascertain the facts by a reasonably diligent and complete search, he is bound by what a reasonably diligent and complete search would show. Fecht v. Makowski, Fla.App.1965, 172 So. 2d 468, 471; New York Life Ins. Co. v. Strudel, 5 Cir. 1957, 243 F. 2d 90, 93; Columbian Nat’l Life Ins. Co. v. Lanigan, 1944, 154 Fla. 760, 768, 19 So. 2d 67, 71. He cannot accept premiums with knowledge, actual or constructive, of facts sufficient to avo…
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Douglas v. The Mut. Life Ins. Co. OF NEW York, 191 So. 2d 483 (Fla. 2d DCA 1966)…beneficiary, was affirmed not [*485] because the insured knowingly and erroneously answered questions on his insurance application hut because the insurance company “did not insist on full and complete answers.” In Fecht v. Makowski, Fla.App.1965, 172 So. 2d 468, the insured recovered upon a liability policy. The insurance company tried to rescind the policy because of a misrepresentation by the insured in their application. The court affirmed and found that in order for the insurer to take advantage of Sec…
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Hydraulic Equip. Sys. & Fabrication, Inc. v. Pa. Millers Mut. Ins. Co., 277 So. 2d 53 (Fla. 3d DCA 1973)…T the assertion by him that he intended to purchase “a general liability policy”. In addition, he stated “That’s what he told me I had when he took my money”. The appellant relies upon the decision of this court in Fecht v. Makowski, Fla.App. 1965, 172 So. 2d 468. On that appeal, this court reversed a judgment for the insurer upon a holding that a claimed misrepresentation by the insured upon the application for insurance was not material. We simply held that the elements for estoppel were not present. We do…
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Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- THE Columbian Nat'l Life Ins. Co. v. Lanigan, 154 Fla. 760 (Fla. 1944)