Commonwealth Insurance Co. of New York v. Soloman

• Decision Date: 16 January 1923
• Citation: 32 Del. 98,119 A. 850
• Court: Supreme Court of Delaware
• Parties: COMMONWEALTH INSURANCE COMPANY OF NEW YORK, a corporation of the State of New York, defendant below, plaintiff in error, v. MORE SOLOMAN, trading as Champion Auto Company, plaintiff below defendant in error

119 A. 850

32 Del. 98

COMMONWEALTH INSURANCE COMPANY OF NEW YORK, a corporation of the State of New York, defendant below, plaintiff in error, v. MORE SOLOMAN, trading as Champion Auto Company, plaintiff below defendant in error

Supreme Court of Delaware

January 16, 1923

Supreme Court, June Term, 1922.

Writ of error to Superior Court, New Castle County, No. 171 September Term, 1921; No. 11, June Term, 1922, of the Supreme Court.

For proceedings in Court below, see 1 W. W. Harr. (31 Del.) 581 117 A. 126.

Defendant below issued to the plaintiff below two policies of insurance covering certain goods, chattels and fixtures, in the total amount of $ 9,700.00. Thereafter, the goods, chattels and fixtures so insured were destroyed by fire. The plaintiff below made claims under the policies for payment of the full sum of $ 9,700.00 as due thereunder, and the defendant below denied its liability to pay the same. The declaration alleges that after the fire the defendant below, in consideration that the plaintiff below would abandon a portion of the claim and release the defendant below from all liability on its policies, promised and agreed to pay the plaintiff below the sum of $ 6,835.64 in full settlement of the claim.

The action was brought, not on the policies of insurance, but on the agreement of settlement alleged to have been made between the parties.

Plaintiff below undertook to show that the alleged agreement was made and entered into on behalf of the defendant below by an adjuster sent by it to the locality for the purpose of adjusting the loss, with authority sufficiently broad to embrace the making of such an agreement as that sued on. Defendant below denied first, that the adjuster ever made the agreement declared upon, and second, if he did, the agreement was not binding on the defendant below because the adjuster had no authority to make such an agreement on its behalf.

The judgment affirmed.

Andrew C. Gray (of Ward, Gray & Neary) and Leo Levy (of the New York Bar) for plaintiff in error.

Daniel O. Hastings and Clarence A. Southerland for defendant in error.

WOLCOTT Chancellor, RICE, HARRINGTON and RICHARDS, J. J., sitting.

OPINION

WOLCOTT, Chancellor

The propositions of law advanced by the plaintiff in error are as follows:

1. The finding of the jury that an agreement of settlement was made between the insurer and the insured is against the weight of the evidence.

2. It was error to admit the testimony of the witness Monrose to prove what his agency was without preceding this by some other proof of the alleged agency.

3. There is no evidence to support a finding of the jury that the adjuster had authority to make the agreement alleged to have been made.

4. An adjuster of fire losses designated to adjust a particular loss, in the absence of express authority, has no authority to settle the claim finally and to promise on behalf of the insurer to pay such loss.

1. As to the first point, it is clear that it is not well taken. If there was evidence sufficient to sustain the finding of the jury, it is not for this court to assume the function of weighing it in order to ascertain its comparative value as against other evidence to the contrary. That is typically a function for the jury, and it would be highly improper for us to review the manner in which the jury performed it.

2. The witness Monrose was the manager of the General Adjustment Bureau, at Philadelphia. The business of the bureau was that of adjusting fire losses. This bureau was engaged by the plaintiff in error to act as its agent in adjusting the loss involved in this suit. Monrose was its manager and it was entirely proper to admit his testimony upon the question of the scope of the agent's authority. The contention of the plaintiff in error comes down to this that an agent cannot testify as to the extent of his agency until after it has been proved in some other way. Oldham v. Cooper, et al., 5 Del.Ch. 151, is cited in support of this proposition, but does not sustain it. All that case decides is that agency cannot be proved by the declarations of the alleged agent. It does not hold, nor does the case of Phleger v. Ivins, et al., 5 Del. 118, 5 Harr. 118, to which we are also referred, hold, that an alleged agent cannot be permitted to testify concerning the nature and extent of his employment, unless the agency is first shown by some other proof. We venture to say that no case can be found anywhere which so holds.

3. We have very carefully gone over the evidence and, though there is conflict therein, yet we find ample to justify the jury in believing that the insurer, plaintiff in error, expressly conferred upon the adjusting agent full power to make the agreement sued upon.

4. This point presents the only serious question in the case. While there is evidence in the record justifying the belief that the adjuster in this case had specific and express authority to settle the loss, yet a portion of the charge to the jury seems to have been predicated on the assumption that if the adjuster was empowered to make settlement, his authorization to that end was to be found only in his general authority to adjust the loss. That portion of the charge to which we refer, and to which exception is taken, is as follows:

"On the question of an adjuster's power, under his authority to adjust a loss, we will say that agency cannot be presumed; it must always be proved by the party relying on it, but it may be proved in various ways. The power of an admitted agent to do a particular thing may, in some cases, be shown by the nature of the business in which he is admittedly engaged. An insurance adjuster employed by an insurance company to adjust a particular loss has certain powers in connection with that business which seem to be reasonably well-defined in many adjudicated cases.

"In the case of Illinois Mutual Fire Ins. Co. v. Archdeacon, et al., 82 Ill. 236, 25 Am. Rep. 313, the court said: 'Where a loss has occurred, and the insured and the company meet and settle, and agree upon the amount of the loss, which is then endorsed on the policy, the very nature of the transaction would seem to imply that the adjustment should be final and binding, unless fraud or mistake has occurred.' The amount of the loss in that case, was endorsed upon the policy by the adjuster. The court further said: * * * 'The only difference between the case cited and this one, is: In the former, a promise to pay the loss as adjusted was proven, while here none was shown, but that cannot affect the principle involved, as the law will imply a promise to pay.' In that case the amount of the loss was in writing, and endorsed on the policy by the adjuster; but we think it is not essential that the agreement be endorsed on the policy or that it be in writing. It is essential, however, that there shall be a clear and binding agreement between the insurer and insured.

"As a result of an examination of the authorities on the subject, we take this to be the law: When an insurance adjuster is employed and directed by the insured to adjust a loss in a particular case, and in the performance of that duty agrees with the insured on the sound value of the property destroyed, the monetary loss of the insured and the pecuniary liability of the insurer, and also definitely and finally agrees with the insured on a compromise settlement of his claim at a certain sum owing from the insurer to the insured, and nothing further remains to be done by the insured and nothing further is to be done on the part of the company except to pay over the balance which has been agreed upon, the adjustment is final and binding on the insurer, unless fraud or mistake has occurred.

"And so we say, if you believe from the preponderance of the testimony that the defendant, acting through its own adjuster, who was authorized and directed by the defendant to adjust the plaintiff's loss, agreed with the plaintiff on the sound value of the property destroyed, the plaintiff's monetary loss, and defendant's pecuniary liability, and also definitely and finally agreed with the plaintiff on a certain sum owing from the defendant to the plaintiff in compromise settlement of plaintiff's claim, the defendant is bound to pay such sum, if there is no fraud or mistake shown, and nothing remains to be done by the parties except the payment and acceptance of the amount agreed upon."

For the plaintiff in error it is contended that it was error to so charge, because authority to "adjust a loss" does not, as a matter of law, embrace within its scope authority to agree to settle it. The plaintiff in error contends that all the adjuster could do as a matter of law under his authority to "adjust a loss," would be to ascertain the sound value of the property and the extent of the damage; and that he could not bind the company to an agreement to pay a compromise sum in settlement.

The policies issued to the defendant in error are standard fire policies. They nowhere make reference to an adjuster, or to adjusting the loss. These terms "adjuster" and "adjust a loss" are very familiarly used in insurance terminology, but they are undefined by the standard policy contract.

When, therefore, in the above quoted language to the jury, reference is made to an insurance adjuster and to adjusting a loss, the meaning to be gathered from what was said is to be deduced not from the terms of the policy-contract between the parties, but from the sense in which the words are ordinarily used in common parlance.

If therefore, an agent is given authority "to adjust a loss," to what extent may...