Cauman v. American Credit Indem. Co.
| Decision Date | 14 January 1918 |
| Citation | 229 Mass. 278 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | MEYER CAUMAN & another v. AMERICAN CREDIT INDEMNITY COMPANY OF NEW YORK. |
November 20, 1917.
Present: RUGG, C.
J., BRALEY, CROSBY PIERCE, & CARROLL, JJ.
Agency, Scope of authority. Insurance, Credit.
One who knows that he is dealing with a special agent is bound to ascertain the nature and extent of his authority.
A general agent of a credit insurance company has no power or authority by an oral agreement to dispense with or override an express agreement made with the insurance company by an applicant for a policy of credit insurance in his written application for the insurance.
Where an applicant for a policy of credit insurance makes his application by filling in and signing a printed form supplied by the insurance company, without reading the terms of the application or the conditions of the policy expressly referred to in the application, which is printed on the back of the form of the policy applied for, these conditions containing a stipulation for a minimum initial loss of $500 to be borne by the insured and a stipulation that the insurance shall be void unless the person whose credit is insured is in sound financial condition on the day the premium is paid, and there is nothing to prevent the applicant from informing himself of the terms of the application and the conditions of the policy, and where also the application provides that the conditions and stipulations therein shall constitute the agreement between the undersigned and the insurance company, "any verbal or written statement, promise or agreement, by any agent of the said company to the contrary notwithstanding," the applicant is bound by the terms of the application he has signed, although at the time of signing he is assured orally by a special agent of the company that full protection will be given to the account in question without any deduction and without any proviso as to the financial condition of the person whose credit is assured when the premium is paid, and although the acts of this special agent are confirmed by the oral assurance of a general agent of the company.
CONTRACT against a credit insurance company for an alleged breach of a contract to insure or indemnify the plaintiffs against loss caused or to be caused by the failure of the Henry Siegel Company, a corporation, a debtor of the plaintiffs. Writ dated December 28, 1914.
In the Superior Court the case was referred to an auditor, who filed a report, of which the essential parts are stated or described in the opinion. He found that Goodwin and Mapes, mentioned in the opinion, "had no authority to make any contract which was binding upon the defendant" and that "there should be a judgment for the defendant." Later the case was tried before Morton, J. He ruled, "as a matter of law, that the evidence in the case was not sufficient to warrant the jury in finding either that the agent Mapes made such a contract and had authority to do so or that, if he undertook to do so without authority, it was ratified." The judge ordered a verdict for the defendant and reported the case to this court for determination, with an agreement of counsel that, if his ruling was correct judgment should be entered for the defendant; and that, if incorrect, judgment should be entered for the plaintiffs in the sum of $3,280.57.
J. E. Hannigan, for the plaintiffs. G. A. Ham, for the defendant.
This is an action to recover damages from a credit insurance company for breach of an alleged contract to insure or indemnify the plaintiffs against loss that might be incurred by the failure of Henry Siegel Company, a debtor of the plaintiffs. A judge of the Superior Court ruled that the evidence was not sufficient to warrant the jury in finding for the plaintiffs and ordered a verdict for the defendant. He reported the case to this court upon the agreement of counsel that, if the ruling is correct, judgment shall be entered for the defendant; otherwise, judgment shall be entered for the plaintiffs for $3,280.57.
The case was referred to an auditor, who found that on December 20, 1913 one Goodwin called on the plaintiff Wolper to solicit credit insurance. Goodwin presented his card, which described him as a special agent of the defendant. Wolper stated that his firm had an account of about $4,500 against the Henry Siegel Company which would be due on February 1, 1914, and which they would like to insure. Goodwin called Wolper's attention to a clause in the policies which provides that in case of loss the insured must bear a certain portion thereof known as the "initial loss." Wolper stated that the insurance must have no provision for an "initial loss," whereupon Goodwin said that if two policies were issued, one of general insurance for $5,000 and a special insurance on the Siegel account for $3,000, known as a "buffer bond," the protection on the Siegel account that was desired would be given, but that "back riders" would have to attach to the policies to cover the Siegel account, a "back rider" being a clause attached to a policy by which accounts are insured within a limited time before the date of the policy. Wolper stated that, as the Siegel account would be paid on February 1 and before the expiration of the policy, he would like to have the $3,000 policy cancelled at that time and get a rebate on his premium; and Goodwin told him he would submit that proposal. Wolper signed an application for each of the two policies without reading either, gave Goodwin his check for $400 in payment of the premiums, and took a receipt, a copy of which is printed in the record. The applications with the check were sent by Goodwin to the defendant's general agent, Mapes, who forwarded them to the home office of the defendant at St. Louis on December 22. With the applications he submitted the proposal of Wolper that the $3,000 bond or policy be cancelled on February 1 after the Siegel account had been paid, and requested that Wolper be allowed a rebate on his premium. In reply the home office telegraphed that they would not issue the buffer bond with the cancellation privilege. Goodwin notified Wolper to that effect and showed him the telegram. Wolper then suggested that the buffer policy be cancelled after the Siegel account had been paid and that the defendant hold the premium rebate until the end of the year and apply it in payment for new general insurance. This new proposal was submitted to the home office by Mapes in a telegram dated December 27, and on the same date the defendant wrote a letter "in which it flatly refused to cancel the buffer policy and rebate the premium in any form," and stated in substance that the plaintiffs had better accept a single bond of $8,000. This letter was received on December 29 by Mapes, who gave it to Goodwin and told him to show it to Wolper, which was done. Wolper told Goodwin that he was willing to take the single bond of $8,000 if that would protect his Siegel account, and Goodwin said it would have a special clause covering the Siegel account, that the policy would come immediately and that he might inform the bank that he was insured. On the same day Mapes told Wolper the account was insured and that he could so state to the bank. Again, on the morning of December 30, Mapes told Wolper that "the account was insured, the policy had no doubt been issued and that the bank might call him up to verify this." On the same day at half past one o'clock in the afternoon, Mapes received the following telegram from the home office of the defendant:...
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