Lauhoff v. Automobile Ins. Co. of Hartford, Conn.

• Decision Date: 29 August 1944
• Docket Number: No. 343-D.,343-D.
• Citation: 56 F. Supp. 493
• Parties: LAUHOFF et al. v. AUTOMOBILE INS. CO. OF HARTFORD, CONN.
• Court: U.S. District Court — Eastern District of Illinois

56 F. Supp. 493

LAUHOFF et al. v. AUTOMOBILE INS. CO. OF HARTFORD, CONN.

No. 343-D.

District Court, E. D. Illinois.

August 29, 1944.

Bookwalter, Carter & Gunn, of Danville, Ill., for plaintiffs.

Sam Levin, of Chicago, Ill., and Wm. Acton, of Danville, Ill., for defendant.

LINDLEY, District Judge.

Plaintiffs, copartners as Lauhoff Grain Company, sue to recover under two policies insuring against loss of use and occupancy, each for $40,000. One expired June 6, 1943, the other October 15, 1943. The policies covered the plant, machinery and equipment of plaintiffs in Chicago Heights, all of which, except the building, was removed to Danville in the summer of 1942. Plaintiffs rely upon an oral contract to transfer the executed policies to the Danville location. Defendant denies that any valid contract was ever made. It is a member of the so-called "Aetna group" consisting of a number of affiliated insurance companies, operating frequently through common agencies. The questions of fact presented center themselves largely about two inquiries—whether John Failing, since early 1942 an officer in the United States Army Air Corps, was an agent with actual or apparent authority to make a parol contract to transfer the policies, and, if so authorized, whether he actually made such an agreement.

Lauhoff, directing partner of plaintiffs, prior to 1938, lived in Detroit. There too lived John Failing, who, according to the testimony of Crowder, the assistant manager of defendant's Detroit office, had been appointed agent for defendant before Crowder became associated with the Detroit office and was retained thereafter. This statement constitutes all of the evidence as to the character of the agency of Failing, other than such as may be reasonably inferred from the facts and circumstances proved. Failing represented other companies as well as the Aetna group, but wrote most of his insurance in that group. For this business, defendant paid him a commission of 10%. Lauhoff, until he moved to Danville, procured most, if not all, his insurance from Failing.

Following 1938 Lauhoff lived in Chicago, and his company, manufacturing principally industrial cereals, operated at Chicago Heights. In June 1941 Lauhoff applied to Failing for use and occupancy insurance policies. One for $40,000 was prepared, handed to Failing and, by him, delivered to Lauhoff. It ran for one year. Failing presented the bill for the premium to Lauhoff who paid Failing. Later, in October, 1941, the same transaction occurred as to the second policy. Each policy was renewed in 1942, and at the time of renewal of each defendant knew that removal was in process. It is upon these existing policies that plaintiffs rely, which, they say, it was agreed should be transferred to Danville.

In November, 1941, plaintiffs procured an option to purchase the Fecker Brewing Company building in Danville. Lauhoff had become interested in this property before that time but had been unable to procure a contract earlier because of one outstanding in favor of another party. In the first week of January 1942, he took up his option and plaintiffs became the owner, it being their intention to remove their equipment and machinery from Chicago Heights to Danville. During the spring and summer of 1942, plaintiffs repaired and altered the building in Danville. In August and September, 1942, the machinery was moved from Chicago Heights to Danville, production being proportionately gradually tapered off in Chicago Heights and developed in Danville. While these events were taking place, defendant, with knowledge of the developments, rewrote the policies, that is, renewed them on the Chicago Heights situs for periods ending in June and October, 1943.

Early in 1942, Crowder, a part of whose duties it was to procure business, either through information from Failing or otherwise, learned of the progressing removal from Chicago Heights to Danville and talked to Failing, saying that he had been reared in the latter city and knew the building plaintiffs were buying and requesting Failing "to get busy and get as much of the insurance" thereon as possible. Failing replied that he had already discussed the matter with Lauhoff, who had promised him some of the insurance. Still later Crowder told Failing that men from Chicago were in Danville making an inspection and again insisted that Failing procure as much of the insurance as possible. Failing reported that Lauhoff had said that he would have to place some of his insurance in Danville, but had agreed that defendant could at least retain the insurance it had. Still later Crowder called Failing, said to him that other companies were cutting in on the business and again requested him to "get busy." Failing assured Crowder that it had been agreed that defendant could keep the U & O insurance, transferring it to Danville, and that Lauhoff had promised to try to give Failing some additional business. As a result of all their conversation, according to Lauhoff and as I find the fact to be, Lauhoff and Failing agreed that the U & O policies should be transferred from Chicago Heights to Danville.

On October 14, 1942, Failing reminded Lauhoff that the policy of October 15, 1941, was expiring. Lauhoff informed Failing that the removal was almost complete and would be entirely finished within a few days and that, therefore, the new policy should probably be written for Danville, but Failing replied that until Lauhoff was sure of the definite time when he would be through moving, the policy should be carried on the Chicago Heights location and renewed for that point and that, when fully moved, Lauhoff would merely have to let him know and that the insurance would cover Danville from that time on. Consequently, on October 20, Lauhoff wrote Failing that the removal had been completed and requested him to change the insurance to Danville. His letter was delivered at Failing's army office on October 23, but not received by the latter until the 24th. Failing then wrote to defendant requesting the formal transfer, but, before the letter reached defendant, on Sunday, October 25, the building was badly damaged by fire.

On Monday, Lauhoff called Failing, reporting the fire. Failing said not to worry, that plaintiffs were properly covered, that everything would be taken care of properly but that "it always took a few days." Later Lauhoff asked Failing whether his company would like to use the same adjustors who were adjusting the other insurance losses and he replied that he thought that would be satisfactory but that he would have to consult the Chicago office. Olson, in charge there, replied that he did not think that the company had any insurance on Danville. This was the first time plaintiffs knew of any question as to the coverage. Failing told Olson that he did not understand how that could be; that he had handled the transfer in the normal method; that he had given Lauhoff assurance that plaintiffs were covered and that plaintiffs were entitled to have their money. Still later, defendant definitely refused to recognize liability and the suit followed.

When Lauhoff told Failing he wanted the insurance transferred, Failing agreed to make the change in location and said that all Lauhoff needed to do was to call or write him when the property was completely removed and that the transfer would be completed and the coverage attach to Danville instead of Chicago Heights upon completion of the telephone call or mailing the letter. At all times Failing knew that Lauhoff had other insurance in Danville but none replacing the U & O policies. From these facts and circumstances and others which I think it unnecessary to reiterate, I find that there was a valid oral contract between Failing and plaintiffs to transfer the existing policies and the already accepted risk from Chicago Heights to Danville before the loss occurred.

Upon the question of the authority of Failing, I have observed that Crowder himself testified that Failing was an agent for the Aetna group; that Crowder, in behalf of defendant, had specifically repeatedly requested Failing to procure the insurance on the Danville plant; that for all the policies Failing procured from the Aetna group for Lauhoff, Failing presented the bills for the premiums to the insured and collected the money. Failing was the only man with whom Lauhoff ever dealt in procuring insurance from this group over a period of years.

Among the insurance policies purchased by Lauhoff from Failing was one of defendant for $1500 covering personal effects, such as is usually carried by travelers. This policy, like the others, was delivered by Failing and the premium paid to Failing. The original policy was not countersigned, the space for the signature appearing before the word "agent" being left blank. However, a loss occurred and the company recognized its liability and paid the loss. Following this payment, an agreement was made to reinstate so much of the face amount of the policy as was represented by the amount of loss, upon the payment of additional premium. This agreement was made February 17, 1942, and recited that in consideration of the additional premium the policy was reinstated for the full amount of $1500 as originally written. This statement was made upon a regular blank of defendant, partly printed and partly in typewriting, and was signed by Failing before the printed word "agent." For all intents and purposes the execution of this insurance contract by Failing was the same as writing an original policy. Consequently, it must be accepted as a fact that there is proof of Failing's authority to write contracts of insurance.

Defendant insists that this policy was effective any place in the country and that because of such character, authority to write it would not include authority to write other insurance. But Lauhoff testified and I find it to be a fact that Lauhoff was never advised of any restrictions or...