Pollock v. German Fire Ins. Co.

• Decision Date: 10 July 1901
• Citation: 127 Mich. 460,86 N.W. 1017
• Court: Michigan Supreme Court
• Parties: POLLOCK et al. v. GERMAN FIRE INS. CO. OF PITTSBURG, PA.

86 N.W. 1017

127 Mich. 460

POLLOCK et al. v. GERMAN FIRE INS. CO. OF PITTSBURG, PA.

Supreme Court of Michigan

July 10, 1901

Error to circuit court, Wayne county: George S. Hosmer, Judge.

Action by Henry B. Pollock and others against the German Fire Insurance Company of Pittsburg, Pa. From a judgment in favor of defendant, plaintiffs bring error. Reversed.

Fred H. Warren, for appellants.

Tarsney & Fitzpatrick, for appellee.

MOORE J.

This is an action upon a fire insurance policy. The circuit judge directed a verdict for the defendant. The case is brought here by writ of error. The policy was dated September 4 1894, and was for one year. It contained the following provisions: 'This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements or conditions as may be indorsed hereon or added hereto; and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy except such as, by the terms of this policy, may be the subject of agreement indorsed hereon or added hereto; and as to such provisions and conditions no officer, agent, or representative shall have such power, or be deemed to have waived such provisions or conditions, unless such waiver, if any, shall be written upon or attached hereto; nor shall any privilege or permission affecting the insurance under this policy exist, or be claimed by the insured, unless so written or attached.' 'This policy shall be canceled at any time at the request of the insured, or by the company by giving five days' notice of such cancellation. If this policy shall be canceled, as hereinbefore provided, or become void, or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy or the last renewal, this company retaining the customary short rate, except that, when this policy is canceled by this company by giving notice, it shall retain only the pro rata premium.' It is conceded that, if defendant is liable at all, it is for $1,800 and interest from July 19, 1899. The facts are not in dispute. The plaintiffs are wholesale merchants in Detroit. For some years their place of business was at 143 Jefferson avenue. They carried a considerable line of insurance, about one half of which was placed with Vernor Bros., and the other half with Bierce & Sage. The plaintiffs did not know that either of these firms issued to them policies in any company for which they were not themselves agents. When the plaintiffs desired insurance, they would notify one or the other of these firms of the amount. The policy or policies would be written, and delivered to them, and the premium would be paid to the firm procuring the policy. In September, 1898, plaintiffs ordered from Bierce & Sage $4,000 of insurance, and they delivered two policies of $2,000 each, running one year from above date. One of these policies was in the defendant company. Bierce & Sage were not agents for this company, but it was represented in Detroit by one Victor P Gaukler, from whom Bierce & Sage ordered the insurance. Gaukler delivered the policy to Bierce & Sage, and the latter delivered it to plaintiffs. Later Bierce & Sage collected the premium from plaintiffs, and made a settlement with Gaukler. When these policies were delivered to plaintiffs, there appeared pasted on the outside of each policy as folded, near the bottom, a printed green slip 3 1/2 inches long by 1 1/8 inches wide, upon which was the following 'Bierce and Sage, General Insurance Agents, 5 Whitney Opera House Bldg. Telephone: Both Lines 1,112. Detroit, Mich.' The plaintiffs supposed Bierce & Sage were the agents for these companies, and not until after the big fire did plaintiffs know that Bierce & Sage had furnished them any insurance in companies for which they were not the actual agents. Plaintiffs did not know Gaukler at all; had never had any insurance business with him; all the business regarding these policies was done solely with Bierce & Sage, and they knew no one else in the transaction. It further appeared by the testimony of Sage, Vernor, and Waterfall, who have been in the fire insurance business in Detroit from 6 to 25 years, that it is customary to write what is known as 'exchange insurance'; that when an agent receives an order for insurance, which, for some reason, he cannot write in his own companies, he places it with other agents. In such cases, the customer does business solely with the agent with whom he places the order, and does not know or come in contact with the agent who actually writes the policy at all. The first agent delivers the policy, collects the premium, attends to renewals, and settles with the agent or company who wrote the insurance. It also appeared by the testimony of the same witnesses that it was the universal and invariable custom among insurance agents, whenver they ordered insurance from another agency, to place their own names on the policy as agents, either by paster or rubber stamp, before delivering it to the customer. Also that, if some privilege was asked or granted during the life of the policy, it would be the duty of the agent who took the original order for the insurance, and delivered the policy, to see that the permit slip was attached to the policy or delivered to the customer. It was further shown that agents who have authority to write policies have authority to consent to transfers from one location to another; that it would be their duty, upon receiving such a request, to see that the transfer was made, or a reason given for not transferring it; that an agent might consent to a transfer, and the company afterwards refuse it; but that in all cases where a transfer was refused it would be the duty of the company to give the customer five days' notice of the cancellation of his policy, and return to him the unearned premium pro rata. Plaintiffs began moving from 143 to 185 Jefferson avenue about January 1, 1899. Before commencing to move, Robert Pollock had called the attention of Frank Sage, an employ�, and special agent for Bierce & Sage, to the contemplated change, and shown him the new location. Sage told him he was glad they were going to move, that it was a better risk, and that their insurance must be transferred. The record shows the fire risk in the new location was regarded as less than in the old one. January 3d, Robert Pollock telephoned Bierce & Sage to transfer their insurance from 143 to 185, and, on the 5th, Vernor Bros. were ordered by telephone to transfer theirs. The message to Bierce & Sage was received by Mr. Sage himself, and he at once looked up the insurance covering the risk. They had a record in their office of all the insurance they had placed for the plaintiffs, including the policy written by Gaukler in the defendant company, and a policy written by Waterfall in the Citizens', of Pittsburg. Mr. Sage then called up Gaukler's office, and told the young lady who answered the telephone that Pollock, Pettibone & Chapman were moving, or had removed, to 185 Jefferson avenue, and wanted their insurance transferred. He also called up Waterfall, and told him the same thing. He then instructed two young ladies in the office--Miss Jakel and Mill Lennox--to make out transfer slips in all the companies represented by them, which was done. All of these policies were transferred as of January 3d, except two, which were transferred on the 9th. Vernor Bros.' insurance was transferred January 5th. When the order for the transfer came in, Mr. Harmon Vernor made out transfer slips, and carried them over to plaintiffs. Robert Pollock took the policies from the safe, and handed them to Vernor, who pasted the transfer slips on the policies, and gave the bunch back to Pollock, who returned them to the safe. Plaintiffs supposed all their insurance had been transferred to the new location. The fire occurred April 4, 1899. The two agencies were notified. Bierce & Sage notified all their companies. The loss was adjusted by a committee of adjusters representing the insurance companies, and by Mr. Chapman and Mr. Pettibone for the plaintiffs. The loss on stock was adjusted at $27,000, and all the companies have paid except the defendant and the Mercantile Fire & Marine. After the fire, it was discovered that these two policies had not been formally transferred to the new location by transfer slips actually affixed to the policies, although plaintiffs supposed all insurance had been transferred; and Bierce & Sage did not know until after the fire that the transfer had not been made. It does not appear why the transfer was not made upon the policy in suit. Mr. Gaukler had died before the trial. The policy was never canceled, nor was a return or tender of any portion of the premium money made. When the defendant was notified of the fire, it denied any liability, for the reason 'that this policy was not transferred to No. 185 Jefferson avenue, nor did our agent consent to its transfer.' It is insisted Bierce & Sage were not defendant's agents, and that no permission was given in writing to remove the goods to the new location.

The first question calling for attention is, under the facts and circumstances shown, were Bierce & Sage agents of the defendant? The legislature of this state has undertaken to regulate the manner in which, and the conditions under which, foreign insurance companies can do business in this state. Section 7246, Comp. Laws, makes it obligatory upon the company to do certain things before it can do business at all in the state. The section also contains a provision reading as follows: 'The term agent or agents under this section, shall include any acknowledged agent, surveyor, broker or other...