Johnson v. Farmers Insurance

Weaver, J. 1. Insurance: policy in general: oral applications: agent’s neglect to forward: resulting damage. The plaintiff’s original petition alleged that, on June 11, 1911, she was the owner of certain described property in the city of Lisbon, Iowa, and for many years had kept the residence building and contents thereof insured in the defendant company; that, on June 25, 1906, she procured from the defendant a policy of insurance on said property for a period of five years; 'that, by inadvertence, at ■ the expiration of said period, the policy was not immediately renewed, but a short time thereafter, to wit, July 20, 1911, one Runkle, who was the defendant’s agent, notified plain [634] tiff’s husband, E. A. Johnson, that the policy had lapsed, and solicited a renewal thereof; and thereupon, plaintiff’s husband, acting'in her behalf, and Bunkle, acting for the defendant, orally agreed upon the issuance of a policy of insurance for the sum of $2,800 on the dwelling house, $1,000 on its contents, and $700 on the house. She further alleges that the agent made a minute of the data necessary for him to have in order to report the transaction to the company and to obtain the policy thereon, and promised that said insurance should be made effective for three years from twelve o’clock, noon, of that day; and the said E. A. Johnson, on the same day, and in consideration of such promised insurance, paid to said agent the agreed premium thereon. It is further alleged that, at the time of this transaction, the agent 'suggested that he had a fireproof safe, which he used' for the safe-keeping of policies, and that, if permitted, he would deposit the plaintiff’s policy there, when received from the company; that, relying upon said agent to make the proper report to the company and secure the issuance of a policy, and believing that this had, in fact, been done, and that the property was duly insured, according to the agreement, she made no further inquiry about it until, on February 15, 1914, her said dwelling and its contents were destroyed by fire, when she discovered that said agent had negligently failed to report the transaction to the company, and did not, in fact, procure the issuance of a policy. Notice of loss was immediately given to the defendant, which denied liability, on the ground that no policy had been issued to her. Thereupon, this action was begun, to recover damages to the amount of the insurance which had been agreed upon with defendant’s agent, and paid for as above alleged. Thereafter, plaintiff filed an amended and substituted petition, stating the alleged facts with more particularity; and among other things, she averred that said agent was [635] duly authorized by defendant to solicit insurance from property owners and collect premiums on such insurance, and to receive from defendant for its patrons the policies issued by it; that the agent, with the knowledge and consent of the defendant, had customarily himself prepared the applications for policies, and forwarded same without the signature of the applicants, except as written thereon by himself; and that defendant had recognized his authority so to do, by accepting such applications and issuing policies thereon; and that this custom and manner of the agent in doing business were also known and relied upon by plaintiff’s husband and agent, and in such reliance, the premium was paid. The plaintiff further alleges that the failure to transmit the premium to the company and to procure the issuance of the promised policy was occasioned by the negligence of defendant’s agent, and without negligence on her part; and that, because thereof, she has suffered damage, to the amount of the insurance which had been agreed upon. Answering the claim thus stated, defendant denied that any policy was ever issued to the plaintiff, or that it ever agreed or undertook to issue such policy, or became in any manner liable to her on account of the loss of the property. It is further pleaded that, immediately after the fire, plaintiff, claiming to have been insured, notified defendant of her loss, and asked for blanks on which to make formal proof thereof. In the same notice, plaintiff stated that the property was insured about August 1, 1911, but that the policy was not in her possession. Because of the giving of such notice and the making of such claim, defendant says it relied upon the fact that no policy had been issued as a sufficient defense, and therefore denied all liability, and employed counsel and incurred expense to sustain such defense; and that plaintiff is, therefore, estopped to assert any claim for a recovery of damages arising from [636] the negligence of defendant’s agent. There was a trial to a jury, resulting in verdict and judgment for the plaintiff for the full amount of her claim. Before taking up the several assignments of error argued by appellant, it will clarify the situation to mention certain matters of fact disclosed by the record. There was evidence from which the jury could find that, in July, 1911, W. H. Runkle was the defendant’s agent in the town of Lisbon, and had transacted business as such with the plaintiff or her husband, who acted as her agent; that, as agent for the defendant, Runkle had solicited many property owners in that vicinity to insure their property with the defendant, and had collected the premiums therefor; that it was his uniform practice not to require such property owners to sign- written applications for the insurance desired, but, having obtained the data required, he himself filled out the applications and signed the names of the property owners thereto, adding to each of such signatures the words “By W. H. Runkle;” that the applications thus made and signed were regularly accepted by the defendant,- and policies issued thereon; that said agent and his manner of doing such business were well known to the plaintiff, or to her husband, who represented her in said matters; that said agent 'personally solicited the renewal of said insurance, and entered into an agreement with plaintiff’s husband to procure a policy for her, as alleged in the petition, and obtained the necessary data to enable him to report the transaction to the company, and received the premium to be paid for such insurance. The jury could properly have found, also, that, at the time when the premium was paid, Runkle said he would deposit the policy, when received, in his safe, where it would be securely preserved; but that, in truth, he neglected to report to the defendant said application or agreement for a renewal of the insurance, or to turn over to defendant the premium [637] collected thereon by him; and that, by reason of such neglect, no policy was, in fact, ever issued. Numerous other facts, of more or less relevance, are either admitted or find support in the testimony; and, so far as the same may appear necessary to the proper disposition of the appeal, they will be hereinafter mentioned more specifically. 2. Insurance: agents: ostensible and actual authority. I. The first proposition argued for appellant is, in substance, that plaintiff could not rightfully expect a policy to be issued to her through Runkle, who was no more than a soliciting agent, until she had signed an application therefor; and, if she relied upon Runkle to fill the application and sign her name thereto, he was, m such respect, her agent, and not the agent of the company; and in such case, the company is not liable for the consequences of his neglect. [638] 3. Insurance: contract in general: negligent failure to issue: evidence. [637] But nothing is claimed for the plaintiff, as we understand the situation, because of Runkle’s failure to subscribe her name to an application. The evidence as to his manner of doing business, and of the company’s acquiescence therein by its issuing policies on his reports with forms of application made and signed by himself, shows a voluntary waiver by the company of the necessity of any written application by the property owner. If it saw fit to do business on' that basis, and issue policies upon risks so solicited and obtained, it is not in position to plead, in avoidance of liability so incurred, that its agent was, in any respect, acting as agent for the property owner. There is no magic in. the mere name “soliciting agent,” “recording agent,” or “general agent.” Our statute provides that every person who shall, in any manner, directly or indirectly, transact business for any insurance company, is the agent of such company (Code Sections 174.9, 1750). The scope and extent of his authority is shown, not merely by [638] reference to his title or to his written commission or credentials, but by the business which he is permitted to do and perform, and does do and perform, in the company’s name, or by its apparent acquiescence and consent. His act in that behalf is the company’s act, and his neglect with respect to such business is the company’s neglect. It may well be possible that, in so far as concerns Kunkle’s promise to deposit the policy in his safe when it was received from the company, it was his individual undertaking, and that, had he received and held the policy, he would, not, as such depositary or bailee, be considered the representative of the company; but the fact of such promise would, nevertheless, be competent testimony on the question of a delivery of the policy so received, and, where the policy is not issued, or not received, and the company or its agent is charged with negligence in that respect, evidence of that promise would also be admissible upon the question of plaintiff’s contributory negligence. 4. Insurance: agents: ostensible and actual authority. II. Counsel say that the company could not, itself, have lawfully subscribed plaintiff’s name to the application, and, therefore, could not authorize. Runkle to do so, or ratify his act in doing it. All this may *le admitted, without conceding that it has aiiy material application to the case now before us. There is nothing in the law which prohibits an insurance company from issuing a policy without formal written application of any kind, or upon ■the written or oral report of its agent; and if, as the jury could fairly find from the evidence, the appellant had adopted a course of business in which its agent, Runkle, was authorized to solicit insurance without taking written applications from the property owner therefor, and to collect the premium thereon in advance, and had been accustomed to issue its policies upon Runkle’s report of such [639] business, without any accompanying written applications, or to issue them upon applications showing upon their face that they had not only been filled out by Eunkle, but signed by the names of the property owners, also written by Eunkle, it cannot be heard to deny its liability in this action merely because plaintiff concedes that she signed no written application for the insurance which she says was agreed upon with the agent, and for which she paid the stipulated premium. That such was the manner and method of business between the appellant and its agent and their patrons generally, is shown without substantial dispute. The records of the company subpoenaed into court show that Eunkle was an active agent, securing numerous risks for the appellant in and about the town of Lisbon, and that, without exception, these policies were issued without written applications, except such as were signed by Eunkle himself. More than 200 such applications, so prepared by him, during the two-year period covering the time in question, and on which appellant had issued policies, were exhibited in court. Under such circumstances, the precedents relied upon by appellant, which emphasize the distinction between a soliciting agent and agents having a wider scope of authority, are not controlling on this appeal. If the authority actually given the agent, or the authority which the appellant apparently permitted him to exercise, was such as to justify the plaintiff in agreeing with him upon the terms of insurance, paying him the premium thereon, and relying upon him to report the same to his company, either orally or with an application made by himself, and to obtain for her a policy' embodying such agreement, and he failed and neglected to report such agreement to the appellant, or to transmit to appellant the premium collected, and failed to notify plaintiff of the true situation, and she, as a person of ordinary care and prudence, was led to believe, and did believe, that the insurance for which' [640] she had paid had been duly effected, then the negligence ot the agent is chargeable to the appellant, and plaintiff maj recover her damages. See Duffie v. Bankers’ Life Assn., 160 Iowa 19; Northwestern M. L. Ins. Co. v. Neafus, 145 Ky. 563; Boyer v. State F. M. H. Ins. Co., 86 Kans. 442. III. It is argued that, even conceding that recovery may be had from an insurance company for damages caused by the negligence of a soliciting agent, it must first appear that plaintiff has done all that she is required to do; and that, to use the language of counsel, “inasmuch as a written application was required, with the name of applicant signed thereto, then, until such application had been signed by herself or by her agent, she has not done all which was required by her and she is not entitled to a verdict.” What we have already said concerning the alleged necessity of a written application, duly signed, sufficiently covers this exception; and it is sufficient here to say that the objection is without merit. 5. Insurance: agent: agent acting for both insurer and insured. The further point is made that Runkle’s agreement, if any, to receive and hold the policy on deposit for the plaintiff, was not within the scope of his authority as appellant’s agent, and in that respect he must be considered as plaintiff’s agent; and that his failure to notify her that no policy had been issued, was negligence only with respect to his agency for her, and not with respect to his agency for the company. The premises thus laid down may, for the purposes of this case, be admitted, but the conclusion as stated does not follow. The duty to notify plaintiff, if defendant refused to issue the policy for which she had paid, was one which the company, or Runkle, as its agent, was bound to perform with reasonable promptness, without any reference whatever to the agreement of Runkle to hold the policy on deposit for her. Neither he nor the company for which he acted could take [641] her money in payment of the agreed premium, and, without notice of a refusal to insure, and without offer to re-' turn the money, escape liability, merely because she did not appear and demand action on their part before the loss occurred. 6. Estoppel: equitable estoppel: mistaken action induced by wrongful conduct. IV. Defendant’s plea of estoppel is to the following effect: When the loss occurred, plaintiff, as we have said, gave notice of it to the defendant, and asked for blanks upon which to make formal proofs. In the same connection, the notice stated that the policy was not in plaintiff’s possession, but the fact that the property was insured and the premium paid was without question, and she demanded payment accordingly. The original petition, as recited in our preliminary statement, set out, with considerable fullness, plaintiff’s alleged dealing with the company through Runkle, the agreement upon a policy of insurance,' the payment of the premium, Runkle’s promise to report to the company and procure the issuance of a policy, plaintiff’s reliance on said promise, Runkle’s negligence with respect thereto, his failure to return the premium paid, and the loss of the property by fire, and demand for judgment for the damages so sustained. The amended and substituted petition restated such alleged facts, expanding the statement somewhat, to include a more detailed recitation of the facts concerning the negotiation, and dealing with Runkle as the defendant’s agent, and the defendant’s method and manner of doing business by and through Runkle. In both the original and substituted petitions, it is alleged that the amount of insurance agreed upon was $3,800, and that the loss of the property by fire exceeded that amount; and in each, there is a prayer for $3,800, with interest. It is the theory of appellant that the notice given to it by plaintiff, immediately after the fire, indicated that the [642] claim so made was upon an alleged right to recover upon a policy or contract of insurance, and that, relying upon such notice as a true statement of the nature of plaintiff’s demand, and upon the fact that no policy had been issued, defendant denied all liability to the plaintiff, and employed counsel and incurred expense in preparing such defense; and that, by reason of these facts, the plaintiff is estopped to claim or have a recovery in this action for damages on account of the agent’s negligence. The claim to recover upon the latter ground is said by counsel to be a material “change of front” by the plaintiff, and that such change will not be allowed, to the defendant’s prejudice. 7. Appeal and error: harmless error: excluding evidence of admitted fact. In support of this defense, appellant offered in evidence the written notice given by plaintiff to defendant soon after the fire; but, on plaintiff’s objection to its materiality,. and because the matter sought to be shown constituted neither a defense nor an estoppel, the offer was denied; and this ruling is assigned as error. If we were to hold the evidence competent, there would be no prejudicial error in the ruling. The notice had been pleaded and set out by the defendant m haee verba in its answer, and 'plaintiff in her reply had specifically admitted it, all of which was already before. the jury. We further hold that there was no prejudice in the ruling, because, for reasons hereinafter stated, we are clear that said notice or letter to the company does not constitute a ground of estoppel. 8. pleading: matters spedaily plead-able: adjudication. [643] 9. Appíjal and error : presumptions : 'non-showing as to contents of exhibits. [642] In further support of the plea of estoppel, it is said that, prior to the commencement of the action, the- plaintiff commenced another action against deféndant in the superior court of Cedar Rapids, in which (as we understand the statement in argument) , ■ she sought to recover pidgment against defendant for this same loss or damage, but had withdrawn or dismissed her action be [643] fore.the same was submitted. In this same connection, defendant called as a witness the clerk of the superior court, who produced a “package of papers” said to be “the files in the case of Iva M. Johnson v. Farmers Insurance Co.,” and identified the petition, amendment tot petition, answer, amendment to answer, and original notice in such proceeding, and offered the several papers in evidence. Plaintiff’s objection to these exhibits .as incompetent, irrelevant, immaterial, and as showing no estoppel or defense to plaintiff’s present action, was sustained. Of this ruling, also, complaint is made. The proceedings in the superior court were not pleaded either as a defense or prior adjudication, or as ground of abatement. Indeed, the fact that any such suit had even been begun in any court is nowhere shown or suggested in the record, until it more or less vaguely or inferentially appears in the introduction of the defendant’s evidence; and the exclusion of the testimony may well be sustained on the theory of its entire irrelevancy. Moreover, the several papers in question are offered simply by name, without anything by which this court can say that their contents did or did not have any material bearing upon the issues in this case. In the absence of any showing in this respect, the ruling below will be. presumed to be right. The trial court appears at first to have held that the alleged estoppel was well pleaded; but, before the case was submitted, reached the conclusion that nothing was shown on which the jury could properly find that an estoppel had been established. In this there was no error. Assuming, as we must for the purpose of this appeal, that plaintiff had arranged in good faith with Runkle, as appellant’s agent, for insurance upon her property, and had paid him the premium thereon under the circumstances shown by the testimony in her behalf, it is putting it very [644] mildly to say that it ought uot to be held, as a matter of law, that she could uot reasonably rely upon said agent to perform his agre.ement, or reasonably understand and believe that a policy had been issued to her; and if, on the day following the fire, still acting on the understanding and belief that her insurance had been so perfected, she notified defendant of the loss, and stated her claim Jhat the property had been so insured, and demanded payment of her damages accordingly, — at the same time disclosing the fact that the policy for which she had contracted was not in her possession, — it would be an extraordinary example of the sacrifice of justice to technicality to say that if, on close examination into the situation, it should be developed that the agent had neglected his duty to report the matter to the company, or the company, being notified, had, through some oversight, failed or neglected to issue the policy, the plaintiff was, nevertheless, estopped to demand her rights in the premises because, in her letter to the company, she had demanded payment of insurance, instead' of damages for failure to insure. No precedent cited in argument goes to this extent, or even approaches it. There is no necessary inconsistency between the claim stated by plaintiff in her notice of loss and that which she asserts in- her pleadings in this case. She admits a.t the outset that she has no policy to exhibit; she does not allege that she ever personally received or had such policy in her possession ; but she does say that she paid for such insurance, and is entitled to the indemnity thus purchased. And if we assume, as we must, the truth of the case made by her on the trial, she was insured, in the very substantial sense that she was entitled to be made whole by the company, whether it be called a contract, indemnity, or damages for the failure of the agent to furnish the policy or to return her money with a refusal to insure. If, as she claims, and as her testimony tends to show, she was misled into the [645] belief that the insurance had been perfected, and that she was entitled to. demand payment as upon a contract of indemnity, her mistake in this respect was occasioned by the defendant itself, or by the conduct and representations of its agent in the transaction of its business; and it would be a striking perversion of legal principle which would permit the defendant to make use of such mistake, induced by its own agent, to escape liability for her loss. Duffie v. Bankers’ Life Assn., 160 Iowa 19; Boyer v. State F. M. H. Ins. Co., 86 Kan. 442 (121 Pac. 329). It is not conceivable that appellant suffered any prejudice or injury because of the form of plaintiff’s notice of loss. 10. Limitation of actions: negligence: negligent failure to issue insurance policy. Y. Defendant also pleads and argues that the form of policy which would have been issued to plaintiff, had* her insurance been perfected, contained a provision barring action thereon if suit were not begun within one year after her loss; that her right to bring this action for damages because of the agent’s negligence'is subject to the same limitation; and, as this action was not begun within the year, her right to maintain the same is barred. As sustaining this proposition, special reliance is placed upon Barre v. Council Bluffs Ins. Co., 76 Iowa 609, and Green v. Liverpool & L. & G. Ins. Co., 91 Iowa 615, which decisions, in turn, cite and apply the rule followed in Smith v. State Ins. Co., 64 Iowa 716, and Hubbard v. Hartford Fire Ins. Co., 33 Iowa 325. In each and all of these precedents,. action was brought to recover indemnity upon an alleged oral contract of insurance (except, perhaps, in the Barre case, where the petition declared upon an oral contract to issue a policy) ; but in none was there any suggestion of a claim to recover damages for negligence. It was, therefore, very properly held that, if the agreement to insure or to issue a policy was to be treated as a contract [646] of insurance, the court would presume, in the absence of evidence to the contrary, that the policy so contemplated was in the usual form then being issued by the company for the insurance of such risks, and that the conditions therein provided would be applicable to the contract sued upon. All this may be correct; but it does not follow that, because an action upon the policy, had one been issued, or upon an oral agreement of insurance would have been barred, the same limitation must be applied to an action to recover damages for the neglect of appellant’s agent to effect a contract of insurance, either written or oral. The parties are in accord upon the proposition that there was no contract of insurance. Plaintiff’s claim is that the defendant’s agent, acting within the apparent scope of his authority, undertook to obtain such a contract and provide her with insurance, but negligently failed so to do; and she demands recovery, not because she was insured, but because she was not insured, and because her want of protection in this respect is due to the neglect of the defendant’s agent.' Generally speaking, an action to recover damages on account of negligence may be brought at any time within the statutory period of two years (Code Section 3447) ; and, in the absence of any showing bringing the case within any of the exceptions to that provision, it is not within the province of the court, to abbreviate the period so fixed. 11. Appeal and error: abstract: contradictions: presumption. VI. Appellant criticizes several of the paragraphs of the court’s charge to the jury. The appellant’s abstract at this point is contradictory and confusing. It is there shown that, upon hearing the defendant’s motion for new trial, the court made and entered its ruling as follows: “Though opportunity was given, no exceptions were taken to the court’s instruc [647] tions, and the motion for hew trial is overruled, and judgment confirmed.” So far as we are able to ascertain from the abstract, this ruling and record have never been changed or amended. In an earlier portion of the record, there is, however, a statement of objections to parts of the court’s charge, purporting to have been made before such charge was read to the jury. In our opinion, upon the record as it stands, this court could properly treat the case as one in which there is no exception to the court’s charge; but we have examined the objections which are said' to have been raised before it was read to the jury, and find that, in all essential respects, such objections are controlled by the conclusions we have already announced, and no reversible error appears in the paragraphs of the charge which are there challenged. Of exceptions taken to rulings on the admission of testimony, it may also be said that such rulings are, for the most part, sustained by our view of the law as hereinbefore expressed. Moreover, the “propositions relied upon by the appellant for a reversal,” in so far as they relate to these rulings, are entirely too general in form, and fail to disclose the error which counsel had in mind in framing tin: assignment. 12. Trial: verdict: excessiveness. VII: The verdict is said to be excessive, even upon plaintiff’s own theory of her case. It appears that the insurance for which she arranged with Runkle included the sum of $1,000 upon the contents of the dwelling. In proving the amount of her actual loss, she testified to having listed the articles of personalty so insured, and fixed their aggregate value at $818,75. The verdict of the jury indicates quite clearly that a recovery was allowed for a sum equal to the entire amount of the contemplated insurance, including $1,000 on the contents of the house. The verdict is, therefore, in excess of the damages which [648] plaintiff would be entitled to recover on any theory oí h ■ r case, to the amount of $186.25 and interest thereon' at the rate of G per cent from the date of the loss until the date of the judgment below. For the -reasons hereinbefore stated, the cause will be remanded for modification of the judgment as above indicated, and as so modified, will stand affirmed. One fourth of the costs of the appeal will be taxed to the appellee, and all other costs taxed to the appellant. — Modified and affirmed. Preston, C. J., Gaynor and Stevens, JJ., concur.