Fireman's Fund Ins. Co. v. Williams

• Decision Date: 07 May 1934
• Docket Number: 31192
• Citation: 170 Miss. 199,154 So. 545
• Parties: FIREMAN'S FUND INS. CO. v. WILLIAMS
• Court: Mississippi Supreme Court

154 So. 545

170 Miss. 199

FIREMAN'S FUND INS. CO. v. WILLIAMS

No. 31192

Supreme Court of Mississippi

May 7, 1934

Division A

Suggestion Of Error Overruled May 21, 1934.

APPEAL from chancery court of Grenada county HON. N. R. SLEDGE Chancellor.

Bill in equity by Homer J. Williams against the Fireman's Fund Insurance Company. From a decree overruling a demurrer to the bill, defendant appeals. Reversed and remanded.

Reversed and remanded.

Smith, Smith & Bloodworth, of Atlanta, Ga., and A M. Carothers, of Grenada, for appellant.

The courts of other jurisdictions have held repeatedly that the allegations as set forth in the amended bill do not entitle a complaining party to recover.

Murphy Hardware Co. v. Rhode Island Ins. Co., 111 S.E. 808.

A renewal cannot arise out of the custom of insurer's agent to renew a fire policy, where no renewal is actually made because of the agent's illness; at least, where the insured becomes aware, before loss, of the fact that the policy has not been renewed, and makes no effort to procure other insurance. So, it is held that an insurance company is not bound by its agent's mere naked promise to renew a policy when it runs out, especially where it is not shown that the agent had any authority to make such a promise. In fact, it is held that a mere promise by the insurer's agent that he will see that a fire policy is renewed when it runs out, is the individual contract of the agent, and does not bind the insurance company, in the absence of a showing of authority to make the same, although, if the parol contract of renewal is entered into by an authorized agent, it becomes the contract of the insurance company, and not of the agent.

2 Couch Cyclopedia of Insurance Law, 1627, sec. 532; Bridges v. St. Paul Fire & Marine Ins. Co., Brown v. Same, 102 Neb. 316, 167 N.W. 64, L. R. A. 1918D 1199; Struzewski v. Farmers Fire Ins. Co., 226 N.Y. 338, 123 N.E. 661.

Generally the custom of insurance companies to renew without a special request is not so well established that an insured can take advantage of it.

Nippolt v. Fireman's Insurance Co., 57 Minn. 275, 59 N.W. 191; 2 Cooley's Briefs on Insurance (2 Ed.), 1403-5; Republic Ins. Co. v. Moss, 235 S.W. 700.

A usage or trade custom must, as it is frequently stated, possess the following essentials: It must be ancient, certain and uniform, compulsory, consistent, general, continued, notorious, reasonable, and not in contravention of law.

17 C. J. 449, sec. 7; Newark Fire Ins. Co. v. Smith, 167 S.E. 79; National Savings Bank v. Ward, 100 U.S. 195, 206, 25 L.Ed. 621.

Usage cannot make a contract where there is none, nor prevent the effect of the settled rules of law.

Bank v. Burkhardt, 100 U.S. 686, 692; Tilley v. Cook County, 103 U.S. 155; Boorman v. Jenkins, 12 Wend. 566, 27 Am. Dec. 158; Thomas v. Guarantee Title Co., 81 Ohio St. 432, 91 N.E. 183, 26 L. R. A. (N. S.) 1210; 27 R. C. L. 183, sec. 20; 17 C. J. 501, sec. 64.

It is elementary law that usage or custom cannot create a contract or liability where none otherwise exists.

Thomas v. Guarantee Title & Trust Co., 81 Ohio St. 432, 91 N.E. 183, 26 L. R. A. (N. S.) 1210; National Savings Bank v. Ward, 100 U.S. 195, 26 L.Ed. 621; 2 Cooley's Briefs on Insurance (2 Ed.), 1403; 26 C. J. 110, sec. 108.

If a usage is entirely local in its nature it is not binding on an insurer domiciled in another state than that in which the usage obtains.

5 Cooley's Briefs on Insurance (2 Ed.), 4094; City Mortgage & Discount Co. v. Palatine Ins. Co., Ltd., of London, England, 145 So. 490; German-American Ins. Co. v. Commercial Fire Ins. Co., 95 Ala. 469, 11 So. 117, 16 L. R. A. 291.

Where a local agent's commission empowered him to issue and countersign policies on risks accepted by him; to renew or cancel such policies; and to assent to assignments thereof, before loss; but such authority was subject to the terms and conditions of the company's printed policy, and the agent's acts were not to be in contravention thereof, or to operate as a waiver of them, the agent's authority depended upon two writings, the agent's commission and the printed policy, which was the standard policy, and it provided for renewal under the original stipulations in consideration of premium for the renewed term. It also stipulated that whatever was done by the agent must be done by writing endorsed upon the policy. It was also held, in the absence of proof that the agent's powers had been broadened, or that the insurer had ratified his acts, or that he had ever been held out as having power to bind the company by an oral contract, to insure or to renew existing insurance, that said agent had no authority to make an oral contract of insurance or to renew an existing policy except in accordance with the authority vested in him by his commission and the "printed policy. "

1 Joyce on Insurance, page 199; Underwood v. Fire Ins. Co., 134 N.Y.S. 105.

The alleged promise or agreement of Mr. Moody, the agent, to renew the policy, as alleged by complainant, if made, was not binding on the defendant insurance company, as he had absolutely no authority to make it.

New York Life Ins. Co. v. O'Dom, 100 Miss. 219; Newman v. National Fire Ins. Co., 152 Miss. 351.

The alleged arrangement and/or agreement relied upon by complainant for a renewal of the policy referred to in the bill is shown upon the face of the bill to have been in violation of the statute of frauds, section 3343 (d) of the Mississippi Code of 1930, and, therefore, no action lies against defendant whereby to charge defendant thereon.

Gerachi v. Sherwin-Williams Co., 156 Miss. 38, 125 So. 410.

Such a contract, as set forth in the bill, creates a dual agency, contrary to law, and is not binding upon the defendant.

21 R. C. L. 827, sec. 11; Wildberger v. Hartford Fire Ins. Co., 72 Miss. 338; Dohlin et al. v. Dwelling House Mutual Ins. Co. of Lincoln, 238 N.W. 921.

Denman & Breland, of Sumner, for appellee.

We submit that this court, in the case of Liverpool & London & Globe Insurance Company v. Hinton, 116 Miss. 764, 77 So. 652, and in other cases hereinafter cited, has aligned itself with the rule that a legal, binding verbal contract may be made between an insurance company, acting through its agent, and an insured, to renew fire insurance policies.

Mallette v. British American Insurance Company, 91 Md. 471, 46 A. 1005; Abel v. Phoenix Ins. Co., 47 A.D. 81, 62 N.Y.S. 218; Commercial Ins. Co. v. Morris, 105 Ala. 498, 18 So. 34; Georgia Home Ins. Co. v. Kelley (Ky.), 113 S.W. 882.

The court also decided in that case that such a contract to renew will be enforced in equity after the loss.

Franklin Fire Ins. Co. v. Taylor, 52 Miss. 441; Crowell v. New Hampshire Fire Ins. Co., 147 So. 762.

It is well settled by the decisions of this court, as well as the authorities generally that a court of equity has jurisdiction to compel "the issuance and delivery of an insurance policy after a loss, where there has been a valid agreement for one before the loss, and will enforce payment of it as if made in advance."

Palmetto Fire Ins. Co. v. Allen, 148 Miss. 97, 114 So. 145, 141 Miss. 681-90, 105 So. 483, 769.

On the point as to the binding and enforcible effect of such an oral agreement to renew the policy and the authority of the agent to make such an agreement, we refer the court to a number of decisions of other states. A large number of these authorities is collected in the annotated note to the case of Oklahoma Fire Ins. Co. v. Virginia Fay Mercantile Co., 153 P. 153, L. R. A. 1916C 779.

Massachusetts Bonding & Insurance Co. v. Vance, 180 P. 693, 15 A. L. R. 995.

It has been held that an insurance company may contract by parol for the renewal of a policy, although it is stipulated in the face of the policy that this shall not be done.

Cohen v. Continental Fire Ins. Co., 67 Tex. 325, 60 Am. Rep. 24, 3 S.W. 296; McCabe Brothers v. Aetna Ins. Co., 9 N.D. 19, 47 L. R. A. 641, 81 N.W. 426; Boos v. Aetna Ins. Co., 22 N.D. 11, 132 N.W. 222; Hartford Fire Ins. Co. v. Buckwalter Lbr. Co., 116 Miss. 822, 77 So. 798; Wiebeler v. Milwaukee Mechanics' Mutual Ins. Co., 30 Minn. 464, 16 N.W. 363; Fireman's Fund Ins. Co. v. Searcy, 157 Ky. 749, 163 S.W. 1103; Gresham v. Norwich Union Fire Ins. Co., 157 Ky. 402, 163 S.W. 214; Baubie v. Aetna, Ins. Co., 2 Dill. 156; Home Ins. Co. v. Adler, 77 Ala. 242; Abel v. Phoenix Ins. Co., 47 A.D. 81, 62 N.Y.S. 218; Wilson v. Hartford Fire Ins. Co., 188 Ill.App. 181.

Our court has held in a long line of cases that an insurance agent, clothed with authority to make contracts of insurance, or to issue policies of insurance, stands in the stead of the principal, that is, the fire insurance company itself, to the insured. Such acts and declarations of such an agent, in reference to fire insurance, are the acts and declarations of the company itself. The company is not only bound by notice to such agent, but is likewise bound by anything said or done by such agent with reference to such contractural relations either before or after the contract is made.

Liverpool & London & Globe Ins. Co. v. Hinton, 116 Miss. 754, 77 So. 652.

It was mutually understood between the complainant and the defendant company, and relied on by the complainant, that the policy had been renewed, on February 3, 1932. This was such a mistake of fact as this court can and should correct. The court can and should enforce the contract that the parties understood was in force and effect between them.

2 Miss. Digest, sec. 5, pages 47 et seq.; 11 Southern Digest, page 235, sec. 8; 2 Miss. Digest, sec. 57, page 61; Hardee v. Cheatham, 52 Miss. 41; 11 Southern Digest, sec. 57, page 257.

As to notice by the insurer and custom of its general agent, w...