Haden v. Farmers' & Mechanics' Fire Ass'n

• Decision Date: 24 September 1885
• Citation: 80 Va. 683
• Court: Virginia Supreme Court
• Parties: HADEN v. FARMERS & MECHANICS FIRE ASSOCIATION.

80 Va. 683

HADEN v. FARMERS & MECHANICS FIRE ASSOCIATION.

Supreme Court of Appeals of Virginia.

September 24, 1885

LEWIS P., absent.

Appeal from decrees of circuit court of Botetourt county, rendered September 2nd and October 25th, 1884, respectively, in the chancery cause wherein Richard G. Haden was complainant, and the Farmers and Mechanics Benevolent Fire Association, of Roanoke and Botetourt counties, was the defendant. In his bill the complainant claimed that the agent of the defendant corporation had, on 19th September, insured his dwelling-house and furniture therein for $1400, and that he had then and there paid the required premium to said agent but that before the policy had been issued, to-wit, on 1st November, 1883, the said house and furniture was consumed by fire; and that he was entitled to recover that sum of the defendant corporation. The defendant demurred to the bill and answered it, setting up that the said agent had no authority to make the alleged contract of insurance; that if he had such authority, the fact was that he only solicited and received the complainant's written application to the defendant to insure said property; and that if the said agent had such authority and did make the alleged contract, it was void, because in said written application the complainant falsely represented that his title to said house was fee-simple and that it was unencumbered. The circuit court overruled the demurrer, and adjudged that the said agent did have authority to make, and did make said contract of insurance; but that the said contract was void as to the said house, which was insured for $1200, on account of misrepresentations made by the complainant as to said title and encumbrance. From this decree the complainant obtained an appeal to this court; and the defendant corporation also asked that the said decree be reviewed and reversed for errors therein whereby it was aggrieved.

Opinion states the other facts.

Haden & Haden, for the appellant.

The court below erred in adjudging that the insurance contract made by the appellee's agent, was avoided by the false representations alleged to have been made by the appellant in his written application for insurance, as to his title to his house, and as to its freedom from encumbrance. If any such misrepresentations was made, it was unintentional and immaterial. The appellant's house was on a tract of nearly 400 acres of land, the fee simple value whereof was estimated at $5750. In this tract the appellant had a life estate, which was estimated to be worth $4372.87. But his sister, Mrs. Hood, shared with him the remainder, to the extent of the estimated sum of only $351. Under these circumstances, the appellant had been professionally advised and actually thought he had a fee simple unencumbered title, but knew and told said agent that there was a law suit pending which cast a cloud upon his title. Lynchburg Fire Ins. Co. v. West, 76 Va. 575; S. M. F. Ins. Co. v. Yates, 28 Gratt. 585; M. F. Ins. Co. v. Weill & Ullman, Id. 389.

Counsel for appellee insist that this agent had no authority to bind the appellee.

The appellee being a corporation can only act through its agents. An insurance company cannot hold out a person as its agent and then disavow responsibility for his acts. Ins. Co. v. McCain, 96 U.S. 84. An agent for an insurance company, authorized to act in its business at a distance from the principal office, has power to bind the company by parol as well as by written contracts. 2 Abbott's National Dig. 794; Baubie v. Æ tna Ins. Co., 2 Dillon 156. And such companies are responsible for the acts of such agent within the general scope of the business intrusted to his care, and no limitations of his authority will be binding on parties with whom he deals which are not brought to their knowledge. 2 Abbott's Dig. 769; Bossell v. American Fire Ins. Co. 2 Hughes (4th circuit), 531. The policy was not issued before the house and furniture were consumed by fire on the 1st November, 1883, because the appellee's agent delayed to forward the application. That agent had assumed the duty of forwarding the application, and it was his fault that it was not forwarded; and the neglect and fault of the agent is the company's neglect and fault, and the company is liable therefor, and should not be allowed to take advantage of its own wrong, and to defeat a just recovery. Woody v. Old Dominion Ins. Co. 31 Gratt. on page 377.

G. W. & L. C. Hansbrough, for the appellee.

Appellee maintains that the decree of the court below is free from error, in so far as it avoids the alleged contract of insurance as to the house, on the ground that the appellant made material misrepresentations as to his title thereto, and its freedom from incumbrance. He stated in his written application that his title was fee simple. It is admitted he had only a life estate in the house and land, and shared the remainder with another. It is said his share in the remainder was much larger than his sister's; was two-thirds, whilst hers was but one. It was either a defect in title or it was an incumbrance. It was material. The materiality of a misrepresentation does not depend on the amount involved, but in its nature; that is, as respects title or incumbrance. " A misrepresentation of title, in the application to a mutual insurance company, avoids the policy." Merrill v. F. & M. Mut. Fire Ins. Co. 48 Me. 285; Allen v. Mut. F. Ins. Co. 2 Md. 111. " Any material misrepresentations will avoid a policy." * * * " By asking the question, it would be manifest the company deemed the information material, and it would be material that the applicant should answer it truly." Flanders on Ins. 361, and 306-7.

But the appellee insists that the said decree is erroneous, in so far, 1, as it overruled the demurrer to the bill. The bill should have stated distinctly, not only the contract of insurance, but when, where, how and by whom, and under what authority it was made. This is elementary. The bill here was plainly defective in those respects. It did not distinctly charge that the said agent had authority to make such contract, but chiefly complained of the delay and negligence of the agent. It did not say whether the contract was parol or written, and left it in doubt whether it was contended that the application was itself the contract of insurance, or whether the contract was something else and outside. Woody v. O. D. Ins. Co. 31 Gratt. 362; Haskins v. Ag. F. Ins. Co. 78 Va. 700.

2. It also erred, in so far as it held that the said agent had authority to bind the appellee by contracts of insurance. The constitution and by-laws are specific in directing that only the board of directors, by its executive committee, can admit new members into the association, and issue policies of insurance. The said agent, and all other agents of the appellee, carried around, not blank policies ready to be filled up and delivered to persons insured, as was the case with the agent, Renzie, in the case of Woody v. O. D. Ins. Co., supra, but only blank applications, to be filled up and signed by the person desiring to be insured, and to be forwarded with the premium to the board of directors, who had to approve the application and issue the policy, or reject it and return it and the premium. " Every person dealing with a corporation is bound to take notice of its charter, by-laws and ways of doing business." Bockover v. Life Asso. of A. 77 Va. 91; Rolfe v. Rundle, 13 Otto 222.

Woody's case is no precedent for that of the appellant. The agent of the Old Dominion Insurance Company agreed to issue a policy to Woody, and received his premiums. That agent had authority to issue the policy. The house was consumed by fire before he issued it. This court held the company liable to pay the amount of the insurance.

The agent of the appellee agreed to forward the appellant's application for a contract of insurance. The agent, Kyle, neglected to forward it until the house was burned. Kyle was culpable for negligence certainly; and the appellee might possibly be held responsible in damages for its agent's conduct. But a contract of insurance is essential as support for this suit for specific performance. There was no contract here. Negligence cannot make a contract of insurance. Nor can delay make one. Winnesheik Ins. Co. v. Holzgraff, 33 Ill. 516. Says Lacy J., in Hoskins v. Ag. F. Ins. Co., supra: --" The fact that an application has been made for insurance and a long time has elapsed and the rejection of the risk has not been signified, does not warant a presumption of its acceptance. In such cases there must be an actual acceptance or there is no contract. "

3. Kyle made no contract of insurance with appellant. He only said to him his property would be insured if the executive committee approved his application. He predicted that it would be approved.

We submit that the decree complained of should be reversed in favor of the appellee, and the appellant's bill be dismissed.

OPINION

FAUNTLEROY, J.

On the 19th of September, 1883, the appellee, a corporation created under the laws of Virginia, sent its agent, one R. P. Kyle to the house of the appellant, in the county of Botetourt, to solicit an insurance of the said house and of the furniture and household property therein. The said agent examined the house and household furniture, and valued the dwelling-house at $1800, and the furniture at $300; and fixed the insurable value of the former at $1200, and of the latter at $200; making the total insurable value $1400; and estimated the amount of premium and charges for such insurance to be six dollars, which the appellant then and there paid to the said agent, who was one of numerous agents of the said association in the counties...