Riverside Development Co. v. Hartford Fire Ins.

Smith, C. J., delivered the opinion of the court. This is an appeal from a judgment denying appellant a recovery upon a tornado insurance policy issued to it by one of appellee’s agents. The declaration was demurred to, and upon the overruling of the demurrer ap-pellee filed a plea of general issue, with notice of special matter to be given in evidence, together with an affidavit [211] alleging that it “has a meritorious defense, and that the foregoing plea and notice nnder the general issne present said defense, which affiant asks to he filed.” This notice of special matter set np facts which constitute a good and substantial defense to the suit. The court, over appellant’s objection, permitted this plea and notice to be filed, and its action in so doing is assigned for error. The ground of this assignment is that the affidavit does not constitute a compliance with section 755 of the Code, and therefore that the judgment of the court on overruling the demurrer should have been that plaintiff recover. Counsel for appellant does not point out wherein this affidavit fails to comply with the statute, and it seems to us that there is no merit in the contention; for, while the affidavit does not set “forth fully the nature of the defense,” the notice, to which reference is made in the body of the affidavit, ■does. The policy was written and issued by W. A. Cox, ap-pellee’s local agent at Marks, Miss. He was, at the time he issued it, one of appellant’s stockholders, which fact was unknown to appellee, and was not learned of by' it until after the loss occurred. At the close of the evidence, the court instructed the jury peremptorily to find for appellee, and there was a verdict and judgment accordingly. From the general rule that an agent cannot bind his principal in any matter in which he himself has an interest, it follows that an agent authorized to issue insurance policies cannot bind his principal by issuing a policy on property owned by him, or in which he has an interests adverse to that of his principal, and, consequently, the policy sued on was void. Greenwood Ice & Coal Company v. Georgia Home Insurance Company, 72 Miss. 46, 17 South. 83; Wildberger v. Hartford Fire Insurance Company, 72 Miss. 338, 17 South. 282, 28 L. R. A. 220, 48 Am. St. Rep. 558; 1st Cooley’s Briefs on In [212] surance, 352; 22 Cyc. 1435, authorities cited; 31 Cyc. 1432; note to Potter’s Appeal, 7 Am. St. Rep. 279; Ritt v. Washington, etc., 41 Barb. (N. Y.) 353; Glens Falls Insurance Company v. Hopkins, 16 Ill. App. 220. But it is said that this property was not owned by the agent bimself, but by a corporation in wbicb be was simply a stockholder, and therefore that he had no interest in the property itself. This distinction is too finespun to be worthy of consideration. It can hardly be said that a stockholder is not interested in the preservation of the property of the corporation in which he has stock, when we remember that the destruction of the corporation’s property has a direct bearing on the value of his stock and on the income to be derived by him therefrom. Again, it is said by counsel for appellant that this rule cannot apply here, for the reason that appellee’s agent was not called upon to exercise any discretion in the issuance of the policy; the rate being fixed, and the agent’s only duty being to write the policy on the payment of the premium. It may be that in writing tornado insurance this agent was not called upon to exercise the same degree of discretion that he is called upon to exercise in writing insurance of a different character; but it cannot be said that he was not called upon to exercise any discretion whatever. And moreover, a violation by an agent, of his instructions is, under some circumstances, binding upon his principal. That this agent did not violate his instructions in issuing this policy, and acted in perfect good faith in issuing it, is wholly immaterial, for that is a matter into which the law will not inquire; it being-contrary to a sound public policy for a man to be permitted to put himself “into relations which ordinarily excite a conflict between self-interest and integrity,” except with the full knowledge and consent of all parties to be affected thereby. The issuance of this policy was reported to appellee-by its agent shortly after it was issued, and because it. [213] then raised no objection thereto counsel for appellant contends that it thereby ratified its agent’s act. In this they are in error, for the reason that the ratification of an invalid act of an agent follows upon a failure to object thereto only when the principal has full knowledge of the circumstances which render the act invalid. The fact that appellee’s agent was one of appellant’s stockholders was learned by it shortly after the loss occurred, and appellant contends that it then became its duty to promptly repudiate its agent’s act in issuing the policy, if it desired not to he hound thereby, and by not so doing it is now estopped from exercising that right. In this appellant is in error, for all that appellee was required to do in this connection was to so act as not to mislead appellant to its prejudice. Again, it is said that this right was waived by appellee because, with full knowledge of the fact that its agent was one of appellant’s stockholders, it called upon appellant to joint with it in the- appointment of appraisers to appraise the amount of appellant’s loss, with which request appellant complied, and an unsuccessful attempt to appraise the amount of the loss was made. A sufficient answer to this contention is that the clause of the policy under which these appraisers were appointed expressly provides that ‘ ‘ such appraisal shall affect no other question under this policy. ’ ’ | There is no merit in any of appellant’s contentions, and therefore the judgment of the court below is affirmed. Affirmed. Cook, J., took no part in the decision of this case.