Caldwell v. Virginia Fire & Marine Ins. Co.

• Decision Date: 06 June 1911
• Citation: 139 S.W. 698,124 Tenn. 593
• Parties: CALDWELL v. VIRGINIA FIRE & MARINE INS. CO.
• Court: Tennessee Supreme Court

139 S.W. 698

124 Tenn. 593

CALDWELL v. VIRGINIA FIRE & MARINE INS. CO.

Supreme Court of Tennessee.

June 6, 1911

Appeal from Chancery Court, Lake County; Jno. S. Cooper, Chancellor.

Suit by Aaron Caldwell against the Virginia Fire & Marine Insurance Company. From a decree for defendant, complainant appeals. Affirmed.

Burnett & Donaldson, for appellant.

Trezevant Bartels & Trezevant, for appellee.

BUCHANAN J.

The bill was filed November 23, 1909. It seeks to hold defendant liable on an oral contract of insurance alleged to have been made between the complainant and the agent of defendant on August 29, 1908, whereby said agent for his principal, the defendant, agreed and undertook for and in consideration of an agreed premium to write for and on behalf of his principal a contract of insurance in favor of complainant, covering a storehouse and stock of goods for a term beginning on September 9, 1908, and continuing for one year from that date, and the alternative averment appeared in the bill that at the date aforesaid, August 29, 1908, the complainant was the holder of a written policy of insurance issued by the defendant, which expired on September 9, 1908, and the oral contract sued on was in substance that this old contract of insurance upon its expiration should be renewed by the issuance of a new policy in writing whereby the complainant would be protected for an additional term of one year from the date of the expiration of the policy held by the complainant.

The bill avers that after the making of the oral contract or contracts sued on, and on or about October 26, 1908, the agent told complainant that he (complainant) was insured, and that again in the early part of November, the agent promised to bring the policy to complainant, which it had been agreed should be issued, for and on behalf of the defendant company as above set out, and that by this conduct of the agent complainant was led to believe that the policy agreed on had been written, and that he (complainant) was fully protected by it, and that under this impression and belief the complainant rested until December 2, 1908, when his property was destroyed by fire, and it then developed that by some oversight on the part of the agent he had failed to write the new policy as agreed on aforesaid; that complainant then tendered to the agent the amount of the premium which had been agreed on between them as the consideration for the issuance of the new policy, but the agent refused to accept the premium, and that complainant then demanded the issuance and delivery of the policy as agreed on aforesaid, but this also the agent declined to do, whereupon the complainant made proof of his loss, and forwarded same to the defendant, and demanded payment from the defendant of the sum of $1,500 which was the amount for which the oral agreement, between the agent and the complainant, provided that the new policy should be written; that the above demand for payment was refused by the defendant, whereupon the complainant brought this suit.

The defenses relied on are as follows: That the agent had no authority to make the oral agreement on which the suit is based; that the making of such agreement was beyond the scope of the agent's authority; that the only authority which the agent had to act for or bind the defendant was in writing, and consisted of a written commission executed by the defendant in duplicate, one copy of which was held by the agent, and one by the defendant, and certain clauses of the standard contract of insurance, which was in writing, and which was the only contract of insurance that the agent had authority to issue for the defendant after the same had been executed by the defendant; that this standard from of policy contained certain restrictions upon the power of defendant's agents to bind it otherwise than in writing and that these restrictions were by the words of the agent's commission embodied in and a part of the commission in substance and effect, and operated thereby to restrict and narrow the authority of the agent.

That no knowledge was ever brought home to the defendant either by the agent or by the complainant of the oral agreement between the agent and the complainant on which this suit is based, until after the loss of the complainant's property by fire; that the defendant never authorized in the first instance the making of the contract on which the suit is based, and never ratified the making thereof after knowledge of it came home to the defendant; that, in short, there was no meeting of minds between the complainant and the defendant in the matter of the execution of the oral agreement on which the suit is based.

The commission of the agent above referred to was as follows:

"Agent's Commission.

"The Virginia Fire & Marine Ins. Co., Chartered by the Va. Legislature 1832, Richmond, Va., After a Century in Successful Operation, Richmond, Va., Jan. 1st, 1906.

"This certifies that B. F. Le Duke (whose sign manual appears at the foot hereof in token of his acceptance of this commission on the terms hereof) residing or having a place of business in Tiptonville, Tenn., has been duly appointed agent of this company for the above town to issue and countersign its policies on property on which risks against loss and damage by fire and lightning may be accepted by him for the purpose of insurance with authority to renew or cancel such policies and to assent to assignments thereof before loss, but this authority is subject to the terms and conditions of this company's printed policy and said agent's acts hereunder are not to be in contravention thereof, or to operate as a waiver of them.

"This commission is subject to revocation by the officers or special agent of said company at will. B. F. Le Duke, Agent.

"In witness whereof the Pres. and Sec'y of the Va. Fire & Marine Ins. Co. have signed this certificate and affix the seal of the company at Richmond, the day above written. Wm. H. Palmer, Pres.

"W. H. McCarthy, Sec'y.

"Endorsed: B. F. Le Duke, Tiptonville, Tenn.

"Jan. 1st, 1906."

The clauses of the standard insurance policy issued by the defendant and relied on in its answer as matter of defense by way of restriction on the powers of the agent under the commission above set out are as follows:

"This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements or conditions as may be indorsed hereon, or added hereto, and no officer, agent, or other representative of this company shall have power to waive any provisions or conditions of this policy except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto, and as to such provisions and conditions, no officer, agent or representative shall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance, under this policy, exist or be claimed by the insured, unless so written or attached."

"This policy may by renewal be continued under the original stipulations in consideration of premium for the renewed term."

"In any matter relating to this insurance no person, unless duly authorized in writing, shall be deemed the agent of this company."

The defendant company in its answer set up the defense that it never received any premium or a consideration from the complainant for the renewal of the policy which expired on September 9, 1908, and that there was in fact no payment by the complainant of the premium for the renewal of that policy, and that there was in fact no renewal of that policy, and that complainant is estopped in this suit by that policy, and that an oral contract of insurance is not binding or valid in the state of Tennessee.

On the foregoing issues proof was taken, and on final hearing the chancellor dismissed complainant's bill, with costs, from which decree of the chancellor complainant has appealed to this court and assigned errors.

An important point in this case is whether or not the scope of the agent's authority was broad enough to enable him to bind the defendant by the oral agreement on which this suit is based.

The fact is undisputed in this record that the entire power and authority of the agent in this case was at date of the alleged oral contract of insurance, contained in two writings, first, the agent's commission; second, the terms of the written policy, which the company in its business issued or as stated in the commission of the agent, the "company's printed policy" the use of the words "this company's printed policy," and the word "countersigned" in the agent's commission are important facts in this suit. The commission would be ambiguous but for them; however, as they are used in the commission it is clear that the agent's authority, and his only authority at the date of the making of the alleged oral contract on which this suit is based, was as follows:

First. To issue the company's printed policy.

Second. To countersign the company's printed policy (and by way of parenthesis it is difficult to see how the agent could countersign any but a printed or written policy).

Third. To accept risks for purposes of insurance to be covered by the company's printed policy.

Fourth. To renew the company's printed policy.

Fifth. To cancel the company's printed policy.

Sixth. To assent to assignments of the company's printed policy before loss.

But all of the above authority vested in the agent is by the express terms of the commission made subject to the terms and conditions of the company's printed policy, and the agent's acts under the commission...