Double K, Inc. v. Scottsdale Ins. Co.

Decision Date22 April 1994
Docket NumberNo. S-92-1005,S-92-1005
Citation245 Neb. 712,515 N.W.2d 416
PartiesDOUBLE K, INC., a Nebraska Corporation, doing business as King's Ballroom, Appellant, v. SCOTTSDALE INSURANCE COMPANY, an Arizona Corporation, Appellee.
CourtNebraska Supreme Court

Syllabus by the Court

1. Summary Judgment: Appeal and Error. In appellate review of a summary judgment, the court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence. Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.

2. Principal and Agent: Proof. The burden is upon the party alleging the existence of an agency relationship to prove that the agent's authority and the agent's acts, for which liability against the principal is sought, are within the scope of the agent's authority.

3. Principal and Agent: Words and Phrases. Apparent or ostensible authority is the power which enables a person to affect the legal relationships of another with third persons, professedly as agent for the other, from and in accordance with the other's manifestations to such third persons.

4. Principal and Agent: Liability. The apparent authority or agency for which a principal may be liable must be traceable to the principal and cannot be established by the acts, declaration, or conduct of the agent.

5. Summary Judgment: Proof. The party moving for summary judgment has the burden to show that no genuine issue of material fact exists and must produce sufficient evidence to demonstrate that the moving party is entitled to judgment as a matter of law if the evidence presented for summary judgment remains uncontroverted.

6. Summary Judgment: Proof. After a party moving for summary judgment has shown facts entitling it to judgment as a matter of law, the opposing party has the burden to present evidence showing an issue of material fact which prevents a judgment as a matter of law for the moving party.

Mark A. Johnson, of The Law Offices of Mark A. Johnson, and Scott Freese, of Hutton, Freese & Einspahr, P.C., Norfolk, for appellant.

Daniel D. Jewell, of Jewell, Gatz, Collins, Fitzgerald & DeLay, Norfolk, for appellee.

HASTINGS, C.J., and BOSLAUGH, CAPORALE, FAHRNBRUCH, LANPHIER, and WRIGHT, JJ.

WRIGHT, Justice.

Double K, Inc., doing business as King's Ballroom (Double K), sued Scottsdale Insurance Company (Scottsdale) seeking recovery for a fire loss suffered April 3, 1986. Double K alleged that its multiperil insurance contract had been extended for an additional year by a binder issued by an independent agent who was the apparent or ostensible agent of Scottsdale at the time the binder was issued. Summary judgment was granted for Scottsdale, and Double K appeals.

SCOPE OF REVIEW

In appellate review of a summary judgment, the court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence. Summary judgment is to be granted only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. Hawkins Constr. Co. v. Reiman Corp., 245 Neb. 131, 511 N.W.2d 113 (1994); Dugan v. Jensen, 244 Neb. 937, 510 N.W.2d 313 (1994).

FACTS

In June 1984, Double K purchased from Scottsdale a fire and casualty insurance policy covering the personal property inside King's Ballroom. The policy was purchased through Roger Hanson, a licensed insurance agent, and through the Scribner Insurance Agency (Scribner). The policy was to provide coverage in the amount of $76,000 and was to run from June 6, 1984, to June 6, 1985.

On June 6, 1985, Hanson issued to Double K an insurance binder which purportedly extended the coverage on the policy. Double K alleged that the binder was signed by Hanson as an agent and authorized representative of Scottsdale. Double K also alleged that when it received the binder, the premium was not stated thereon and was not paid because Hanson had told Double K that a refund due from another insurance policy would be applied to the renewal premium on the personal property policy.

In December 1985, Hanson sold all interest in his business to Sirek Agency, Inc., doing business as Town & Country Agency (Town & Country). Town & Country held a resident agent's license and was licensed to place insurance upon risks located in Nebraska through nonadmitted insurance companies acting as a surplus-lines agent.

On April 3, 1986, fire destroyed Double K's personal property, resulting in a loss exceeding $76,000. Town & Country notified Scottsdale, which disclaimed any liability and claimed that Hanson had no authority to issue the binder on Scottsdale's behalf. As a result, Double K sued to recover on the policy.

Double K alleged that Scottsdale, a nonadmitted insurance company, did business in Nebraska through its general agent, Diversified X/S Underwriters (Diversified). Double K further alleged that after Hanson sold all his interest in the insurance business to Town & Country, Double K was told by Town & Country that the agency had a binder.

Double K alleged that Hanson had authority as an agent in fact of Scottsdale to issue the binder by virtue of the following: (1) The district court found that Hanson was at no time advised by anyone that he could issue a binder, that Hanson did not issue the binder, and that Hanson was not an agent of Scottsdale, nor was there any apparent authority on behalf of Hanson to act as an agent for Scottsdale. The court found that Hanson, not Scottsdale, led Marvin Konopasek, Double K's founder, to believe that Hanson had authority to act for Scottsdale. The court concluded that Hanson's apparent authority was not traceable to Scottsdale, and there was no evidence that any of Hanson's acts concerning the issuance of the written binder were traceable to Scottsdale.

Double K paid its premium by and through Hanson; (2) Scottsdale failed to notify Double K that Hanson was not its agent or agent in fact; (3) by Double K's directing all [245 Neb. 715] communication by and between Scottsdale and Double K through Hanson, Double K was led to believe by Double K's acts that Hanson was an agent of Scottsdale; and (4) by Scottsdale's failure to personally notify Double K of the cancellation of the policy, Double K was further led to believe it had coverage obtained through Hanson. Double K alleged that Hanson had implied and apparent authority to issue the binder on behalf of Scottsdale and that Scottsdale was estopped to deny otherwise.

ASSIGNMENT OF ERROR

Double K alleges the district court erred in sustaining Scottsdale's motion for summary judgment.

ANALYSIS

Because this is an appeal from an award of summary judgment, we are required to view the evidence in a light most favorable to Double K and give it the benefit of all reasonable inferences deducible from the evidence. See Hawkins Constr. Co. v. Reiman Corp., 245 Neb. 131, 511 N.W.2d 113 (1994). Double K claims that Scottsdale and its agents allowed Double K to believe that Hanson was an agent for Scottsdale and that, therefore, the binder issued by Hanson was effective to provide coverage for the loss from the fire.

Double K must prove that Hanson had authority to provide the binder. The burden is upon the party alleging the existence of the agency relationship to prove that the "agent's authority and the agent's acts, for which liability against the principal is sought, are within the scope of the agent's authority." Wolfson Car Leasing Co., Inc. v. Weberg, 200 Neb. 420, 426, 264 N.W.2d 178, 182 (1978). See, also, Western Fertilizer v. BRG, 228 Neb. 776, 424 N.W.2d 588 (1988).

Double K purchased the multiperil policy for the period of June 6, 1984, to June 6, 1985. Hanson had previously handled Double K's renewal and financing of premiums for a similar policy carried through the Mission Insurance Companies, which policy had been canceled during its term for underwriting reasons. In 1984, Hanson asked Scribner to obtain this type of policy for Double K. Scribner contacted Diversified, a brokerage firm which placed hard-to-write insurance and represented companies which were not licensed to do business in Nebraska. Diversified found the policy available through Scottsdale, which was not admitted to sell insurance in Nebraska. Scribner received a quote from Diversified and asked that the coverage be bound effective June 6, 1984. Diversified requested a completed application, which was received from Scribner on June 21, 1984.

Scribner received the original policy and an agent's copy which showed the agent's name as Diversified. Scribner forwarded the bill and policy to Hanson, who delivered the policy to Konopasek. Hanson then arranged for financing of the premium, which amounted to $3,791.30.

In February 1985, Hanson sold the casualty portion of his insurance business to Town & Country, but the sale did not include the policy covering King's Ballroom, which policy was still owned by Scribner. Subsequently, Hanson received a renewal form from Scribner which asked for a breakdown of the sales at the ballroom. Konopasek verbally provided that information to Hanson, who transferred it to a request form which he returned to Scribner. Hanson stated that he assumed Scribner would send the form to Diversified, which would then forward it to Scottsdale.

Scribner received a letter dated April 17, 1985, from Diversified regarding the renewal of the...

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