Greenwich Ins. Co. v. Waterman

• Decision Date: 30 March 1893
• Docket Number: 68.
• Citation: 54 F. 839
• Parties: GREENWICH INS. CO. v. WATERMAN et al.
• Court: U.S. Court of Appeals — Sixth Circuit

54 F. 839

GREENWICH INS. CO. v. WATERMAN et al.

No. 68.

United States Court of Appeals, Sixth Circuit.

March 30, 1893

Statement by TAFT, Circuit Judge:

This was a writ of error to a judgment of the circuit court for the eastern district of Michigan in favor of Cameron D Waterman and Joshua W. Waterman against the Greenwich Insurance Company for $5,475. The action was on an agreement by defendant to insure plaintiffs against loss or damage by fire to an amount not exceeding $5,000 on the steamer Chenango, in consideration of a premium of $50, to be paid by plaintiffs when requested, the risk to attach from the 10th of April, 1890, at noon. On the 11th of April, 1890, the steamer Chenango caught fire, burned, and became a total loss, whereby, as plaintiffs claimed, the defendant became liable for the full amount of the insurance.

The defendant pleaded the general issue, and the case was heard before a jury. On the trial the plaintiffs introduced evidence to show that a verbal contract of insurance was made between their agent, Ralph, and Dickinson, the agent of the insurance company, the risk to attach from the 10th of April the day of making the contract. The evidence of the defendant tended to show that Ralph had applied for insurance to date not from the 10th of April, but from the 20th of that month that Dickinson had no authority to make a binding contract of insurance for the company, and had forwarded an application, written out by himself, fixing the date for the risk to attach on the 20th of April, and that a policy had issued in accordance with this application. The issues on the trial were-- First, as to the agreement between Ralph and Dickinson; and, second, as to Dickinson's authority in representing the company. On both these issues, the jury found for the plaintiffs.

Dickinson was a clerk for Eber Ward, and was the general manager of his insurance business, and it was not denied by defendant that he had the same authority that Ward had to represent the company. Ward was a local agent of the Greenwich Insurance Company at Detroit, and did a general hull and cargo marine insurance business. He had no written commission. The limits of his authority were fixed by the course of business between him and the general agent of the company, Flint, at Buffalo. He never issued policies of insurance on vessels. He was furnished with certificates of insurance with which to insure cargoes. His course of business in insuring vessels was to receive a verbal application from the vessel owner or his agent, and then himself fill out a written application, and forward it to the general agent at Buffalo, receiving in return the policy filled out in accordance with the application. Ralph, the plaintiff's agent, knew that Ward had no authority to issue policies on vessels, or what are called 'hull policies.' It was undisputed that no local agents at Detroit of foreign insurance companies had authority to issue hull policies, and that the usual course of business was like that just described in Ward's case. When a policy was sent to Ward in response to an application, he would deliver it, with a premium note, to the insured. The premium note would be sent to the general agent, and returned to Ward for collection, when due. Proofs of loss under marine policies had been served on Ward without objection by the company, and so, too, had notices of abandonment. He was the agent of the company named by its secretary to receive service of process in Michigan, as required under the Michigan law. He testified that it was the distinct understanding between him and the predecessor of Flint in the general agency at Buffalo that he should have no power to make a binding contract of insurance for the company on vessels. It was the custom of vessel owners at the lake ports to delay taking out their insurance until their vessels were ready to sail on their first trips, in order to get the benefit of a reduction in rates, which not infrequently took place about that time. It was contended on behalf of the plaintiffs below that, because of this condition in the insurance business, a well-defined usage had become established by which the local agents of foreign companies were understood to have authority to bind their companies by preliminary contracts of insurance from the date of the application, when the applicant desired the risk to attach from that day.

The evidence chiefly relied on to prove the usage was that of Ralph, the agent of the plaintiffs. Another witness, Adams, also testified on the subject, but Ralph's evidence was much fuller, and less confused. Ralph's examination upon the subject was as follows: Questions by counsel for plaintiff: 'Question. Is there any well-known usage among insurance men and owners of vessels on the lake ports as to when a risk for which a verbal application is made to be covered by a policy, afterwards to be issued, takes effect or attaches? Answer. Yes, sir; there is a very well-defined usage in regard to that. Q. And under that usage, or in pursuance of that usage, when does a risk of that character attach? A. At once, on the application being made to the agent, or we would not have any safety in doing business. Cross-examination: Q. I suppose you mean by that, Mr. Ralph, that it depends upon the agreement made, does it not? For instance, if you ask to have a policy attached on the 20th of April, and made the application on the 1st, it would not attach on the 1st of April. There is no usage of that kind, is there? A. No, sir; it would not attach on the 1st. Q. That all there is about the usage is that it is a matter of arrangement at the time the application is made, is it not? A. Yes, sir. If you want both to attach at once, we would consider it attached, if we made the application to the agent. Q. If the agreement is made? A. If I wanted insurance to-day, I would go to the agent and tell him and make my application, and I should consider under the usage-- Q. Is there anything more to that usage than the fact, where you apply to the agent, that some time afterwards a policy is returned, which takes effect in accordance with your application? A. Yes, sir. Q. That is all there is to it? A. Yes, sir; about. Q. And, so far as you know, no question has ever arisen in reference to it? It would not naturally arise unless there was a loss? A. Yes, sir. Q. So that the question as to whether the authority of the agents differ has never been involved in any of the cases that you refer to, so far as you know, has it? A. No, sir. Q. You have no doubt that there is a difference in the authority of agents, have you; for instance, that some have the power to accept risks themselves, without communicating with the company, while others do not? You know that from your business experience, do you not? A. Well, I consider when a man takes a risk, that binds the company. Q. Don't you know that there are conditions as between agencies that some agents are authorized expressly to bind the company, while others are not? A. I haven't had experience in other office but my own; that is, writing anybody else's policies. Q. You don't know anything about any other agencies? A. I don't know what their agreement is especially. Q. Or what their authority is? A. I know they are agents of the company. Q. You know they take applications? A. Yes, sir. Q. And upon applications taken by them the company subsequently, as a rule, writes policies in accordance with the application? A. Some are written in the local offices. Q. Do you know of any marine insurance company in Detroit that writes policies? A. Yes, sir. Q. Who? A. The Detroit Fire & Marine, and Michigan. Q. Do you know of any foreign insurance company that writes policies here in its office in Detroit? A. What do you mean,-- hull policies, or marine policies? Q. Hull policies. A. No; I don't know of an agent that writes hull policies here. Q. So far as you know, it is the invariable rule for the application to go to the local agent for delivery? A. Yes, sir; for hull policies. Q. It is the invariable rule for the application to go to the general agent of the company through the local agent,-- for the general agent of the company, upon that application, to write the policy and send it to the local agent for delivery? A. On hulls themselves, I think that is perhaps so. Q. So far as you know, that is the invariable rule? A. So far as it applies to Detroit.'

Dickinson, Thurber & Stevenson, for plaintiff in error.

F. H. Canfield, (Levi T. Griffin, of counsel,) for defendants in error.

Before JACKSON and TAFT, Circuit Judges, and HAMMOND, District Judge.

TAFT Circuit Judge (after stating the facts.)

By their verdict the jury found that Ralph and Dickinson stipulated that the risk should attach from the 10th of April. The finding was based on sufficient evidence after a fair submission of the issue to the jury, and cannot be reviewed in this court.

The main controversy here is on the question of Ward's authority to bind the company by a preliminary and verbal contract or insurance. The court below, in effect, charged the jury that, if there was a well-defined usage by which local agents of foreign insurance companies could make binding contracts on applications for insurance to attach the same day, Ward could bind the company accordingly, whatever his private instructions.

We are of opinion that the charge of the court on this point as a proposition of law was sound.

If such a definite usage in respect to local agents of foreign insurance companies had been proven, the Greenwich Insurance Company would have been charged with notice of it, and...