Bankers Fire & Marine Ins. Co. v. Dungan

• Decision Date: 03 April 1961
• Docket Number: No. 41792,41792
• Citation: 128 So.2d 544,240 Miss. 691
• Court: Mississippi Supreme Court
• Parties: BANKERS FIRE & MARINE INSURANCE COMPANY v. Everette A. DUNGAN.

Page 544

128 So.2d 544

240 Miss. 691

BANKERS FIRE & MARINE INSURANCE COMPANY v. Everette A. DUNGAN.

No. 41792.

Supreme Court of Mississippi.

April 3, 1961.

Watkins & Eager, W. F. Goodman, Jr., Jackson, for appellant.

Breland & Whitten, Sumner, for appellee.

ETHRIDGE, Justice.

The questions in this case are whether an insurance agent, who is unable to write a particular fire policy in his own company, and who procures one in another company through its agent, under a course of dealings between them, acts as the agent of the insurer and not of the insured; and if so, whether the first agent's knowledge of prior insurance on the property waives the 'other insurance' clause of the new policy. We hold that both of these questions must be answered in the affirmative, and therefore affirm the judgment of the Circuit Court of Tallahatchie County.

The facts are summarized as the jury was warranted in finding them. Dungan, the plaintiff, owned a home more than one mile from the city limits of Charleston, Mississippi. For several years he carried a $2,250 policy of fire insurance on his residence and contents with the Northern Assurance Company, Ltd. This policy was written through Warren Hardy, doing business as the Valley Insurance Agency of Charleston. In early 1959, Dungan discussed additional insurance with Hardy, who gave him an inventory book in which to list his property, but he lost the book and did not go back to Hardy.

John B. Burnett, doing business as the Burnett Insurance Agency, Charleston, is an agent of State Farm Mutual Insurance Company. His father, Jess Burnett, runs the office but the son is the owner and agent. Dungan had his automobile insurance written by that agency, and in January 1959 he went to the agency to pay that premium. He talked to both of the Burnetts about additional fire insurance, and told them of the $2,250 fire policy with Northern Assurance Company, Ltd. About a week later Dungan returned to buy additional insurance on a five-year plan, which the Burnetts said would save him money. On that visit Dungan paid the first year's premium of $27.90, for $2,000 fire insurance on his home and $1,000 on the contents. He received a receipt for it. Burnett did not tell him that he was unable to write the policy in his own company, because the property was more than one mile from town.

Burnett was not a formally designated agent of appellant, Bankers Fire & Marine Insurance Company. However, in early 1957 he worked out an oral arrangement with Robert F. Carpenter of Greenwood, a general agent representing appellant, by which, if Burnett's company could not write a policy, and if one of Carpenter's companies could, he would get Carpenter to write the coverage. Working together, Burnett obtained and Carpenter wrote 25 to 30 policies during the next two years. Burnett would get the description of the property, other pertinent information, collect the premium, and remit it to Carpenter. Carpenter then wrote the policies and remitted the premiums, less commissions, to the company. He then sent the policy to Burnett, who would deliver it to insured. Under this arrangement, Carpenter also remitted one-half of all commissions to Burnett. This agreement had been in operation at least two years before the Dungan policy was written by Carpenter.

Without Dungan's knowledge, Burnett called Carpenter, who wrote the policy in accordance with these prior arrangements, and sent it to Burnett, whose office manager personally handed it to Dungan. The policy was dated January 27, 1959. On April 4, 1959, the insured's house and contents burned. The policy contained a provision that other insurance covering the property was prohibited, unless otherwise stated thereon; and unless permitted, the existence of other insurance would invalidate Banker's policy. After the fire, Carpenter learned of the additional insurance. Appellant refused to pay Dungan. Appellant asserts that Burnett was not its agent, and it cannot be estopped from pleading the 'other insurance' clause, since any knowledge of it by Burnett could not have been that of its agent, Carpenter, and of appellant. It is asserted that Burnett was the insured's agent, and not the agent of the insurer. The jury returned a verdict for plaintiff.

The judgment will be affirmed on two grounds: (1) For this transaction, Burnett was the agent of the company under the general law of agency; and (2) he was the agent of the company under the provisions of Miss.Code 1942, Section 5706.

29 Am.Jur., Insurance, Section 138, entitled 'Agent Procuring Policy in Another Company', summarizes the pertinent rule as follows: 'According to the weight of authority, where an insurance agent who is unable or unwilling to sell insurance in his own company to one who has made application for insurance to him in his capacity as an agent representing an insurer and has not employed him as a broker to obtain insurance, procures insurance in a company not represented by himself, either by direct application to the company or through an agent of such company, he acts as the agent of the insurer and not of the insured, and in some jurisdictions it is expressly provided by statute that under such circumstances the insurer shall be charged with the agent's knowledge of any facts affecting the risk issued, and that he shall be considered the agent of the company issuing the insurance.' See also 29A Am.Jur., Insurance, Section 1037.

There are a number of cases holding to that effect. For example, Pacific Fire Ins. Co. v. Bowers, 1934, 163 Va. 349, 175 S.E. 763, is analogous in its facts. It was there held that the agent who procured the policy from another agent was acting in that instance as the agent of insurer, and her knowledge of any facts affecting the risk must be considered as knowledge of the company issuing the insurance. To the same effect are: New Brunswick Fire Ins. Co. v. Nichols, 1923, 210 Ala. 63, 97 So. 82; Camden Fire Ins. Ass'n v. Wandell, Tex.Civ.App.1917, 195 S.W. 289; McGraw v. Germania Fire Ins. Co., 1884, 54 Mich. 145, 19 N.W. 927; Farmers' & Merchants' Ins. Co. v. Wiard, 1899, 59 Neb. 451, 81 N.W. 312; Pollock v. German Fire Ins. Co. of Pittsburg, 1901, 127 Mich. 460, 86 N.W. 1017; Schoener v. Hekla Fire Ins. Co., 1880, 50 Wis. 575, 7 N.W. 544; Codd v. New York Underwriters Ins. Co., 1943, 19 Wash.2d 671, 144 P.2d 234.

Wilkinson v. Goza, 1933, 165 Miss. 38, 145 So. 91, 93, follows essentially the above-stated rule. Insured desired insurance on some farm buildings. Wilkinson, the local agent, advised him that the companies he represented did not not write such insurance, but he would furnish him application blanks and assist in securing insurance through brokers. The agent's employee filled out the application, had plaintiff sign it, and...