Kerr v. Milwaukee Mechanics' Ins.

LOCHREN, District Judge, after stating the case as above, delivered the opinion of the court. 1. Defendant was not estopped by its notice to plaintiff, in which it denied liability on the ground that the property described in its policy was not in existence when such policy was delivered, from proving that the policy of the Phenix Insurance Company covering the same property had not been canceled when the property was burned. These matters are so far from being inconsistent that proof of the one almost necessarily proves the other, and no element of an equitable estoppel is even suggested. 2. In this case there is no claim that there was, prior to the execution of the written policy of the defendant company, and its delivery to and acceptance by the plaintiff, any verbal agreement on behalf of that company to insure the property, which might make the contract of insurance take effect before the delivery of the written policy, and render that writing only the better evidence of the terms of the contract which the parties had agreed on. City of Davenport v. Peoria Marine & Fire Ins. Co., 17 Iowa, 277. If, therefore, at the close of the testimony, it clearly appeared that the written policy of the defendant company had not, at the time of the burning of the elevator, become, by delivery and acceptance, a completely binding contract, then the defendant company never incurred any liability as insurer, and the court’s direction to the jury was proper; otherwise it was not. As all the evidence shows that the policy of the defendant company was not intended as a new or additional insurance of the property, independent of other existing insurance, but was intended only to take effect upon the surrender for cancellation of the outstanding policy of the Phenix Insurance Company, which policy it was to replace and become substituted for, it becomes important to consider the status of the Phenix Company’s policy at the time of the fire, as it is certain that the two policies were not in force at the same time. The policy of the Phenix Company was issued in November, 1900, insuring this elevator property for one year. It is admitted that it was valid and binding. It could [446] only terminate “by the expiration of the risk, by the agreement of the parties, or by some means provided by the contract.” Massasoit Steam Mills v. Western Assur. Co., 125 Mass, 110, 114. It did not terminate by lapse of time, as it had about xi months to run at the time of the fire. It was not terminated by the means provided by the contract, which was by giving five days’ notice of cancellation and returning the unearned portion of the premium. This notice of cancellation and return of premium must be to the insured, and not to the agent who procured the insurance, and whose authority is executed and exhausted by the procurement of the insurance. Insurance Co. v. Nill, 114 Pa. 248, 6 Atl. 43. But though the state agent, Coryel, expressed a purpose to cancel the pólicy of the Phenix Company unless a higher premium was paid and query sheet furnished, lie took no steps toward such cancellation; and his conference with McCann ended with the expectation, at least on his part, that the policy of the Phenix Company would be continued by McCann’s compliance with his demands. Two days later the conversation between Rohrer and McCann shows that the latter still expected to pay the additional premium and retain the Phenix Company’s policy, unless Rohrer should succeed in inducing the defendant or some other company to consent to assume and carry the risk at the old rate. Up to the end of this conference between Rohrer and McCann on December 10, 1900, there was certainly no termination of the policy of the Phenix Company by any agreement of the parties, nor any insurance, or agreement to insure, on the part of the defendant company. The plaintiff, who was insured by the Phenix Company’s policy, which he had in his bank, and without whose consent it could not be surrendered nor invalidated except by the five-days notice of cancellation and return of unearned premium, had no notice or information that its cancellation or replacement by other insurance was even being considered by anyone. From that time until after the destruction of the elevator property by fire on December 16, 1900, there was no agreement between the parties for the surrender or cancellation of the policy of the Phenix Company, nor for the insurance of the property by policy of the defendant company in substitution for the insurance by the Phenix Company. Nothing was done about"the matter in the meantime except what was done by the insurance agent Rohrer alone, without conference with or direction from either the plaintiff, or the Phenix Company, or the defendant company. On December 12, 1900, he caused his clerk to fill out the policy in suit of defendant company, and countersigned it as agent of that company, and placed it in his safe. On September 15th he advised defendant company by letter of the making of this policy, and was promptly, by telegraph, directed to cancel it. He did not deliver it to plaintiff, nor seek to take up the policy of the Phenix Company, until one day after the property was destroyed by fire. The claim of the plaintiff now is that, when defendant’s policy was written and countersigned, and the agent of the insurance company noted on his books a transfer of the premium, and that the Phenix Company’s policy was canceled, the last-named policy thereby became canceled and terminated, and the policy of [447] defendant company in force, and held by Rohrer as plaintiff’s agent. Many cases hold that an agent of fire insurance companies to issue their policies may also be constituted by the insured his agent to receive the policies, and to keep and care for them, with plenary power to keep the property insured in accordance with general directions of the insured, and attend to all renewal, cancellation, and replacement of insurance, without consulting the assured in respect to particular policies or other details. Hamm Realty Co. v. New Hampshire Fire Ins. Co., 80 Minn. 139, 83 N. W. 41; Dibble v. Assurance Co., 70 Mich. 1, 37 N. W. 704, 14 Am. St. Rep. 470; Buick v. Insurance Co., 103 Mich. 75, 61 N. W. 337. In those cases such had been the course of dealing between the insured and the agent for a term of years. Here no such authority is shown; nor was there any course of dealing shown from which such unusual authority can be presumed : and the conversation between plaintiff and Rohrer when the policies were exchanged after the fire shows that no thought of the existence of any such authority was in the mind of either. Rundberg & McCann were bound to keep the property insured and pay the premiums. They procured the insurance through Rohrer, but it had to be to the satisfaction of the plaintiff, the insured; and policies had been always delivered to and accepted and retained by him. He could refuse any policy offered that was not satisfactory to him. And when, in response to McCann’s inquiry after the fire, as to whether any change had been made, Rohrer stated that he had written the business in the Milwaukee Mechanics’, his further statement, “I still have the policy in my possession; I have never delivered it,” indicates strongly that at the moment he regarded the transaction as incomplete. “An agent of an insurance company has no authority to insure property already destroyed; and a policy written and intended as a substitute for a subsisting policy in another company, but not delivered, and of which the assured has no knowledge until after the property is destroyed by fire, is not a valid contract of insurance.” Stebbins v. Insurance Co., 60 N. H. 65. To the same effect, see Hermann v. Insurance Co., 100 N. Y. 411, 3 N. E. 341, 53 Am. Rep. 197; Insurance Co. v. McKenzie, 70 Ill. App. 615; Insurance Co. v. Turnbull, 86 Ky. 230, 5 S. W. 542. These cases hold that the written but undelivered policy never matured into a contract for insurance, and that liability upon the subsisting policy which was intended to be replaced was fixed by the burning of the property while it was still in force. The acts of bookkeeping of Rohrer in marking cancellation on his office record of the Phenix Company’s policy and transferring in his accounts the credit for premium from that company to the defendant company, all done in anticipation of his purposed delivery of defendant company’s policy in replacement for the expected surrender of the policy of the Phenix Company, were futile, and affected no existing rights or liabilities. Insurance Co. v. Turnbull, 86 Ky. 230, 237, 5 S. W. 542; Insurance Co. v. McKenzie, 70 Ill. App. 615, 623. In the present case it clearly appeared that at the time of the burning of the elevator the policy of the Phenix Insurance Company was a valid contract of insurance, which had never been surrendered nor canceled; and that plaintiff, the insured, then held it as such. [448] The policy of the defendant company was then an undelivered writing, not yet a contract, and because of the destruction of the property while it was in that condition it never became a contract. There was no error in directing the verdict for the defendant, and the judgment is affirmed.