Constant v. Allegheny Ins.

6 F. Cas. 356, 3 Wall. Jr. 313

• Court: U.S. Circuit Court for the District of Western Pennsylvania
• Decided: November 15, 1861
• Status: Published

Opinion

GRIER, Circuit Justice.

To entitle the plaintiff to judgment on this verdict, he must show: ■

1st. That on the facts as found the secretary of the insurance company could legally bind the company to guarantee an insurance made by another insurance company.

2d. That such a promise or agreement was made, in such form as to support an action at law against the corporation.

By its act of incorporation this company could make insurance which would be legally valid only by a policy attested by the president, secretary, and the seal of the corporation. Yet, before such instruments are attested in due form, the president or secretary, or whoever else may act as a general agent of the company, may make agreements, and even parol promises, as to the terms on which a policy shall be issued, so that a court of equity will compel the company to execute the contract specifically (see Commercial Slut. Ins. Co. v. Union Mut. Ins. Co., 19 How. [00 U. S.] 318); and where the loss has happened, to avoid circuity of action the chancellor will enter a decree directly for the amount of the insurance for which the company ought to have delivered their policy, properly attested.

The secretary of the company, in this case, replied by telegram to one sent by Springer, who acted as a broker or mutual agent of the parties, not that the defendants would themselves take the whole risk of $20,000, but “that it should be taken.” The company showed their construction of their undertaking by transmitting policies to the amount requested, equally divided among four insurance companies, as negotiated by defendants, and divided among the three several owners of the boat, according to their respective interests. The objection made by the insured was not to the manner in which the risk was divided, but that the agent of one of the companies (the Quaker City), had the character' of being a very troublesome person to deal with in case of a loss which would require adjustment.

Assuming the representation of the secretary, that in case of loss “we will feel ourselves bound for a satisfactory adjustment,” is an agreement to guarantee the solvency of the Quaker City Insurance Company, had the secretary authority to make a simple or parol contract to bind his principal to guarantee the solvency of another company? We think he had not. Every promise to make a policy of insurance under the seal of the company, and the terms on which it will be done, falls necessarily within the scope of the authority confided to such agent; but any other merely collateral promise or representation, which does not involve the execution of a policy of insurance, is not within the scope of his authority, as agent, because it is not strictly within the scope of the powers granted to the corporation.

Whether the officers of the corporation could, by covenant, duly executed, but not in the form of a policy of insurance, bind the company to perform such a contract, we need not inquire. This is a suit at law, and the.plaintiff must show a legal obligation; executed according to the forms required by the law, which confers the corporate powers on the defendant And if it were a bill in equity, the chancellor would decree only a specific execution, to wit, the delivery of an instrument of writing, executed and attested according to law, and such as was within the powers of the corporation as provided by their charter.

But assuming that this parol promise, as stated in the secretary’s letter, would support a suit at law against the company, is there a promise to guarantee the solvency of the Quaker City, or any of the three other companies who joined in taking this risk of $20,-000? The parties did not complain that the defendants would not take the whole risk on themselves; but had it negotiated and divided among other companies. The objection was not made to the solvency of any of the companies, but on the anticipated difficulties of adjustment in case of a loss occurring. The undertaking of the secretary is not that the defendant shall pay the amount of the loss, but to take the trouble of adjusting the loss with this captain’s agent. This might be an easy matter for the defendants’ officers to perform, as the very same adjustment would have to be made with and for themselves, and other companies who were not infested by such an agent

The adjustment of a loss is defined to be the “settling and ascertaining of the indemnity which the assured, after all allowances and deductions made, is entitled to receive under the policy, and fixing the portion which each underwriter is liable to pay.”

Now, the direction of the secretary to Springer is to tender the policies, and if they are not satisfactory to the owners to cancel them; stating that they are not re-insurances, and that “we feel ourselves bound” not to pay the losses if the other insurers should be insolvent, but “for a satisfactory adjustment,” and adding, “we deem the companies good, and if any parties can settle with them we can.” Here is no guarantee. The whole length and breadth of this undertaking is a satisfactory adjustment of the loss, and no more. [The facts ■as found by the jury, do not, therefore, support the claim alleged in the declaration. The defendants are consequently entitled to judgment for the defendant] ³

Judgment for the defendant

3 [From 1 Am. Law Reg. (N. S.) 110.]