Anderson v. Northwestern Fire & Marine Insurance

201 N.W. 514, 51 N.D. 917, 1924 N.D. LEXIS 93

• Court: North Dakota Supreme Court
• Decided: November 1, 1924
• Status: Published

Opinions

Johnson, J.

This is an action in which the plaintiff seeks to recover under an insurance policy which he claims was renewed. The policy was dated February 24, 1920, for three years, covering certain property. The plaintiff alleges that on or about the 14th of March, 1923, it was agreed between him and an agent of the defendant that the policy should be renewed for a period of three years upon the same terms and conditions and for the samo premium as the original policy; that on the 15th of March, 1923, the property covered in the policy was destroyed by fire; and that the defendant had refused to make an adjustment or pay the loss, pursuant to the contract. The defendant answers, ’ denying in substance that the policy was renewed; and alleges that the agent alleged to have entered into the renewal agreement was “only authorized to transmit to this defendant applications for insurance and that insurance upon said class of property could only be issued by the home office of the defendant • corporation. Defendant further alleges that no application for insurance on the part of the plaintiff was ever transmitted to defendant corporation at any time subsequent to. February 24, 1923.”

At the trial, plaintiff called one Kavanaugh for-cross examination under the statute on the theory that he was an agent, or a managing agent, of the defendant, with offices at Orary, in this state. It was he who made the alleged renewal agreement. Kavanaugh testified that he held a license from the commissioner of insurance, as agent of the de fondant at Crary; that he had heen acting'as local agent of the company for twenty years; that his duties as agent were “to solicit insurance, to take applications and issue policies on city property, and to take applications for farm property” and to accept premiums paid and remit the proceeds, less his commissions. Witness was then shown Exhibit 2, being the policy of insurance dated February 24, 1920, issued to the plaintiff, and, after identification, it was offex-ed and received in evidence. The policy bears upon its back the endorsement “M. 11. Kavanaugh, Agent, Crary, N. D.” The policy is also countersigned by the same person as agent, the countersignature being dated February 25, 1920. The concluding sentence of the policy is that “this policy shall not bo valid until countersigned by the duly authorized agent of the company at Crary, N. D.” The application on which the policy was issued is dated February 23, 1920, and the policy stipulates that the insurance runs from the 24th of February, 1920, at noon, until the 24th of February, 1923, at noon. The policy contains this provision: “In any matter relating to this insurance, no person, unless duly authorized in writing, shall be deemed the agent of this company. This policy may by a renewal be continued under the original stipulation, in consideration of premium for the renewal term, provided that any increase of hazard must be made known to the company at the time of renewal, or this policy shall be void.” When the policy was issued, the premium was not paid until some time in June, following, by agreement between the agent and the insured. Plaintiff testified that on the 14th of March, 1923, the agent Kavanaugh called at his home and that there was some conversation with reference to the policy. The court did not permit the plaintiff to state this conversation, on objection being made thereto by counsel for the defendant. The main objection was that the agent did not have authority with respect to the class of insurance involved to bind the company by any conversation and that until the authority was shown the conversation was hearsay and incompetent. Kavanaugh was then recalled and testified that he had received a notice from the company some time before he called at the home of the plaintiff, in which they asked him, with reference to the policy:' “May we expect a renewal?” or words to that effect. The plaintiff .made several efforts to prove the conversation between the agent Kavanaugh and the plaintiff, in which it was claimed that the policy was renewed, but on objection the court did not permit the conversation to be shown either by the plaintiff himself or through the cross examination under the statute of the witness Kavanaugh. The plaintiff thereupon made several offers of proof. Plaintiff Anderson offered to prove the delivery to him of the policy which expired on the 24th of February, 1923, and the amount of the insurance; that on the 34th of March, the agent Kavanaugh visited the plaintiff’s residence, “informed him that his policy had expired, and asked if he did not want him to renew the same. The plaintiff said that he would on the same terms and conditions as the policy contained; that the said agent-then agreed to renew said policythat the property was destroyed by fire on the 15th of March, and that the defendant had refused to make any settlement on account of the loss! The plaintiff further offered to-prove through the agent Kavanaugh substantially the same facts with reference to the alleged agreement of renewal, pursuant to the conversation on March 14, 1923. In addition, through this witness, plaintiff offered to prove that the agent agreed to waive the condition of the policy that the premium be paid in cash, but had agreed to extend payment thereof until the month of June, 1923, and that upon the said proposition having been made to the plaintiff, he accepted the same and renewed the policy. Other offers of proof were made, not material to be noticed in the view we take of the case. The court excluded the offers tending to show the agreement to renew and instruct the jury, in substance, that recovery could not be had unless the authority of the agent Kavanaugh to renew the policy after it expired was established, but that there was no evidence showing such authority. The jury returned a verdict for the defendant and the plaintiff appeals.

Numerous errors are assigned, but it is. not necessary to discuss them in detail. The case turns upon the sufficiency of the evidence and the offer of proof to make an issue of fact for the jury, establishing authority in the agent Kavanaugh to enter into an agreement to renew the policy which expired by its terms on February 24, 1923. The defendant contends that the policy expired on February 24; that thereafter it could not be renewed; that a new application would have to bo made and acted on by the home office; and that the agent had no authority to bind the company by agreeing to a renewal after the policy had expired.

Section 4926, Coinp. Laws 1913, provides that “no insurance company shall do business in this state except through its authorized agents who must be residents oí and have their office or place of business in this state. All policies not written in accordance with the foregoing provisions shall be deemed a violation of this article.” Sec'tion 4959, Comp. Laws 1913 reads as follows:

“Whoever solicits insurance on behalf of any insurance corporation or person desiring insurance of any kind, or transmits an application for a policy of insurance, other than for .himself, to or from any such corporation, or who makes any contract for insurance, or collects any prémium for insurance1, or in any manner aids or assists in doing cither, or in transacting any business of like nature for any insurance 1 corporation, dr advertising to do any such thing, shall be held to be an agent of such corporation to all intents and purposes, unless it can be shown that he receives no compensation for such services. This section shall not apply to fraternal, assessment or beneficiary associations.”

It will be noticed, first, that no insurance company may transact business in this state except through resident agents; secondly, that any person who solicits insurance in behalf of any company or transmits an application for a policy for a person other than himself, or who makes any contract for - insurance, or who collects any premium for insurance, or who in any manner aids or assists in doing either, or in transacting any business of a like nature for an insurance corporation, is an agent of such company “to all intents and purposes,” unless it appears that he receives no compensation for the service. The evidence and the offer of proof, if true, clearly show that Kavanaugh was a resident agent of the defendant; that he solicited insurance, transmitted applications, collected premiums and otherwise transacted an insurance business for and in behalf of the defendant. Under the statute, therefore, he would be an agent of the defendant “to all intents and purposes.” It must be conceded that the situation is not different from what it would have been had the company expressly notified the plaintiff that Kavanaugh was their agent to “all intents and purposes.” Evidence was put into the record by- the defendant tending to show certain limitations upon the authority of the agent Kavanaugh, but there is no claim, or, at least, no evidence in the record showing, or tending to- show, that the plaintiff knew óf any such limitations. As far as the plaintiff was concerned, Kavanaugh was the agent of defendant “to- all intents and purposes” and he was at liberty to deal with him accordingly. Upon proof of the acts enumerated in the statute, plaintiff established the agency of Kavanaugh “to all intents and purposes.” '

Did Kavanaugh have the authority to renew the policy, after the date of its expiration, according • to its terms ? This is the crucial question in .the lawsuit. .Stated otherwise, was the plaintiff justified in relying upon the authority with which the statute clothed Kavanaugh as agent of the defendant “to all intents and purposes,” and in negotiating with him for. the renewal of the. policy -subsequent tp thq expiration date? ' • -

Statutes analogous to and, in some instances, identical with § 4959j supra, have been enacted in several states. . See 32 C. J. 1057. Such .a statute has been in force in the State of Wisconsin for many years, as §. 1977, of the Revised Statutes. That statute was enacted prior to § 4959, supra, and has been many times construed by the Supreme Court of Wisconsin. In Schomer v. Hekla F. Ins. Co. 50 Wis. 575, 7 N. W. 544, ¶ 4 of the syllabus reads:

' “The object of § 1977,'Rev. Stat. is to change the rule of law that the insured must at his peril know whether the person with whom he is dealing as an agent has the power he assumes to exercise, and to make an insurance company responsible for the acts of the person who assumes to represent and act £ot¡.-it, in soliciting insurance, issuing policies, etc.”

The court refers to the title of the original statute which reads: “Au . Act to Protect the Public Against Unauthorized Insurance Agents,'” as indicative of the purpose the legislature had in view. The court .then says:

“If .seems to be designed in the clearest manner to make the company responsible to the public for the acts of one whom it permits to solicit insurance in its-behalf, or who receives applications for insurance, ... . whether such person has in fad authority to - act for -it or not.” (Italics are ours.)

In Renier v. Dwelling House. Ins. Co. 74 Wis. 89, 42 N. W. 208, speaking of the same section, the court say:

“The local agent here having performed those several acts in behalf of the company, and with its authority, the latter can not disclaim his agency in the doing of anything necessarily implied, in the specific acts thus authorized." (Italics ours.)

The court then held, notwithstanding policy provisions to the contrary, that the. local agent had authority to waive answers in the application and stipulations in the policy as to the condition of the property and the existence of incumbrances thereon. In Stehlick v. Milwaukee Mechanics’ Ins. Co. 87 Wis. 322, 58 N. W. 379, the court held that under this section the local agent who had performed the acts therein enumerated was agent of the company “to all intents and purposes” and had power to bind the company by an agreement to insure, notwithstanding limitations of his powers as between himself and the corporation. To the same effect is Zell v. Herman Farmers’ Mut. Ins. Co. 75 Wis. 521, 44 N. W. 829. In Prichard v. Connecticut F. Ins. Co. — Mo. App. —, 203 S. W. 223, it was held that a local agent who had power to solicit and take applications, collect premiums, countersign and deliver policies, may bind the principal by an oral contract of insurance. See also Ferguson v. Home Ins. Co. 208 Mo. App. 472, 236 S. W. 402; American F. Ins. Co. v. King Lumber & Mfg. Co. 74 Fla. 130, 77 So. 168, p. 174. A statute like 4959, supra, controls stipulations to the contrary in the policy. Continental L. Ins. Co. v. Chamberlain, 132 U. S. 304, 33 L. ed. 341, 10 Sup. Ct. Rep. 87. Oral contracts of renewal and oral agreements to renew are generally held valid. 15 A.L.R. 1010, note, the adoption of the standar*d policy by statute does not render such contracts invalid. 15 A.L.R. 1001 note.

The policy considered in McCabe Bros. v. Ætna Ins. Co. 9 N. D. 19, 47 L.R.A. 641, 81 N. W. 426, contained many conditions not substantially different from those of the policy in the case at bar. The authority of the agent in that case to enter into an oral agreement to renew was challenged. The authority of McBride there was substantially the same as the authority of Kavanaugh in the case at bar. McBride had “full power to receive proposals for insurance against loss or damage by fire; to act as surveyor, or to appoint surveyors, of buildings to be insured, or containing property to be insured, in St. Thomas and vicinity; and insurance thereon to make, by policies signed by the president, and attested by the secretary of said ¿Etna Insurance Com pany, and countersigned by the said William McBride, agent.” It was held that McBride was a general agent, with power to enter into a binding executory contract by parol to issue or renew a policy in the future. While the statute does not specify surveying the premises as one of the acts, the doing of which makes one person the agent of the company, the record shows that Kavanaugh had this authority. The original application contains his signed statement of survey. Kavanaugh was an agent and his authority to renew would seem to be unquestionable under all the authorities. In the case of Post v. Ætna Ins. Co. 43 Barb. (N. Y.) 351, cited with approval in McCabe Bros, v. Ætna Ins. Co. supra, plaintiff relied on a renewal agreement with .the local agent, which was made after the policy had expired. Defendant contended that it was not bound. The court say:

“Bo far as the exercise of his authority as agent is involved, it can make no difference that the time had expired for which the policy was issued; The possession and use of the defendant’s certificates of renewal, together with the exercise of that authority in other instances, indicate that the power of renewing and continuing insurances had been conferred upon this agent. There is nothing in the case showing him to be confined or restricted,-in the use of it, to the cases where the policy renewed was still valid as an insurance; and those who dealt with him were entitled to presume that no such restriction or qualification existed. He was authorized to accept risks, to agree upon and settle the terms of their insurance, and to carry them into effect by issuing and renewing policies on behalf of the defendant. This was sufficient to constitute him a general agent for the defendant at the place where the business of the agent was transacted, and he could as well exercise his authority by renewing and continuing a policy which had already expired as by making and issuing a new one.

“The agreement which, upon the evidence, the jury must have found existed in this case, did not of itself renew the insurance. But it imposed upon the defendant’s agent the duty of doing whatever was necessary to effect a renewal of it. An agreement of that nature, either •express or implied, must necessarily precede the renewal of any insurance, and' a similar one is made to ascertain and determine the subject, term and rate of insurance in all cases where policies are issued- They are directly and necessarily within the employment and authority of the agent, whose business could 'not be carried on without-the power to enter into them, and the law does not require them to be in writing in order to become obligatory on the parties. They have-often been the subject of judicial controversies, and always held binding on the principal, when fairly established by proof.”

It can not bo doubted that the company itself had the power to contract with the plaintiff, even after the 24th of February, 1923, that his buildings should be insured for a term of three years at the same premium and on the same condition as provided in the original -policy, and to agree that that instrument, should stand as the measure of the rights of the parties. It is difficult to escape the conclusion that Ilavanaugh, as agent of defendant “to all intents and purposes,” likewise had the power to enter into such a renewal contract and bind his. principal, at least in the absence of any knowledge in plaintiff of limitations upon the authority as between the agent and the defendant,, and that the jury might have so found. There is nothing in the policy to indicate that the renewal clause shall cease to become operative so as to make re-insurance on the same terms and conditions impossible without a new application, after the date fixed in the policy for its-expiration. If there be uncertainty in-this regard, it must be resolved against the defendant. Comp. Laws 1913, § 5914. If the policy had been renewed before it expired it is not contended that a new application would have been required. It can not be doubted that the parties-by express agreement would have the power to enter into a contract, subsequent to the termination of the policy, and by reference adopt the terms and conditions of the policy, that is, renew it. We believe this construction is in harmony with what is commonly understood by the term “renew” or “renewal.” It is well known that agreements and obligations are extended or renewed perhaps as frequently after maturity as before. Defendant’s agent visited the premises, doubtless saw the property and was probably satisfied that there had been no increase in the hazard. The testimony shows and the offers of proof are to the effect that a contract was entered into between the agent and the plaintiff, whereby it was agreed that the contract of insurance was continued, renewed, for another period of three years upon the same conditions and for the same premium. The renewal agreement is definite and specific. It is evident that the defendant expected Kavanaugh to- act for it in renewal' negotiations, for they so wrote him. There 'can be ho doubt- about the legal right of the plaintiff to assume, under the' facts in this record, that the agent had the authority to renew the contract. It will not be questioned that the agent could have renewed the policy before it expired. McCabe Bros. v. ¿Etna Ins. Co. supra. The court should have permitted the plaintiff to prove the terms of the alleged renewal agreement with the agent of'the defendant and submitted the issues of fact to the jury. He admitted that he had performed the acts enumerated in the statute. The power to renew the policy after its expiration may be fairly implied from the specific acts authorized, from the testimony, and the offers of proof.

Tor the reasons stated, the judgment must be reversed and a new trial granted. It is so ordered.

Bronson, Ch. J., and Christianson, Nuessle, and Birdzell, JJ., concur.