American Insurance Co. v. Gallatin
| Decision Date | 16 December 1879 |
| Citation | 3 N.W. 772,48 Wis. 36 |
| Parties | THE AMERICAN INSURANCE COMPANY v. GALLATIN and another |
| Court | Wisconsin Supreme Court |
Argued December 2, 1879.
ERROR to the Circuit Court for Winnebago County.
The action below was on a policy of insurance against loss by fire, issued by the defendant company to the plaintiff Gallatin, on his dwelling-house in the city of Oshkosh, and household furniture and wearing apparel therein. In case of loss, a portion of the insurance money was payable to the plaintiff Kuettle by the terms of the policy. The property was destroyed by fire during the term for which the policy was issued.
A few weeks preceding the fire, Gallatin procured other insurance on the same property in another company, and no consent thereto of the secretary of the defendant company was written on the policy in suit. The only defense made to the action is, that the policy was thereby rendered void.
The condition in the policy on which the defense is founded, is as follows: "If the assured shall have obtained, or shall hereafter obtain, any other insurance on the property hereby insured, or on any part thereof, without the consent of the secretary of this company written hereon, then the policy shall be void."
After the testimony had all been given, the circuit judge directed the jury to find for the plaintiffs, and to assess their damages at $ 373.32. A verdict was thereupon returned as directed. It is conceded that, if the plaintiffs are entitled to recover, the damages are assessed at the sum due on the policy.
The testimony is sufficiently stated in the opinion. The circuit court denied the defendant's motion for a new trial, and judgment was entered pursuant to the verdict; and the defendant company brought the case to this court by writ of error.
Affirmed.
The cause was submitted on the brief of Charles W. Felker for the plaintiff in error, and that of Weisbrod & Harshaw for the defendants in error.
The argument for the plaintiff in error was substantially as follows: 1. The company never consented to the procurement of additional insurance, and never even had any notice or knowledge of the fact until after the loss. The recording agent, Lawson, through whom alone the company could be charged (in the absence of any act done by, or communication had with, the general officers of the company), testified that he never consented to further insurance or had any notice or knowledge thereof before the fire. When Gallatin applied to him for insurance in the fall of 1876, and again just before the fire, he did not give his consent. He referred him to King, for an obvious reason. Lawson being then a recording agent, his consent would have bound the company; while if King took the application for additional insurance, he must necessarily submit it to the company which could accept or refuse, relieving Lawson of responsibility. But such a reference to a mere soliciting agent had nothing of the nature of a consent by Lawson to grant the additional insurance; nor could the making of such an application to him be any notice of the insurance afterwards taken in another company. 2. Suitors will not be permitted to plead ignorance of the law that an agent can bind his principal only within the scope of his authority and that whoever deals with a special agent, constituted for a special purpose, deals at his peril, and is bound to know the extent of his authority. The existence of soliciting agents as a distinct class of insurance agents, with special and limited powers, is as well known as almost any other usage of business. In the first transaction which Gallatin had with King, the latter solicited the insurance, wrote up the application, and gave Gallatin a receipt signed by King & Lawson in these words: On the back of this receipt was a statement that $ 2.80 would be due on a specified day of each year; that a printed notice would be forwarded to the assured before each such installment fell due; and that he could transmit the amount as therein directed, at the risk of the company. The receipts for the second and third installments (dated in September, 1875 and 1876, respectively, and being for the only installments paid after the first), were dated at the office in Chicago, and signed by the secretary of the company; and, in the absence of any evidence to the contrary, it must be presumed that the installments were paid directly to the company. These transactions clearly charged Gallatin with notice of King's limited and special authority as a mere soliciting agent (Wood on Fire Ins., 652; 2 Kent, 621; Dunlap's Paley, 202; Story on Agency, § 133; May on Ins., § 138); and so far as the claim that the condition of the policy as to additional insurance was waived is based on any act of King, they bring the case clearly within the decision in Fleming v. Hartford Ins. Co., 42 Wis. 616. If King had no power to bind his principal by contract, he could have no power to waive any conditions of an executed contract. It cannot be seriously questioned that if Gallatin dealt with King with knowledge that he was exceeding his authority, the company were not bound; and if the question had been submitted to the jury, they must have found the existence of such knowledge. Mitchell v. Lycoming Ins. Co., 51 Pa. 402; Ins. Co. v. Johnson, 23 Pa. 72; Winnesheik Ins. Co. v. Holzgrafe, 53 Ill., 516; Healey v. Imperial Ins. Co., 5 Nev., 268; 13 Gray 79; 6 id., 169; 8 id., 32; Markey v. Mut. Ben. Ins. Co., 103 Mass., 78; Catoir v. Am. Life Ins. and Trust Co., 33 N. J. Law, 487; Schenck v. Mercer Co. Mut. Fire Ins. Co., 24 N.J.L. 447; Barrett v. Union Mut. F. I. Co., 7 Cush., 175; Forbes v. Agawam Mut. F. I. Co., 9 Cush. 470; 24 Mich., 268; Keenan v. Dubuque Mutual F. I. Co., 13 Iowa, 375; Ayres v. Hartf. F. I. Co., 17 Iowa 176; 25 id., 50; 2 Denio, 65; 18 N.Y. 387; 66 id., 464; 20 id., 52; Wilson v. Genesee Mut. Ins. Co., 14 N.Y. 418; Bush v. Westchester F. I. Co., 63 N.Y. 531. There is indeed a conflict of authority upon the question of the extent to which insurance companies are bound by the acts of their soliciting agents down to the time of the final execution of the contract by the delivery of the policy; and it is here conceded that such companies should be bound by all that such an agent does, or knows concerning the risk, down to that time, since that is within the scope of his duties. Mitchell v. Ins. Co., supra; Rowley v. Empire Ins. Co., 3 Keyes, 559; Anson v. Winnesheik Ins. Co., 23 Iowa, 84; Miller v. Mut. Ben. Life Ins. Co., 31 Iowa 216; Franklin Life Ins. Co. v. Sefton, 53 Ind., 380. But here the conflict of authority ceases. When the soliciting agent has fulfilled his mission and exhausted his powers, by procuring a delivery to the applicant of a policy of insurance, courts cannot enlarge and extend his powers by giving him authority thereafter to change the conditions of the policy, and bind the company, until the loss be paid. But this the circuit court attempted to do by its direction to the jury to find for the plaintiff below.
For the defendants in error, it was argued as follows: 1. It is settled in this state that an insurance agent authorized to issue policies and receive premiums may bind the company by a waiver of any condition of the policy. Warner v. Ins Co., 14 Wis. 318; Miner v. Ins. Co., 27 Wis. 693; Roberts v. Ins. Co., 41 Wis. 321; Gans v. Ins. Co., 43 Wis. 108; Winans v. Ins. Co., 38 Wis. 342. The only case in this state which makes a distinction between soliciting or surveying agents and recording agents, is Fleming v. Hartford Ins. Co., 42 Wis. 616; and in that case the court held that the plaintiff could not recover, on the ground that he had notice that the agent had no authority to make a contract of insurance. Many authorities in other states hold that a mere soliciting agent can neither make a contract of insurance nor waive any condition of the policy, provided that either actual or constructive notice of his limited authority is brought home to the assured. In all these cases it was shown that the assured had either direct notice of the agent's limited authority or knowledge of such facts as a prudent man was bound to regard. Secret limitations by the company upon the agent's apparent authority are not sufficient; but the assured must have notice of such limitations. Wood on Fire Ins., §§ 383, 390. In the present case it does not appear that Gallatin had any knowledge or notice, at the time the original policy was issued, that King & Lawson had no authority to issue policies; but the company itself led him astray by indorsing on the policy, "King & Lawson, Agents," instead of describing them simply as "Soliciting Agents." These men kept a regular office or place of business, kept a register of all policies issued by this company, sometimes collected premiums, and in fact transacted a general insurance business; and Gallatin had no reason to question their authority as recording agents. Nor, when he applied for and obtained additional insurance, had he any notice, direct or indirect, of the limited authority of King; but he exercised due diligence, and was led by the fraudulent acts of Lawson to believe that King had full authority to grant such insurance. In referring him to King, Lawson must be held to have consented that he should take the additional insurance if King procured it for him; he impliedly authorized King to procure for Gallatin such further...
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