Cassville Roller Milling Co. v. Aetna Insurance Co.

• Decision Date: 07 March 1904
• Parties: CASSVILLE ROLLER MILLING CO., Respondent, v. THE AETNA INSURANCE CO., Appellant
• Court: Kansas Court of Appeals

79 S.W. 720

105 Mo.App. 146

CASSVILLE ROLLER MILLING CO., Respondent, v. THE AETNA INSURANCE CO., Appellant

Court of Appeals of Missouri, Kansas City

March 7, 1904

Appeal from Dade Circuit Court.--Hon. H. C. Timmonds, Judge.

AFFIRMED.

Order affirmed.

Fyke Bros., Snider & Richardson and George & Landis for appellant.

(1) Mr Reynolds, general manager of and for the mill company through whose hands all its business passed, and who looked after its insurance matters, as he did all other business transactions, was clothed with authority to legally represent it in the transactions out of which this suit grew, and his acts in those transactions, were the acts of the mill company, valid and binding upon it. Gentry v. Ins Co., 15 Mo.App. 215; Breckenridge v. Ins. Co., 87 Mo. 62; Rice v. Groffman, 56 Mo. 434; McNichols v. Nelson, 45 Mo.App. 446; Nicholson v. Golden, 27 Mo.App. 132; Sharp v. Knox, 48 Mo.App. 169; Ruggles v. Washington Co., 3 Mo. 496; Nichols v. Kern, 32 Mo.App. 1; Bank v. Lumber Co., 54 Mo.App. 327; Silver v. Railway, 5 Mo.App. 381, 72 Mo. 194. (2) Even if the policy of insurance sued on had not, by the company's effort to cancel the same been deprived of all life, notwithstanding, the company in its own person supposed and claimed it had been legally cancelled, then it stood, by reason of the defendants having failed to give the specified notice (if it was required in this instance), and its failure to refund such of the premium as had been paid, void or enforcible at plaintiff's option. Hopkins v. Ins. Co., 78 Iowa 344; Kerby v. Ins. Co., 13 Lea 340; McCullom v. Ins. Co., 61 Mo.App. 352. (3) The policy in suit being enforcible or void April 14, 1902 (the date of the loss), at plaintiff's option, its election in the matter determined the rights and obligations of both parties. Laundry v Ins. Co., 151 Mo. 90; Bernard v. Ins. Co., 38 Mo.App. 106; Wilson v. Ins. Co., 5 N.E. 818; McCullom v. Ins. Co., 61 Mo.App. 352; Okey v. Ins. Co., 29 Mo.App. 105; LaForce v. Ins. Co., 43 Mo.App. 518; Horowitz v. Ins. Co., 40 Mo. 557; Frink v. Ins. Co., 66 Mo.App. 513. (4) Its acceptance of that part of the premium which had been paid, when returned by defendant's agent; understanding the policy had been cancelled, or that defendant claimed it had been cancelled, was an act contradicting and inconsistent with an intention to enforce the policy, and by it plaintiff became estopped from insisting that the contract be enforced. Laundry Co. v. Ins. Co., 151 Mo. 90; McCullom v. Ins. Co., 61 Mo.App. 352.

Davis & Steele and E. P. Mann for respondent.

(1) The position maintained by respondent in the trial court and the main ground upon which the court set aside the nonsuit is, that the policy being in full force and effect at the date of the fire, the policy could not have then been cancelled, the only thing they could legally do in this case at that time was a settlement of the loss or an adjustment thereof, which was not attempted. The effect of a cancellation is to relieve the insurer from any future liability on the policy, but it does not reach back and absolve the company from any liability which it may have already incurred. If the subject-matter of the contract has already been destroyed by the cause insured against, at the time when the cancellation is effected, the insurer is not discharged from liability thereby. 16 Ency. of Law (2 Ed.), 876. (2) A contract of insurance is a contract to pay liabilities and the cause of action is complete when the liability attaches. Locke v. Homer, 131 Mass. 93; Thompson v. Taylor, 30 Wis. 68; Trinity Church v. Higgins, 48 N.Y. 532; Maloney v. Nelson, 144 N.Y. 182. (3) It stands admitted by the record in this case that at the time of the fire the policy was valid and binding and the fire at once changed the obligation of the insurance company from a contingent to an actual liability, fixed and determined by the policy. The authorities are numerous that a debt can not be extinguished by the payment of a less amount even though both debtor and creditor may agree that the less amount shall be paid and received in full satisfaction of the debt. Gibbony v. Ins. Co., 48 Mo.App. 185; Riley v. Kershaw, 52 Mo. 224; Dry Goods Co. v. Goss, 65 Mo.App. 55; Griffith v. Stonebreaker, 61 Mo.App. 1; Clark v. Ins. Co., 35 L. R. A. 276; 2 Wood on Insurance, sec. 443; Summers v. Ins. Co., 45 Mo.App. 53; Ehrlich v. Ins. Co., 88 Mo. 249; Okey v. Ins. Co., 29 Mo.App. 105; Lee v. Hassett, 39 Mo.App. 67; Marchildon v. O'Hara, 52 Mo.App. 523. (4) The Cassville Roller Mill Co., after the fire, respondent admits and appellant contends or asserts, was insolvent before the fire. Either contention being true, then Mr. Reynolds (the manager) would have no power or authority to release a debt of $ 1,500, due from appellant, for the mere pittance of $ 36; and the corporation or creditors could pursue and recover the remainder. The funds, assets and property of insolvent corporations are trust funds for benefit of creditors. Brick Co. v. Schoenrich, 65 Mo.App. 283; 1 Morawetz on Private Corporations, sec. 499; Webb & Co. v. Lumber Co., 68 Mo.App. 556; Gardner v. Ins. Co., 58 Mo.App. 611; McCartney v. Ins. Co., 45 Mo.App. 373; Rothschild v. Ins. Co., 74 Mo. 41; 16 Ency. Law (2 Ed.), 855.

OPINION

ELLISON, J.

This action is based on a policy of fire insurance. At the close of the evidence, the trial court having intimated that a demurrer to plaintiff's case would be sustained, it took a nonsuit with a leave to set it aside. It did so move and the court sustained the motion, whereupon defendant appealed from the order.

Plaintiff is a corporation which owned and operated a flour mill. Its general manager was S. R. Reynolds who was likewise a director and stockholder. Defendant's agent at Cassville, where the mill was located, was C. D. Manley. Prior to February 19, 1902, plaintiff had been carrying a policy on the mill issued by defendant for $ 1,500. A few days prior to that date, Manley met Reynolds and reminded him that his policy would expire at that time and asked if he desired to renew it. Reynolds answered that he did, and Manley then said he would write it up. He did write it, and a few days after the 19th, Reynolds was in Manlay's office, after night, attending a meeting of the school board, when Manley said to him: "Here is that insurance policy written up for you," at the same time handing it to him, telling him it was a copy of the former one. Reynolds took it and "looked through it," and then said to Manley: "Charley, I don't want to take this to the mill; I will take it to the bank, I will stick it back here in a pigeonhole and take it down there; if I take it to the mill I will forget it." Manley said, "all right," and Reynolds said, "I just stuck it back." The premium was $ 75 and none of it was paid at this time, but shortly afterwards he met Manley on the street and paid him $ 20 and again, shortly after that, paid him $ 16.25. Reynolds never came back for the policy; and it seems that on its issue being reported to the defendant company, it ordered it to be returned for cancellation and that Manley returned it to the company, whereupon the latter wrote across its face, "Cancelled and returned March 12, 1902." The policy, while giving the company power to cancel, required that the plaintiff should have five days' notice; and no notice was given, nor did Reynolds know that Manley had returned it. Four weeks thereafter, on April 12th, the mill burned at night. In the morning following, these men met in the postoffice and Manley said to Reynolds that his policy had been cancelled. The latter asked him why he had not informed him before, that he (Reynolds) had represented to the bank that he had $ 3,000 insurance and that this left him in a "peculiar condition." He then had Manley go with him to the bank and make it right there by explaining that Reynolds had not misrepresented matters to it, as he did not know of the cancellation. On the same day, but two or three hours later, Manley handed back to Reynolds the $ 36.25 premium money which had been paid him as already stated. Reynolds kept it a few days and then, on advice of one of the bank officers, he deposited it to Manley's credit and notified him of the deposit.

Plaintiff's reply admitted that the premium money was paid back to Reynolds, but that Reynolds did not know what it was for and that as soon as he found out he deposited it in bank for Manley. The reply also set up that Reynolds had no authority from plaintiff to accept the money. But in giving his testimony, which was the sole evidence in the case, aside from the documents, Reynolds stated that he did know what the money was for and that he kept it several days, and then only deposited it for Manley on advice of the bank.

From the foregoing facts there is no doubt that each of these agents represented and bound their principals up to the time of the loss as fully as if the actions recited had been performed by the principals themselves.

There is no doubt, considering the former dealings between the parties, that when Manley handed Reynolds the policy at the school board meeting in his office and Reynolds accepted it and then put it back in Manley's desk so that he might afterwards go by and take it to the bank, there was a full and completed contract of insurance between them, so that, if nothing intervened to change that relation and a loss occurred, the defendant would have been liable therefor; and the fact that the premium had not been paid at that time would not affect the liability.

There is no doubt that although the company had the policy returned to its main office and had it indorsed as cancelled several weeks before the fire, yet, as plaintiff was not notified of the cancellation up...