RIVES, Circuit Judge.
Appellee, Mrs. Gladys Leith Holmes, as beneficiary, sued the appellant, Continental Casualty Company, for the proceeds of a purported accident and health insurance policy insuring her deceased husband, Oliver Wendell Holmes, while flying as a pilot. She claimed that coverage was in force as a result of an oral binder or oral contract of insurance effected by the Company’s agent, W. T. Musgrove, on January 3, 1957, and again on February 20, 1957. Her suit was primarily based on the proposition that W. T. Musgrove, a partner with W. R. Cadenhead in the firm of Musgrove Insurance Agency, had authority to orally bind the Company. Continental Casualty Company impleaded as third-party defendants the Musgrove Insurance Agency and the two partners individually (appellees here), alleging that none of the third-party defendants had actual authority to make the oral agreement and averred that, if Continental Casualty Company was liable to the plaintiff in this action (such liability being denied) on account of any apparent or ostensible authority, then the third-party defendants are in turn liable in the same amount to Continental Casualty Company.
The trial court submitted the questions to the jury with instructions that if they found the agents to have had either acual or apparent authority to orally bind the Company, the plaintiff would recover, and if they found the authority to be apparent only, then they should also find in favor of the Company in the same amount as against the agents.
The verdicts of the jury wei*e in favor of the plaintiff, assessing her damages at $52,750 and in favor of the third-party
defendants. Necessarily, therefore, the jury found that the agents had actual authority to make the alleged oral binder or contract.
Appellant-defendant contends vigorously that there was no substantial evidence justifying submission to the jury on the question of the agents’ authority.
The deceased insured, Oliver Wendell Holmes, had prior to 1956 taken out several policies of various kinds of insurance, always using the Musgrove Insurance Agency of Florence, Alabama, to place his insurance. On February 3, 1956, Holmes executed an application for aviation accident insurance for coverage in the sum of $50,000, as a passenger in a certain aircraft, on a form provided by Queen Insurance Company, for which W. T. Musgrove was agent. Musgrove forwarded this application together with a similar application of James Luther Culver to the Atlanta, Georgia, office of Queen Insurance Company, and this Company, already having considerable exposure under a policy covering the same aircraft, undertook to place this insurance with a friendly competitor, Continental Casualty Company. Mr. Herbert V. Holland, Jr., the representative of the Aviation-Travel Accident Division of the Atlanta branch office of Continental Casualty, was given the information of the two applicants by Queen, and Holland wrote a letter to Musgrove on February 23, 1956, confirming the rates and amount of coverage, enclosing application to be completed and stated that Holmes and Culver both had coverage effective February 17, 1956. This letter appears in the margin.
The application was executed by Holmes on February 27, 1956, and forwarded with a letter from Musgrove to Holland on February 29, 1956. The policies were issued and returned to Musgrove.
Upon discovery that these policies did not contain a countersignature by a licensed resident agent of Alabama, Holland telephoned W. R. Cadenhead, Mus-grove’s partner, on March 9, requesting that the policies be returned to Atlanta for proper countersignature. There was delay in complying with this request, and on April 11, Holland wrote to Musgrove again requesting a return of the policies for proper countersignature. Upon further delay, Holland wrote Cadenhead on April 30 suggesting that Musgrove be licensed as an agent in Alabama which would allow Musgrove’s countersignature to stand. Cadenhead answered on May 3 and gave Holland the necessary information to have Musgrove licensed. Thereafter, on May 7, Holland wrote Cadenhead a general business letter discussing the licensing of Musgrove and the countersignature of the two policies in question. In this letter he attempted to solicit business from the Musgrove Insurance Agency. This letter appears in the margin.
Holland then had the
license request cleared through Continental Casualty’s Agents’ License Department in Chicago.
Musgrove was licensed by the Insurance Department of the State of Alabama on May 24 and this agent’s license was forwarded to Mus-grove on May 28,1956.
Musgrove testified that he had a telephone conversation with Holland in February or March of 1956, during which Holland asked permission to apply for a resident agent’s license for Musgrove and Musgrove gave the permission. Musgrove stated that they discussed the type of agency and the commission to be paid. Musgrove testified:
“Q. In that same conversation did Mr. Holland make any statement to you with respect to what kind of an agent he wanted you to be, and that Continental Casualty Company wanted you to be, Mr. Musgrove ?
* * * * *
“The Court: What were the exact words he told you?
“The Witness: To be a full agent for the aviation accident division, special risk, department of the Continental Casualty Insurance Company to secure business in Florence, Alabama and my territory for his company.
“Q. Now during that same telephone conversation, did you and Mr. Holland have a discussion about how much business potentially there was in the North Alabama area? A. Yes, sir.
“Q. Did you and Mr. Holland in this conversation discuss anything about what sort of limits that they wanted to write, or wanted you to sell for the Continental Casualty Company in regard to aviation accident policies? A. Nothing more than they were the largest writer, and the highest limit, wrote big limits, and wanted it.
“Q. Did Mr. Holland during that telephone conversation make any statement to you in regard to what sort of limits on a policy that you could sell for the Continental Casualty Company, Mr. Musgrove? A. No, sir.
“Q. Did Mr. Holland at that time give you any information or advice about to whom and with whom you would do business with the Continental Casualty Company? A. Through his department, Herbert Y. Holland, of the Continental Casualty Company.
“Q. Did he at that time tell you that you would be subordinate to any other resident agent, or any other sort of agent for the Continental Casualty Company in the State of Alabama. A. No, sir.
“Q. Did you, Mr. Musgrove, have any conversation on that same occasion with Mr. Holland about how you would be paid for the business that you sold for the Continental Casualty Company or not ? A. Yes.
“Q. Will you tell us what that was? A. Full agency commission and to be handled like all my other business, in my business.”
After Musgrove received his resident agent’s license from Holland on May 28, 1956, these parties had no further contact whatsoever until February 4, 1957.
On December 10, 1956, Musgrove wrote Holmes a letter concerning Holmes’ policies in force at that time. Concerning the policy with Continental, this letter stated:
“Aviation Accident Policy which should be rewritten since you are flying a plane by yourself; this is written on a passenger basis, and not as pilot, but you should have this changed to cover you as pilot of the plane, and I would appreciate your considering this and agreeing to change it. It will cost you more money but will give you the protection that is needed. This policy was charged to Pressure Concrete Company of Florence, and I think in all fairness, and I am sure you agree, that we should transfer this over to your account. Will appreciate very much your discussing this with me the next time we get together.”
Musgrove then had a conversation with Holmes on January 3, 1957, and in that conversation Holmes stated he wanted aviation accident insurance on a pilot’s coverage basis, and Musgrove told him that he was covered from then on. Mus-grove made a notation reading “Wendell Holmes Aviation Piolit (sic) * * and testified that he “went back to the office with it, and turned it over to my partner, Billy Cadenhead, for processing and getting the policy endorsed or a new policy issued, whichever was necessary to be done.” Musgrove told Cadenhead that Holmes was at that time insured by oral binder. The next day, January 4, Cadenhead wrote Continental Casualty Company stating:
“Continental Casualty Company
“Re: AA 108707
“Oliver Wendall (sic) Holmes
“Gentlemen:
“It is Mr. Holmes wishes to also have pilots coverage under this policy so will you please send us the necessary applications to have completed, or advise us what information you need. I am not sure what kind of plane he is flying but will secure this for you if necessary.”
Thereupon Holland answered Cadenhead on January 7 with the following letter:
“Oliver Wendell Holmes
“AA-108707
“Dear Mr. Cadenhead:
“We will be delighted to entertain Mr. Holme’s (sic) application for Pilot Coverage. I am enclosing another application which we would like to have him complete and also a Pilot History Form which also must be submitted.
“Depending upon Mr. Holmes experience and needs of the insurance, it is possible that our underwriters would not like to write as much as $50,000. principal sum for piloting. Completion of these two forms will help to determine this. If he should need only $25,000. while piloting, or that is all that could be written, we would be able to reduce the principal sum under the present policy to $25,-000. All the present coverage is included in the Pilot Policy, so that he would have $50,000. just as he now has with $25,000. piloting. Of course, this is all problematical.
“Please let me know if I may be of further help.”
Some six weeks later, on the night of February 20, 1957, Holmes brought the application and pilot’s history form to Musgrove’s office. The application had been partially filled out by Cadenhead. In the application was the question, “Do you understand and agree that no insur
anee will be effective until the policy is issued,” and Cadenhead had inserted “yes.” Concerning this answer, Mus-grove testified as to the conversation between him and Holmes:
“The Witness: * * * I mean he went over these, read, he said ‘Look there, right there,’ and I told him — and then is when he questioned me, he said ‘Haven’t I been covered since you bound me back there ?’
“And I said ‘You have been covered for pilot’s coverage.’ And he said ‘Well, I have been flying just about every day.’ And he said ‘What’s this over here ?’ And I said that the ‘Yes’ right there wouldn’t make any difference, because he was under binder, and it was just a mere formality of getting the document or the policy to him.
“I did not know whether the Continental Casualty Company would indorse it. If they indorsed it, they didn’t need this application; if they wanted to rewrite a new policy, then they would take this application and rewrite a new policy and this would become a part of the policy.
“And after that Mr. Holmes was satisfied with that, and I reaffirmed to him at that time that ‘You are covered flying as a pilot.’
“The Court: Is that what you stated to him?
“The Witness: Yes, sir.
“Mr. Cox: All right, now.
“The Court: Did he sign the application, or had it already been signed?
“The Witness: No, sir, he signed it that night.”
The next day, February 21, Oliver Wendell Holmes was killed while flying as a pilot, and on this date Musgrove had the application forms on his desk.
Cadenhead took the application and pilot’s history form to Atlanta on February 25 and there met with Holland. Holland testified that, during that meeting and also during a telephone conversation that day with Musgrove while Cadenhead was in Holland’s office, neither Cadenhead nor Musgrove made any reference to or discussed the oral binding of insurance as to Holmes. However, Cadenhead testified that he told Holland on this occasion that Musgrove had told Holmes that he was covered and that Holland did not then deny that Musgrove had the authority to bind Holmes.
About a week later, on March 4, Holland made an office memorandum concerning the above meeting and discussing the method of placing pilot coverage. This memorandum is printed in the margin.
It had penciled in at the bot
tom thereof: “Activity toward greater Continental production in this agency is greater than ever.”
Thereafter, upon a denial of coverage by Continental Casualty Company, this suit followed.
Plaintiff’s theory of the case rests upon the authority of the agent to effect a policy of insurance by an oral binder or by an oral contract of insurance, concluding that if sufficient authority existed in the agent Musgrove to bind the Company, it is immaterial for plaintiff’s recovery whether the authority be actual (express or implied) or apparent (ostensible). Plaintiff also proceeds on the collateral theory that Musgrove was a
general agent
for the Company which position automatically gave him the power to orally bind the Company in various ways. In presenting this double-barreled approach, the plaintiff claims that Mus-grove had authority whether he is found to be a general agent or something less, such as a soliciting agent.
Appellant’s first and second specifications of error rest upon the re-fusal of the trial court to grant a motion for a directed verdict made at the close of all the testimony and the refusal to grant a judgment notwithstanding the verdict. In reviewing the latter motion, as well as the first, we must determine if the record contains evidence of “probative facts capable of supporting, with reason,” the verdict; for if it does, the verdict must stand.
Another similar test to review jury verdicts is that if there is
any substantial evidence
which supports the verdict, it must stand.
“Substantial evidence” has been best defined by Chief Justice Hughes as follows: “It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”
With these premises in mind, we hold that appellant’s first two specifications of error are well taken as there was no substantial evidence that Musgrove had either actual or apparent authority to orally bind Continental Casualty Company.
We state at the outset
that the test to determine whether a general
agency exists, in both Alabama case law and in general insurance law, is whether the agent “has the power to bind the insurer by his contract of insurance, or to issue policies on his own initiative, or to accept risks, and if the agent has actual authority to do these things, he is a general agent”;
he may then bind the company in other ways, such as by oral contract, by waiving certain policy or application provisions and the like.
The general agent whose authority is limited in some way or an agent who is, by certain limitations, less than a general agent may also bind his principal in the above ways as though he were a general agent by apparent or ostensible authority through the doctrines of waiver, estoppel, or ratification, and, of course, the injured party must have relied upon this apparent authority in some way to his detriment.
He may also be less than
a general agent (such as a soliciting agent) and have actual authority to bind the company by oral binders or contracts in certain types of insurance.
I. ACTUAL AUTHORITY.
(a) General Agent.
Therefore, if Musgrove had the power to bind the Company “by his contracts of insurance, or to issue policies on his own initiative, or to accept risks,” or if the Company designated Musgrove to be a general agent by some action or manifestation, then he would be a general agent with the power to bind the Company in the manner claimed by Mrs. Holmes. It is elementary that
actual authority
can only be created “by written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him to act on the principal’s account.”
The facts which Mrs. Holmes vigorously insists establish by substantial evidence that Musgrove had authority as a general agent are discussed as follows:
First, Musgrove’s testimony as to a telephone conversation in February or March of 1956 where Holland assured Musgrove that he would be a “full agent * * * to secure business” and would receive a “full agency commission,” as quoted
supra.
This is appellee’s strongest evidence. However, this conversation took place prior to the issuance to Musgrove of a license by the State Department of Insurance at a time when Musgrove was not an agent of the Company. The term “full agent” can only be reasonably construed as bringing into existence the status of principal and agent or employer and employee, not as conferring general agency powers upon Musgrove.
Second, the agent’s certificate or license from the Superintendent of Insurance of the State of Alabama, authorizing Musgrove to act with the powers listed as “Miscellaneous Casualty, including Official Surety Bonds.” Summarily, this certificate “is only evidence of the existence of the agency in some form.” American Life Ins. Co. of Alabama v. Carlton, 1942, 242 Ala. 661, 8 So.2d 166, 169. See also, Liberty Nat. Life Ins. Co. v. Staggs, 1942, 242 Ala. 363, 6 So.2d 432, 433; American Life Ins. Co. of Alabama v. Aladdin Temple Ben. Ass’n, 1939, 238 Ala. 512, 191 So. 903.
Third, plaintiff’s exhibit No. 13, which was a request from the Atlanta branch office to the General Office in Chicago of Continental Casualty Company to license Musgrove as an individual resident agent. Appellee places great emphasis upon paragraph 8 of this request. Paragraph 8 entitled “Applicant will report business through” is answered “Atlanta” as the branch office
and “Musgrove Insurance Agency” as the General Agency or Agency. The pertinent portions of this application are reported in the margin.
Holland testified unequivocally that the information under paragraph 8 was for the sole purpose of identifying any business produced by Musgrove as belonging to the Atlanta Branch Office, and this request never went out of the offices of the Com-
pany and was not known to Musgrove until after this litigation was commenced and was never known to Holmes. However, even had Musgrove known of this instrument, the only manifest purpose of the instrument was a request to license an agent. We agree with appellant that it is without reason to interpret plaintiff’s exhibit No. 13 as affording the basis of a finding that Musgrove was a general agent of the Company.
Fourth, Musgrove’s authority to issue trip accident policies. While Holland testified that Musgrove had authority to issue these individual trip accident policies, the record indicates that he never issued one and did not receive any policy blanks until after February 27, 1957, the date on which a book of “VBT Travel-Accident Policies” was sent to Musgrove. Even had Musgrove received and made out these policies, it would not be evidence of general agency. These policies required no formal underwriting and would not, of course, have covered flying as a pilot or crew member. We agree with appellant that there is no substantial difference between this type of policy and the policies which can be procured from vending machines in all major airports. This type policy is characterized by the necessity of immediate issuance, and the basic differences between it and a Health and Accident Policy on a pilot for $50,000 for a year are so obvious as to warrant no further discussion.
Fifth, certain correspondence which passed between Holland and Musgrove or Cadenhead. This correspondence has already been set out in this opinion. For instance, see Holland’s letter of February 23, 1956, Holland’s letter of May 7, 1956, Cadenhead’s letter of January 4, 1957, Holland's letter of January 7, 1957, Holland’s memorandum of March 4,1957. Appellee insists that these items of correspondence, either individually or collectively, are substantive evidence of Musgrove’s authority as a general agent. Again, we do not agree. A careful reading of the letters in the light most favorable to appellee indicates that they have no probative value in ascertaining or indicating Musgrove’s authority to act as a general agent, but rather these letters indicate a limited agency.
Sixth, the fact that Holmes was given life insurance as a passenger effected by oral binder from 17th February until the middle of May, 1956. Appellee in brief and in the court below insists that Musgrove orally bound the Company for this time and such fact is strong evidence of his authority to orally bind the-Company on the contract in question. However, the record clearly shows that Holland and not Musgrove bound the-coverage as to Holmes and Culver on-. February 17, 1956, after obtaining the-necessary information from Queen Insurance Company and that this was confirmed to Musgrove by letter on February 23,1956, which also contained the applications. The Company accepted the-risk here. Further, Musgrove was
not
an agent of Continental Casualty Company on February 17, 1956.
Other pertinent facts, which are undisputed, showing the relationship between Musgrove and Continental Casualty Company are briefly as follows. During the-period from February 17, 1956, through February 20, 1957, Musgrove or his-agency did not have in possession any blank policies providing for aviation accident insurance or blank applications
of
Continental Casualty Company relating-to such insurance, except the two original, applications signed by Holmes and Culver and the second application signed by-Holmes on February 20, 1957; and during this time, Musgrove handled no insurance business for Continental except, those applications above. Holland, who, was the only representative of Continental with whom Musgrove dealt, did not have authority from Continental to, extend to an agent authority to bind, normal aviation accident insurance (except trip policies) and did not have au
thority to authorize an agent to write policies covering flying as a pilot.
Musgrove did not receive any specific instructions from Holland concerning his agency and had no written agency contract with Continental other than the license issued by the Alabama Department of Insurance.
The undisputed evidence further showed that the underwriting in connection with applications for insurance of the type involved in this case was done either in Atlanta or Chicago. And it was not the practice during 1956 and 1957 of
any
company writing accident and health insurance in Alabama to give oral binders.
There was also undisputed evidence to show that Musgrove knew that he did not have actual authority to accept risks and make contracts for Continental and therefore was not a general agent. This evidence is: First, the two applications for coverage of Holmes and Culver while flying as passengers (which were sent to Musgrove for the signature of Holmes and Culver after an oral binder had been effected by Holland on the basis of the applications to Queen Insurance Company) contained the same question as the later application for pilot coverage, which was “Do you understand and agree that no insurance will be effected until the policy is issued?” Second, the two original policies issued on the above applications which insured Holmes and Culver while flying as passengers had as a normal policy provision the following:
“This policy, including the endorsements and the attached papers, if any, constitutes the entire contract of insurance. No change in this policy shall be valid until approved by an executive officer of the Company and unless such approval be endorsed hereon or attached hereto. No agent has authority to change this policy or to waive any of its provisions.”
Third, the application for pilot coverage signed by Holmes on February 20, 1957, stated: “12. Do you understand and agree that no insurance will be effected until the policy is issued?” This was answered, “Yes.” Fourth, Musgrove had in his possession a pamphlet from Continental captioned “This Is Max” and relating to policies covering passengers in certain specified aircraft. This pamphlet limited the authority of agents by providing:
“Binding — Regular Max: No agent has authority to bind coverage. Policies are to be dated effective on the date the issuing office approves application. (See question #12 on app SRZ-1171-B.)"
We also place some emphasis on the fact that Cadenhead, in his letter to Holland of January 4,1957, merely asked for application forms for pilot coverage and did not mention that Musgrove had orally bound the Company for $50,000, knowing that Musgrove had assured Holmes of coverage. Again, after receiving Holland’s letter of January 7, 1957 (which stated, “We will be delighted to entertain Mr. Holland’s application for Pilot Coverage” and expressed doubt as to a $50,000 pilot’s coverage), Cadenhead did not advise Holland of Musgrove’s oral binder of January 3.
We are of the opinion that all of the evidence in this case can only show that Musgrove was merely a “local” or “resident” agent, having the powers normally conferred on a “soliciting” agent with no actual authority to bind the Company by oral contract or binder, and that his actions in assuring Holmes of immediate coverage were clearly without the scope of his actual authority. There were no “written or spoken words or other conduct of Continental Casualty Company which, reasonably interpreted, caused Musgrove to believe that Continental desired him to act on Continental’s account as a general agent.”
(b) Soliciting Agent.
Anticipating that the evidence might not meet the requirement of showing a general agency, appellee alternatively alleges that Musgrove’s authority as a soliciting agent was broad enough to effect an oral binder of this sort, since
«* * * almost all soliciting agents are now given the power of temporary binder to protect the insured while his application is being considered by the company for acceptance or rejection.” 16 Apple-man, Insurance Law and Practice, § 8691, p. 105.
This statement is taken out of context and refers to a fire insurance agent’s power to issue ten-day binders which are “more or less automatic, and ministerial in their nature.” An analogous power which Musgrove had was the issuance of the individual trip accident policies. However, neither of these even resemble the general agent’s power of issuing policies, accepting risks, and other acts involving the “exercise of selection and discretion.” 16 Appleman, supra, p. 105.
II. APPARENT AUTHORITY.
The countersuit below instituted against the Musgrove Insurance Agency and the two individuals as partners was based entirely on apparent authority of Musgrove to so act. Again, it is elementary that, before a principal may be bound by its agent’s apparent or ostensible authority, the person dealing with the agent must have relied on the appearances in some way to his detriment.
We agree with the appellant that, “in the case at bar, there was clearly no factual basis for the trial court to submit to the jury the question of apparent or ostensible authority of Musgrove, for the reason that there was no holding out by Continental Casualty Company of Musgrove as an agent authorized to make contracts of insurance.” See 2 C.J.S. Agency § 96, pp. 1205-1206. While the evidence shows that the book of VBT travel-accident policies came into Mus-grove’s possession after Holmes’ death, even if Holmes had known that Mus-grove could have issued these trip policies (there was no evidence on this), the policies themselves would have put Holmes on notice that they did not cover a pilot or crew member or anything other than trip insurance. See, Great American Casualty Co. v. Eichelberger, Tex. Civ.App., 37 S.W.2d 1050; Hartline v. Mutual Benefit Health & Accident Ass'n, 5 Cir., 1938, 96 F.2d 174.
According to Musgrove’s testimony, Holmes twice relied on Musgrove’s assurance that he was covered by oral binder, once on January 3 and again on January 20, but this reliance cannot impose liability on the Company as there is a complete absence of actual or apparent authority.
The judgment is therefore reversed and the cause remanded with directions to enter judgment for the defendant. See 28 U.S.C.A. § 2106.
Reversed and remanded with directions.