Baker & Co., Florida v. Preferred Risk Mut. Ins. Co.
| Decision Date | 24 March 1978 |
| Docket Number | No. 76-1726,76-1726 |
| Citation | 569 F.2d 1347 |
| Parties | BAKER AND COMPANY, FLORIDA, Plaintiff-Appellee, v. PREFERRED RISK MUTUAL INSURANCE COMPANY, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
James A. Becker, Jr., Velia Ann Mayer, Jackson, Miss., for defendant-appellant.
Thomas W. Crockett, Jr., Lester F. Smith, Jackson, Miss., for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Mississippi.
Before WISDOM, GODBOLD and CLARK, Circuit Judges.
The ultimate question here is an old one: Which of two innocent parties must suffer a loss caused by the dishonesty of a third? Baker and Company sued Preferred Risk Mutual Insurance Company because of the unauthorized, fraudulent actions of Preferred Risk's agent, William Carpenter. Baker lost $68,602.23 in its dealings with Carpenter. A properly instructed jury returned a verdict for $41,814.53, the amount of Baker's loss it could have found to have been caused by the acts of Carpenter which were within his implied actual authority. We affirm.
After a period of employment as an agent in Preferred Risk's Jackson, Mississippi, office, Carpenter was transferred to a Columbus, Mississippi, insurance agency which had been purchased by Preferred Risk. In Columbus, Preferred Risk rented an office and employed a part-time secretary for Carpenter. It supplied Carpenter with standard agency application forms for fire and automobile insurance, policy change requests, binders and receipts. Carpenter's contract of employment authorized him to solicit insurance business for Preferred Risk in the Columbus area on a non-exclusive basis. Carpenter's stated contractual authority was as follows:
1. The PREFERRED RISK MUTUAL INSURANCE COMPANY (hereinafter, the Company) does hereby appoint the party signatory to this contract (hereinafter, the Agent) as its limited agent to solicit for said Company acceptable applications for insurance and to render such service to policyholders of the Company as may properly and reasonably be given by an Agent of the Company subject to regulations and instructions contained in the manuals, articles of incorporation, by-laws, or other instructions or modifications thereof, as may from time to time be promulgated by the Company, including the terms and conditions of this contract, for those purposes only.
2. Nothing contained herein is intended or shall be construed to create the relations of employer and employee.
He was licensed by the State of Mississippi as a Preferred Risk representative. Although Carpenter did not have the authority to issue policies, Preferred Risk did confer upon him the right to issue binders which would have the effect of creating insurance coverage for a period of 30 days.
Baker and Company engaged in the business of financing insurance premiums. Premium financing involves an advance by the finance company to the insurance company or its agent of the premium due for the full term of the policy. This advance is then repaid by the insured to the finance company in amortized monthly installments which include an additional amount to cover financing charges. The finance company is secured in making this advance payment by obtaining the right to cancel the policy and to receive the return premium due upon cancellation if timely repayments are not made.
To promote their business, Baker employed a representative to contact insurance agents throughout Mississippi and urge them to use Baker to service their customers who wished to finance premiums. Baker's representative supplied these agents with a Baker premium financing kit consisting of instructions and forms to accomplish the financing. Included in each kit were forms referred to as the "Power of Attorney" letter. This letter described the advance payment which Baker had made on a specific policy of insurance, stated that the premium on this policy was being financed by Baker, and requested the company to list Baker on its records as "Power of Attorney to request cancellation of the policy if the terms of the (financing) contract are not complied with." Acknowledgement by the insurance company to Baker on a copy of the form was requested. Carpenter was one of many Mississippi insurance agents contacted by Baker's representative and supplied with premium financing kits.
Carpenter conceived and executed a scheme whereby he would make up fictitious insureds, purport to issue policies to them, finance the premium with Baker, obtain payment of the premium specified to himself, direct Baker to send the "Power of Attorney" form to Preferred Risk at his own address, and wrongfully acknowledge receipt of Baker's "Power of Attorney" letter for Preferred Risk.
Preferred Risk never expressly conferred authority on Carpenter to perform such an acknowledgement function in its behalf. Indeed, Preferred Risk gave Carpenter no instructions on premium financing procedures, though it concedes that Carpenter had authority to perform premium financing. Between January and June of 1973, Carpenter confected 146 fraudulent premium financing transactions. He processed the documents in Preferred Risk's office and used its part-time secretary to prepare them. For several months Carpenter made lump sum payments to Baker to meet installments due and keep the fraud concealed. No part of the premium financing income...
To continue reading
Request your trial
-
Finch v. Hughes Aircraft Co.
...L.Ed.2d 288] (1961); York Manufacturing Co. v. Colley, 247 U.S. 21 [38 S.Ct. 430, 62 L.Ed. 963] (1918); Baker & Co. v. Preferred Risk Mutual Insurance Co., 569 F.2d 1347 (5th Cir.,1978); Cement Asbestos Products v. Hartford Accident & Indemnity Co., 592 F.2d 1144 (10th Cir.,1979); Uncle Ben......
-
Bass v. International Broth. of Boilermakers
...his own words and to charge in his own style. Smith v. Borg-Warner Corp., 626 F.2d 384 (5th Cir. 1980); Baker & Co. v. Preferred Risk Mutual Insurance Co., 569 F.2d 1347 (5th Cir. 1978); Coughlin v. Capital Cement Co., 571 F.2d 290, 300 (5th Cir. 1978). Provided only that he communicates th......
-
Wegerer v. First Commodity Corp. of Boston
...Frosty Land Foods International, Inc. v. Refrigerated Transport Co., Inc., 613 F.2d 1344 (5th Cir.1980); Baker & Co. v. Preferred Risk Mutual Insurance Co., 569 F.2d 1347 (5th Cir.1978). Instructions must be considered as a whole and particular instructions and requests for instructions are......
-
Farmhand, Inc. v. Anel Engineering Industries, Inc.
..."A party is not entitled to have the jury instructed in the particular language of its choice." Baker & Co., Fla. v. Preferred Risk Mut. Ins. Co., 569 F.2d 1347, 1350 (5th Cir.1978). The language and timing of these portions, considered as part of the entire charge, were not likely to misle......