* Writ of error granted.
The policy in suit is conditioned to "be void" in case "any change, other than by death of the insured, take place in the interest, title, or possession" of the property subsequent to the date of the policy, without the "agreement" of the company "indorsed" on the policy. It is an admitted fact that Mr. Scott, the insured, made completed subsequent sale of the property on February 5, 1926, before the day of the fire on February 10, 1926, and that no "agreement" or permission was "indorsed" on the policy to make such change of title. The company, as admittedly shown, never waived the stipulation, and had no notice at all of the sale, and no attempt was made to notify it. Notice may not be imputed to it by reason of consent or knowledge acquired by agent, for it was established that C. L. Duncan, the sole authorized agent, in no wise had dealing with the matter, and had no knowledge of it. Therefore the contractual right of avoidance of the policy is conclusively made to exist, and must be enforced, unless, as admitted by the insured, estoppel in pais, as pleaded, arises in the special facts, precluding the assertion of the right of forfeiture.
The precise acts and conduct which are claimed to amount to an estoppel, together with all the evidence in relation thereto, appear in the agreed facts set out above. Looking to the special facts, it appears that the insured immediately informed J. B. Rowland of the sale of the property, and, handing him the policy, requested that "the insurance be transferred to Mr. Fuquay," the purchaser of the property. After looking at the policy, Mr. Rowland replied as follows:
"This policy expires in April. Probably Mr. Fuquay will sell this place in a few days, and then we will transfer the policy; and, if Mr. Fuquay does not, whenever it expires we will make the transfer then to whoever owns it."
Further, as Mr. Scott said:
"Mr. Rowland put no indorsement on the policy; he just handed it back and told me: `It is all right for it to stand like it was. When we renew it, we will change it.'"
The language of Mr. Rowland does not conclusively show that he, in intent and purpose, was agreeing to the sale and transfer of the insurance, as well as to make "indorsement" on the policy thereof, at the time he "handed the policy back" to the parties. At most, it amounted to nothing more than a bare promise to "make the transfer" in the future, either when "Mr. Fuquay will sell this place," or after the present "policy expires in April," and "when we renew it." It may be that the words "it is all right" could extend to and include an expressed consent to the alienation of "the title" to the property by the insured. It will be assumed, however, as the defendants in error seem to insist, that J. B. Rowland assured the parties that both the conveyance of the "title" to the property and the sale and "transfer of the insurance" were "all right," and would be recognized, equivalent to an oral agreement in such respects.
Such assurance and consent of J. B. Rowland was, as claimed by the defendants in error, nevertheless binding on the company, although the authority of J. B. Rowland as agent was terminated, because the defendants in error had no knowledge of the termination of the agency. They invoke the general rule, quoting it:
"The acts of an agent after his authority has been revoked bind a principal as against third persons, who, in the absence of notice of the revocation of the agent's authority, rely upon its continued existence."
Stated in other words, if an insurance company has appointed an agent to transact business for it, parties dealing with him in that business have a right to rely upon the fact of a continuance of his authority as such agent until informed in some way, either in person or by circumstances, of its revocation. The rule is founded upon the doctrine of estoppel. The final element of estoppel is that the person claiming it has been misled into such action by the other party that he will suffer injury if the estoppel is not declared. Did the company mislead the other parties? The question involves consideration in the evidence of the necessity and sufficiency of notice to the defendants in error. Looking to the special facts, it appears, first, that the policy was for the period of three years from April 18, 1923. The premiums were fully paid. It was a completed transaction, and nothing more remained to be done. It was in no wise a transaction uncompleted before the revocation. The company did not have to agree to subsequent conveyance "of title" or "transfer of insurance." The insured was in no special relation different from that of general policyholders in the locality; and there is no pretense of the company's holding out J. B. Rowland as an agent after August 7, 1925, or that J. B. Rowland was undertaking to act as the agent of the company. On the contrary, it was agreed that:
"J. B. Rowland did not claim on February 5, 1926, or at any time thereafter, that he was the
agent of defendant, and has not claimed to be agent of defendant since August 7, 1925."
After August 7, 1925, J. B. Rowland was in no wise clothed with indicia of authority of an agent. It was agreed that "on August 7, 1925, * * * all supplies in the way of policy forms were transferred [from J. B. Rowland] to C. L. Duncan"; the latter being the newly appointed and sole agent from and after August 7, 1925. The necessity of notice, as relied on, especially to the insured, appears in the agreed facts to the extent only:
"That neither plaintiff knew of the termination of the agency of J. B. Rowland until several weeks after the destruction of the house [by fire]. The plaintiff Scott, at the time he went to the office of J. B. Rowland and informed him that he had sold the property and wanted the policy changed, believed that J. B. Rowland was still the agent of the defendant; that the defendant had never informed him that J. B. Rowland was no longer its agent at Mt. Pleasant, and had never given any public notice of any character or through public print of the termination of his agency. * * * Prior to August 7, 1925, defendant delivered to J. B. Rowland printed blotters, with its name and the name of J. B. Rowland as agent; and the plaintiffs obtained some of these blotters a few days before the loss of the house by fire from the office of J. B. Rowland, and at the time of the conversation in evidence some of the blotters were in possession of J. B. Rowland."
Was there sufficiency of notice? As appears:
"J. B. Rowland's authority as agent of defendant was terminated on August 7, 1925, and his commission of authority taken up."
He was not afterwards agent "at Mt. Pleasant and vicinity." As appears:
"On August 11, 1925, the defendant company filed designation with the department of insurance, Austin, Texas, designating C. L. Duncan as its agent at Mt. Pleasant, and no revocation was ever filed with the commissioner of insurance. C. L. Duncan distributed blotters with the name of defendant and his own name as local agent of defendant printed thereon, in the various business houses in Mt. Pleasant and vicinity. * * * On August 7, 1925, * * * all supplies in the way of policy forms were transferred [from J. B. Rowland] to C. L. Duncan. * * * J. B. Rowland did not claim on February 5, 1926, or any time thereafter, that he was the agent of defendant, and has not claimed to be agent of defendant since August 7, 1925."
It is clearly shown that there were reasonable efforts in good faith to give local notoriety of the termination of the agency of J. B. Rowland and the appointment of C. L. Duncan as sole agent. There was even recordation, as authorized by statute (article 5065, R.S.
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* Writ of error granted.
The policy in suit is conditioned to "be void" in case "any change, other than by death of the insured, take place in the interest, title, or possession" of the property subsequent to the date of the policy, without the "agreement" of the company "indorsed" on the policy. It is an admitted fact that Mr. Scott, the insured, made completed subsequent sale of the property on February 5, 1926, before the day of the fire on February 10, 1926, and that no "agreement" or permission was "indorsed" on the policy to make such change of title. The company, as admittedly shown, never waived the stipulation, and had no notice at all of the sale, and no attempt was made to notify it. Notice may not be imputed to it by reason of consent or knowledge acquired by agent, for it was established that C. L. Duncan, the sole authorized agent, in no wise had dealing with the matter, and had no knowledge of it. Therefore the contractual right of avoidance of the policy is conclusively made to exist, and must be enforced, unless, as admitted by the insured, estoppel in pais, as pleaded, arises in the special facts, precluding the assertion of the right of forfeiture.
The precise acts and conduct which are claimed to amount to an estoppel, together with all the evidence in relation thereto, appear in the agreed facts set out above. Looking to the special facts, it appears that the insured immediately informed J. B. Rowland of the sale of the property, and, handing him the policy, requested that "the insurance be transferred to Mr. Fuquay," the purchaser of the property. After looking at the policy, Mr. Rowland replied as follows:
"This policy expires in April. Probably Mr. Fuquay will sell this place in a few days, and then we will transfer the policy; and, if Mr. Fuquay does not, whenever it expires we will make the transfer then to whoever owns it."
Further, as Mr. Scott said:
"Mr. Rowland put no indorsement on the policy; he just handed it back and told me: `It is all right for it to stand like it was. When we renew it, we will change it.'"
The language of Mr. Rowland does not conclusively show that he, in intent and purpose, was agreeing to the sale and transfer of the insurance, as well as to make "indorsement" on the policy thereof, at the time he "handed the policy back" to the parties. At most, it amounted to nothing more than a bare promise to "make the transfer" in the future, either when "Mr. Fuquay will sell this place," or after the present "policy expires in April," and "when we renew it." It may be that the words "it is all right" could extend to and include an expressed consent to the alienation of "the title" to the property by the insured. It will be assumed, however, as the defendants in error seem to insist, that J. B. Rowland assured the parties that both the conveyance of the "title" to the property and the sale and "transfer of the insurance" were "all right," and would be recognized, equivalent to an oral agreement in such respects.
Such assurance and consent of J. B. Rowland was, as claimed by the defendants in error, nevertheless binding on the company, although the authority of J. B. Rowland as agent was terminated, because the defendants in error had no knowledge of the termination of the agency. They invoke the general rule, quoting it:
"The acts of an agent after his authority has been revoked bind a principal as against third persons, who, in the absence of notice of the revocation of the agent's authority, rely upon its continued existence."
Stated in other words, if an insurance company has appointed an agent to transact business for it, parties dealing with him in that business have a right to rely upon the fact of a continuance of his authority as such agent until informed in some way, either in person or by circumstances, of its revocation. The rule is founded upon the doctrine of estoppel. The final element of estoppel is that the person claiming it has been misled into such action by the other party that he will suffer injury if the estoppel is not declared. Did the company mislead the other parties? The question involves consideration in the evidence of the necessity and sufficiency of notice to the defendants in error. Looking to the special facts, it appears, first, that the policy was for the period of three years from April 18, 1923. The premiums were fully paid. It was a completed transaction, and nothing more remained to be done. It was in no wise a transaction uncompleted before the revocation. The company did not have to agree to subsequent conveyance "of title" or "transfer of insurance." The insured was in no special relation different from that of general policyholders in the locality; and there is no pretense of the company's holding out J. B. Rowland as an agent after August 7, 1925, or that J. B. Rowland was undertaking to act as the agent of the company. On the contrary, it was agreed that:
"J. B. Rowland did not claim on February 5, 1926, or at any time thereafter, that he was the
agent of defendant, and has not claimed to be agent of defendant since August 7, 1925."
After August 7, 1925, J. B. Rowland was in no wise clothed with indicia of authority of an agent. It was agreed that "on August 7, 1925, * * * all supplies in the way of policy forms were transferred [from J. B. Rowland] to C. L. Duncan"; the latter being the newly appointed and sole agent from and after August 7, 1925. The necessity of notice, as relied on, especially to the insured, appears in the agreed facts to the extent only:
"That neither plaintiff knew of the termination of the agency of J. B. Rowland until several weeks after the destruction of the house [by fire]. The plaintiff Scott, at the time he went to the office of J. B. Rowland and informed him that he had sold the property and wanted the policy changed, believed that J. B. Rowland was still the agent of the defendant; that the defendant had never informed him that J. B. Rowland was no longer its agent at Mt. Pleasant, and had never given any public notice of any character or through public print of the termination of his agency. * * * Prior to August 7, 1925, defendant delivered to J. B. Rowland printed blotters, with its name and the name of J. B. Rowland as agent; and the plaintiffs obtained some of these blotters a few days before the loss of the house by fire from the office of J. B. Rowland, and at the time of the conversation in evidence some of the blotters were in possession of J. B. Rowland."
Was there sufficiency of notice? As appears:
"J. B. Rowland's authority as agent of defendant was terminated on August 7, 1925, and his commission of authority taken up."
He was not afterwards agent "at Mt. Pleasant and vicinity." As appears:
"On August 11, 1925, the defendant company filed designation with the department of insurance, Austin, Texas, designating C. L. Duncan as its agent at Mt. Pleasant, and no revocation was ever filed with the commissioner of insurance. C. L. Duncan distributed blotters with the name of defendant and his own name as local agent of defendant printed thereon, in the various business houses in Mt. Pleasant and vicinity. * * * On August 7, 1925, * * * all supplies in the way of policy forms were transferred [from J. B. Rowland] to C. L. Duncan. * * * J. B. Rowland did not claim on February 5, 1926, or any time thereafter, that he was the agent of defendant, and has not claimed to be agent of defendant since August 7, 1925."
It is clearly shown that there were reasonable efforts in good faith to give local notoriety of the termination of the agency of J. B. Rowland and the appointment of C. L. Duncan as sole agent. There was even recordation, as authorized by statute (article 5065, R.S. 1925), of the fact. The company did not quietly withdraw Rowland's agency. The circumstances tend conclusively to show that by the exercise of ordinary caution the insured would have been timely and sufficiently led to knowledge of the revocation. All the parties lived in the same town, which was not one of a large population. Added to these efforts appear the undisputed facts that:
"J. B. Rowland did not claim on February 5, 1926, or any time thereafter, that he was the agent of defendant, and has not claimed to be agent of defendant since August 7, 1925. * * * C. L. Duncan distributed blotters, with the name of defendant and his own name as local agent of defendant printed thereon, in the various business houses in Mt. Pleasant and vicinity. * * * From that date (August 7, 1925), including and after February 10, 1926, the said C. L. Duncan held himself out to the public in Mt. Pleasant and vicinity as agent of the defendant company."
The public generally had reasonable notice of the termination of the agency. Yet, as admitted:
"The plaintiff or either of them made no inquiry from any one in an effort to determine whether or not J. B. Rowland was still the agent of defendant company."
The case would be an entirely different one, had the facts shown a recent termination of the agency of J. B. Rowland, and only a quiet withdrawal of his authority, without circumstances to publicly indicate cessation of such authority. It would be extreme to hold the company liable upon the ground of estoppel in the special facts. Quoting from the case of Ins. Co. v. Campbell, 42 Neb. 208, 60 N.W. 599:
"To hold otherwise would make the insurer liable for the acts and conduct of those who confessedly were not its agents, and who were no longer in its employ. Counsel * * * invoke the familiar rule that, where the relation of principal and agent has once been established, it will be presumed as to third persons to continue. The answer to this is that this presumption of law was entirely overcome by undisputed evidence that the relation of principal and agent which had once existed between Ayerst
Taffinder and the company had been terminated. It can make no difference that the insured had no notice that the agency had ceased and that other agents bad been appointed."
We have been referred to no case of similar facts where the rule invoked has been applied. The present case is not comparable to the line of cases cited by defendants in error. In the case of Insurance Co. v. McCain, 96 U.S. 84, 24 L.Ed. 653, the special facts on which that case turned were, as stated therein:
"The policy was received from an agent of the company, one B. F. Smith, who was appointed to solicit applications for policies and collect premiums for a district of country embracing a part of Mississippi and also a part of Alabama, in which the insured resided. To him the first premium was paid. The second premium, due on the 10th of December, 1869, was paid on the 5th of that month to his subagent, who, before the 10th, handed him the amount, and it was
credited in his account rendered to the company in April following. The account disclosed the fact that the amount was received upon the policy in question. After its receipt, no communication was made by the company to the assured that Smith was not its agent at the time of the payment, nor was any objection made to the sufficiency of the payment. The insured died in June, 1870."
Clearly the silence of the company, after receiving the statement of the agent that the premium had been paid to him, is equivalent to an adoption of the act of the agent. The above case is illustrative of a long line of similar cases. No such facts, though, are to be found in the present case. In the case of Insurance Co. v. Hanna, 81 Tex. 487,17 S.W. 35, the facts on which the question turned as stated therein are:
"Davis [after his agency terminated in 1878] * * * collected the premiums on the policy of J. S. Hanna annually since 1878, for the general agent of the company (C. H. Brush) at Philadelphia. The receipts were sent to him by the company on its usual forms for collection. He never heard of any objections made by the company to these collections."
An entirely dissimilar case to the present one.
In the case of Gragg v. Insurance Co. (Ky.) 107 S.W. 321, the case turned on the bare question of the sufficiency of the notice of termination, the court holding the issue one for the jury in the special facts proven. It was shown to the extent only that:
"In March, 1904, Wait was discharged or removed as agent, and Denton Robinson, who also had an office as insurance agents, * * * were appointed agents in his place." In February, 1904, the policy was issued by Wait as agent of the company. In May, 1904, Harry Wait consented that the policy might be transferred to appellant. That Wait, although removed, "continued to act as agent in the settlement of policies that were issued by him. That Wait at the time he consented to the transfer of the policy notified the company of the fact."
There was no effort at notoriety or notice at all of the termination of the agency. The agency was merely quietly withdrawn. The insured in that case was justified in believing that Wait was still the authorized agent, through the neglect or fault of the company. The company was "notified" by Wait of "the transfer of the policy," and did not repudiate the act. Another line of cases involve purely special transactions of trading corporations and partnerships, initiated and not completed before revocation of agency and of the business relation, and no attempt to give any notice thereof. In Insurance Co. v. Threlkeld, 60 Ark. 539,31 S.W. 265, it appeared, as stated, that:
"John J. Sumpter Co. had exercised "authority for some time with the knowledge and approval of" the company. "The fact that it furnished blanks for the report of such action is significant. It clearly implies that the authority was given."
There were clear grounds of estoppel in that case, wholly differing from the present case. It would serve no purpose to further illustrate the cases, as all of them are of special facts entirely differing from those of the present case.
We believe the evidence is entirely insufficient to meet the requirements of an estoppel. J. B. Rowland was not authorized to make the "agreement"; the company gave timely and reasonable public notice of cessation of his authority; the company never ratified or adopted the agreement, or even knew of it at all; the insured was not justified by any act of the company in believing that Rowland was still the authorized agent.
The judgment is therefore reversed, and judgment is here entered for plaintiff in error; the defendants in error to pay all costs.
On Rehearing.
Defendants in error insist:
"That if your opinion shall stand as against a rehearing, it is in conflict with the principle laid down in Ruling Case Law, p. 860, reading: `So far as third persons are concerned, the principal, as a rule, may revoke the authority of his agent at any time; but it is settled that the acts of an agent after his authority has been revoked bind a principal as against third persons, who, in the absence of notice of the revocation of the agent's authority, rely upon its continued existence.'"
The cases are practically unamimous on this general concept. It is often stated as if it were an axiom. It means that, in the case of mere revocation, it is the fault, as constituting the element of fraud, of the principal, if notice is not given to third persons, and that therefore the principal is bound by the agent's act, upon the doctrine of estoppel. It further means that the doctrine of estoppel furnishes the basis upon which one person may be bound by acquiescence, as constituting the element of admission, in the acts or conduct of a discharged agent who had dealt with a third person in such manner as to create the appearance of agency. The rule quoted is therefore controlling, according to the proof of particular facts of each case, with the distinction mentioned constantly recognized.
In the present case upon the conclusive proof that J. B. Rowland's agency had terminated, the presumption no longer could be indulged of continuity of agency. This rule of presumption peculiarly concerns burden of proof or duty of producing evidence, whereever from one fact another is presumed. 1 Greenleaf on Evidence, § 42; 10 R.C.L. p. 872, § 15; 1 Jones on Evid. p. 293. And the evidence is conclusive that the company did not merely revoke the agency without notice. Reasonable notice was given in ways
unequivocal and of sufficiency to afford knowledge of revocation to the public at large in the locality. A reasonably prudent person, in the exercise of ordinary caution, upon mere inquiry would have been led to a knowledge of the revocation. In such facts it was unnecessary that personal information be brought home to the defendants in error, the company having reasonably done what it could to make the revocation as notorious in the locality as was the fact of previous agency. Defendants in error admitted that they "made no inquiry from any one in an effort to determine whether or not J. B. Rowland was still the agent of defendant company."
As appears, they had had no dealings with J. B. Rowland, as agent, since June 10, 1924, to date of sale of property in February, 1926. It is further conclusively proven that there was no holding out in any way by the company of J. B. Rowland as its agent, or adopting or acquiescing in any acts done by him. The company never knew of the purported agreement of J. B. Rowland. In no wise does the element of admission of agency appear by acquiescence of acts done by Rowland with third parties. In these facts, the rule must be applied, in denial of liability. It is the general principle of elemental and substantial justice that estoppel does not arise without fault.
In the original opinion the disposition of the case was made to turn upon the single point, quoting:
"We believe the evidence is entirely insufficient to meet the requirements of an estoppel. J. B. Rowland was not authorized to make the `agreement'; the company gave timely and reasonable public notice of cessation of his authority; the company never ratified or adopted the agreement, or even knew of it at all; the insured was not justified by an act of the company in believing that Rowland was still the authorized agent."
The facts are agreed and without conflict. The motion is overruled.