Morris McGraw Woodenware Co. v. German Fire Insurance

ESTOPINAL, J. The case is correctly stated by the District Judge as follows: Plaintiff’s stock of merchandise was totally destroyed by fire, April 5, 1908, the loss amounting to $61,106.02. Plaintiff claims that it was insured by thirty-three companies for $67,500.00. The defendant is one of said companies, it having issued a policy of one thousand, five hundred dollars {$1,500.00), and the portion of loss to be borne by it is one thousand, three hundred and fifty-seven dollars and ninety-one cents ($1,357.91), but it paid only $1,222.12, leaving a balance due of $135.79, which plaintiff claims in this suit. Defendant admits that the fire occured resulting in the total destruction of the plaintiff’s stock in trade and a loss of $61,106.02, and its liability under the policy issued by it, but it contends that the total insurance was $75,000, (not $67,500.00), in thirty-seven (not thirty-three) companies, and that its proportion of the loss is $1,222.12, which it has paid. — 128 — The testimony shows that plaintiff gave its insurance to the insurance agency of Adolphe Rocquet & Company, Limited; that this agency distributed the risk among the insurance companies represented specially by it, and insurance companies represented by other agencies and agents. That it selected companies in which to place the lisk without direction from or discussion with plaintiff; that plaintiff had the right to reject any and all policies when presented by said agency; that plaintiff fixed only the amount of insurance to be carried by it and Rocquet & Company, Limited, placed the risks; that prior to March 31, 1908, plaintiff was insured for $75,-000.00; that on March 31,1908, plaintiff directed Adolphe Rocquet & Company, Limited, to “cut out” $7,500.00 worth of insurance, thus reducing the total insurance to $67,500.00; that said agency retained in its possession four policies amounting to $7,500.00; that after March 31, 1908, plaintiff held only thirty-three policies, amounting to $67,500.00; that the fire occurred April 5,1908; that some of the thirty-three companies have settled in full with plaintiff; that others, among which is defendant, have made only partial settlements, without prejudice. Plaintiff takes the position that having instructed Rocquet & Company, Limited, to reduce their insurance from $75,000.00 to $67,500.00, and having refused to accept policies aggregating $75,000.00, when presented to them before the fire by the Rocquet Company, Limited, and the Rocquet Company, Limited, having then withheld four policies aggregating $7,500.00; that this constitutes the notice required to the company, and said four policies were in consequence canceled. On the other hand defendants contend substantially that Rocquet & Company, Limited, were not agents of the Insurance Companies in question, but acted as insurance — 129 — "brokers, and that as such became the agent of the insured. The Eocquet & Company should have notified the four companies or their authorized agents, of the plaintiff’s request that the policies be canceled, and that until then they were not so canceled. The record shows that Eocquet & Company, Limited, intended to send such notices, but it never reached the insurance companies. The McGraw Company contend that they did not employ the Eocquet Company, Limited, as their agents, but dealt with it as an insurance agency, and the agency had ample and timely notice from the McGraw Company that they did not wish to carry the amount' of insurance that they formerly carried. It may be true that McGraw Company never considered Eocquet & Company, Limited, in any other light than as insurance agents, and so they were quoad, the companies which they had authority to represent, but when they undertook to place risks in companies other than those they were authorized to represent, and this they had a right to do under their arrangement with the McGraw Company, they were obliged to do so through agencies having authority to represent those other companies, and hence Eocquet & Co. were merely the intermediary be tween their customer, the McGraw Company, and the authorized agents of those companies, in other words Eocquet & Company, Limited, while engaged in “keeping up ’ ’ the insurance, did so as brokers quoad the companies represented by other agencies. It will not avail the McGraw Company to say that Eocquet & Company, Limited, were not authorized to act in that capacity. It appears to us that the McGraw. Woodeware Company, Limited, long established in an extensive business, must have been measurably familiar with the method and manner of placing insurance by insurance agencies. That — 130 — they were ignorant of the character of the relations arising between an insurance agency, themselves, and an insurance company which such agency was not authorized to represent and the law governing as between the insured, the authorized agency, and the insurance company, is evident, and it is this issue that the Court is called upon to determine-. Eocquet & Company, Limited, were insurance agents as defined by the Supreme Court in the case of New Orleans vs. Rhenish, Westphalia Lloyds, 31 An. 781, as follows: “They negotiate insurance upon commission, and to increase their income they procure authority from foreign companies to place risks for them, and they solicit the patronage of persons desiring to insure, they are under no obligations to solicit for any particular company, each company simply agrees to accept such risks as they have placed for them. ’ ’ The fact is not disputed that Eocquet & Company, Limited, had never been given authority by the four companies involved, to place risks for them. Bach one of these four companies had its own Insurance Agency to which it had given authority to place risks. Eocquet & Company, Limited, had no such authority, and hence the relation of agent and principal did not exist. As before stated, on the 31st of March, 1908, Eocquet & Company, Limited, brought to the McG-raw Company policies aggregating $75,000.00. All of the policies were admittedly in force on that day. The McGraw Company refused to accept that amount of insurance and refused to accept the policies, instructing Eocquet & Company, Limited, to reduce the insurance to $67,500.00. Naturally, Eocquet & Company, Limited, who were not directed to cut out any particular policies, elected to withdraw four policies aggregating $7,500.00 — 131 — taken in four companies of which, they were not the agents, and returned to the McGraw Company, the policies (thirty-three in number) aggregating $67,500.00, and intended to notify the authorized agents of the companies in which the rejected policies had been taken, to cancel same. This Eocquet & Company, Limited,'failed to do. In our view of the matter it is immaterial whether the McGraw Company intended to deal with Eocquet & Company, Limited, as agents or not, or whether the agreement with Eocquet & Company, .Limited, to keep up the insurance of the McGraw Company, up to a certain figure be termed an employment by the McGraw Company, of Eocquet & Company. The facts remain that the McGraw Company did arrange with the Eocquet Company, Limited, to have their insurance “kept up,” by attending to expired and expiring policies and having them renewed, and these relations between Eocquet & Company and the McGraw Company, existed for some time, and were satisfactory to the McGraw Company. Eocquet & Company “kept up” the insurance, and had not been instructed to place the risks in any named companies, and they placed the risks in thirty odd companies. It may not have been, as before stated, that the Mc-Graw Company intended to use Eocquet & Company, Limited, as their agents, but Eocquet & Company, Limited, in carrying out their mandate, did so in the usual course. They were converted into brokers quoad companies not represented by them, and as such became the agents of the McGraw Company. A broker ordinarily has implied authority to do everything necessary to effect the business about which he is employed unless restricted by express instructions or the usage of the trade. No restrictions of any kind were placed on Eocquet & — 132 — Company, Limited, and they placed the insurance in accordance with the usage of the business. Our attention is directed by counsel for plaintiff to Cooley’s Brief on Insurance, claiming that the rule laid down in the cases cited therein is specifically: “If an.insurance agent to whom application for insurance is made, procures a policy from a company for which he is not the regularly appointed agent, he will, for that policy, be regarded as the agent of the company issuing the policy, so that the latter will be bound by his acts and statments just the same as if he was its regularly appointed agent. ’ ’ We have established the status of Rocquet & Company, Limited, to be that of “brokers” in the employ of MeGrraw & Company. It may not be questioned that a broker cannot act as the agent of both parties when their interests are conflicting. As we appreciate the law governing foreign companies, the only persons authorized to represent them as agents are those persons who are duly authorized by the insurance company, and to whom has been issued a certificate by the Secretary of State, pursuant to the provisions of Act 105 of the Legislature of 1898. • That the authority of Cooley cited by counsel for plaintiff does not apply to a “broker,” is self evident from the following citation from that author’s work found at page 2798, Vol. III. “Notice canceling a policy given to a broker employed generally to look after all of the policy holder’s insurance business, and who has exercised such employment continuously for a considerable period, is sufficient. This is the principle underlying the leading case of Stone vs. Franklin Insurance Company, 105 N. Y. 543, (12 N. E. 45), and it has been — 133 — approved and followed in numerous well considered cases. “In another leading case (Hartford Fire Insurance Company vs. Reynolds, 36 Mich. 502), the rule thus laid down was said to apply even where the insurance agent acts as a broker for the insured, and especially where he exercises his own discretion in selecting the companies among which the risk is to be distributed (Dibble vs. Northern Assurance Co., 70 Mich. 1 [37 N. W. 704] . So where the insured employs an insurance agent to keep certain property continually insured for a certain amount, part of the insurance being taken in companies represented by the agent, and part through other companies (Schauer vs. Queen Ins. Co., 88 Wis. 561 [6 N. W. 994] ), such agent must be regarded as a broker, and authorized to receive for the insured notices of cancellation. ’ ’ These are precisely the conditions in the case at bar, and hence it follows that if notice of cancellation by the insurance company given to Rocquet & Company, Limited is held to be notice to the McGraw Company, certainly, notice of cancellation by the McGraw Company, to Rocquet & Company, Limited, was not notice to the Insurance Company. The issues as made by the facts in the case at bar are not by any means new, having been passed upon by Courts of many jurisdictions. “Though a duly appointed agent of an insurance company must, as regards that company, be regarded as the agent of the insurer, yet, as to other companies, in which he procures insurance for a property owner, he may be considered the agent of the insured. ’ ’ — 134 — Smith & Wallace Co. vs. Prussian Nat. Ins. Co., 68 N. J. Law, 674. “So he may, by special agreement, as an agreement to‘keep an owners’ property insured, become the agent of the insured.” Johnson vs. North British Ins. Co., 66 Ohio State Reports, p. 6 (6 3N. E. 610). “An insurance agent to whom a request for insurance is made and who, acting as broker, procures all or part of such insurance through other agents of companies not represented by him, is the agent of the insured. ’ ’ Parish vs. Rose Bud Mining & Milling Co., 140 Cal. 645 (74 Pac. 312). .“Though under special circumstances, a broker may be the agent of the insurer, the mere fact that he receives a commission from the. insurer for placing the insurance with him, does not change his character as an agent of the insured.” Mutual Firemens Ins. Co. vs. Thomas, 92 Fed. 127; East Texas Fire Ins. Co. vs. Brown, 82 Texas 631; Seaman vs. Knapp Stout & Co., 89 Wis. 171; American Fire Ins. Co. vs. Brooks, 83 Md. 832. We are of opinion that the four policies in question; Western Insurance Company, for $1000.00; Norwich Insurance Company, for $1000.00; Illinios National Insurance Company for $2000.00, and the Cosmopolitan Insurance Company, for $2,500.00 not having been canceled by proper notice given to their authorized agents, were alive and in full force and effect at the time of the fire which destroyed plaintiff’s property, and are liable for their pro-rata share of the loss suffered. — 135 — June 21, 1909. Bocquet & Company, Limited, were never their agents. Their authorized agent was never notified to cancel the policies which are admitted to have been in force on March 31, .1908. Delivery of the policies to Bocquet & Company, Limited, was delivery to the McGraw Company. We think the judgment rendered by the Court a qua was error, and accordingly, it is now ordered, adjudged and decreed, that the judgment appealed from be, and it is hereby avoided, set aside and reversed, and it is now ordered that there be judgment in favor of defendant, dismissing plaintiffs suit with costs in both courts.