Maryland Cas. Co. v. McTyier

• Decision Date: 17 July 1924
• Citation: 266 S.W. 767,150 Tenn. 691
• Parties: MARYLAND CASUALTY CO. v. MCTYIER ET AL.
• Court: Tennessee Supreme Court

266 S.W. 767

150 Tenn. 691

MARYLAND CASUALTY CO. v. MCTYIER ET AL.

Supreme Court of Tennessee.

July 17, 1924

Appeal from Chancery Court, Shelby County; F. H. Heiskell, Judge.

Suit on policy of burglary insurance by Mrs. Gussie McTyier and others against the Maryland Casualty Company. From a decree for complainants, defendant appeals. Affirmed.

Bearman & Bearman, of Memphis, for complainants.

E. B Klewer and R. Lee Bartels, both of Memphis, for defendant.

CHAMBLISS J.

This appeal is from a judgment on a burglary insurance policy resisted on the ground of change of title of the property insured without the consent of the company.

The policy was originally issued to the husband of complainant through F. B. Hunter & Co., local insurance agents, with whom the husband had various insurance transactions covering several years. Before the premium was paid by the originally insured, he went into bankruptcy. The property, a stock of merchandise, was sold and purchased by his wife, the complainant. Soon thereafter a robbery occurred, followed shortly by another. It was insisted for complainant that Hunter & Co. were notified of the change of ownership before the first robbery and advised that no new policy would be necessary; and that before the second robbery the company's general agents in Memphis, Henderson & Schley were advised of the change and acquiesced therein and thereafter accepted notice of the loss. Meanwhile, after these notices had been given, the premium was paid by the complainant to Hunter & Co., through whom the insurance had been originally placed.

Issues were submitted to a jury, who found: (1) That notice was given F. B. Hunter & Co. of the change of ownership on February 8th, a few days prior to the first robbery; (2) that Hunter & Co. advised complainant that no new policy need be issued; (3) that notice of the change of ownership was communicated to the company, or its general agents, Henderson & Schley, about February 22d; and (4) that the company or its general agents, Henderson & Schley, assented to the continuance in force of the policy.

These findings would seem to be conclusive of the case, but it is earnestly otherwise insisted on several grounds. It is said that F. B. Hunter & Co. were not agents of or acting for the company, but for the insured. It appears that this was a firm doing a general insurance agency business, and that it was through this firm alone that the insurance now in question was handled and placed. They accepted the application originally and delivered the policy, and it was to them that the premium payments were made, a number of weeks later, and after the change in ownership had taken place and the policy had been continued in force with their assent. The chancellor was of opinion that chapter 442, Acts of 1907, was controlling, section 1 of which provides:

"That any person who shall solicit an application for insurance shall in all matters relating to such application and the policy issued in consequence thereof be regarded as an agent of the company issuing the policy, and not the agent of the insured, and all provisions in the application and policy to the contrary are void and of no effect whatever; provided, this act shall not apply to licensed fire insurance brokers."

It is argued for the company that this act does not apply, first, because Hunter & Co. did not solicit the application in this case; and, second, because if they did their agency terminated with the delivery of the policy, and could in no event empower them to assent to the change. Definitions are given of the term "solicit" appearing in the act, but when considered in its context we are of opinion that this term includes broadly any person who holds himself out as an insurance agent and thus invites and receives insurance business, collecting and transmitting premiums and delivering policies and receipts. By engaging in this business one solicits applications for insurance in the sense of this statute, and we think it clear that Hunter & Co. come within this statute.

Second, some holdings of other states are quoted from, but the statutes construed are in no case identical with the Tennessee act, the language of which is so clear that there remains little room for construction. It will be observed that it is expressly provided that " any person who shall solicit an application for insurance shall in all matters relating to such application and the policy issued in consequence thereof be regarded as an agent of the company," etc.; and having stated the proposition affirmatively, the act goes on to provide negatively that such person shall not be the agent of the insured. It is impossible to escape the effect of the words which we have italicized above. It was manifestly not the intention of the Legislature to restrict the agency representation of the company to matters relating to the application only, but to extend it to all matters relating to the policy issued. It is apparent that the Legislature purposed affording to the insured a responsible connection with the insuring company, with which he was dealing, often times a nonresident corporate entity of uncertain address, with its identity, for purposes of legal notice, more or less obscure.

The act contemplates that one who is recognized by an insurer as suitable and competent to handle its funds and deliver its policies is also suitable to represent it in respect to other matters arising in connection therewith. Independently of this legislation, the limited agency doctrine has been generally recognized, by which the authority of the agent receiving the application and delivering the policy is restricted to matters in connection with the issuance of the policy and the application therefor.

The Tennessee cases cited by counsel (Duluth Nat. Bk. v. Knoxville Ins. Co., 85 Tenn. 76, 1 S.W. 689, 4 Am. St. Rep. 744; and Martin v. Ins. Co., 106 Tenn. 525, 61 S.W. 1024) arose prior to the passage of the act of 1907 and, moreover, are fire insurance cases, expressly excepted from the provisions of the act. These cases are therefore not controlling.

The Wisconsin and Ohio statutes are similar to ours, although not so express on the point under consideration, and they have been construed in accordance with the views above expressed Schomer v. Hekla Fire Ins. Co., 50 Wis. 575, 7 N.W. 544. We are cited to Central State Ins. Co. v. Lake Erie Prov. Co., 13 Ohio Cir. Ct. R. 661; and see Pollock v. German Fire Ins. Co., 127 Mich. 460, 86 N.W. 1017.

We deem it unnecessary to review further the authorities presented touching this proposition. In view of our statute, it must be held that F. B. Hunter & Co. were the agents of the insurance company in all matters relating to this policy issued through them. It follows that notice to them of the change and their assent thereto was notice to and binding upon the insuring company.

It cannot be questioned that either the bankruptcy of the insured or the subsequent sale and transfer of the property covered to the wife, unless assented to by the insurance company, would avoid the policy. The jury has found that notice was given to F. B. Hunter & Co. and that they assented to the change before the first robbery occurred; and that notice was received by the general agents of the company and their assent given shortly after the first robbery and before the second loss.

It is insisted that there is no material evidence to sustain the finding of the jury with respect especially to the general agents, but we think there is material evidence of the notice to and assent of both Hunter & Co. and the general agents, as found by...