Miller v. Fireman's Ins. Co.

• Decision Date: 05 December 1903
• Citation: 46 S.E. 181,54 W.Va. 344
• Parties: MILLER v. FIREMAN'S INS. CO. OF BALTIMORE.
• Court: West Virginia Supreme Court

46 S.E. 181

54 W.Va. 344

MILLER v. FIREMAN'S INS. CO. OF BALTIMORE.

Supreme Court of Appeals of West Virginia.

December 5, 1903

Submitted January 20, 1903.

Syllabus by the Court.

1. A fire insurance policy gives right to the company to cancel it on five days' notice. The company instructs its local agent to take up the policy for cancellation, and the agent informs the assured that the company elected to cancel the policy, and stated to him that he would procure him a policy in another company for which he was agent. The assured, with this understanding, delivered up the policy to the agent for cancellation, and the agent delivered it to the company, and it was canceled by it. Held, that the policy was thereby canceled.

2. An insurance agent directed by his company to take up for cancellation a policy of insurance has no power to take it up with a condition that he would get for the assured a policy in another company, and the surrender of the policy to such agent for such cancellation on such condition is an absolute cancellation.

Error to Circuit Court, Summers County; J. M. McWhorter, Judge.

Action by James H. Miller against the Fireman's Insurance Company of Baltimore. Judgment for plaintiff, and defendant brings error. Reversed.

Dent J., dissenting.

Peyton & Perkinson and Northcott, Perry & McComas, for plaintiff in error.

Miller & Read, for defendant in error.

BRANNON J.

J. B Lavender, agent of the Fireman's Insurance Company of Baltimore at the town of Hinton, issued to James H. Miller its insurance policy for the sum of $1,000, insuring said Miller against loss by fire on certain books and office furniture in his law office, in said town of Hinton, for the period of three years, for which the premium was fully paid to said Lavender. On December 19, 1900, J. B. Lavender went to James H. Miller, and told him that the Fireman's Insurance Company was going out of business in West Virginia, and wanted him to procure a return of said policy for cancellation, and told Miller that, if he wished he would give him another policy in another company as good without additional cost. And Miller in his testimony says that, "with this understanding, I gave him the policy." Thereupon said policy was delivered by said J B. Lavender to U. O. Michaels, special agent of said insurance company, who was in town for the purpose of taking up and canceling policies, which fact was told Miller; and said policy was thereupon canceled and destroyed by said company, and said Lavender given credit for the proper amount of return premium. Afterwards, on the 3d day of September, 1901, the property which had been embraced in said policy was destroyed by fire; and then Miller enquired of said Lavender if he had ever issued him any new insurance upon said property, and, finding that he had not, set about to make proofs of loss under the destroyed policy in defendant company, and on the 9th day of November, 1902, instituted action in the circuit court of Summers county, wherein a judgment was rendered in favor of plaintiff, Miller, for the sum of $925, from which this writ of error is prosecuted.

There is but one contention of importance in the case, and that is as to whether or not the policy sued upon had, prior to the loss complained of, been canceled. It is contended by the defendant that the surrender of the policy to Lavender amounted to an agreement to surrender the policy for cancellation, and constituted a waiver on the part of the insured to have the notice given him which was provided in the policy, and the payment to him of the return premium as provided for therein. On the other hand, it is contended by plaintiff that the circumstances under which said policy was returned through Lavender to the company for cancellation, amounted to nothing more than a conditional surrender, and that the condition upon which the surrender was made was not complied with prior to the time of the loss. Lavender was agent for several companies. Miller's statement in evidence is: "One evening Mr. Lavender came into the office, and told me that the company was going to quit business here; that their special agent, Mr. Michaels, was in town, and wanted to take up my policy. He said, if I wished, he would give me another policy in another company as good, without any additional cost. With this understanding, I gave him the policy."

The policy gave the company right to cancel on notice. Miller waived notice, assented to cancellation, asked no notice, and gave up the policy with final intent, because he knew that the local agent received it for the very purpose of delivering it as a surrendered policy to the general agent then in the town to take up policies. It could be canceled by consent without notice. See Ins. Co. v. Johnson, 105 F. 286, 44 C.C.A. 477. To show further that Miller considered it a cancellation, he lay nine months without mention of any condition as annexed to the cancellation to the company, so that it might take steps to protect itself, and never inquired of the agent for a policy in another company. Strange that he should thus be silent so long, if he had made only a conditional surrender! "Acts speak louder than words." Miller claims that he surrendered the policy with the condition that Lavender should procure him a policy in another company, but he knew that, while Lavender had authority to cancel, he had no color of authority to make a conditional cancellation--one leaving the company still liable. He had either to surrender or not surrender the policy. He could not make a surrender upon such condition. As he surrendered, it was a surrender freed of condition. Dealing with an agent, he was bound to know his limited authority. Otherwise who would be safe from an agent's unauthorized act? In making such a condition (it was not such) the agent would be acting to the harm of the principal. Apply here the rule in Rohrbough v. Express Co., 50 W.Va. 149, 40 S.E. 398 (4), 88 Am.St.Rep. 849, and we find that he could not do so, and that Miller was bound to know this: "The powers of an agent must be exercised for the benefit of his principal only, and when he acts otherwise with the knowledge and participation of the person relying upon his unauthorized act, his principal is not bound." What benefit did the company get from this condition? It was to its harm, because it kept the company still bound. The sufficient answer to this theory of conditional surrender is that the parties could not make such a condition. That condition would be a contract which the agent had no right to make. But if the parties could make such condition, they did not do so. It was no condition, but an independent agreement between Miller and Lavender, unknown to the company, with which it had nothing to do. The cancellation was one thing between certain parties. The procuring of new insurance was another thing between other parties. Miller surrendered the policy, and appointed Lavender his own agent to get another policy, leaving part of the premium in his hands to pay for another policy; otherwise he would have demanded it. In Hillock v. Traders' Co., 54 Mich. 531, 20 N.W. 571, a general agent went to the place where a policy had been placed, and sent the local agent to the insured party to cancel the policy; and this agent went to the insured party and informed him that the company had ordered him to cancel the policy, and said, "Will see if I can put it in some other company for a year," and the insured said, "All right. Be sure you put it in good companies." No premium was returned; nothing said about it. The policy was not actually surrendered. Judge Cooley delivered a labored opinion, and said: "The dealings of these parties had come to an end when Brown had responded to the notice of cancellation that it was all right, and directed the agent to procure new insurance. This company was not concerned with what should take place between Brown and Estee afterwards. Brown was looking to Estee for new insurance, and would be entitled to a return of the premium on failure to obtain it; and Estee would be expected to bring the amount into their own settlement, as they saw fit." The syllabus says: "The actual tender of unearned premium is unnecessary to the cancellation of an insurance policy, if the minds have met on the point that the policy is to be canceled; and, if the insured directs the insurance agent to procure other insurance, it is presumable that he means him to use for the purpose the money that he would have to return, and the direction would be a waiver of such tender." It was held that formal surrender of the policy was not necessary. Here there was a formal surrender. Miller made no actual condition. His words did not so import. Why did he not retain the policy until a new policy should be delivered, if he made it a condition? In the case of Hopkins v. Phoenix Ins. Co., 78 Iowa 344, 43 N.W. 197, after reciting the following facts: "A policy provided that it might be terminated at any time on notice to the insured, and refunding or tendering a ratable proportion of the premium for the unexpired term. The evidence showed that the company's local agent, acting under instructions, notified the insured that the policy was canceled; that assured carried the policy to their office to surrender it, but defendant's agents did not call for it; it was not delivered; and that assured began negotiations for other insurance." Held, that those facts were sufficient to justify a finding that the policy had been canceled; and held, further, that "the assured, having acquiesced in the cancellation, though no payment of the premium or tender of the premium was made, is estopped to set up the nonpayment." "A policy which in terms provides that it may be...