Stewart v. Coleman & Co.

81 So. 653, 120 Miss. 28

• Court: Mississippi Supreme Court
• Decided: March 15, 1919
• Docket: No. 20494
• Status: Published

Opinion

Ethridge, J.,

delivered the opinion of the court.

B. L. Stewart bought a manufacturing plant and certain lots upon Avhich said factory was situated from the Bank of Commerce of Gulfport, Miss., at and for the sum of sixteen thousand - dollars, and executed a deed of trust in favor of said bank for sixteen thousand dollars, in which deed of trust he agreed to keep the property insured in a sum not less than sixteen thous- and - dollars, payable to the bank as its interests may appear, and agreed that if he failed to procure the in--surance, the bank could procure the insurance and charge him with the premiums thereon as part of the indebtedness secured thereon by the deed of trust. .One S. A. Tomlinson operated an insurance- agency in Gulf-port under the firm names and style of Coleman & Co., .and Stewart - applied to Tomlinson for insurance o.n the said manufacturing plant, which Stewart'was operating under the name of the Stewart Door Manufacturing Company, and directed Tomlinson' to deliver the insurance policies to the Bank of Commerce, .and the bank would pay the premiums upon said policies. The employees of Coleman & Co. went to Stewart and procured the data necessary for the securing of said policies. Tomlinson procured policies, some written by companies represented by him and some written by companies represented by other agents, and took the said policies to the bank and delivered them, collected the premiums and receipted the bank for the same, and the amount of the premiums was charged to the account of Stewart by the bank. Subsequent to the issuance of these original policies Tomlinson went to the bank for the purpose of canceling the policies, but without notice ,to Stewart, and procured the original policies delivered to the hank, and substituted other policies for' them, and from time to time between January, 1914, and April 25, 1914, undertook to cancel different polcies and substitute other policies for them, and finally canceled or took up some of the policies without .giving Stewart any notice so that the insurance was reduced or undertaken to be reduced to ten thousand, two hundred and fifty dollars, all without the knowledge or consent of Stewart, but the said policies were delivered to Tomlinson for cancellation and substitution by the cashier of the bank, which bank had the policies in its possession. On the 25th day of April, 1914, the manufacturing plant was burned, and > the insurance adusters came to adjust the losses; that is, the companies having polices to the amount of ten thousand, two hundred and fifty dollars. When the adjusters came Stewart told them he had sixteen thousand dollars insurance on the property, but when he went to the bank to get the policies he was informed that all policies above ten thousand, two hundred and fifty dollars had been canceled.' He protested that the companies had no author-, ity to cancel without notice to him,. and demanded of the bank and of Tomlinson the names of the insurance companies wMcli had written the policies upon said • property, but the hank and Tomlinson refused to give the information, and Stewart filed a bill in the chancery court for discovery, and through the answer of Coleman & Co. and the bank discovered that policies had been written on the said property as follows:

Policy No. Date. Amt.

National Lumber Co. 112405 Jan.21/14 $3,500 00

Springfield Fire & Marine 1613 Jan.21/14' 3,000 00

National Fire. 948451, Feb. 6/14 2,000 00

New York Underwritérs. 20541 Feb. 9/14 1,500 00

Glens Falls. 1014 Feb.12/14 1,500 00

Fireman’s Fund. 156210 Feb.19/14 1,500 00

Globe & Eutgers. 772205 Feb.26/14 1,500 00

Orient. 543102 Feb.26/14 1,500 00

London & Lancashire.. 8489474 Mar. 7/14 1,500 00

Orient . 543104 Mar.11/14 1,000 00

National Fire. 948460 Mar.11/14 1,000 00

Caladonian .2425393 Mar.14/14 1,000 00

German Fire. 305253 Mar. 1/14 1,500 00

Agricultural . 1330 Mar.23/14 1,000 00

American .■. 36549 Mar.23/14 1,500 00

Continental . 753 Mar.23/14 1,250 00

German Alliance..:. 80507 Mar.23/14 . 1,250 09

German Fire. 305254 Mar.23/Í4 1,000 00

Germania . 5095 Feb.23/14 1,500 00

Equitable . 601107 Mar.27/14 1,250 00

Royal Exchange.3965455 Apr. 3/14 1,250 00

Thereupon suit was filed by Stewart against said companies for the amount of-the difference between ten thousand, two hundred and fifty dollars collected and the amount of sixteen thousand dollars, the minimum amount of insurance agreed to be carried*, suit being filed in the chancery court, and praying for judgment according to his rights arising under the said state of facts, alleging that Coleman & Co. and the bank, or either of them, had no authority to cancel the insurance procured upon his property, and bringing in all of the insurance companies, so that judgment might he rendered according to the rights of all parties. The insurance companies denied liability, and contended that Coleman & Co. represented the insured in procuring the insurance, and that he was the agent of the insured rather than the agent of the insurance companies, and, if this defense was not sound, that the hank had authority to surrender the’policies involved, and to reduce the insurance on the theory that the hank was the agent of Stewart; and third, that the property was overinsured. The several policies contained provisions limiting the amount of the insurance to he carried on the plant to sixteen thousand dollars. They also contended that Stewart had nó interest in the policies, as they were payable to the hank as its interest appéared.

Stewart testified in his own behalf, and said that the property destroyed by fire was estimated by the adjusters at forty-two thousand dollars, and _ that he was the sole owner of the Stewart Door Manufacturing Company, subject only to the deed of trust held by the bank; that he paid'the bank sixteen thousand dollars, or rather gave a deed of trust for that amount for the purchase money and received a deed; that the deed of trust had never been foreclosed, and that he arranged with the Bank of Commerce to pay the premiums of insurance and charge it to his account; that the first premium was' paid and receipt taken, and that he had not authorized any one to surrender his policies, and no one had the authority to surrender them so that they would amount to less than sixteen thousand dollars; that he furnished Coleman & Co. with a schedule of his property, and that Coleman &• Co. had written insurance on other property belonging to him; that George Thomas and Miss Laura Bankin, employees of Coleman & Co., came out and secured the data; that Miss Bankin was the bookkeeper and Thomas an employee of Coleman & Co. .He introduced a receipt from Coleman & Co. for the premiums reading.as follows:

“Received of Bank of Commerce, thirteen hundred forty-four and 75/100 dollars for Stewart Door Co. [Signed] Coleman & Co., hy S. A. Tomlinson. 2/26/14. ’ ’

He also testified. that subsequent to the fire he had settled with, the Bank of Commerce on the deed of trust hy paying the ten thousand, two hundred 'and fifty dollars, to the hank, and agreeing to sell the lands and injured machinery and to give the hank one-third of the proceeds; that the machinery was practically worthless.' He had been offered one9 hundred and fifty dollars for the boiler, but considered it worth more than that, hut not more than four hundred dollars.

Rucks Terger, an insurance agent, testified for the complainant that he was a member of the Hewes & Terger- Insurance Agency, and was manager of the agency when some of the policies involved in” this suit were issued, and that F. S. Hewes was then owner of the agency; that at the time these policies were issued .there was no special understanding between him and Tomlinson qbout the division of the commissions, but that Tomlinson .was paid a commission on the policies suffering a loss; that the commissions were divided equally between the agents, unless some special arrangement was made. The agreement between the bank and Stewart as ,to the settlement of the deed of trust was introduced in evidence, and bears date July 31, 1917, more than three years subsequent to the burning.

The defendant introduced no evidence except the agreement between the bank and Steymrt settling the deed of trust and that Tomlinson was elected a director of the bank January 14, 1914. Neither Tomlinson nor the officers of the bank were introduced to contradict Stewart’s testimony, resting their case upon complainant’s evidence, and the court adjudged that the complainant was not entitled to the relief prayed for, and the suit was dismissed on its merits, and Stewart taxed with the costs.

In the ease of Interstate Fire Ins. Co. v. Nelson, 105 Miss. 437, 62 So. 425, thijs court laid down the rule as to the power of an agent to procure insurance as follows:

“As a general rule, an agency to procure insurance does not necessarily confer the power to cancel insurance. It has been held, and we think correctly, that ‘such an agency terminates when the insurance is procured and .the policy delivered to the principal.* Cooley’s Briefs on the Law of Insurance, sections 2796, 2797> and cases there cited.” ’

Stewart testifies that neither the hank nor Tomlinson had authority to cancel- the policy. He is not contradicted on this point, and both the officers of the bank and Tomlinson were available to the insurance companies, and we assume they would have testified if the facts would warrant it in favor of the insurance companies, as the record shows they refused to give Stewart any information until compelled to do so by the court. They were not shown to be in collusion with Stewart, and we must accept the testimony of -Stewart as true, as he is not contradicted either by direct evidence or by circumstances. As to the proposition that the answer sworn to on information and belief presents evidence to sustain the chancellor’s finding, we do not thirdr this point well taken. In Purvis v. Woodward, 78 Miss. 922, 29 So. 917, this court said:

“It is clear that the answer was sworn to by one who had no personal knowledge of the facts set forth in the answer, and such an answer is not within the protection of the rule.”

The answers in. the present case were made on information and belief by parties not connected with the transaction and who, under the facts of this record, could have had no personal knowledge of the facts set forth in the answer.

We do not think there was overinsurance in the sense that overinsurance would avoid the policies. It was not the intention of either the agexit Tomlinson or Stewart or the hank to have more than sixteen thousand dollars insurance in force at any one time; and, while the total •policies written exceed this amount, it was not intended by any of - the parties that there should be more than sixteen thousand dollars insurance, and certainly the agent of the . insurance companies, Tomlinson, had knowledge of. the facts. Section 2615,, Code of 1906, section 5078, Hemingway’s Code, makes the agent delivering an insurance policy the agent of the company for that purpose, and we have held that the company cannot avoid a policy because of other, insurance, if the agent writing the insurance for the companies had knowledge of the,facts. Ætna Ins. Co. v. Smith, 117 Miss. 327, 78 So. 289, L. R. A. 1918D, 1156.

There is no merit in the contention that Stewart had no interest in the insurance,policies because they were payable under the mortgage clause to the bank as its interests may appear; for the payment- to the bank would have benefited Stewart by paying his debt and leaving his. property free, whereas not paying the amounts left Stewart indebted to the bank, which.debt he had to care for after the fire. "

Inasmuch as the insurance coinpanies gave no notice of cancellation to Stewart, and inasmuch as the testimony shows-that neither the bank nor Tomlinson had authority to cancel any insurance without the consent-of Stewart, the policies first, issued to the extent of sixteen thousand dollars remain in force and are liable to the appellant. That is to say, the National Lumber Company was liable on policy No. 112405 issued January 21, 1914, for three thousand, five hundred dollars, which it paid; the Springfield Fire & Marine Insurance Company is liable on No. 1613, issued January 21, 1914, for three thousand dollars; National Fire was liable on policy No. 948451, issued February 6, 1914, for two thousand dollars, which it paid; the New York Underwriters’ Insurance Company is liable on policy No. 20541, issued February 9, 1914, for one thousand, five hundred dollars; G-lens Falls Insurance Company is liable on policy No. 1014, issued February 12,< 1914, for one thousand, five hundred dollars; Fireman’s Fund is liable on policy No. 156210, issued February 19, 1914, f°r one thousand, five hundred dollars; Globe & Rutgers is liable on policy No. 772205, issued February 26', 1914, for one thousand, five hundred dollara • the Orient is liable on policy No. 543104, issued Fef>-ruary 26, 1914, for one thousand, five hundred dollars. The several companies will be credited on said amounts with the amounts paid the insured; that is to say, judgment is-here rendered for five thousand, seven hundred and fifty dollars, with six per cent, interest from June 25, 1914, against the Springfield Fire & Marine Insurance Company of Springfield, Mass.; the New York Underwriters Insurance Company of New York; the Glens- Falls Insurance Company of Glens Falls, N. Y.; the Fireman’s Fund Insurance Company of San Francisco, Cal.; the Globe & Rutgers Insurance Company of New York; and the Orient Insurance Company of Hartford, Conn.; said sum to be prorated between said insurance companies in proportion to the amount that the several policies bear to the total amount of the said policies written by said companies. •

Reversed and judgment here.