Reynolds v. Continental Ins. Co.

• Decision Date: 04 April 1877
• Citation: 36 Mich. 131
• Court: Michigan Supreme Court
• Parties: James S. Reynolds v. The Continental Insurance Company

36 Mich. 131

James S. Reynolds v. The Continental Insurance Company

Supreme Court of Michigan

April 4, 1877

Heard January 23, 1877 [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material]

Error to Washtenaw Circuit.

Judgment affirmed, with costs.

Beakes & Cutcheon, for plaintiff in error.

If the defendant received the plaintiff's money for the insurance and kept it, as he offered to prove, it was a ratification of the contract. The company could not repudiate the contract while retaining its consideration. At any rate the evidence was admissible to go to the jury, as one of a series of facts which (with others the plaintiff had a right to prove) would tend to show a ratification of the insurance contract. The question here is not whether that fact alone would be sufficient of itself to bind the defendant, but whether it was so utterly immaterial to the issue that the plaintiff could not be harmed by its exclusion.

The plaintiff was allowed, it is true, to show that he paid the insurance premium to the defendant's agent, Kirchhofer, and that the money had never been returned to the plaintiff; but if the defendant denied that to be a sufficient payment to the company, it was competent to show its payment to the company. On the other hand, if the payment to Kirchhofer was a sufficient payment to the company, then we submit that the court erred in taking the case from the jury by the charge. In a controversy between these parties we suppose it to be a fair presumption of law (in the absence of contrary proof) that the agent did his duty by reporting this insurance and by forwarding to the defendant the plaintiff's money, which he obtained while acting, or at least professing to act, in behalf of the defendant in making an insurance contract the company had the right to make. That Kirchhofer's only relation to this company was that of agent, authorized to receive premiums, and make insurance contracts in its behalf, is perfectly clear. That it was his duty to pay over or account to the company for all insurance premiums received on whatever insurances he made, or undertook to make, on its account as agent, is equally clear.

Courts have gone quite as far in other cases to charge the principal at the suit of third persons on the presumption that in the ordinary course of business the knowledge of the agent would naturally become the knowledge of the principal; and that it may be assumed, prima facie, that what would naturally happen between parties in fiduciary relations, did happen. So when a man employs an attorney, whatever may be the special directions, the adverse party and the public have the right to suppose, unless informed to the contrary, that the attorney has the usual powers of an attorney, and the attorney's concessions on the trial, though against the instructions of his client, are binding. So as to brokers and others, the principal, by implication of law, confers upon them the usual powers incident to their occupation.--Story on Agency, §§ 106, 94, 85; Nickson v. Brohan, 10 Mod. 109; Andrews v. Kneeland, 6 Cow. 354; Lobdell v. Baker, 1 Met. 195, 202; Gibbs v. Boies, 13 Vt. 208, 214; Laussatt v. Lippincott, 6 S. & R., 386. 393; Chitty on Contracts, 199, 200, marginal paging.

In this case it will be seen that the general occupation of Kirchhofer was that of an insurance agent, insuring all kinds of property, when appointed by the defendant. The date of the certificate of appointment is June 23, 1874, and he had been engaged in the business over a year prior to July 18th, 1874.

A local insurance agent, with power to insure, or having blank policies to be filled out and issued by him, is a general agent in the sense of the law.--May on Insurance; Carroll v. Charter Oak Ins. Co., 40 Barb. 292; Post v. AEtna Ins. Co., 43 Barb. 251. The possession of blank policies, signed by the officers of the company, is evidence of a general agency.--Pitney v. Glens Falls Ins. Co., 65 N.Y. 6.

The power of such an agent in a stock company is plenary. He may make such memoranda and endorsements modifying the general provisions of the policy, and even inconsistent therewith, as in his discretion seems proper.--Pitney v. Glens Falls Ins. Co., 65 N.Y. 6. Such an agent has an implied authority to alter the printed blanks so as to cover risks which would not otherwise be insured against.--Gloucester Mfg. Co. v. Howard Ins. Co., 5 Gray 501, 502.

So, too, an agent entrusted with blank contracts of insurance to be filled by him, may by erasures in the printed blanks convert an alternative or conditional contract into an absolute one, and if his want of authority is not known to the assured, the company will be liable.--Dayton Ins Co. v. Kelly, 24 Ohio St., 345, 356, 359, 365.

Though printed policies in the hands of the agents provide expressly that they shall not be valid until countersigned by the agent, a policy delivered by such agent as a completed instrument is valid, though not countersigned.--Hibernia Ins. Co. v. O'Connor, 29 Mich. 241; Westchester Ins. Co. v. Earl, 33 Mich. 143.

In this case, Kirchhofer had in his possession blank policies signed by the proper officers of the company, and was entrusted with the power of filling them. The effect of this was to give him a carte blanche to insure any property he pleased, and to write over the official signatures furnished him any forms of insurance contract. There is no safety for the public under any other construction. In Lightbody v. North American Ins. Co., 23 Wend. 18, will be found a case not distinguishable in principle from this.

If the defendant shall claim that the policies were sufficient notice to Reynolds that Kirchhofer was not authorized to insure mills, we answer:

1. It does not appear that the policies that Kirchhofer had at the time of the contract of insurance contained any notice or mention of restricted authority. The policy (Exhibit B) tendered by Kirchhofer after the fire, and which Reynolds refused to receive, contained a statement that it should not be valid "unless countersigned by Samuel Kirchhofer, the agent of this company for insurance of property other than manufactories and other special hazards." But this policy was never seen by Reynolds before the fire. In fact it was not drawn until after the fire; and Reynolds had no information that the policies contained any such statement--if, in fact, they did contain it. Exhibit B is therefore immaterial to the case.

2. The company being authorized to insure mills or other special hazards, the delivery of a blank policy signed by the president and secretary (which was adapted as well to the insurance of manufactories as of any other property) to the defendant's sole agent at Manchester, was a sufficient expression of the company's assent, through its chief executive officers, to its being so filled as to insure manufactories, or any property to which the form of policy was adapted. The delivery to any person of a blank policy so signed, would confer sufficient authority to bind the company if filled up by him with any description of property, provided only that the counter signature or assent of Kirchhofer should be obtained--assuming, of course, that the assured acted in good faith. There are no words of prohibition to Kirchhofer. The words are merely by way of description, or identification, and it was of course competent for the company to enlarge the powers of an agent originally limited, or to use him as the medium of delivering any kind of policy.

3. An ordinary person in reading the policy, Exhibit B, would understand that it was only essential that Kirchhofer should countersign it before delivery, and not as any limitation in the contract, or in the kind of property which such a policy might insure. Any other construction would make it misleading and deceptive. There is no declaration that the policy shall not be valid to insure manufactories and special hazards.

Ashley Pond, for defendant in error.

Plaintiff, sworn as a witness on his own behalf, testified that in July, 1874, and prior to that time, one Samuel Kirchhofer, with whom the alleged contract for insurance was claimed to have been made, resided at Manchester, and that his business was that of insurance agent. Witness was then asked: "For what companies was he (Kirchhofer) acting?" The question was objected to by defendant's counsel, and the objection sustained, and this ruling is the basis of the first assignment of error.

I submit that the ruling was correct. If the question is to be construed to mean, for what companies Kirchhofer purported or appeared to be acting, the answer could have had no tendency to prove that he was in fact an agent of the defendant corporation. On the other hand, if it is construed to mean, for what companies he was in fact and by authority acting, preliminary questions were required for the purpose of showing that the witness had some proper means of knowing. The fallacy of permitting him to answer such a general question without first having given some evidence tending to show his means of knowledge, is clearly demonstrated by his subsequent testimony, from which it appears that he had no such means of knowledge and no knowledge.

The ruling which is the basis of the first assignment of error having been made, counsel for defendant produced a certificate of appointment of said Kirchhofer as agent for the defendant, and the same was put in evidence on behalf of the plaintiff, and a copy is annexed to the bill of exceptions. This appointment bears date June 23, 1874; it was admitted on behalf of defendant that it was received by Kirchhofer prior to the 18th of July, 1874. By the terms of this appointment Kirchhofer had no...