Benner v. Farm Bureau Mut. Ins. Co. of Idaho, Inc.

• Decision Date: 13 November 1974
• Docket Number: No. 11475,11475
• Citation: 96 Idaho 311,528 P.2d 193
• Parties: George M. BENNER and Sherrin Benner, husband and wife, Plaintiff- Respondents and Cross-Appellants, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF IDAHO, INC., a corporation, Defendant-Appellant and Cross-Respondent, and Warren Bauman, Defendant-Respondent and Cross-Respondent.
• Court: Idaho Supreme Court

Page 193

528 P.2d 193

96 Idaho 311

George M. BENNER and Sherrin Benner, husband and wife, Plaintiff- Respondents and Cross-Appellants, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF IDAHO, INC., a corporation, Defendant-Appellant and Cross-Respondent and Warren Bauman, Defendant-Respondent and Cross-Respondent.

No. 11475.

Supreme Court of Idaho.

Nov. 13, 1974.

Merrill & Merrill, Pocatello, for appellant and cross-respondent.

Vern E. Herzog, Jr., Pocatello, for respondent and cross-respondent.

Terrell, Green, Service & Gasser, Pocatello, for respondents and cross-appellants.

BAKES, Justice.

This action arises out of an alleged oral contract of insurance. George M. Benner and Sherrin Benner, husband and wife, plaintiffs, respondents and cross-appellants in this action, had purchased a homeowners insurance policy in June of 1970 from insurance agent Warren Bauman, defendant, respondent and cross-respondent, who sold insurance exclusively for and was the exclusive agent in the area for Farm Bureau Mutual Insurance Company of Idaho, Inc., defendant, appellant and cross-respondent. The policy provided for $15,000 coverage on the Benners' home in Samuels, Idaho, $6,000 coverage on the contents of the home, and $1,000 coverage (with $100 deductible) upon possessions outside the home. The policy was to be in force for a year; it was renewed upon the same terms a year later in 1971.

During the summer of 1971 the Benners sought to sell their home in Samuels. The buyers they found were initially unable to secure financing and the Benners agreed to rent the house to them on a temporary basis until all the necessary loans were approved. During the period in which the future buyers would be renting their home in Idaho, the Benners wished to continue the insurance upon the house, but they wished to insure their own personal belongings, which they would take with them to California, rather than the renters' possessions in the Samuels house.

To achieve this result, Sherrin Benner testified that in a telephone call with Bauman she asked him if the coverage under the policy could be split between the house in Samuels and the possessions that they were taking to California. She testified that Bauman responded, 'Fine, Mrs. Benner, I will take care of everything.' Bauman, on the other hand, testified that he remembered Sherrin Benner telling him that she and her family were moving to California and that they wished to retain coverage on the home while they were renting it. He testified that neither insurance of personal property to be taken to California nor splitting the coverage was discussed and that he did not agree to insure personalty outside the state of Idaho.

The Benners moved to California in September of 1971. A month later, on October 27, the house they were renting burned and all of its contents, which the Benners valued at over $10,000, were destroyed. The Benners submitted a $6,000 claim for the loss to Farm Bureau. Farm Bureau refused to pay $6,000, offering the Benners $900 ($1,000 minus the $100 deductible), the coverage the Benners had in their written policy for losses outside the home.

The court found that in the telephone call with Bauman that Sherrin Benner had entered into an oral contract with Farm Bureau to insure their personalty in California for $6,000. The court further found that over $6,000 damage to the possessions had occurred. Accordingly, the court held Farm Bureau liable to the Benners for $6,000 under the contract, and judgment was entered against Farm Bureau for $6,000 plus reasonable attorney fees of $1,000, as provided by I.C. § 41-1839. However, the court found Bauman neither liable to the Benners under the contract of insurance nor liable to reimburse Farm Bureau for its payments under the contract.

Farm Bureau assigns several errors relating to the trial court's finding that a binding new or modified contract of insurance was entered into that was to cover personal property to be taken to California. We uphold the trial court's finding with regard to the contract. In another case involving an insurance agent acting outside of the scope of his authority in direct opposition to his company's instructions, this Court approved the following instruction given by the trial court: 'An insurance company is bound by all acts, contracts or representations of its agent which are within the scope of his apparent authority, notwithstanding the fact that they may be in violation of private instructions or limitations upon his authority, unless the person with whom the agent is dealing has either actual or constructive knowledge of the agent's limitation of authority.' Huppert v. Wolford, 91 Idaho 249, 256 420 P.2d 11, 18 (1966). The trial court was presented with substantial though conflicting evidence supporting a finding that a representation of insurance coverage upon the personalty in California was made by an agent apparently authorized to offer such coverage to one unaware of the limitations upon the agent's authority. Thus, the trial court's finding that a contract of insurance was entered into was supported by substantial, competent evidence and will not be disturbed on appeal. I.R.C.P. 52(a); Huppert v. Wolford, supra....