Jernigan v. National Union Fire Insurance

BkogdeN, J. The questions of law presented by the record are as follows: *679 1. Was tbe National JJnion Fire Insurance policy duly canceled? 2. Did tbe plaintiff ratify tbe substitution or issuance of tbe Yorkshire policy in lieu of tbe National Union policy? Tbe first question must be answered in tbe negative. Tbe methods prescribed by law for tbe cancellation of fire insurance policies are discussed and applied in Dawson v. Insurance Co., 192 N. C., 312, 135 S. E., 34. Tbe plaintiff, for whose benefit tbe insurance was procured, knew nothing of tbe cancellation of tbe National Union policy, therefore, neither approved, waived nor ratified tbe cancellation. In tbe Dawson case tbe Court said: “No contract,-valid in its inception, and unobjectionable in its terms, can be canceled, without tbe consent of all parties, who have acquired rights thereunder.” Tbe power of a local insurance agent, without tbe knowledge or consent of tbe insured, to substitute one policy for another is discussed in tbe following cases: Waterloo Lumber Co. v. Des Moines Ins. Co., 138 N. W., 504, (51 L. R. A. (N. S.), 539); Niagara Fire Ins. Co. v. Raden, 5 Southern, 876; Grace v. Ins. Co., 109 U. S., 278; City of New York Ins. Co. v. Jordan, 284 Fed., 420; Clark v. Ins. Co. North America, 35 Atlantic, 1008; Insurance Company of North America v. Burton, 294 Pacific, 796; Gulf Ins. Co. v. Landamore, 22 Southwestern (2d), 978; Johnson v. Ins. Co., 63 Northeastern, 610; N. Pellagi & Co. v. Orient Ins. Co., 148 Atlantic, 869. Tbe Glarh case, supra, is directly in point and states tbe principle involved as follows: “There was no contract between tbe plaintiff and tbe defendant company at tbe time tbe loss occurred. There was a subsisting contract between tbe plaintiff and tbe Commercial Union. Tbe unauthorized attempt on tbe part of tbe agent of tbe defendant company to make such a contract by entering in bis “daily report” tbe memorandum of such contract was not enough. Tbe contract of insurance is to be tested by principles applicable to tbe making of contracts in general. Tbe terms of tbe contract must have been agreed upon. This necessarily implies tbe action of two minds, of two contracting parties. If it is incomplete in any material particular, or tbe assent of either party is wanting, it is of no binding force.” Tbe Burton case, supra, is also directly in point. Tbe syllabus by tbe Court declares: “Where one applies to an agent authorized to issue policies and collects premiums for insurance in a stated sum, and tbe agent issued a policy therefor, delivered it and collected tbe premium, tbe contract was complete, and tbe agent on notice from insurer to cancel tbe policy could not, without insured’s knowledge, place tbe risk with another insurer.” Tbe opinion of tbe Oklahoma Court in said case also said: “There is a well established rule that, where an owner constitutes tbe agent of a fire insurance company bis agent to keep tbe *680 property insured with power to select the insurer or insurers, such agency carries with it the power to cancel a policy without notice to the insured and substitute therefor a policy in another company, as he may be the agent for the insured for such purpose, and as such may, for the insured, waive notice.” And the opinion continues: “There being no evidence of express authority for the agent to cancel the first policy, and there being no sufficient evidence of direction by plaintiff to the agent to insure the property and keep it insured, and no evidence of a course of dealing or custom between the parties sufficient to justify a conclusion that the agent was authorized to act for the plaintiff to the extent of waiving notice of the cancellation of the first policy, we conclude that, no notice having been given to plaintiff as required by law and the terms of the policy, the first policy was not canceled before the fire occurred, and it was then too late.” The foregoing cases and many others of like tenor fully recognize the right of the insured, to ratify the action of the local agent in' issuing the substituted policy, for the reason that both policies were obviously issued for his benefit. Nevertheless, in the case at bar, the insured stated that she “was looking to the National Union Eire Insurance Company to whom she had paid her premium to pay the loss and damage which she had sustained.” The result-is that the National Union policy, not having been properly canceled, was in full force at the time of the fire, and the local agent, without the knowledge or consent of the plaintiff, had.no authority to issue the Yorkshire policy. Moreover, as the insured has not ratified the issuance of the Yorkshire policy, she is entitled to recover upon the first policy issued. Consequently, the judgment is Reversed.