Brown v. Franklin Mutual Fire Insurance

Lathrop, J. The only exception taken in this case by the defendant is to the admission of evidence of a general custom and usage to the effect that persons authorized by mutual fire insurance companies in Massachusetts to solicit insurance can bind the company until notice of the refusal of the risk by the company is received by the agent and communicated to the person desiring the insurance. [568] If this were a stock company there could be no doubt of the admissibility of such evidence. Baxter v. Massasoit Ins. Co. 13 Allen, 320. Putnam v. Home Ins. Co. 123 Mass. 324. Baker v. Commercial Union Assurance Co. 162 Mass. 358. And we see no reason why the same rule should not apply to a mutual insurance company unless there is something in the statutes or in the by-laws of the company which necessitates a different conclusion. A stock company may undoubtedly make an oral contract of insurance. Sanborn v. Fireman’s Ins. Co. 16 Gray, 448, 454. Emery v. Boston Marine Ins. Co. 138 Mass. 398, 409. Commercial Ins. Co. v. Union Ins. Co. 19 How. 318. We find nothing in the St. of 1887, c. 214, §§ 44 and 45, to which we are referred by the defendant, which indicates that such an insurance cannot be effected, nor do we find anything in the by-law of the company which is stated in the exceptions that shows such a mode of insurance to be invalid. The by-law is: “ The directors may authorize the president and secretary to make insurance, and will issue policies at such rates of insurance and under such limitations and restrictions as they shall prescribe.” These are merely enabling words, and do not restrain the power which such a company has by law to make contracts. Sanborn v. Fireman’s Ins. Co. and Commercial Ins. Co. v. Union Ins. Co., ubi sufra. The case at bar differs essentially from Brewer v. Chelsea Ins. Co. 14 Gray, 203, and Baxter v. Chelsea Ins. Co. 1 Allen, 294, in each of which cases the by-law provided that before the policy should be delivered the assured should pay such premium and give such deposit note as the president and directors should determine. The efféct of this by-law was held to be that the contract could not be completed nor the policy take effect until the premium was paid and the note given. There was sufficient evidence in this case to warrant the. jury in finding that Porter, if not the general agent of the company, was held out by the company as having authority to make such a contract as is alleged to have been made in this case, and as the evidence shows was made. If Porter’s authority was limited by private instructions given to him by the officers of the company, this cannot bind the plaintiff if he had no knowledge of it. His authority “ must be determined by the nature of his business [569] and the apparent scope of his employment therein. It cannot be narrowed by private or undisclosed instructions, unless there is something in the nature of the business or the circumstances of the case to indicate that the agent is acting under special instructions or limited powers.” Markey v. Mutual Benefit Ins. Co. 103 Mass. 78, 92. Exceptions overruled.