Lea v. Atlantic Fire Ins. Co.
| Decision Date | 31 March 1915 |
| Docket Number | 255. |
| Citation | 84 S.E. 813,168 N.C. 478 |
| Parties | LEA ET AL. v. ATLANTIC FIRE INS. CO. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Wake County; Whedbee, Judge.
Action by J. T. Lea and J. W. Adcock, copartners doing business as Lea & Adcock, against the Atlantic Fire Insurance Company. From a judgment for plaintiffs, defendant appeals. Affirmed.
An arrangement by the agent for an insurance company, who was also cashier of a bank, that the premium should be charged against insured's account at the bank, does not invalidate the policy.
This is an action to recover upon two contracts of insurance. The record discloses that the plaintiffs, Lea & Adcock, were, in December, 1913, and January, 1914, doing a leaf tobacco business at Fuquay Springs, N. C.; that they owned a large quantity of leaf and scrap tobacco then in the Banner Warehouse; that on the 17th of December, 1913, they applied to Howard & Aiken, agents of the defendants, for $3,000 of insurance on said stock of tobacco, and that on the 9th day of January, 1914, plaintiffs likewise applied to said agents for $2,500 additional insurance on said stock of tobacco in the Banner Warehouse; that when application was made to the said agents for the said insurance the said agents agreed with the plaintiffs that they would insure said stock of tobacco; and that they did execute the two paper writings spoken of as "Binders," in words and figures as follows, to wit:
On the 26th of January, 1914, and before policies of insurance had been issued and delivered to the plaintiffs, a fire broke out in a neighboring warehouse, called the Farmers' Warehouse, which fire spread to the Banner Warehouse and consumed it, together with the stock of tobacco therein. The next day after the fire the plaintiffs notified the defendants of the fire and of their loss, and demanded payment for the same. The defendant declined and refused to make payment. The premiums upon the policies referred to in the binders had not been actually paid by the plaintiffs at the time of the fire, but credit had been extended to the plaintiffs, the amounts due thereon had been charged up by the defendants' agents, Howard & Aiken, against the plaintiffs, Lea & Adcock. Mr. Howard, of Howard & Aiken, was cashier of the Fuquay Bank, and all premiums of Lea & Adcock by a previous agreement, were charged. "A debit slip was returned the same as checks, and were cashed and returned and charged to Lea & Adcock's account." This arrangement had been in force between the parties for several years. In September, 1913, the plaintiffs had taken out other insurance in the defendant company, and the premium amounted to $33. The slip which was charged up by Howard, the cashier, against Lea & Adcock on the September policy was offered in evidence as tending to show the said arrangement. It was for $33. Mr. Chamberlain, who was in charge of the plaintiffs' business, testified that all of the plaintiffs' insurance was under that arrangement, which arrangement had been in force for many years.
Both Howard and Aiken, agents of the defendant, were examined as witnesses. Mr. Howard, who is cashier of the bank, confirms the statement that the binders were issued by him as agent for the defendant, and "that a slip in each case would be placed in the bank against Lea & Adcock for the premium, and that this would be a debit ticket and would be returned and canceled as a voucher." He says that this agreement was effective when the binders were issued, and that when credit was extended to Lea & Adcock, Howard & Aiken became responsible to the company with respect to remitting to them; that he looked after the financial end of the matter, but that Mr. Aiken, his partner, usually filled out the policies for tobacco. It appears in December that Mr. Aiken, who usually did this work, was absent, and that Howard did not have the time to fill out the policy until the fire occurred. Mr. Howard explains about the blank policies, about 50 of these blank policies were in his possession as agent of the defendant, all signed up by the president and secretary of the defendant. He states that they were in the usual form, signed by G. H. Dortch, secretary, and by Chas. E. Johnson, president, and that they were sent to his firm from the Raleigh office; that he had them in his possession when he gave both binders; that his firm delivered the policies to the insured and did not have to send to Raleigh for the policies. He states that that is the only way that Howard & Aiken ever did business for the defendant, and that it was the usual and customary way of issuing policies; that they would report to the company that they had issued a policy, but would never report that they had given a binder because the policy was to follow soon afterwards; that during the life of their agency Howard & Aiken issued one hundred and six policies for the defendants in this way, and that the premiums during their five-month agency amounted to over $1,000 net to the defendant; that it was not customary to notify the company of the issuing of any memorandum slip; and that they did not make a daily report of any binding slips. He further states that the policy issued by the defendant in September, 1913, was deposited in the Bank of Fuquay for safe-keeping.
Mr. Aiken, the partner of Mr. Howard, says that the memorandum slip for the policy dated September 18th was not reported to the defendant; "we never reported a binder, we reported only the policy." He says that the tobacco companies had printed forms of binders, which was a kind of preliminary insurance to take effect before the policy could be written, and that binders issued upon the tobacco of these companies were never reported to their general agents. This witness further states that on one occasion he asked Mr. Busbee, the general agent of the defendant, for a printed form of binder, as it was not always convenient to write out the policy immediately. Mr. Busbee stated that he would send one, but never did. The defendant required us to make daily reports when we issued a policy, but not as to binders. Blank forms of policies duly signed up by an officer of the defendant, identified by this witness, being 50 in number, and a large lot of stationery, which was furnished to the agents, including books, etc., were identified by this witness and offered in evidence.
A jury trial was waived, and by consent his honor found the facts in the form of answers to issues as follows:
1. Did the defendant through its duly authorized agents, Howard & Aiken, on the 17th of December, 1913, insure the plaintiffs' stock of tobacco in the Banner Warehouse at Fuquay Springs in the sum of $3,000 for a period of twelve months? Answer: Yes.
2. Did the defendant through its duly authorized agents, Howard & Aiken, on the 9th day of January, 1914, insure the plaintiffs' stock of tobacco in the Banner Warehouse at Fuquay Springs in the sum of $2,500 for a period of 12 months? Answer: Yes.
3. If so, was said insurance of $5,500 in force on the 26th day of January, 1914? Answer: Yes.
4. Was said stock of tobacco so totally destroyed by fire on the 26th day of January, 1914? Answer: Yes.
5. In what sum is defendant indebted to plaintiffs on account of said insurance? Answer: $5,500, with 6 per cent. interest from May 21, 1914 (60 days after proof of loss).
6. What was the value of the tobacco of the plaintiffs destroyed by fire at date of fire, January 26, 1914? Answer: $11,184.54.
Judgment was entered in favor of the plaintiffs, and the defendant excepted and appealed.
A. B. Andrews, Jr., and James H. Pou, both of Raleigh, for appellant.
Winston & Biggs, of Raleigh, for appellees.
There are several exceptions to the admission of evidence, but all of them were taken to preserve and present the contentions of the defendant: (1) That a standard form of policy of insurance having been adopted by statute, neither a parol contract of insurance nor a written memorandum of the contract, known as a binder, is valid; (2) that there is no evidence of a parol contract, and no evidence of a delivery of the binder; (3) that there is no evidence that Howard & Aiken, agents of the defendant, had authority to make a contract of insurance, and if we are against the defendant on these positions, the evidence offered to prove these facts was competent.
1. Is a parol contract of insurance or a memorandum of the contract, called a binder, valid, although a standard form of policy has been adopted by statute? In the absence of a statutory prohibition the great weight of authority is in favor of the validity of a parol contract of insurance. 19 Cyc. 600; Vance on Insurance, 155; Com. Marine Ins. Co. v. Union Fire Ins. Co., 19 How. 318, 15 L.Ed. 636; Ins. Co. v. Colt, 20 Wall. 567, 22 L.Ed. 423; Phenix Ins. Co. v. Ryland, 69 Md. 437, 16 A. 109, 1 L. R. A. 549; Home Ins. Co. v. Adler, 71 Ala. 524; Fire Ins. Co. v. Wilcox, 57 Ill. 182; Campbell v. Ins. Co., 73 Wis. 108, 40 N.W. 661; Walker v. Ins. Co., 56 Me. 378; Floars v. Ins. Co., 144 N.C. 235, 56 S.E. 915. In the last case this court said:
"It seems to be well established that, in the absence of some statutory inhibition, an oral contract of insurance, or to insure, will be upheld if otherwise binding, except, as suggested by one author, in the case of guaranty insurance"
--and this position is fully sustained by the other authorities cited. The memorandum of the...
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