More v. New York Bowery Fire Ins. Co.

• Decision Date: 26 January 1892
• Citation: 29 N.E. 757,130 N.Y. 537
• Parties: MORE et al. v. NEW YORK BOWERY FIRE INS. CO.
• Court: New York Court of Appeals Court of Appeals

130 N.Y. 537

29 N.E. 757

MORE et al.

v.NEW YORK BOWERY FIRE INS. CO.

Court of Appeals of New York, Second Division.

Jan. 26, 1892.

Appeal from supreme court, general term, fourth department.

Action by George B. More and Charles J. Pierce against the New York Bowery Fire Insurance Company to recover on a contract for fire insurance. Judgment for plaintiff on report of referee affirmed at general term. Defendant appeals. Reversed.

The other facts fully appear in the following statement by BROWN, J.:

This action was brought to recover upon an alleged parol contract to insure the plaintiffs' creamery building in Delaware county for the term of six months, from May 12 to November 12, 1887. The defendant denied the making of the contract. It appeared that Omar V. Sage was the secretary of the Co-Operative Insurance Company, a company engaged in the insurance business in the counties of Greene, Schoharie, and Delaware, and issuing policies limited in amount to $2,500. For the purpose of dividing risks where the value of the property on which the insurance was sought exceeded that amount, he requested to be and was appointed agent for the defendant company. As such agent, he had full power to fix the rate of premium, collect the same, and issue policies. The Co-Operative Company had numerous agents soliciting insurance in the counties named, who were informed by Sage of his appointment, and the purpose of it, and to whom he sent blank applications, with instructions that, in case they secured business for the defendant, they should fill out such applications as completely as possible, and send to him at Catskill, leaving blank the place to be signed by the agent for his (Sage's) signature. On May 12, 1887, Charles E. Nichols, one of the agents for the Co-Operative Company, as a result of negotiations had with the plaintiffs. filled out one of the blank applications which had been sent to him as aforesaid, and forwarded it by mail to Sage at Catskill. On its receipt, Sage wrote to Nichols, saying that he had written to the defendant in reference to the risk, and would advise him as soon as he heard from them; that the risk was special, and he did not wish to write it without first submitting it to the company. On the same day, he wrote to the defendant at New York, stating the application, and what the risk was; and the defendant immediately replied, rejecting the application, and declining to write the policy. This letter from the defendant was received by Sage about May 19th, but he negected to notify the plaintiffs or Nichols of the defendant's action. The application made out by Nichols was as follows: ‘New York Bowery Fire Insurance Company of New York, in consideration of thirteen 50-100 dollars, do insure G. B. More and Co. to the amount of eighteen hundred dollars on their 1 1/2 story frame building, shingle roofed, situated in the village of No. Harpersfield, Del. Co., N. Y., on the south side of Main street, used as a creamery for the manufacture of butter. Said eighteen hundred dollars is divided as follows: $800 on building; $800 on fixtures therein; $200 on butter packages, milk cans, and butter therein contained. Term, six months; amount, $1,800; rate, 3/4 per cent.; premium, $13.50. Commences, May 12, 1887. Terminates, November 6, 1887. _____, Agent.’ On May 30th the plaintiff sent a check for the premium agreed upon to Nichols, which he received, but never remitted to Sage or the defendant; and on June 6th the buildings were burned. With reference to the application for the insurance the referee found that it was made after two or three conversations between Nichols and the plaintiffs, and ‘was written on the day of its date as the final agreement which the plaintiffs had concluded to make, and as the terms had been agreed on;’‘that the plaintiffs did not see the application blank;’‘that the plaintiffs understood distinctly, from their conversation with Nichols, that he could not make or issue a policy of insurance upon their property in behalf of the defendant, and that, before such policy could be issued, their application must receive the approval of some other person or persons.’ With reference to the payment of the premium, he found: ‘That, a day or two thereafter, Nichols met one of the plaintiffs, who asked him if he had received the check, and said that he had received no policy, and Nichols told him that it was all right; that he had heard nothing from the company, and consequently it was all right; and that he would get the policy in a day or two.’‘That plaintiffs believed that they were insured according to the terms of the writing * * * after the assurance given them by Nichols, upon the receipt of the check for the premium, that it was all right, or he would have heard from the company.’ He found, as a conclusion of law, ‘that the writing of Nichols on the 12th day of May, 1887, together with the acts of the defendant and the agent, Sage, and by reason of the writing not being repudiated within a reasonable time after it was submitted to the defendant, became and was a valid and subsisting contract of insurance at the time of the fire, according to the terms of the writing, and in the form of the standard stock policy of the state, and was, as such, binding on the defendant.’

A. H. Sawyer, for appellant.

John P. Grant, for respondent.

BROWN, J., ( after stating the facts.)

The question presented in this case is whether there was a contract for insurance between the parties; and it may be said that, if such a contract existed at any time subsequent to May 12th, it had not been rescinded or annulled at the time of the fire. If there was a contract, it grows out of the acts of the agent, Sage, and his subordinate, Nichols, which are binding upon the defendant, notwithstanding the fact that it promptly refused to accept the risk or issue a policy when the application was presented to it.

An agent of a fire insurance company, having unrestricted authority to accept risks, fix premiums, and make and issue policies, has power to bind his principal by a preliminary parol contract to issue a policy. Ellis v. Insurance Co., 50 N. Y. 402;Angell v. Insurance Co., 59 N. Y. 171. Such was the power possessed by Sage as the agent of the defendant; and, had he agreed to issue a policy to the plaintiffs, the judgment could be sustained. The general term based its decision upon the application of the principle of the cases cited to the facts which that court assumed to exist, that Sage knew on May 16th that the insurance, according to the agreement between Nichois and the plaintiffs, was to take effect from May 12th, and that the plaintiffs relied upon the defendant as an insurer of their property, and that Sage's silence, under these circumstances, was in legal effect an approval of the application, and a consent on the part of the defendants to enter into the contract contemplated by the plaintiffs. That Sage had the power and authority to make just such a contract as plaintiffs claim was made, may be conceded, but the facts assumed by the general term were not found by the referee. He refused to find that Nichols agreed that, in case the property was burned after May 12th, plaintiffs would get their insurance, or that the agreement was to commence on that date. The finding that he did make was that the evidence tended to the belief that it was to be considered as commencing on that day. But this was qualified by another finding, that plaintiffs understood from Nichols that he could not issue a policy, and that, before that was done, their application must receive the approval of some other person. In effect, this was a finding that there was not to be a contract...