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Franklin Fire Insurance Company v. Vaughan, 92 U.S. 516 (1875)

Franklin Fire Insurance Company v. Vaughan

92 U.S. 516


A. having bought goods at an auction store, and made part payment therefor, and having the disposal of them, permitted them to remain there for sale by and under his direction. He agreed that the first proceeds of the sale, to the amount of $3,150, should be paid to the vendor, and that the auctioneers, if they advanced money upon the goods, should retain the possession and control hereof as security. No advance was made. A. procured an insurance upon the goods for $2,500, representing that no other person was interested therein, that they were unencumbered, and that he estimated their value to be $12,000. Part of the goods were sold and, the remainder having been destroyed by fire, A. brought suit against the company for the amount of the policy. The company set up by way of defense that his statement as to the freedom of the goods from encumbrance was untrue, that he, knowing of its rule not to insure goods at more than three-fourths of their value, had overvalued them, and that they were in fact worth but $6,000. The jury found that the value of the goods destroyed was $7,204. Held that the facts of the case do not justify the claim that the property was encumbered or that the title of the insured therein was not absolute. Held further that as nothing appeared at the trial to show that the estimate of the value of the goods by A. was not an honest one, the charge of the court below that such valuation, if made in good faith and without intention to mislead or defraud the company, would not defeat a recovery was without error.

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