Planters' Mutual Insurance v. S. Lyons, Lindenthal & Co.

38 Tex. 253

• Court: Texas Supreme Court
• Decided: July 1, 1873
• Status: Published

Opinion

Walker, J.

This is an action brought to recover on a policy of insurance for $6000, dated August 13, 1870. The appellees insured their goods in the town of Waco, in the company of the appellant, at a four per cent, gold premium. Stock consisted of clothing, boots, shoes and dry goods. The insurance was under a continuing policy for one year.

As a part of the contract for insurance it is stipulated, “that if the insured shall have, or shall hereafter make, any other insurance on the property hereby insured, or any part thereof, without the consent of the company written hereon,” then the policy is to be void. This provision is customary in fire insurance policies, and the-question it presents in this case is by no means new to-the courts. But the facts are peculiar.

The appellant (defendant below) made two defenses to-the payment of the policy.

A fire having occurred' in April, 1871, by which the-whole of the appellees’ stock, amounting to some $12,000" or $13,000, -was consumed, it was attempted in the court below to show that the appellees were responsible for the-fire, and that the loss was occasioned through their fraud. That defense however is abandoned in this court, but it is here insisted, as it was below, that the policy is void by reason of the appellees having obtained an additional insurance on their stock of $4000 without the consent of the appellant, as stipulated in the policy. To this it is replied and insisted, that the necessary steps were taken, and the consent of the company virtually obtained to the-additional insurance.

' There is not much conflict in the evidence, and the main facts appear to be about these: Previous to the thirteenth of August, 1870, Flint & Chamberlain were the local agents of the appellant at Waco. Their business not permitting them to give the necessary attention to the agency, they had notified the managing officers of the company of a desire to surrender the agency. They were however requested by the officers of the company to refer them to a suitable agent who would “do the work for the pay;” and further, that they would allow their names still to be used as the agents of the company, perhaps upon the ground that they were responsible business men and bankers in the town of Waco.

E. A. McKinney was recommended, and appears to have been thenceforward the active business agent of the company at Waco; and it is easily gathered from the evidence that no insurance was solicited, policies taken, reports made, or any other act of agency performed by any one acting for the company, in. the town of Waco, except by E. A. McKinney.

Mr. McKinney states in his depositions that he corresponded with the company; made regular reports from his agency; received letters and communications from the secretary of the company. He filled out the policy in this instance, received the premium, and paid it over to the company, though it is true the names of Flint & Chamberlain are written on the margin of the policy, as agents. Yet it is insisted by the company that McKinney was only a special agent, with limited powers, not extending to the granting of the privilege to policy holders of taking additional insurance.

We confess there may be some difficulty in determining what was the precise relation of McKinney to the insurance company — whether he was but a sub-modo or special agent, without the necessary power of granting the license himself; yet we think, under proper instruction as 'to the law of agency, it was a question of fact for the jury to determine, how far McKinney was the agent of the company.

Lindenthal, one of the appellees, states that all the transactions in regard to the policy herein sued on were had with McKinney ; that he paid him the premium ; that he knew of no other agency in Waco for the appellant.

Regarding the status of McKinney as a question of iact, and considering him the agent of the company for the ordinary transaction of its business at Waco, how does his conduct affect the law of this case? It is clear, from the evidence, that before the second insurance was taken in the London Globe Company, Lyons, the senior partner of appellees’ firm, called upon McKinney, with the request that his firm might be allowed to make additional insurance on their goods; and we gather both from Lyons’ and McKinney’s evidence, that the matter was distinctly spoken of and understood by the perties; and, as a result of the interview, McKinney took a business card of Messrs. Massie & Herndon, insurance agents at Galveston, and wrote on the back of the card the following words and figures:

“Frame range; now insured for $6000, at four per cent.; average stock $12,000. Lyons will select company, and I will make application. McKinney.”

This memorandum is not dated; but by the testimony of Lyons, it was written about the nineteenth of January, 1871, and was intended to signify the assent of McKinney, that if Lyons would select a company in which to make additional insurance, McKinney would make the application for it.

Lyons obtained the additional insurance while in the city of Hew York, and it is furthermore testified by McKinney that Mr. Cohen, a member of the appellees’ firm, informed him in February, 1871, that they had obtained an additional insurance on their goods ; that he did not make any objection, but, as he believes, he informed the company — though upon this point the evidence is somewhat doubtful. There, however, can be no doubt that it was his duty to inform his company of so important a matter, and if he did — the fire not occurring until the eighth of April, 1871 — the company had abundant time to act in the premises, and if the officers considered that the second insurance had been obtained without the proper consent of the company, and that their policy was made void thereby, they should have so informed the appellees.

But it is insisted that the judgment of the District ■Court should be set aside for errors in the charge to the jury; that the charge is erroneous; that it improperly deals in abstractions and hypothetical cases.

We have examined this charge, and are not prepared, in our judgment, so to pronounce upon it. There is evidence in the case to which every part of the charge, as far as it could do good or harm, applie's, and we find no misstatement of the law in it. Doubtless the charge might have been more brief, a,nd quite as favorable to the appellees as it was. We admit the authorities to some extent hold that mere notice to an agent, without assent, •of an intention to procure subsequent insurance, is not sufficient. (Kimball v. Howard Fire Insurance Company, 8 Gray, 33; Miller v. Hamilton Fire Insurance Company, 5 Duer, 101; Worcester Bank v. Hartford Fire Insurance Company, 11 Cushing, 265.) And it. has also been held that mere verbal consent, when written consent Is required by the by-laws of a mutual company, is not sufficient, even where the policy itself is silent on the subject. (Hale v. Mechanics’ Mutual Insurance Company, 6 Gray, 169.) And in Dietz v. The Mound City Insurance Company, 38 Mo., 85, the court say “that •stipulations as to consent, for further insurance must be strictly complied with ;” and it is further held, in some •cases, that parol evidence of consent by the company is not sufficient where, by the policy, written consent is required.

But this question is left in some doubt; other courts have treated it differently, and we will proceed to refer to •some of the arguments and adjudicated cases on the •other side. Flanders, in his late valuable treatise on the Jaw of fire insurance, says:

“If the insurer has actual knowledge of the existence of other insurance at the time he issues his policy, he will not be permitted to set up that fact to evade a liability which he has deliberately assumed.” (p. 42.)

“And if the insurer, at the time he obtains his policy, informed the agent of the insurer that he already had other insurance, he will be entitled to recover in case of loss, notwithstanding the agent neglected to enter it in writing on the policy.” (Page 43; see also, N. E. Fire and Mar. Ins. Co., 38 Ill., 166; Rowley v. The Empire Ins. Co., 40 New York, 557; Tallman v. The Atlantic Ins. Co., 40 New York, 87; Washington Ins. Co. v. Davidson, 40 New York.)

In the case of Howitz v. The Equitable Insurance Company (40 Mo.), the charter of the company contained a clause to the effect, “that if insurance on any house shall be and subsist in said company, or in any other company, at the same time, the insurance made in and by this company shall be deemed and become void, unless such double insurance subsist with the consent of the directors, signified by endorsement on the back of the policy, signed by the president and secretary.”

The policy also in this case, like the one under consideration, contained a clause which provided, that if the insured should procure any other insurance, and should not, with all reasonable diligence, give notice to the company, and have the same endorsed on the policy, or otherwise acknowledged in writing, the policy should cease and be of no further effect. The application was for insurance to the amount of ten thousand dollars.

The agent of the company informed the applicant that by the rules of the company it could not take but five thousand dollars on any one risk, but, at the same time, offered to procure insurance for the remaining five thousand dollars. This the agent accomplished the next day and notified the insured, who subsequently paid the premium and received his policy.

On this state of facts it was held to have been the duty of the company, upon being notified by its own agent of the additional insurance, to have endorsed the same upon the plaintiff’s policy, or to have notified him of the refusal of the risk; and that having failed to do so, it was estopped from setting up as a defense the failure to have such additional insurance endorsed upon the policy. (Flanders, pp. 51, 52.)

And so we think in file case at bar. If the company were informed by McKinney that additional insurance had been effected on the appellee’s goods, and the consent of the party was not given and endorsed on the policy, the policy should have been at once vacated, and the appellees notified.

Flanders, (pages 56, 57) says, “that when the contract of insurance is rendered void by reason of notice not being given of other insurance, and having the same mentioned in or endorsed upon the policy, it may be revived and rendered binding by subsequent acts of the insurers, manifesting an intention to treat it as a valid and subsisting contract, notwithstanding the forfeiture. And this right of waiver is not curtailed by an express provision of the policy that none of its conditions can be waived except in writing, signed by the secretary.”

It is competent for the parties to rescind or modify this provision by a valid agreement, even by parol, and an executed agreement to renew the policy clearly has that effect. (See Carrol v. Charter Oak Insurance Co., 38 Barbour, 402; Dearborne v. Cross, 7 Cowen, 48; Carrol v. Charter Oak Insurance Co., 40 Barbour, 292.)

The case of Carrugi v. The Atlantic Fire Insurance Co., 40 Georgia, 135, is a case very similar to the one at bar, and the court hold in a very able opinion that “Where a policy of insurance contained a clause that < if any prior or subsequent insurance has been, or may hereafter be, made upon said property, and not consented to by said company in writing, this policy shall be null and void,’ and the policy holder notified the agents of the company that he would get additional insurance and the agent consented, and the insured acted upon that consent and purchased the insurance, the first policy is not void, although the consent of the agent was not in writing.

“An agent of an insurance company, authorized to make and revoke contracts of insurance, is the proper person to give consent to the procuring of new insurance, unless his powers be restricted by the company in this respect, and the insured have notice of the restriction.

“Notice of an intention to get additional insurance and consent thereto by the agent of the company is sufficient, under the clause in this policy, to justify the insured in procuring the new insurance, there being no fraud. But if, after this new insurance is effected, the original policy be renewed, and no other notice in fact be given to the agent of the new insurance, the insurance will or will not be valid, according as, from all the facts and the conduct of both the insured and the agent, the jury shall believe it was or was not the intent of the insured to commit a fraud by over-insuring his property.’’

In the Insurance Company v. Wilkinson, 13 Wallace, 222, in the opinion by Justice Miller, the court hold: “That insurance companies, who do business by agencies at a distance from their principal places of business, are responsible for the acts of their agents within the general scope of the business with which, they are entrusted, and no limitation upon the authority of the agent will be binding on the parties with whom he deals unless such limitation be brought to their knowledge.”

If, then, there was any limitation on the authority of McKinney to act as agent of the company in all matters pertinent to its business at Waco, the evidence does not show that the appellees had any knowledge whatever of the limitation, but, on the contrary, they deny that knowledge in their depositions.

Flanders also lays down the rule, “That a general agent for effecting insurance on behalf of the company has full power to insure, to renew, and to receive notice of other insurance,” and cites Carrol v. Charter Oak Ins. Co., 40 Barbour, 292; Sheldon v. Conn. Mut. Life Ins. Co., 25 Conn., 207; New York Central Ins. Co. v. Nat. Pro. Ins. Co., 20 Barbour, 469 ; and Peck v. The New London Mut. Ins. Co., 22 Conn., 575; and the note on page 164 cites Farmers’ M. F. Ins. Co. v. Marshall, 29 Vt.; and Mound City Mut. Fire and Marine Ins. Co. v. Curran, 42 Mo., 374, to the doctrine that the authority of a general agent is restricted to the range of his employment, and the acts and representations which an ordinary person might expect of him, and that he would be authorized to do or to make on behalf of his principal; and it is left as a question of fact for the jury, whether a given representation was really calculated to impose upon a careful and prudent man.

We think this question properly arose upon McKinney’s memorandum on the back of Massie & Herndon’s card.

It is in cases like this thát Justice Miller says, “ The courts of law and equity in modern times apply the doctrine of equitable estoppels to companies chargeable with notice through their agents; and the principle is, that where one party has, by his representations or his conduct, induced the other party in a transaction to give him an advantage, which it would be against equity and good conscience for him to assert, he would not, in a court of justice, be permitted to avail himself of that advantage.”

These principles of the law were stated in the charge of the court below, with some unnecessary qualifications, which rendered the charge quite as favorable to the appellant as the current authorities would justify. But we think the jury understood the law of the case from the charge of the court, and that the verdict was quite consistent with the law and the facts; therefore, the judgment is affirmed.

Affirmed.