British-American Assur. Co. v. Cooper

• Decision Date: 11 March 1895
• Citation: 40 P. 147,6 Colo.App. 25
• Parties: BRITISH-AMERICAN ASSUR. CO. v. COOPER. [1]
• Court: Colorado Court of Appeals

40 P. 147

6 Colo.App. 25

BRITISH-AMERICAN ASSUR. CO. v. COOPER. ^[1]

Court of Appeals of Colorado

March 11, 1895

Appeal from Arapahoe county court.

Action by Job A. Cooper against the British-American Assurance Company. From a judgment for plaintiff, defendant appeals. Reversed.

Sylvester G. Williams, for appellant.

Pattison Edsall & Hobson (E.E. Whitted, of counsel), for appellee.

THOMSON J.

Action on policy of insurance against loss by fire. Judgment for plaintiff, from which defendant appeals. The answer of appellant (defendant below) contained four defenses. By the first it denied that it ever insured the plaintiff. By the fourth it denied that the plaintiff had complied with the conditions and requirements of the policy. The second is as follows: "And, further answering, defendant says that the policy of insurance of defendant company alleged to have been issued to the plaintiff was not a valid contract of insurance, because of the following facts, to wit: That said policy was issued by the firm of Schwanbeck & Wile, local agents of defendant, and at the town of Creede, in the state of Colorado. And, upon information and belief, defendant says that, at the time said policy was so issued, the said Schwanbeck & Wile were duly-authorized general agents of the plaintiff herein in respect to the property sought to be so insured, with general charge and supervision thereof, and duly authorized in the premises and charged, among other things, with the duty and authority to have said property insured, and to deal fully with respect to the insurance thereon; that said Schwanbeck & Wile, then and there assuming to act in the double relation and capacity of agent for the plaintiff and as agent for the defendant in the same transaction, wrote said policy of insurance; that thereafter, and at all times prior to the 18th day of May 1892, said policy remained in the possession of said Schwanbeck & Wile; that on or about the 13th day of May 1892, the defendant, then and there believing that said policy had been duly and properly issued, and believing that the same was then in full force and effect, caused said policy to be canceled in accordance with the terms and conditions thereof, and long prior to the destruction of said property, viz. on or about the 18th day of May, as aforesaid, the policy was duly surrendered and returned to defendant; that not until after the alleged destruction of said property did defendant have knowledge of the fact that said Schwanbeck & Wile were the agents of the plaintiff herein." To this defense a demurrer was sustained for insufficiency.

We think the court erred in sustaining the demurrer. It is distinctly stated in this answer that, in effecting the insurance, Schwanbeck & Wile were the agents of both parties to the transaction. They were the local agents of the defendant at Creede, and authorized to act in its behalf. They were also the general agents of the plaintiff, fully empowered to act for him in procuring insurance upon his property; and in pursuance of their authority to procure insurance for him, and of their authority to write policies for the defendant, this policy was written. They, therefore, as agents of the plaintiff, contracted with themselves, as agents of the defendant, for the insurance which is the subject of this action. If the averments of this answer are true,--and the demurrer admits that they are,--they constitute a complete defense. The views of contracting parties are supposed to be in conflict. During the negotiation the interest of each is uppermost in his own mind, and his efforts are directed to securing a recognition of that interest. If he acts by agent, he is entitled to the exclusive services of the agent in the transaction, and to the full benefit of the agent's judgment and ability in making terms with the other party. It is manifest that, where the same person assumes to act for both parties to a bargain, he takes upon himself duties which are incompatible. If he is honest, leaving out of consideration any unconscious bias which might incline him towards one or the other side, the utmost that can be expected of him is impartiality; but impartiality is exactly the qualification which is inconsistent with agency. The agent is chosen to represent the interest of his principal against the hostile interest which he is to meet. He cannot discharge his duty and be impartial. It is therefore impossible for a person acting in the same transaction for two opposing parties to perform his duty to both; and a contract made by him in this double capacity may be avoided by either party, unless it was so made by his express authority, or unless, with full knowledge of the facts, he afterwards ratified it. And it is not necessary, for the purpose of avoiding it, that the contract should be tainted with fraud, or be disadvantageous to the complaining party. His right to repudiate it grows out of the nature of the transaction itself, and is not connected with any question of fraud or of benefit or detriment which might accrue from it to him. New York Cent. Ins. Co. v. National Protection Ins. Co., 14 N.Y. 85; Utica Ins. Co. v. Toledo Ins. Co., 17 Barb. 132; Mercantile Mut. Ins. Co. v. Hope Ins. Co., 8 Mo.App. 408; Lee v. Smith, 84 Mo. 304; 1 May, Ins. § 125; Mechem, Ag. § 67.

The following is the third defense: "For further answer defendant says that said policy contained the following condition and stipulation, viz.: 'This policy shall be canceled at any time at the request of the assured; or by the company, by giving five days' notice of such cancellation. If this policy shall be canceled as hereinbefore provided, or become void, or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy or last renewal, this company retaining the customary short rate, except that, when this policy is canceled by this company by giving notice, it shall retain only the pro rata premium.' That in accordance with the condition of said policy, and more than five days prior to said fire, to wit, on or about the 13th day of May, 1892, the defendant gave due notice to plaintiff of the cancellation of the said policy, and returned to the plaintiff the pro rata premium for the unexpired term of said policy. That on or about the 18th day of May, 1892, the plaintiff delivered and surrendered said canceled policy to the defendant." The plaintiff replied, denying the allegations concerning the cancellation of the policy. The cause was then submitted to the court upon an agreed statement of facts, of which the following is the substance: The plaintiff having contracted for the erection of the building which was the subject of the insurance, it was constructed by the contractor under the supervision of Schwanbeck & Wile, who were real-estate agents, and the cost of the building was paid through them. After its completion Schwanbeck & Wile were employed by the plaintiff as his agents to lease it to tenants and collect the rents, and they remained such agents until its destruction by fire. Prior to its completion, the plaintiff directed Schwanbeck & Wile to cause it to be insured against loss by fire as soon as it should be completed; but, upon being informed by them that they were themselves insurance agents, he authorized them to insure it in companies which they represented, without designating the companies or specifying the amount of insurance desired. When the building was completed, Schwanbeck & Wile did not insure it in any of the companies then represented by them, but a short time afterwards, having been appointed local agents at Creede of the defendant company, they insured it with the defendant, and issued the policy in suit, whereby the defendant, in consideration of a premium of $50, agreed to insure the plaintiff against loss or damage by fire to the building to the amount of $500 for the period of one year. The premium was paid by Schwanbeck & Wile out of rents collected by them as plaintiff's agents. The premium rate was determined by the Underwriters' Union, of which the defendant was a member. The policy...