National Union Fire Insurance v. School District No. 55

Wood, J., (¡after stating the facts). The court correctly instructed the jury that “there was no contract of insurance in this case.” The only issue presented by this appeal is whether or not an insurance company is liable for the negligence of its agent in failing to send to the company an application for insurance, where the only authority of the agent is to solicit applications for insurance, to deliver policies when issued, and to receive .and receipt for initial premiums. ■ When an agent acts within the scope of his authority, the principal is bound. Railway v. Ryan, 56 Ark. 247. Now in the written application of appellee for a policy of insurance it is stated: “It is understood and agreed that this application shall not be construed as a contract of insurance against said company until same shall be approved by the officers of said company, which approval shall be evidenced by the issuance .and delivery of its policy. ’ ’ Under the express terms of .this proposal on the part of appellee for insurance it is stipulated that there shall be no contract of insurance until the company shall approve the application and evidence its approval by the issuance of a policy. Under this stipulation of appellee, even if the soliciting agent had promptly forwarded the application to the company, the latter was under no legal obligation to issue the policy to appellee. The authority of the soliciting agent to receive and forward the application if strictly followed did not impose upon the appellant any legal duty. If the application had been promptly transmitted and received, appellant would not have been liable until the policy was actually issued. Cooksey v. Mutual Life Ins. Co., 73 Ark. 117; Peoples Mut. Life, Accident and Health Ins. Co. v. Powell, 98 Ark. 166. Negligence and liability therefor can not be predicated upon a state of facts that do not impose any legal duty. The better reason and the decided weight of authority supports the doctrine that mere delay in passing upon an application for insurance can not be construed as accepting such application and consenting to be bound for the insurance sought by it, nor can a cause of action for negligence be grounded upon such delay. Albania Gold L. Ins. Co. v. Mayes, 61 Ala. 163, and other cases cited in appellant’s briefs The soliciting agent with only the limited authority shown by the undisputed evidence, could not bind the company by stating that a policy would be issued. American Ins. Co. v. Hornbarger, 85 Ark. 337. Appellee could not assume or presume that the special agent with only limited authority, could bind his principal by any statements he made concerning his own 'authority. Appellee must be ¡held, under the undisputed evidence to have known the extent and nature of the authority of appellant’s special agent. U. S. Bedding Co. v. Andre, 105 Ark. 111. It follows that appellee, under the undisputed evidence, had no canse of action, .and the trial court erred in not so declaring. The judgment is therefore reversed and the cause is dismissed.