Fleming v. Hartford Fire Insurance

Cole, J. In this case the nonsuit was granted on the ground that there was no sufficient evidence for the jury to have found, if the cause had- been submitted to them, that the plaintiff had made a valid contract of .insurance with a duly authorized agent of the company, as alleged in the complaint. The defendant’s counsel admitted that a parol contract of insurance was as valid and binding as one in writing, when made by an [619] agent authorized £o effect insurance and issue policies; hut he insisted that the evidence clearly showed that the agent Brack-ett, with whom the business was transacted, had no such authority, and that this fact was, or should have been, known by the plaintiff. It appears that the company has two systems of agencies in the country — one called a recording agency, established in places large enough to warrant it, where the agent has authority to make contracts of insurance, issue and cancel policies, and keep a record of the business transacted by him; the other called a surveying agent, who is merely authorized to receive and forward applications for insurance to the proper office, deliver policies sent to him issued on such applications, and collect premiums thereon, but has no authority to issue policiés under any circumstances. Brackett was a surveying agent, and received and forwarded the plaintiff’s application to the general agent at Chicago for approval and for a policy thereon; and the fact is indisputable that he assured the plaintiff that the insurance would take effect from the date of the application, Uo money was, however, paid at the time, the agreement or understanding being that the premium was to be paid on the receipt and delivery of the policy. According to the rules or instructions of the company, in case of risks on detached dwellings or farm property, the surveying agent might make the insurance take effect from the time of the application, subject to the approval of the general agent; but the property in question was not of that class. The plaintiff ’s risk was not accepted by the general agent, he having rejected it after the hotel was burned, but before he had any knowledge of that fact. Brackett testified, in substance, that when he took the plaintiff’s application, he was acting as recording agent for other companies, for which he made contracts of insurance and issued policies, and that he did, in fact, at this time, issue to the plaintiff a policy in theEranklin Insurance Company. He says that, in effecting contracts of insurance, he made no distinction between those companies that he [620] had. the right to issue policies for, and the defendant, having the idea that he had the right to make applications for both alike. But there is really no evidence to show that any officer of the defendant had notice that he was transacting business contrary to his instructions — if he did so,— or knew that he was assuming to act in any other manner than as authorized; nor is there any ground for saying that the company held him out to the world as clothed with authority to take risks for it and make valid contracts of insurance. Further, it appears to us that there were facts attending the transaction of the business sufficient to charge the plaintiff, as a person of ordin-aiy prudence, with knowledge of the restricted authority of the agent with whom he was dealing. The plaintiff certainly had notice that Brackett could not issue the policy for the defendant; that his application must be forwarded to the general agent for approval, and the policy issued by such agent if the risk were accepted. There was likewise what took place before the loss, when he procured additional insurance in the Continental Insurance Company, because of the delay in receiving the policy of the defendant, and the subsequent surrender of that insurance. It is very true that Brackett then gave positive assurance that the insurance by the defendant was valid; but the plaintiff had no right, under the circumstances, to rely upon these declarations as binding upon the company. If he did not actually know that Brackett had no power to accept risks, agree upon and settle 'terms of insurance, and carry them into effect by a valid parol agreement, as a prudent and ordinarily careful person, he was bound, in view of what took place, to inquire as to the extent of the authority of the agent with whom he was dealing. It will be borne in mind that the plaintiff had received from Brackett a policy in the Franklin Insurance Company; had become anxious about the delay in getting a p olicy on his application for insurance in the defendant company; and had taken out additional insurance in the Continental in lieu of it — things which [621] it seems strange he shonld have done if he really supposed there was a binding parol agreement made with the defendant to insure his hotel in the first instance. And, though told by Brackett that the insurance in the defendant company was “ all right,” would take effect from the “ date of the application,” etc., still he had no right to rely upon these declarations as binding the company. If he had, then a person might in any case rely upon the representations and declarations of an agent, however restricted his powers, and all limitations upon the authority of the agent would be idle and nugatory. "We have, in many cases, substantially enforced the rule laid down by the supreme court of Illinois, in Ætna Insurance Co. v. Maguire, 51 Ill., 342, cited by plaintiff’s counsel, that where an insurance company appoints an agent authorized to take risks, issue policies and represent the company in effecting insurance, and the agent, by his acts or declarations, known and acquiesced in by the company, induces the public to believe he is vested with power necessary to do the act or waive the condition, the company is bound by the acts of such agent. But tie plaintiff does not bring his case within that rule; for here the company had appointed Brackett as a surveying agent merely, and had no notice that he was violating his instructions in any manner, or was acting in a way not authorized about its business. We therefore think the jury would have had no right to find upon the evidence, had the cause been submitted to them, that the plaintiff made a valid contract of insurance with a duly authorized agent of the defendant, as claimed in the complaint. It follows from this view that the nonsuit was right and must be affirmed. By the Court. — Judgment affirmed.