Commercial Union Assur. Co. v. Urbansky

• Decision Date: 06 June 1902
• Citation: 113 Ky. 624,68 S.W. 653
• Parties: COMMERCIAL UNION ASSUR. CO. v. URBANSKY et al. [1]
• Court: Kentucky Court of Appeals

68 S.W. 653

113 Ky. 624

COMMERCIAL UNION ASSUR. CO. v. URBANSKY et al. ^[1]

Court of Appeals of Kentucky.

June 6, 1902

Appeal from circuit court, Jefferson county, law and equity division.

"To be officially reported."

Action by Ida Urbansky and another against the Commercial Union Assurance Company on a policy of insurance. Judgment for plaintiffs, and defendant appeals. Affirmed.

John Barret and Wm. B. Thomas, for appellant.

M. A D. A. & J. G. Sachs, for appellees.

PAYNTER J.

Mr Boston, manager of the appellees at Gallatin, Tenn., applied to Mr. Donnell, agent for the appellant and a number of other insurance companies at that place, for $3,500 of insurance on the goods owned by the appellees at the above-named place. Donnell was instructed to place the insurance in two of the best companies. Thereupon he wrote a policy of $2,000 in the appellant company, and $1,500 in another company. In a few days thereafter, to wit, Saturday, July 15, 1899, Donnell came to the appellees' store to solicit more insurance. Appellees' agent asked him for the two policies, and expressed a desire to pay the amount of the premiums, which was $65. Donnell told him that the policies were locked up in bank, and that he could not then get them. The appellees' agent told him to bring his policies Monday, and get the amount due for premiums. Donnell said that it was unnecessary to do that; that he could wait until the 1st of the month, as he then made his collections. On Sunday morning Donnell received a letter from the appellant, advising him of its desire to have the policy which he had issued returned to it for cancellation, and in compliance with that request he mailed the policy to the appellant. On the same morning Donnell issued a policy in the Norwich Union Insurance Company, antedating it Saturday, July 15, 1899. On that night a fire occurred in the block in which the appellees' goods were situated, which resulted in their destruction. On Monday morning plaintiff's manager demanded the two policies which Donnell had issued. When Donnell delivered to him two policies, one of which was for $2,000, which he had issued on Sunday morning in the name of the Norwich Union Company, appellees' agent did not know the names of the companies in which Donnell had issued the original policies and did not learn until some days afterwards that Donnell had made an effort for the substitution of one for the other policy. When he learned this he tendered back the policy in the Norwich Union Company, and demanded the original policy which had been issued in the appellant company. The appellees had never asserted a claim under the policy issued in the Norwich Union Company. The questions are: (1) Had the appellant's agent the right, without the knowledge or consent of the appellees, to substitute the policy of the Norwich Union Company for the one which had been issued in the appellant company? (2) Had the appellees forfeited the policy by reason of additional insurance on their property?

Preliminary to the first proposition, it may be stated that verbal contracts of insurance are valid. Insurance Co. v. Rowe (Ky.) 49 S.W. 422; Fidelity & Casualty Co. v Ballard & Ballard Co. (Ky.) 48 S.W. 1074; Insurance Co. v. Spiers, 87 Ky. 285, 8 S.W. 453; Insurance Co. v. Owen's Adm'r, 94 Ky. 197, 21 S.W. 1037. It may also be added that when appellees' agent applied for insurance, and told the agent of the appellant to select the companies in which to place policies amounting to $3,500, such policies as were issued under that instruction in accordance with the contract were enforceable, although the companies were not designated by appellees' agent. So, when the policy was issued in the company for $2,000, although it was not actually delivered, there was a binding contract of insurance. If the policy had not been issued at all, an enforceable contract of insurance would have existed. The question recurs, could appellant's agent cancel that contract of insurance without notice to the insured? There was no contract between the parties that the insurance agent, Donnell, was to keep the appellees' property insured in the sum of $3,500, nor was it in contemplation of the parties that there would be occasion for the cancellation of the policy to be issued, and others substituted in lieu thereof. While it is true that it may be regarded within the agreement that the companies which were to be selected in which policies were to be issued should have the right to cancel, this, however, could not be done without notice to the insured before the loss occurred. Insurance Co. v. Haynes, 10 Ky. Law Rep. 276; Insurance Co. v. Yates, Id. 984; Insurance Co. v. Owen's Adm'r, supra. There was no notice given in this case that the policy had been canceled. The appellees did not employ the appellant's agent to represent them in the matter of procuring insurance and maintaining it upon their property. They simply applied to him, as the agent of insurance companies, to issue two policies in good companies. When he agreed to issue these policies and select the companies, he was acting as the agent of the insurance companies, and not the appellees. If it could be said, in any legal sense, that he was the agent of the appellees, it was only to the extent of...