Day v. St. Paul Fire & Marine Ins. Co.
| Decision Date | 10 April 1920 |
| Docket Number | 15539. |
| Citation | 189 P. 95,111 Wash. 49 |
| Court | Washington Supreme Court |
| Parties | DAY v. ST. PAUL FIRE & MARINE INS. CO. |
Department 1.
Appeal from Superior Court, King County; Everett Smith, Judge.
Action by Ann E. Day against the St. Paul Fire & Marine Insurance Company. From a judgment for plaintiff, defendant appeals. Reversed.
H. T. Granger and S. H. Steele, both of Seattle for appellant.
Flick & Paul, of Seattle, for respondent.
The respondent is suing upon a fire insurance policy which was issued by the appellant on October 25, 1916, in the sum of $1,000, insuring a Winton automobile, owned by the respondent, which was burned December 15, 1916. The appellant, as a defense to the action, relied upon the fact that the respondent, at the time the insurance was obtained represented that the automobile was manufactured in the year 1911, and that when purchased by respondent in October, 1911, was new and had cost respondent $3,400, whereas, in fact, the automobile was a 1910 model, and when purchased by respondent was a secondhand car and had cost her $2,000, $800 paid in cash and $1,200 in trade; that had the appellant known the car was a 1910 model, or a secondhand car, or that it had cost plaintiff only $2,000, the policy would not have been issued. The testimony shows that insurance was not written on a 1910 model in October, 1916, at the rate charged the respondent. The respondent's husband, through one Fraser, procured the insurance from appellant; the husband telling Fraser that the car was a Winton touring car, manufactured in 1911, and that he had bought it new in that year. Fraser telephoned this information to the agent of the appellant, who consulted the price list of Winton automobiles of 1911 model, and discovered therefrom that such a car would cost $3,400. Appellant's agent filled out the application with the data given him by Fraser and wrote the policy. The car had been sold by the Winton company previous to its sale to the respondent, and a payment of $700 or $800 made; the car then being returned to the Winton company for resale. The respondent was informed of these facts at the time of the purchase. The contract of purchase between respondent and the Winton company described the car as a 1910 model.
The premium on secondhand cars is higher than on new cars, and the insurance law requires schedules of rates to be filed with the insurance commissioner, deviation from which renders the insurance company guilty of a misdemeanor. The respondent's husband knew that the car was secondhand, and admitted that he represented it as a new car, but denied that he knew it was a 1910 model. The jury returned a verdict for the respondent in the full amount of the policy, from the judgment upon which verdict the appellant brings this appeal, basing its claim to a reversal on these grounds: First, that a conclusive presumption of implied deceit arose from the testimony and left no question of fact for the jury as to respondent's intent to deceive; second, that Fraser was the agent of the insured and that his statements and acts bind her; third, that an erroneous instruction was given as to the degree of proof necessary to establish fraud; and, fourth, that the appellant was not estopped by the knowledge of its agent, obtained in a conversation with the respondent's husband after the issuance of the policy to deny that the respondent or Fraser had misrepresented the facts at the time the policy was procured.
The first question we will consider is the instruction given by the court to the jury, whereby the jury was empowered to determine, from the facts, as to whether Fraser was the agent of the appellant or the agent of the respondent. In 1911 the Legislature passed the insurance code (Rem. Code 1915,§§ 6059-1 to 6059-238), which is a complete act in itself, and was intended to cover the entire insurance relationship, and by that code the acts constituting one an insurance agent or insurance broker, and the duties and powers of such insurance agent or broker are defined. Under the act, Rem. Code, § 6059-2, an 'insurance agent' is defined as 'a person, * * * duly appointed and authorized by an insurance company, to solicit applications for insurance * * * or to solicit applications and effect insurance in the name of the company, * * *' and an 'insurance broker' is defined as 'any person * * * not being an appointed agent for the company in which insurance * * * is effected, and acts or aids in any manner in negotiating contracts of insurance * * * for a party other than himself.' By section 6059-45 insurance agents and brokers must apply for and receive licenses. The act further provides for penalties for one acting as agent or broker without license.
Under the testimony, Fraser was not an agent of the appellant as defined by the statute, but performed all the acts which the statute defines as constituting one a broker, except that he had no license to act in that capacity. It is therefore argued by respondent that Fraser, not being a legally constituted broker under the act, was an agent of the insurance company, under the rule obtaining prior to the passage of the insurance code, which rule was that an insurance agent who places insurance in a company other than his own would be considered the agent of the insurer, so that the insurer would be bound by his acts and statements at the time of issuing the policy in the same manner as if he was its regularly appointed agent. Cooley's Briefs on Insurance, pp. 2491 and 2629; Mesterman v. Home Mutual Insurance Co., 5 Wash. 524, 32 P. 458, 34 Am. St. Rep. 877.
Fraser had no appointment or authority to solicit applications and effect insurance for the appellant; therefore he could not be its agent. He aided in negotiating the contract of insurance with the appellant; therefore he was a broker. But it is contended that he could not be a broker for the reason that he had failed to take out a license. The acting as a broker without having complied with the requirements of the act does not render the insurance which he had obtained void or voidable, but merely rendered him personally liable for the penalty provided in the act for having assumed the functions of a broker without obtaining the proper license. There is nothing in the testimony to show that appellant or respondent were acquainted with the fact that Fraser was not possessed of a proper license, and, he having been selected by the respondent, there is no reason why the appellant should be charged with the responsibility for his conduct. Even though we might concede that Fraser was not a broker, yet the respondent should be bound by his acts upon the theory that Fraser was her agent, thus departing from the rule existing before the passage of the insurance code, for the reason that the code expressly provides who shall be agents of the company, and was passed for the purpose of clearly defining the insurance company's duties and liabilities. It was error therefore for the court to leave to the jury, as a question of fact for it to determine, the status of Fraser, and it should have been determined, as a matter of law, that Fraser was either the agent or broker representing the respondent, and any knowledge he had or representations he made were the knowledge and representations of the respondent.
Complaint is also made as to the definition given in the instruction of the character of proof necessary to establish fraud and misrepresentation. The court properly told the jury that fraud and deceit must be established by clear and convincing evidence, and, continuing, said that fraud was to be proven by potent and strong evidence because it is the policy of the law to 'deal with men on the basis of their honesty and with the presumption that men are dealing with one another in a spirit of fairness and honesty.' Although this instruction may have been in language somewhat different from that ordinarily used, we cannot say that it does not properly measure the degree of proof necessary to establish fraudulent conduct, and was not such an instruction as to call for a reversal of the case.
The appellant argues that the court was also in error in submitting to the jury an instruction touching upon the question of estoppel, as follows:
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