Lumbermen's Mut. Ins. Co. v. Slide Rule & Scale Eng. Co.
| Decision Date | 02 September 1948 |
| Docket Number | No. 848.,848. |
| Court | U.S. District Court — Southern District of Illinois |
| Parties | LUMBERMEN'S MUT. INS. CO. v. SLIDE RULE & SCALE ENGINEERING CO. SLIDE RULE & SCALE ENGINEERING CO. et al. v. FIREMEN'S FUND INS. CO. et al. |
Gillespie, Burke & Gillespie, by Louis F. Gillespie and Frank W. Young, all of Springfield, Ill., for original plaintiff.
Carl Lambach, of Davenport, Iowa, and Marks Alexander, of Springfield, Ill., for original defendant and third-party plaintiffs.
Gillespie, Burke & Gillespie and Frank W. Young, all of Springfield, Ill., and McKinney, Hough & Carlson, of Chicago, Ill., Barber & Barber, of Springfield, Ill., Myers & Snerly, of Chicago, Ill., Giffin, Winning, Lindner, Newkirk & Jones, of Springfield, Ill., Brown, Hay & Stephens, by Paul W. Gordon, all of Springfield, Ill., and Putnam, Putnam & Putnam, of Des Moines, Iowa, for third-party defendants.
The important and in some respects novel legal questions to be resolved in this proceeding stem from the following facts:
Slide Rule and Scale Engineering Company is an Illinois corporation engaged in the manufacturing business with its principal place of business in the City of Mt. Olive, Macoupin County, Illinois. General Credit Corporation is an Indiana corporation engaged in general financing operations and licensed to do business in Illinois. At all pertinent times here involved General Credit was engaged in financing various operations of the Slide Rule and Scale Manufacturing Company, and by reason thereof had an insurable interest in the property of Slide Rule.
The original plaintiff, Lumbermen's Mutual Insurance Company, the third party defendants, Firemen's Fund Insurance Company, Citizens Insurance Company of New Jersey, and Iowa Mutual Insurance Company, are foreign corporations, licensed to do business in Illinois, and engaged in writing policies of fire insurance; and the Illinois Mutual Insurance Company, third party defendant, is an Illinois corporation, engaged in the same business. One Edward Collins is a general insurance agent residing in the City of Gillespie, Macoupin County, Illinois, and was the agent for and representative of each of said insurance companies. As such insurance agent, he had previously written policies of fire, workmen's compensation and liability insurance for Slide Rule, in fact handled all of their insurance requirements. He had at different times prior to December 27, 1946, solicited from the officers of Slide Rule a new type of fire insurance policy covering their inventory of raw materials, materials in process of manufacture and finished products, sometimes called inventory insurance. On December 27, 1946, the officers of Slide Rule called Collins on the telephone and a conversation ensued with the officers of both third party plaintiffs (Slide Rule and General Credit Corporation), who were then at the offices of Slide Rule in Mt. Olive. W. A. Anderson, president of General Credit, told Collins that they, the third party plaintiffs, desired such inventory insurance and that he would send him a letter concerning its terms. Accordingly on January 10, 1947, he sent a letter to Collins, asking him to cover immediately on a monthly basis the insurance talked about in the telephone conversation of December 27, which letter is set forth in full in footnote.1 While Collins had on other occasions discussed with third party plaintiffs the companies that he (Collins) represented there was no specific direction by third party plaintiffs that this insurance be placed in any specific company, and neither was there any indication by Collins as to which company would carry the risk. Collins was himself a licensed insurance agent and broker under the laws of the State of Illinois, and associated with him in the Collins Agency was his wife, Eleanor Collins.
Upon receiving the letter from Anderson, Collins on January 14, 1947, sent the following letter to Illinois Mutual:
On January 15, 1947, the Illinois Mutual wired Collins that they could not accept the risk, and on the same date wrote Collins a confirmatory letter, advising that this was a class of risk they did not write.
Following receipt of this wire, Collins under date of January 15, 1947, wrote Lumbermen's to "please bind, effective 12 o'clock noon, January 15, 1947, $75,000.00 insurance on the Slide Rule, etc., to cover their inventory of goods in process, raw material, and finished slide rules. * * *" On January 17th, Lumbermen's replied to Collins that they had on account of the rather hazardous nature of Slide Rule's operations and for other reasons decided that they should not accept any additional liability on Slide Rule. (It appears that Lumbermen's already had issued fire contracts covering other property of Slide Rule.) Upon receipt of this communication from Lumbermen's, Collins again wrote them on January 18, urging them to take $25,000 of the contemplated risk of $75,000, and asking them to please keep that amount bound until they notified him to the contrary. Lumbermen's replied to this letter on January 20, again declining the risk for substantially the same reasons theretofore assigned.
On January 18, 1947, Collins wrote Firemen's Fund, as follows: On January 20, Firemen's Fund wired Collins that they preferred to decline the risk account of the class.
On January 28, 1947, Collins wrote Mr. Royster, a special agent for Citizens, advising him that he was sending him $25,000 on a factory at Mt. Olive. This was followed by another letter from Collins to Royster on January 30th, enclosing an unsigned application form for $25,000 on the risk in question, giving the name of the insured, the description of the building and the type of insurance and the amount of $25,000. On February 1, Mr. Royster replied to Mr. Collins, as follows:
The discrepancy in ownership referred to in the letter was due to recent transfers and is of no significance in our present controversy.
Royster thinks that on the following Tuesday, February 4, he phoned Collins from St. Louis that Citizens would decline the risk, but Collins states that he has no recollection of such a call or such a conversation and that his first advice as to Citizens unwillingness to accept the risk came when Royster called at his office on Saturday, February 8. Whether Royster called Collins on February 4 or not is probably of no importance as it is not contended that any information was ever conveyed to third party plaintiffs or either of them of Citizens desire not to carry the risk. On Saturday morning, February 8, Royster came to Collins' office in Gillespie and told him that they had inspected the plant at Mt. Olive and that they should get off the risk.
Effective January 30, 1947, Iowa Mutual issued its policy for $25,000, covering the inventory in question. The property in question was consumed by fire on the evening of February 8, 1947, with a resultant loss to the third party plaintiffs of the sum of $74,574.05, the amount of loss being stipulated by all parties concerned. Iowa Mutual concedes a valid insurance contract on its part and concedes liability for its pro rata share of the loss. All other insurance companies deny liability.
It is not in dispute but that Collins was the agent for all the fire insurance companies involved with the scope of his express authority in each instance resting upon his contract with the company. In his agency contract with the Illinois Mutual he was appointed agent for the purpose of soliciting applications for insurance, the company agreeing to pay a commission on all accepted risks — he was not furnished with insurance policies of the Illinois Mutual and did not actually issue the insurance contracts from his office.
In his agency agreement with Lumbermen's Collins was not only authorized to solicit insurance but in most cases he actually issued the contracts of insurance from his own office. This agreement provided that the company authorized the agent to issue and countersign the policies of the company. The agency agreement also provided that a true report of each binder, policy, endorsement or certificate issued, should be mailed to the company on the day of its execution or before the date on which the insurance is effective. It further provided that all issuance of binders and policies should be in accordance with the manuals or written and printed instructions of the company furnished to the agent. Collins was also supplied with forms of insurance policies by both Firemen's and Citizens and given authority to issue such contracts of insurance from his own office. The agency agreement with both of such last...
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