Hanover Fire Ins. Co. v. Wood

*383 SOMERVILLE, J. [1] “Where one is sought to be charged with the act of another, proof of the authority under which the act was done is indispensable; * * * and as the evidence must harmonize with the pleading, it should be substantially, yet distinctly, alleged that the act was the principal’s, or authorized by him.” Childress v. Miller, 4 Ala. 447, 450. So, where the complaint alleges merely that an agent did an act purporting to bind his principal, it is insufficient as against apt demurrer. It should go further and allege that the agent was duly authorized to act for the principal in that behalf. May v. Kelly, 27 Ala. 497, 502. In that case the complaint alleged that one Bell, the captain and master of a steamboat, and the agent of its owners, as such captain and agent, accepted a draft “for steamship messenger and owners,” the suit being against the owner upon the acceptance. The court said: “Bell may have been the agent of the owner of the steamboat, and the agent of the defendant, and yet have had no authority to accept any bill for the defendant. It was not enough to aver that Bell was the agent of the defendant. It was incumbent on the plaintiffs to know the extent and nature of his authority as agent, or, at all events, to have alleged that his agency embraced or authorized the acceptance of the bill.” [2] ' On this principle, when it is alleged that the agent did some primary act which he was duly authorized to do, and a secondary and distinct effect is imputed to such act — as, for example, waiver or estoppel with respect to the pleader’s previous conduct — it is not sufficient to allege the authority of the agent to do the primary act merely; but either the waiver or estoppel must be charged directly upon the principal, or it must be alleged that the agent was authorized to bind the principal as to such waiver or estoppel. [3] Plea 6 sets up a cancellation of the policy by the insurer on five days’ notice, as authorized by the terms of the policy. Replication I> confesses the cancellation, but seeks to avoid its effect by showing that thereafter the insured paid the premium of $41.80, by which, it is implied, the policy was reinstated. The allegation is that— “with a full knowledge [of the fact of cancellation] by the defendant, or its authorized agents, acting in the line and scope of their employment, the defendant, or its authorized agents [so acting], did receive from the plaintiff the sum of $41.80, the amount of the premium for one year.” Had the replication alleged simply that the defendant, with such knowledge, received the unpaid premium, the legal implication would have been, prima facie, the reinstatement of the policy and its continuation as a contract of insurance. But the reception of the premium by an agent could have no such result unless the agent was authorized to waive and set aside the cancellation— an authority of equal grade with the authority to issue the policy originally — or unless the company, with knowledge of the payment through the knowledge of an agent so authorized, fails to repudiate the payment and return the money to the insured within a reasonable time after such knowledge was acquired. According to the testimony of defendant’s witnesses, plaintiff went to the office of defendant’s agents in Birmingham (who issued the policy and seemed to have general authority and powers with respect thereto), and paid his delinquent premium to a young woman clerk, who was authorized to receive payments of money due for premiums, but who had no authority to issue policies or to deal with them in any way as contracts of insurance.- There was abundant evidence to support defendant’s plea of cancellation; and, if the jury had so found, and if they had further believed defendant’s testimony as to the circumstances of the payment relied on by plaintiff, and as to the efforts of defendant’s responsible agents to return the money to plaintiff as soon as they learned of its payment, they would have been bound, under the law, to return a verdict for defendant, so far as this issue was concerned. Very clearly, we think, replication D is defective in not alleging that the premium payment was received by an agent of defendant who had authority to reinstate the canceled policy. This defect was aptly pointed out by the twenty-fourth ground of demurrer, which should have been sustained. The instructions given to the jury by the trial judge do not so clearly draw the distinction noted as to cure lie error in overruling the demurrer, and we think it probable, from our study of the record, that this was a matter of controlling importance in the rendition of the jury’s verdict. Replication O is subject to the same defect as D, and for the same reason the demurrer thereto should have been sustained. [4] Replication H to plea 5 is not thus defective in its allegations, for it alleges that the defendant company, acting by its duly authorized agents, denied liability, etc., which sufficiently comprehends the authority of the agents as to the act charged. 2 Corp. Jur. 905, § 611; Childress v. Miller, 4 Ala. 447, 451. On the other hand, replication J alleges only that “the duly authorized agents” of defendant denied its liability, which does not sufficiently show that they were authorized to thus act for and bind the company; since they may have been duly authorized agents, with authority to do other things, but not the thing in question. Prine v. Am. Cent. Ins. Co., 171 Ala. 343, 54 South. 547; Ala. State Mut. Ass’n Co. v. *384 Long, etc., Co., 123 Ala. 667, 26 South. 655. For this reason the demurrer should have been sustained to the latter replication. We remark, however, that the error was technical merely, since there was no real dispute as to the fact of such denial of liability by an agent duly authorized in that behalf, the legal effect of which was to avoid the breaches charged in the plea by waiving the performance of the stipulation's in question. Continental Ins. Co. v. Parkes, 142 Ala. 650, 39 South. 204. [5, 6] The receipt and retention of an overdue premium by the .insurer is a waiver of forfeiture for nonpayment of the premium when due. Security Mut. Life Ins. Co. v. Riley, 157 Ala. 553, 47 South. 735. But it cannot operate as a waiver of forfeiture for breach of the iron safe clause unless the receiving agent had authority to make such a waiver, and .unless he knew of the breach at the time he received the payment. Nor does the mere retention of the unearned portion of a premium after forfeiture, though done with knowledge of the forfeiture, amount to a waiver as a matter of law. Ala. State. Mut. Ass’n, Co., v. Long, etc., Co., 123 Ala. 667, 678, 26 South. 655. [7] Replications L and M, as answers to plea 7, were not subject to the demurrer, since they allege an express waiver of the iron safe clause by agents of the insurer, acting in the line and scope of their employment, with full knowledge of the facts. But replication C to plea 7 is insufficient, in that it does not answer to one of the breaches set up in the plea, viz. plaintiff’s failure to keep his books and -inventories in some place not exposed to a fire which would destroy the building. Replication O is insufficient, also, as an answer to plea 13, in that it does not answer to one of the breaches set up in that plea, viz. that plaintiff did not produce his set of books and inventory, if any he had, showing his business, for the inspection of defendant. These defects are aptly pointed out by the grounds of demurrer numbered 20 and 22, which should have been sustained. [8] Plea 10, to which demurrer was sustained, was the same in substance as plea 7, with the additional averment that— “This plaintiff did not produce his set of books and inventories showing his business, for the inspection of this company, as was required,” etc. The breach of that provision would be a bar to recovery on the policy. Chamberlain v. Shawnee Fire Ins. Co., 177 Ala. 516, 58 South. 267. We find no ground of demurrer to plea 10 nor to that part of it above quoted, which could properly be sustained, and we think the demurrer to that plea should have been.overruled. The errors above noted require a reversal of the judgment, to the end that the case may be retried upon issues appropriately framed in the pleadings. Appellant’s contention that the evidence failed to show such general authority in its Birmingham agent, the Kendrick-I-Iouseal Real Estate & Insurance Company, as to bind the company by such agent’s acts of waiver, estoppel, or reinstatement, cannot be sustained. On the contrary, the evidence clearly supports the conclusion that the Kendrick-I-Iouseal Company was the general agent of the defendant company, and therefore authorized to waive compliance with the provisions of the iron safe clause, or to waive a forfeiture for the breach thereof, or to reinstate the policy after its voluntary cancellation. On the other hand, it is clear that the office clerk to whom, according to defendant’s evidence, the amount of the premium was paid after the alleged cancellation of the policy was not the agent of defendant, though in the service of defendant’s agent, and that, with or without knowledge of forfeiture or cancellation, she could not bind defendant by either express or implied waiver of a forfeiture, nor by reinstatement of a canceled policy. Waldman v. N. B. & M. Ins. Co., 91 Ala. 170, 8 South. 666, 24 Am. St. Rep. 889. With respect to the alleged cancellation of the policy by defendant, and in denial of its validity, plaintiff makes two contentions: (1) That the cancellation was not effective because defendant did not return to plaintiff the unearned portion of the premium; and (2) that it was inoperative, in any event, because notice was given as of a cancellation in prsesenti instead of at the end of five days. [9] The first contention is not well taken. The fact that the general agent settled with the insurance company for the amount, of the premium which had not been collected from the insured, though it kept the policy in full force and effect, and prevented its cancellation as for nonpayment of the premium, was nevertheless not the equivalent of an actual payment of the premium by the insured — the express condition upon which the unearned portion of it was required to be returned as a part of the act of cancellation; and, not having actually paid any money to the company or its agent, nor incurred any obligation to the agent in that behalf, the insured would not be entitled, either in law or in good conscience, to have anything returned to him. We construe the words “actually paid,” as used in the policy in that connection, as meaning actually paid by the insured with his own money or credit, and not merely constructively paid for his account by the agent of the insurer, without any agreement with the insured to do so, and without any extension of credit to him. As to these circumstances - the evidence is in conflict. *385 This view is not in conflict with the case of Buckley v. Citizens’ Ins. Co., 188 N. Y. 399, 81 N. E. 165, 13 L. R. A. (N. S.) 889, where the circumstances held to amount to “actual payment,” and so tq require the return of the unearned premium as a condition to cancellation, were materially different. [10] We think the objection to the form of the notice of cancellation is technical and without merit. It is true the notice declares that the policy “is hereby Canceled,” whereas the policy provides that it may be canceled at any time by the company “by giving five days’ notice of such cancellation.” Nevertheless such declaration will be intended as operative, according to the terms of the policy, at the end of five days after notice thereof. The giving and refusal of several requested instructions is complained of, but those assignments of error need not be specially dealt with, in view of what has been already said, and as those instructions may not be requested again in the same form. Let the judgment be reversed, and the cause remanded for another trial. Reversed and remanded. SAYRE, GARDNER, THOMAS, and MILLER, JJ., concur. ANDERSON, C. J., dissents in part, but concurs in reversal of judgment.