John R. Davis Lumber Co. v. Hartford Fire Insurance

37 L.R.A. 131, 70 N.W. 84, 95 Wis. 226, 1897 Wisc. LEXIS 173

• Court: Wisconsin Supreme Court
• Decided: February 2, 1897
• Status: Published

Opinion

Maeshall, J.

The findings of fact are to the effect that Winchester was an insurance broker, with all the ordinary authority as such, to procure insurance for plaintiff, subject only to its approval respecting the character of the insurance companies issuing the policies; that, as such broker, he procured for plaintiff three of the policies in question, from defendants’ agents, Sunderland & Ostrander, at West Superior, Wisconsin, which, for convenience, we will designate •^as the first line; that such policies were issued in consideration, in part, of an agreement made with Winchester on plaintiff’s behalf, that plaintiff would not take or accept any policy on the same property in either of the defendant companies from any other agent or agents, but that plaintiff did not know of such agreement till after the fire of June 19, \ 1894. From such facts, the trial court was requested to find, as a conclusion of law, that the plaintiff was bound by the agreement pursuant to which such first line of policies was-issued, which request was refused, and a decision made, instead, that the authority of Winchester, though agent for plaintiff to procure the policies, was limited to such procurement, and that plaintiff was not bound by the agreement not to take a double line of insurance in the defendant companies. By the learned judge’s opinion we are informed-that his conclusion was based on the ground that Winchester was a special agent, and that, though in fact the agent for plaintiff, in law he was the agent for defendants, under sect 1977, E. S.

Leaving out of view the statute, which was evidently very persuasive with the trial court, what the powers of an insurance broker are can hardly be a subject for serious controversy. He is the agent for the assured, according to all authorities on the subject, though at the same time, for some-purposes, he may be the agent for the insurer, and his acts and representations within the scope of his authority as such agent are binding upon the assured. Mechem, Agency, § 931; Hartford F. Ins. Co. v. Reynolds, 36 Mich. 502; Standard Oil Co. v. Triumph Ins. Co. 64 N. Y. 85; Hamblet v. City Ins. Co. 36 Fed. Rep. 118; May, Ins. § 124A. Says Mr. Justice Page, in Am. F. Ins. Co. v. Brooks (Md.), 34 Atl. Rep. 373: “ It appears to be well settled that, where-one engages another to procure insurance, the person so employed is agent for the insured, and not for the insurer, in-all matters connected with such procurement.” Questions involving the scope of the powers of an insurance broker to represent the insured arise most frequently where notice of cancellation is served by the insurer on such broker, when the contract of insurance requires it to be served upon the insured. In such cases the question turns on whether the employment of the broker extended beyond the mere procurement of the insurance. If not, it is held that his agency ceased upon the delivery and acceptance of the policy, so-that service of notice of cancellation on him was ineffectual. Kehler v. New Orleans Ins. Co. 23 Fed. Rep. 709; Franklin Ins. Co. v. Sears, 21 Fed. Rep. 290; Body v. Hartford F. Ins. Co. 63 Wis. 157; Hermann v. Niagara Ins. Co. 100 N. Y. 411; Grace v. Am. Cent. Ins. Co. 109 U. S. 278; Broadwater v. Lion F. Ins. Co. 34 Minn. 465; White v. Conn. F. Ins. Co. 120 Mass. 330; Indiana Ins. Co. v. Hartwell, 100 Ind. 566. Bat the broker may be so clothed with authority as to have full power to act for the insured in canceling, as well as procuring, policies. Standard Oil Co. v. Triumph Ins. Co., supra; Hartford F. Ins. Co. v. Reynolds, supra. In all cases the familiar rule respecting the relation of principal and agent applies, that, within the scope of his authority to procure insurance, he stands in the place of the principal, and the latter is bound by whatever, within such scope, such agent may do, to the same extent as if it were done by such principal.

Such is the law pertaining to this subject, unless varied by sec. 1977, R. S., which probably exerted controlling influence with the trial judge. Such section provides that whoever solicits insurance on behalf of any insurance corporation or property owner, or transmits an application for insurance, or a policy of insurance, other than for himself, to or from any such corporation, or who makes any contract for insurance, or collects any premium for insurance, or in any manner aids or assists in doing either, or in transacting any business of like nature for any insurance corporation, or advertises to do any such thing, shall be held to be an agent •of such corporation to all intents and purposes.” Obviously, under such section, Winchester, for some purposes, was the agent of the defendants. Such is the effect of Schomer v. Hekla F. Ins. Co. 50 Wis. 575, and other cases in this court. He was their agent to deliver the policy. He was their agent in respect to any representations made by him to the plaintiff. He was their agent to receive the premium, and for some other purposes. But that did not prevent him from being plaintiff’s agent at the same time in procuring the policy; and in respect to everything which did not conflict with, the statutory agency for the defendants.' 2 Am. & Eng. Ency. of Law, 595. In Wood v. Firemen's F. Ins. Co. 126 Mass. 316, where a similar question, under a similar law, was under discussion, Mr. Justice Colt said: “The statute relating to agents of insurance companies does not change the rule of the common law regulating the power of agents to bind their principals;” and further, in effect: The statute cannot be construed so as to prevent the person who is agent for the insurer for some purposes, by virtue of the statute, from being the agent for the insured for other purposes. He may well be agent for each in matters which do not conflict. Sec. 1977, we hold, does not vary the common-law rule respecting the relations of principal and agent, so but that an insurance broker, in the procurement of an insurance policy, may bind his principal in matters pertaining to such procurement, though it clothes him at the same time with power to bind the insurance company, as its agent, in matters within the scope of the statute. The common-law rule exists, notwithstanding the rule of the statute, except where the two conflict, and then the former must give way to the latter.

Applying the foregoing to the facts of this case, no reason is perceived why Winchester did not bind the plaintiff by the agreement he made with Sunderland & Ostrander against a double line of insurance. It was the usual and proper course to pursue to limit the proportion of insurance that each company would carry on plaintiff’s property. Plaintiff’s officers knew that such was the policy pursued generally by insurance companies, as sufficiently appears from the evidence. They could not have obtained the policies without submitting to such policy. They knew that, when they clothed Winchester with authority to procure the insurance, it must be procured subject to such policy. Therefore they necessarily clothed him with authority to make the arrangement that he did to protect the defendants, and they are bound thereby, even though they had no notice of the agreement till after the first fire. Moreover,, plaintiff’s officers, with full knowledge of the facts obtained after the fire of June 19, insisted on taking the benefits of the policies; and, by their conduct in that regard, they ratified the agreement in question, whether it was originally authorized or not. The rule applies that if one, with knowledge of the facts, accepts the benefit of an act done in his behalf by another, he thereby assumes its responsibilities by accepting such benefits, though the act be done without original authority. He makes it his act, and is bound to the same extent as if the same were originally authorized. So held in Samo v. Gore Dist. M. F. Ins. Co. 26 U. C. C. P. 405, where, in discussing the subject of whether representations, made by a broker in obtaining insurance were binding on the insured by ratification, Haggebty, C. J., said, in effect: The plaintiff cannot claim the benefits of an insurance policy obtained by the broker as his agent, and at the same time insist that he is not liable for that agent’s statements, on the faith of which statements being true the insui-ance was effected.

The views above expressed lead to the conclusion that the trial court erred in the decision contained in the first conclusion of law, to the effect that plaintiff was not bound by the agreement made between Winchester and Sunderland & Ostrander to protect defendants against the danger of being held liable upon two lines of policies, and erred in not concluding, as requested by defendants’ counsel, that such agreement was binding when made, and also erred in refusing to find, as requested by them, that plaintiff was bound by such agreement by ratification.

It does not necessarily follow from the foregoing that the judgments should be reversed on defendants’ appeals, for if, notwithstanding the erroneous conclusion of the trial court, the judgments are yet right on the facts found, or on the ■evidence, they must be affirmed. Cornell v. Barnes, 26 Wis. 473; Sanford v. McCreedy, 28 Wis. 103. It is therefore important to inquire whether the agreement made with Sun-derland & Ostrander that plaintiff would accept but one line of insurance from each of the defendants was waived by them. The evidence shows that the policies obtained of Bobert Shields & Son (which for convenience we will call the “ second line,” to distinguish them from the policies issued ■at the West Superior agency, which we call the “ first line”) were ordered by John B. Davis, June 5, 1894; that they were not paid for or delivered till after the fire of June 19, 1894; that, as soon as defendants were informed that the second line of policies had been ordered, they insisted upon one of the lines being canceled, and gave some preference to the second line; that June 19, 1894, after the fire, Sunder-land & Ostrander were assured by Winchester that no claim would be made against defendants under any policies, except those issued at their agency; that the next day John B. Davis called on Shields & Son, and paid for and obtained possession of the second line of policies; that, as soon as defendants learned that the second line of policies had been -delivered, they ordered Shields & Son to pay back to plaintiff the entire amount of the premiums, and to cancel such policies; that thereupon the agents sent a telegram to plaintiff, to the effect that the policies were canceled, subject to loss; that such telegram was followed by the service of a noticeVn plaintiff on the 27th day of June, 1894, to the same effect, at which time a tender of the full amount of the premiums was made, accompanied by a demand for a return of the policies; that such tender and request were repeated on the 2d day of July, 1894, and such tender was kept good down to the time of the trial; that plaintiff refused to receive the money tendered, or to comply with the request to return the policies, or to submit to the cancellation thereof, as demanded, or otherwise, except in such manner as to protect its causes of action for loss on account of the fire of June 19, 1894; and defendants persisted in their position that plaintiff should accept the full amount of the premiums, and return the policies as void from the beginning. It will be observed that defendants’ position was consistent only with a determination on their part to rescind the contracts of insurance altogether and that of plaintiff’s officers only with the theory that such position was fully understood by them, and that their intention was not to submit to any cancellation but such as could not prejudice their claims for loss alleged to exist on account of the fire of June 19. The trial court so concluded, and embodied such conclusion in the findings of fact in No. 16, to the effect that, “ after the fire of June 19, the defendants insisted upon recalling, revoking, and unmaking the contracts of insurance with plaintiff company, issued by Robert Shields & Son, and treating them as if they had never been in force, and each took the position that that line of insurance was wholly inoperative from its inception.” It would seem from this that no claim can be seriously made, but that, if the contract against a double line of insurance was binding on plaintiff when made, or by a subsequent ratification, and it was so binding, it was not at any time thereafter waived. The evidence and the findings of fact are conclusive on this point. From the foregoing it follows that the conclusion of the trial court that defendants are liable upon the second line of policies for the fire of June 19,1894, cannot be sustained, and that it was rightly decided that they are not liable on such policies for the fire of July 27, 1894.

There is left to be determined on defendants’ appeals the questions relating to their liability for loss on the first line of policies for the fire of July 27, 1894. It is claimed on the part of the defendants that such policies were canceled by the proceeding covered by the thirteenth finding of fact, to the effect that, July 7, Sunderland & Ostrander telegraphed Winchester at Phillips, Wisconsin, to cancel such policies; that no premium had been received or would -be accepted; that on such date the policies were in the possession of plaintiff; that it owed Winchester therefor, and that he was indebted for the premiums to defendants; that Winchester promptly notified plaintiff of the contents of such telegram; that plaintiff notified Sunderland & Ostrander that only a cancellation under the conditions of the policies would be consented to; that on July 7, 1894-, to guard against any question that might arise growing out of payment of the premiums by plaintiff to Winchester, or acts equivalent to such payment, defendants caused the full amount of the premiums to be tendered to plaintiff, and a surrender of the policies demanded.

From what has heretofore been said, Winchester having delivered the policies and his connection therewith as plaintiff’s agent to procure the same having ceased, a notice of cancellation served on him was of no value. Though if he were so circumstanced that if a notice of cancellation served upon him would have been effectual, no such notice was served. He was directed to cancel the policies. If that gave him authority to make the cancellation, or to give the proper notice of cancellation to plaintiff, he did not exercise it. In fact, there does not appear to have been any effort to cancel the policies under the conditions contained in the contract. The law is well settled that a policy of insurance cannot be canceled under the provisions in that regard, unless such provisions are strictly followed. The right of cancellation does not exist at all except by contract, and a clause in that regard is in the nature of a condition precedent, which must be strictly complied with in order to make an effort to cancel effective to accomplish its purpose. Van Valkenburgh v. Lenox F. Ins. Co. 51 N. Y. 465. There must be an actual notice of cancellation, within the meaning of the policy, not a mere notice of a desire to cancel or a no-tice that the policy will be canceled, or a notice to cancel; -■and the notice most be served on or given to the proper person, and a tender of the unearned premium must be made for the purpose of meeting the condition of the contract. Nothing short of that will do. Wood, Eire Ins. § 113; Mohr & Mohr Distilling Co. v. Ohio Ins. Co. 13 Fed. Rep. 74; Quong Tue Sing v. Anglo-Nevada Ass. Corp. 86 Cal. 566. As stated by the learned circuit judge in his opinion, relating to the second class of policies, an excessive tender does -not render it ineffective, but with this modification, for the ■purposes for which such tender is made; but a tender and demand for a surrender of the policies, made for the purpose of a rescission and refused on that ground, cannot operate as a sufficient tender to effect a cancellation under ■the terms of the policy. Any other rule would be dangerous and inconsistent with the whole theory of a cancellation ■by contract. To effect such a cancellation, the minds of the parties must meet, the same as in respect to any other contract; hence a tender and demand for the purpose of canceling a policy from the beginning, refused on that ground, will form no legitimate basis whatever upon which to claim ,a cancellation pursuant to the condition contained in the policy. Where the policy provides that it may be canceled ■on notice and payment of the unearned premium, such provision is in the nature of a continuing, irrevocable offer, and when accepted, according to its terms, a new contract is made, which terminates the policy from the date of such acceptance. Under each of the policies in question, plaintiff was bound by such an offer to submit to its cancellation, to ■take effect at the date of its acceptance. Such an offer has never been made or accepted as to either of such policies, but ■a demand for a cancellation of the policies from the beginning was made, which was refused. The minds of the parties .never met on the subject of cancellation pursuant to the ■contracts; hence the condition precedent contained therein, the performance of which was requisite to the cancellation defendants now contend for, has never been performed.

The trial court found that defendants are liable on the first policies for the fire of July 27, because of the payment •of the premiums to "Winchester, July 23; that such payment operated as a waiver of the cancellation of the policies if such cancellation had theretofore taken place. Such findings were excepted to, but, as they are only made on the theory that the policies were canceled prior to such payment (and we have found that they were not), it is unnecessary to consider the assignments of error predicated thereon.

A further claim is made on defendants’ appeals that each judgment was entered for $318.54 in excess of the amount ordered at the foot of the findings. Such claim may not be exactly correct, but a computation of the interest that wTe have made sufficiently shows that there was a serious error made by the plaintiff in that regard, and that such error is approximately as claimed by defendants.

The result of the foregoing is that plaintiff’s appeals from the judgments to the effect that no recovery can be had on the policies obtained of Robert Shields & Son, June 20,1894, for the fire of July 27,1894, must be affirmed; and that, on defendants’ appeals, the judgments must be reversed as to the recovery on the second line of policies for the first fire, and on the second line of policies for error in computing interest, and the cause remanded with directions to enter the proper judgments in conformity herewith, as indicated in the mandate.

By the Court.— That part of each judgment appealed from by plaintiff is affirmed; and on defendants’ appeals the judgments are reversed, and the cause remanded, with directions to enter judgments in favor of the plaintiff for $1,090.88, with interest thereon at the rate of six per cent, per annum from September 19, 1894, and $3,576.49, with interest thereon at the same rate from the 17th day of November, 1894, with costs as taxed in that court, against the defendant Hartford Fire Insurance Company of Hartford, Connecticut, and a like judgment against the National Fire Insurance Company of Hartford, Connecticut, and a like-judgment against the Phoenix Assurance Company of London. Full costs are allowed to each of the defendants in this-court on the two appeals from the judgments against such, defendant, except that only one third of defendants’ costs for printing on their appeals shall be taxed in each judgment on such appeals, and one third of defendants’ costs for printing on plaintiff’s appeals shall be taxed against plaintiff in each judgment on such appeals.