American Bankers' Ins. Co. v. Lee

Citation134 So. 836,161 Miss. 85
Decision Date01 June 1931
Docket Number29425
CourtUnited States State Supreme Court of Mississippi

Division A

Suggestion Of Error Overruled July 10, 1931.

APPEAL from chancery court of Pike county, HON. R W. CUTRER, Chancellor.

Suit by George W. Lee against the American Bankers' Insurance Company. From a decree for complainant, defendant appeals. Reversed and rendered.

Reversed, and judgment here for appellant.

Lotterhos & Travis and Chalmers Potter, all of Jackson, for appellant.

Even though the agent who solicits the insurance assures the applicant that it will go into effect at once, if he signs an application which stipulates that the insurer incurs no liability until the policy is issued and delivered, the insurer incurs no liability until the policy is so issued and delivered, the theory here being that the written contract cannot be varied by parol evidence of the agent's agreement. Especially is this true where the agent was wholly unauthorized to so agree, and the agreement was unwarranted.

2 Couch Cyc. of Insurance Law, 1584.

When the appellee signed an application for insurance on which a policy was afterwards issued, these two instruments constituted the complete written contract between the parties and no evidence of oral understandings prior or contemporaneous thereto was admissible to vary or add to the terms of the written contract.

McInniss v. Manning, 131 Miss. 119, 95 So. 250; Houch v Wright, 23 So. 422.

Every person has a constitutional right to limit the powers of his or its agents, and if it reserves a right to pass upon the contract as sent to it, and the purchaser represents in such contract, that no outside representations have been made, and the contract contains all the agreements of the parties, such purchaser will not thereafter be permitted to show statements made by the agent to him not embraced in the contract.

J. B. Colt Co. v. Odom, 136 Miss. 651, 101 So. 853; Fresno Home Packing Co. v. A. J. Lyon & Co., 53 So. 585, 98 Miss. 228; Cheek-Neal Coffee Co. v. Morrison Co., 51 So. 1, 96 Miss. 835; Truly v. Mutual Life Ins. Co. of New York, 108 Miss. 453, 66 So. 970; Tropical Paint Co. v. Mangum, 125 So. 248, 155 Miss. 876; Orgill Bros. & Co. v. Polk, 124 So. 649, 155 Miss. 492.

The powers possessed by agents of insurance companies, like those of any other corporation or of an individual principal, are to be interpreted in accordance with the general law of agencies. No other or different rule is to be applied to a contract of insurance than is applied to other contracts.

Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609; 32 C. J. 1062; Fisk v. Liverpool & London & Globe Ins. Co., Ltd., 164 N.W. 522.

No presumption exists however that the companies' agents have authority to make a parol contract to insure; such authority must be proved affirmatively.

2 Couch Cyc. of Ins. Law, 1586; 2 Joyce, p. 1298, sec. 525.

As a general rule an obligation rests upon a person dealing with an agent known to be acting under an express or special authority, to ascertain the limits of his authority to act for and bind his principal. Especially is it true, in case of a special agent, whether the authority be written or verbal, that the party dealing with him is bound to inquire into the nature and extent of the agent's authority, for the principal cannot be bound beyond the authority delegated by him.

2 Couch Cyc. of Ins. Law, 1485.

The law itself makes no presumption of agency; it is always a fact to be proved; and the person who alleges it has the burden of proving it by a preponderance of the evidence.

Mechem on Agency (2 Ed.), p. 183, sec. 255.

The burden of proof is upon him who asserts it to show either a direct authorization of the agent, or by proving such facts or circumstances, or such a course of conduct, as by implication it can be presumed that the agent was acting within the real or apparent scope of his authority. If one invests another with real authority he is bound by reason of the actual power conferred. If, however, he clothes him with apparent authority, he is bound, because he has induced others to deal with him as an agent. The one rests upon a fact; the other upon a supposed fact. But before the alleged principal is precluded from denying the existence of the supposed fact, it is necessary that the other party should show that he was misled, not by the alleged agent, but by the principal.

New York Life Ins. Co. v. O'Dom, 100 Miss. 219, 56 So. 379; Missouri State Life Ins. Co. v. Boles, 288 S.W. 271.

When the agent's authority went no further than to take applications for insurance, collect the policy fee, forward the application for insurance to the defendant for its acceptance or rejection, and deliver the policy when issued under defendant's direction, the alleged oral contract of insurance of the soliciting agent, which the defendant did not authorize or ratify, cannot be imputed to it.

Banks v. Cloverleaf Cas. Co., 233 S.W. 80; Aetna Ins. Co. v. Northwestern Iron Co., 21 Wis. 464; O'Brien v. New Zealand Ins. Co., 108 Cal. 227; Fisk v. Liverpool & London Globe Ins. Co., 164 N.W. 522.

Generally it may be said that agency cannot be proved by the statements, declarations, or admissions of the agent made out of court, but must be established by tracing its source to some word or act of the alleged principal.

Barry & Finan Lumber Co. v. Citizens' Insurance Co., 136 Mich. 42, 98 N.W. 761.

A soliciting agent, authorized to receive applications and to forward the same to the company for approval or rejection and to collect and transmit premiums, has no authority to make an oral contract to insure, even though he told the insured, on a prior occasion, that the insurance would take effect from the time of the application, and a policy has been issued on that application.

2 Couch Cyc. of Ins. Law, 1585.

The authority of an agent employed to solicit health and life insurance is altogether different from that of fire insurance agents, who customarily write policies for their companies, and, consequently a mere soliciting agent has no authority to make or alter contracts.

2 Couch Cyc. of Ins. Law, 1587; 32 C. J. 1116; Continental Casualty Co. v. Hall, 80 So. 335, 118 Miss. 871; Phipps v. Union Mutual Ins. Co., 150 P. 1083, 1084.

A soliciting agent has no authority to bind the insurance company by a present contract of insurance.

Patterson v. Prudential Ins. Co., 23 S.W.2d 198; Commonwealth Casualty Co. v. Kuhit, 225 P. 251; Basinsky v. Nat'l Cas. Co., 122 Wash. 1, 209 P. 1027; 26 C. J. 100; Firemen's Fund Ins. Co. v. Rogers, 33 S.E. 954; Hertz v. Security Mut. Ins. Co., 154 N.W. 745.

There was no meeting of the minds between the insurance company and the appellee.

The insurance company was acting only on a written application and the policy was not delivered until after the appellee has been injured and a contract was not consummated.

Ivie v. International Life Ins. Co., 117 So. 176; Mutual Life Ins. Co. of New York v. Shoemake, 89 So. 154, 126 Miss. 497; Newark Fire Ins. Co. v. Russell, 107 So. 417, 142 Miss. 397; Jacobs v. New York Life Ins. Co., 15 So. 639, 71 Miss. 656; New York Life Ins. Co. v. McIntosh, 38 So. 775, 86 Miss. 236; Nat'l Life & Acc. Ins. Co. v. Hugger, 131 So. 75.

The elements of a contract of insurance are: (1) A subject-matter. (2) A risk or contingency insured against and the duration thereof. (3) A promise to pay or to indemnify in a fixed or ascertainable amount. (4) A consideration for the promise, known as the premium and the period of payment thereof. (5) An agreement, or meeting of the minds of the parties, upon all the foregoing essential elements. These elements are essential to a contract of insurance regardless of whether it is in writing or in parol.

32 C. J. 1095, sec. 180; 15 A. L. R. 995-1021.

Section 5196 of the Code of 1930 has been many times construed by this court since it assumed its present form, and this court has never held that said statute extends the powers of a special agent, but on the contrary this court has many times recognized and enforced the distinction between a special or soliciting agent and a general agent.

Continental Casualty Co. v. Hall, 80 So. 335, 118 Miss. 871; New York Life Insurance Co. v. O'Dom, 56 So. 379, 100 Miss. 219; Stuart v. Coleman, 81 So. 653, 120 Miss. 28; Germania Life Insurance Co. v. Bouldin, 56 So. 609, 100 Miss. 660; Interstate Fire Ins. Co. v. Nelson, 62 So. 425, 105 Miss. 437; Southern States Fire Company v. Nelson, 62 So. 426; Scottish Ins. Co. v. Wylie, 70 So. 835, 110 Miss. 681; New York Ins. Co. v. Smith, 91 So. 456, 129 Miss. 544; Indemnity Co. of America v. Jenkins, 107 So. 208; National Life & Accident Ins. Co. v. Hugger, 131 So. 75.

Equitable estoppel of the principal is founded upon a false representation made for and on behalf of the principal by an agent thereunto authorized or acting within the apparent scope of the agent's authority. Unless there has been some holding out of the agent by the principal to the insuring public, or unless the agent has held himself out with the knowledge and consent of the principal, as having authority to bind the principal by a contract of insurance, then in the absence of such knowledge or holding out there cannot arise against the principal and in favor of the insured an equitable estoppel.

New York Life Ins. Co. v. O'Dom, 100 Miss. 219, 56 So. 379; Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609.

Price & Price, of Magnolia, H. V. Wall, of Brookhaven, and Thomas Mitchell, of Magnolia, for appellee.

As in the case of agencies in general, an insurance company is bound by all the acts, contracts or representations of its agent, whether general or special,...

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