## Facts

- Thomas Sardo, a Paterson, New Jersey jeweler, sought theft insurance for his stock of jewelry.
- Sardo applied through intermediaries and met with Mellor Newman, a local agent for Fidelity & Deposit Company of Maryland.
- Newman stated he could write burglary insurance and would contact the company about the coverage Sardo wanted.
- Fidelity’s Newark issuing office investigated Sardo’s premises and issued a written policy.
- The policy, as written, covered “money and securities,” not jewelry.
- Newman reviewed the policy but assumed “money and securities” included jewelry.
- Sardo did not carefully read the policy and assumed it covered jewelry because that was what he had sought.
- After a robbery in which jewelry was stolen, Fidelity denied coverage because the policy did not insure jewelry.
- Sardo filed an equity action seeking reformation of the policy to substitute “jewelry” for “securities.”

## Issues

1. Whether an insurance policy may be reformed to cover jewelry based on mutual mistake when the issued policy plainly covers only “money and securities,” and the insurer did not share the agent’s assumption about the wording.
2. Whether an insured who could have protected himself by reading the policy may obtain reformation absent fraud or proof that the insurer, with knowledge, ratified the agent’s broader representations.

## Decision

- The court reversed the decree granting reformation and dismissed the claim for reformation.
- The court held reformation was unavailable because the evidence did not show a mutual mistake shared by both contracting parties regarding the policy’s terms.
- The agent’s assumption that the wording included jewelry did not establish that the insurer was under the same misconception.
- Because Sardo had the opportunity to examine the policy and no fraud or knowledgeable ratification by the insurer was shown, equity would not rewrite the contract to add jewelry coverage.

## Legal Principles

- A written insurance contract will not be reformed for mistake unless the mistake is mutual and both parties share the same misconception about the written terms.
- An insurance company’s agent’s unilateral misunderstanding or assumption about policy language does not, without more, prove the insurer’s mutual mistake.
- When an insured could have protected himself by examining the policy, reformation based on an agent’s representations is unavailable absent fraud or proof that the insurer, with full knowledge, ratified those representations.
- Reformation requires clear and convincing proof that the writing fails to express the actual agreement of both parties.

## Conclusion

The court refused to reform the policy to cover stolen jewelry because the record showed, at most, the agent’s and insured’s unilateral misunderstanding, not a shared mistake by the insurer, and the insured’s failure to read the policy barred equitable relief absent fraud or insurer ratification.


Sardo v. Fidelity & Deposit Co., 100 N.J. Eq. 332, 134 A. 774 (N.J. Ct. Err. & App. 1926)