Fireman's Fund Ins. Co. v. McGreevy

• Decision Date: 03 November 1902
• Docket Number: 1,681.
• Citation: 118 F. 415
• Parties: FIREMAN'S FUND INS. CO. v. McGREEVY.
• Court: U.S. Court of Appeals — Eighth Circuit

118 F. 415

FIREMAN'S FUND INS. CO. v. McGREEVY.

No. 1,681.

United States Court of Appeals, Eighth Circuit.

November 3, 1902

W. W Morsman, for plaintiff in error.

J. B Sheean and M. F. Harrington, for defendant in error.

Bernard McGreevy, the defendant in error (plaintiff below), was, in June and July, 1897, and before and after that time, the local agent, at the city of O'Neill, Holt county, Neb of the Fireman's Fund Insurance Company, of San Francisco, Cal., the plaintiff in error (defendant below). On July 2, 1897, upon one of the executed blanks furnished him by said defendant, he made out, and as such agent countersigned, a policy of insurance, by the terms of which the defendant company, in consideration of the sum of $75 premium, insured said plaintiff for one year from noon of that day against all direct loss or damage by fire to his two-story frame, brick foundation, shingle-roof warehouse, situate in said city, on a described parcel of land of the plaintiff, to the amount of $3,000; and on the same day transmitted said policy by mail for approval to the assistant manager of said defendant at Chicago, Ill., together with his daily report as such agent, describing said insurance, and stating that said warehouse was built about 1883, of wood, and was of the cash value of $3,500 to $4,000. Thereupon said policy of insurance was, on July 3, 1897, approved by said assistant manager, and returned to the plaintiff, who paid therefor to defendant the sum of $63.75, being the amount of said premium of $75 after deducting therefrom 15 per cent. thereof as plaintiff's commission as such agent for effecting the insurance. Said warehouse building had been erected in 1883 as a creamery. That business proving unprofitable, the appliances were removed after two or three years, and it was changed and used for a time as a hotel. That use was also abandoned, and shortly before June, 1897, it had been used for storing chicory and other commodities. In the meantime, prior to 1890, the title to the property became vested in the Holt County Bank to satisfy a debt owing it by the creamery company, and about 1893 became vested in Oscar O. Snyder, as receiver of said bank, which had become insolvent. For more than two years said receiver had offered and endeavored to sell said building and the land on which it was situated-- about one-half acre-- when he sold and conveyed the same to plaintiff for the sum of $500, with plaintiff's agreement to pay the outstanding taxes against the same, which were less than $100. In a book of instructions issued by defendant to its agents, a copy of which had been furnished plaintiff when first appointed, defendant had directed that: 'All risks should be considered with reference to their moral hazard. Never issue a policy for an amount that the insured would rather have than the risk covered. If a building is badly located, too large, in a business not adapted to it, don't write it. Don't cover large hotels or factory risks built in expectation of a population that has not

materialized. If a risk is an elephant on the hands of its owner, let those cover it who write menageries. We don't. ' Agents were also directed to decline to insure all unsalable and unprofitable property. The plaintiff, when he sought the approval of defendant's assistant manager of said policy, did not inform him or defendant company anything about the use or occupation of said building, or about his purchase of the same, or the price he had paid therefor, or at which it had previously been offered for sale by the receiver; and defendant company had no information of any such matters before the destruction of said building by fire. After plaintiff's purchase of the building, it was used as a grain warehouse, and grain was stored in it when it was burned on December 18, 1897. A few days after the fire, Frank D. Lyon, an agent of defendant, came to O'Neill to examine and adjust the loss, and while there ascertained the price which plaintiff had paid for the property. Offers of settlement were made on each side, and not accepted; and at the suggestion of said Lyon plaintiff obtained from a carpenter whom they met an approximate estimate of the cost of replacing the building, for which service plaintiff gave the carpenter grain from the burned building of the estimated value of $5. Afterwards, and not later than January 4, 1898, said Lyon having learned the contents of the daily report which plaintiff had sent to defendant's assistant manager when he sent said policy to him for approval, on behalf of defendant and by direction of its attorney notified said plaintiff that defendant denied all liability on said policy because of plaintiff's fraud and suppression of facts when the policy was issued; and on behalf of defendant tendered to plaintiff the sum of $77.23, being the sum paid by plaintiff for the policy and interest thereon until the day of such tender. After formal proofs of loss, this action was begun in the district court of Holt county, Neb., and was thereafter properly removed to the circuit court of the United States for the district of Nebraska; and upon trial a verdict was rendered February 19, 1901, in favor of the plaintiff for $3,656.25 upon which judgment in favor of plaintiff was entered September 21, 1901, for $3,806.26 and costs.

Before SANBORN and THAYER, Circuit Judges, and LOCHREN, District Judge.

LOCHREN District Judge, after stating the case as above, .

In issuing the policy of insurance to himself, the plaintiff not only acted on his own behalf, but also acted and assumed to act as the agent of the defendant insurance company. He did not send to the defendant an application for insurance to be acted on through some other agent who might investigate the risk, but made out the policy himself as defendant's agent, and sent it for approval to defendant's manager accompanied by his daily report of that risk; on which report he expected the manager to act, as he did act, in approving the risk. And plaintiff countersigned the policy as defendant's agent, and charged and was allowed his commission of 15 per cent. of the premium for effecting the insurance as defendant's agent. The court therefore correctly instructed the jury that as such agent the duty devolved on the plaintiff to disclose to his principal, when applying for insurance, or for the approval of the insurance policy, such facts as he possessed a knowledge of, which he had reason to believe, if brought to the attention and knowledge of the insurance company, would influence them, or might influence them, not to approve the policy upon the property in question. An agent may deal...