Flanagan v. Sunshine Mutual Ins. Co.
| Decision Date | 10 March 1950 |
| Docket Number | 9085 |
| Citation | 41 N.W.2d 761,73 S.D. 256 |
| Parties | FLANAGAN, Guardian ad litem for Glen Flanagan, a minor, Respondent, v. SUNSHINE MUTUAL INS. CO., Appellant. |
| Court | South Dakota Supreme Court |
Appeal from Circuit Court, Pennington County, SD
#9085—Affirmed
Whiting, Wilson & Lynn, Rapid City SD
Attorneys for Appellant.
Julius F. Sieler, Rapid City, SD
H. M. Lewis, Hot Springs, SD
Attorneys for Respondent.
Opinion Filed Mar 10, 1950; Rehearing Denied May 8, 1950
This is an action brought to recover on an automobile insurance policy. Glen Flanagan, a minor, purchased a car from the James Auto Sales Company of Hot Springs. Part of the purchase price was paid in cash and the balance was represented by a conditional sales contract executed by the purchaser and the seller, and assigned by the seller to the Central Credit Corporation of Rapid City. The car was insured first in the Central National Insurance Corporation. This policy was cancelled by the insurer and another policy was issued and delivered to the Central Credit Corporation by the Sunshine Mutual Insurance Company, defendant. Thereafter the car was damaged by an accidental upset. Defendant denied liability and this action was commenced by the plaintiff to recover on the policy of insurance. Judgment was entered for plaintiff and defendant appealed.
Notice of cancellation of the policy of the Central National Insurance Corporation was given by serving the Central Credit Corporation, but no notice of cancellation was given to the insured. It is the contention of appellant that the policy was still in effect at the time of the upset. The conditional sales contract contains the following provision:
“Seller may insure said property against fire and theft, or any accidental physical damage to the car to protect purchaser, seller or seller’s assignees.”
The assignment of this contract to the Central Credit Corporation vested in the assignee the authority of the seller to insure the car. It is the general rule that if the insured authorizes an agent not only to insure but to keep the property insured, with power to select the insurer, and the agent then places the insurance in a company not represented by him, he is the agent of the insured and notice of cancellation to such agent binds the owner. McGraw Wooden Ware Co. v. German F. Ins. Co., 126 La. 32, 52 So. 183, 38 LRA, NS, 614 and note, 20 AnnCas 1229; 29 AmJur, Insurance, § 282. Here the authority of the Central Credit Corporation was to keep the car insured in any company it might select so long as the contract remained in effect. The Credit Company was not the agent for any insurance company but was the agent of the insured. Notice of cancellation of the Central National Insurance policy was notice to the insured and was sufficient to cancel the policy whether the owner of the car was advised of the cancellation or not. After the cancellation of the Central National policy the Central Credit Corporation was authorized to procure other insurance. This it did under the authority of the contract. Appellant also contends that Holm, agent of the appellant, and Ray, manager of the Central Credit Corporation, concealed from appellant the fact that the insured car was encumbered by the conditional sales contract, and that the insurance on the car had been previously cancelled by another insurance company; that this was done in order to induce appellant to insure the car.
The evidence shows that Ray as assistant manager of the Credit Corporation telephoned the office of Holm, doing business as the Rapid Insurance Agency, agent for appellant, and requested a policy of insurance on the car. The written application was prepared in Holm’s office. The application stated the name of the insured, a description of the car and the coverage. Items 6, 7 and 8 of the application were in the following form:
“If mortgaged or encumbered, loss, if any, under Coverages C, D, E, F, or G, Payable as interest may appear to the named Insured and...
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