Packard v. Dorchester Mutual Fire Insurance

Virgin, J. The policy stipulated that it "shall be void if any material fact or circumstance stated in writing has not been [149] fairly represented by the insured, . . or if without the assent in writing of the company, the situation of circumstances affecting the risk shall, by or with the knowledge, advice, agency, or consent of the insured, be so altered as to cause an increase of such risks. ” The testimony showed that the application contained a misrepresentation as to the contiguity of other buildings ; and that an alteration of the building insured was subsequently made, causing a material increase of the risk. It was not controverted that the plaintiffs made their application through one Holman, an insurance agent, believing him to be the agent of the company; that he assumed to act as its agent, wrote the application, sent it to the company with his name as its agent upon it; that the company received it, acted upon it, issued the policy in pursuance of it, wrote Holman’s name upon the back of it, sent it to him for delivery and received the premium through him. Thereupon the presiding justice ruled that Holman was the agent of the company. It was admitted that Holman knew of the misdescriptions in the application written by him, and that the alterations wmre made with his knowledge and consent. Whereupon the presiding justice ruled that, notwithstanding the misdescriptions, the company was bound; and that Holman’s verbal consent to the alterations were obligatory upon the company, under the statute. We perceive no error in these rulings. To be sure, the mere fact that Holman signed the application as agent, was not enough to show him to be the company’s agent. Campbell v. Man. F. Ins. Co. 59 Maine, 430. The defendant could not prevent such an act on his part done in its absence. But that fact carried home to the company’s knowledge by sending to it the application with his assumed official signature thereon, combined with its subsequent acts, including the indorsing his name on the-policy, might well be construed by the plaintiffs as an official recognition of his assumed character at common law, but also to. bring his authorization within R. S., c. 49, § 18. Dunn v. G. T. Railway, 58 Maine, 187; Ins. Co. v. McCain, 6 Otto, 84. [150] The company could' doubtless waive written assent to the material alterations. Adams v. McFarlane, 65 Maine, 152; Wood v. Poughkeepsie Ins. Co. 32 N. Y. 619. In the absence of any known restrictions of authority, the agent could do the same. It is common knowledge that the authority of an agent comprises not what is expressly conferred, but also, as to thii’d persons, what he is held out as possessing. Hence the principal is frequently bound by the act of his agent, performed in excess, or even in abuse of his actual authority; but this is only true as between the principal and third persons, who, believing, and having a right to believe, that the agent was acting within the scope of his authority, would be prejudiced if the act was not considered that of the principal. Barnard v. Wheeler, 24 Maine, 412, 418 ; Clark v. Metropolitan Bank, 3 Duer, 248. This doctrine is established to prevent fraud and proceeds upon the ground that when one of two innocent persons must suffer from the act of a third, he shall sustain the loss who has enabled the third person to do the injury. Story, Ag. § 127. Of course when restriction of authority is brought home to the knowledge of those with whom the agent deals, his acts in excess of such restricted authority will not bind the principal. Ins. Co. v. Wilkenson, 13 Wall. 222. Thus where one of the ■express conditions of a policy was that "no officer, agent, or representative of a company shall be held to have waived any of the terms and conditions of the policy, unless such waiver shall he indorsed hereon in writing, ” it was held that this limitation ■of power of the agent to waive the conditions was brought to the knowledge of the insured by the policy itself, and any attempted waiver otherwise than therein stipulated, was not binding upon the company. Walsh v. Hartford F. Ins. Co. 73 N. Y. 5, 9. 'There is no such clause in the policy now before us. According to the stipulation in the bill of exceptions, the entry must be, Defendant defaulted. Interest to be added from January 22, 1883. Peters, C. J., Walton, Libbey, Emery and Haskell, JJ., ■concurred.