Boyer v. State Farmers' Mutual Hail Insurance

121 P. 329, 86 Kan. 442, 1912 Kan. LEXIS 316

• Court: Supreme Court of Kansas
• Decided: February 10, 1912
• Docket: No. 17,427
• Status: Published

Opinion

The opinion of the court was delivered by

Burch, J.:

The greater part of the brief for the defendant is devoted to arguments which relate to the agent’s lack of authority, under the restrictions placed upon him, to effect a contract of insurance, and to the necessity for an acceptance of the application as a condition precedent to the formation of a contract of insurance. Many authorities are cited upon these subjects, including those decisions which hold that unreasonable delay in acting upon an application does not constitute acceptance and does not warrant a presumption of acceptance. The course of the inquiry in this case lies in a different direction. This is not a suit on a contract of insurance and the judgment does not rest upon the breach of such a contract. The position of the plaintiff and of the district court is, that under the peculiar conditions surrounding the transaction the agent should have forwarded the plaintiff’s application promptly for acceptance or rejection; that the application would have been accepted if he had done so and a contract of insurance would have been consummated protecting the plaintiff from the loss which occurred; that the negligence of the agent in not forwarding the application until it was too late for the acceptance of it to be of any benefit to the plaintiff was the negligence of the company; and consequently, that the company wrongfully deprived the plaintiff of the indemnity he should have had, to his injury.

For all purposes of taking and forwarding the application the agent was the company itself. He could negotiate an application for insurance based upon cash, upon the applicant’s note, or upon any other terms, precisely as the board of directors of the company might have done. The option exercised by the agent to take a note instead of the cash which he might have received (Finding No. 5) was an option exercised by his principal. He could dispense with a bank cheque or draft (Finding No. 24) as an essential feature of the application, and whatever the arrangement with the applicant might be, it was the agent’s duty to present it for acceptance or rejection to the officer or officers holding the reserved power to determine whether or not a policy should be issued. The agency relation of insurance solicitors to the insurer and the person solicited and the authority of such agents over the subject of the application are fully discussed in the case of Pfiester v. Insurance Co., 85 Kan. 97, 116 Pac. 245, and the rules of law there stated are applicable here.

When the application was solicited by the agent the danger period of the corn-growing season had been reached and early action whereby the risk of injury might be shifted to the defendant was a matter of much consequence to the plaintiff. The application was given for the purpose of transmission to the defendant’s headquarters and not that it might be retained by the agent and carried about in his pocket. The defendant itself recognized the necessity for expeditiousness in a letter of instruction to the agent, which was introduced in evidence and which no doubt was regarded by the court as quite material when considering the matters covered by finding No. 12. A portion of the letter reads as follows:

“Special Notice. — Send all applications promptly, because there is no liability of the Company until the application is Received and Approved by us.”

It is fair to presume that likelihood of the destruction of the plaintiff’s corn by hail induced the very high rate of premium demanded for the brief term of the insurance — in this case six per cent on $1000, .or five per cent of the full value of the crop at the time of the negotiations. There was sufficient danger to the plaintiff to be apprehended from delay in closing the transaction that a reasonably prudent business man, guided by the considerations which ordinarily regulate conduct, would have acted with diligence. If the agent only be considered it is clear enough that he would be liable if his negligent retention of the application prevented its timqly acceptance. Since he was merely the arm of the defendant the obligation resting upon him was the obligation of the defendant. Therefore, the duty of the defendant to secure prompt transmission of the application from the solicitor’s field to the central office is quite apparent. Whether or not the delay in this case was unreasonable was a question of fact for the trier of the facts and as it is presented here is not one of law for this court.

It is claimed that the finding that a policy would have been issued before the com was destroyed had the application been forwarded promptly is not sustained by the evidence. The finding is sufficiently sustained by the proof that the application was immediately approved upon its arrival at the defendant’s office, and a policy was issued accordingly taking effect at noon of the same day. The position of the defendant was that its hailstorm business was conducted on a cash basis only and its witnesses supported this position by some interesting testimony. They stated that premiums must be paid in cash, that promissory notes are never accepted, that the defendant was not interested in the plaintiff’s note and did not know what became of it, and that the defendant was only interested in a cash settlement for the policy — all in face of the proof that three policies at least (Finding No. 10) were issued on July 12 without cash and without hesitation or objection.

It is said that the plaintiff invited delay by giving his note instead of paying cash. Findings 5 and 6 dispose of this contention and they are abundantly sustained by the evidence. It is further said there is no evidence that the plaintiff did not know the agent would attempt to sell the note before sending in the application. The plaintiff did not testify in so many words that he had no such knowledge, but the evidence is quite conclusive that he believed he had paid his premium and that the application would go forward immediately. Other criticisms of the findings of fact are either invalid or immaterial. Certain evidence objected to was admissible under the decision in the case of Pfiester v. Insurance Co., 85 Kan. 97, 116 Pac. 245.

The judgment of the district court is affirmed.