N. Pelaggi & Co., Inc. v. Orient Ins. Co.
| Decision Date | 05 February 1930 |
| Citation | 148 A. 869 |
| Court | Vermont Supreme Court |
| Parties | N. PELAGGI & CO., Inc. v. ORIENT INS. CO. |
Exceptions from Washington County Court; Warner A. Graham, Judge.
Action by N. Pelaggi & Co, Inc., against the Orient Insurance Company. Judgment for plaintiff, and defendant brings exceptions. Affirmed.
Argued before POWERS, C. J, SLACK, MOULTON, and THOMPSON, JJ, and SHERMAN, Superior Judge.
Gelsi Monti, of Northfield, and Erwin M. Harvey, of Montpelier, for plaintiff.
Chas. H. Darling, of Burlington, and Fred E. Gleason, of Montpelier, for defendant.
POWERS, C. J. McAllister & Kent, of Barre, were general agents for several fire insurance companies, including those here involved. A policy written by them in the Star Insurance Company covering the plaintiff's granite shed in Northfield was to expire on July 14, 1926. Prior to that date, the company instructed the agents not to renew it. Thereupon, and at some time prior to July 10, 1926, they wrote and delivered to the plaintiff a policy in the New Hampshire Fire Insurance Company which bore date and was to take effect at noon on July 14, 1926. This policy was to take the place of the Star policy when it expired. It contained a provision that it might be canceled by the insurer by giving the insured a five days' written notice thereof. When a report of the issuance of this policy reached the home office of the New Hampshire Company, that office, under date of July 10, 1926, requested its agents to cancel the same, immediately. Upon receipt of this request, McAllister & Kent called the plaintiff's office at Northfield by telephone and informed Miss Davis, who was in charge of the office and intrusted with the duty of looking after the plaintiff's insurance, that the New Hampshire policy was canceled, and that they would rewrite it in another company; and it was then arranged that Miss Davis was to hold that policy until a representative of the agency could call at the Northfield office, when the new policy would be exchanged for it. The exact date of this telephone conversation is not fixed. There is evidence in the record that it was prior to July 14, the day on which the New Hampshire policy was to attach; but, as no claim is made by the plaintiff that that policy never took effect, we assume that it did.
Without further action regarding the New Hampshire policy, but treating it as legally canceled, McAllister & Kent, on July 14, issued a policy in the defendant company to take its place. The property covered by these policies burned on the early morning of July 18, before the exchange of policies had been made and while the New Hampshire policy was in the plaintiff's office at Northfield and the defendant's policy was in the office of McAllister & Kent at Barre. After the fire the agents went to North field with the Orient policy and turned it over to the plaintiff. They took in return a lost policy receipt in effect releasing the New Hampshire company from liability, the policy in that company having burned in the fire.
The ultimate question here is, Which of these policies, the New Hampshire or the Orient, was in force at the time of the fire? It is expressly admitted that the defendant is not liable, unless the New Hampshire policy was legally canceled before the fire. The five-day clause above referred to, during which time the fire occurred, was Inserted in the policy to give the insured time to secure other insurance on the property before it was left uncovered; it was for the benefit of the insured, and so it could be waived, either by the Insured or its agent. Phoenix Ins. Co. v. State, 76 Ark. 180, 88 S. W. 917, 6 Ann. Cas. 440; Federal Ins. Co. v. Sydeman, 82 N. H. 482, 136 A. 136; Hollywood L. & C. Co. v. Dubuque F. & M. Ins. Co., 80 W. Va. 604, 92 S. E. 858.
The undisputed evidence tended to show that some years before this fire the plaintiff arranged with McAllister & Kent to place and keep in effect fire insurance on this Northfield plant to the amount of $60,000; that by this arrangement the agents were to select the companies and apportion the amount between them; and the jury would be justified in finding that at different times they were obliged to change companies after a policy had been written, and substituted one policy for another without notice to or consulting with the plaintiff further than to request the return of the policy to be replaced.
The authority conferred by this arrangement and its legal effect are vital factors in the case. In considering and deciding these questions, it must be borne in mind that McAllister & Kent were to do more for the plaintiff than to place the insurance; they were to keep it in force.
The defendant says it cannot be held, because (1) its policy was not delivered until after the fire; and (2) that the New Hampshire policy was not lawfully canceled for lack of notice to and waiver of the five-day clause by the insured.
In support of the first of these propositions, the defendant points to the fact that its policy never left the desk in McAllister & Kent's office. That a fire insurance policy must be delivered before it becomes effective may be assumed. Though we find no occasion to consider the question of delivery apart from that of cancellation, we may say in passing that it does not take much to establish a delivery of an insurance policy. Manual delivery is not indispensable. It is a question of intention largely. If a policy is written under an agreement therefor, and is complete and ready for delivery, so that nothing remains to be done but pass it over to the insured, though it remains in the hands of the insurer's agent, a constructive delivery results, which satisfies the rule. In such a case, the insurance agent is deemed to hold the policy for the insured. Porter v. Mutual Life Ins. Co., 70 Vt. 50-1, 508, 41 A. 970; Stephenson v. Allison, 165 Ala. 238, 51 So. 622, 138 Am. St. Rep. 26, and interesting and instructive note on page 29.
The most important question in the case is, Was the New Hampshire policy canceled before the fire? In the first aspect of this question, the answer depends upon what authority was vested in McAllister & Kent by the plaintiff.
It is not seriously denied that a dual agency may exist where there is no conflict of interests between the masters; but it is vigorously insisted by the defendant that here are such incompatible and conflicting interests between the plaintiff and defendant that the attempt to make McAllister & Kent the agents of the insured in the matter of canceling the New Hampshire policy and waiving the five-day clause therein was ineffective on grounds of public policy, and that the defendant is not bound by it, since it knew nothing of it.
That the cases relied upon by the defendant justify its position cannot be denied. But by the weight of authority and the better reasoning, we think, the rule is established that, where an insurance agent, representing several companies, is under an agreement with a property owner to keep a risk covered to a certain amount, without specification of companies or amounts for each by the latter, the former has authority to transfer that risk or a part of it from one company to another as occasion may reasonably require, without notice to or consent by the insured. The owner, by constituting him his agent to keep the property insured thereby, empowers him to select the companies to carry the risk, and clothes him with authority to cancel one policy and substitute another therefor.
Phoenix Ins. Co. v. State, 76 Ark. 180, 88 S. W. 917, 918, 6 Ann. Cas. 440, 441, is a much cited case on this subject. The facts in that case were much like those in this. A lumber company owned a mill and stock of lumber.
On April 10, 1902, it applied to an insurance agent for a policy on its lumber. A policy in the Greenwich Insurance Company was issued and mailed to the insured. On April 21 the agent received instructions from that company to cancel the policy or secure a higher rate. He chose to cancel; and on the same day he wrote the insured that he was canceling that policy and rewriting it in the Phoenix, another company. He wrote such a policy on April 23, and mailed it to the insured. That night the lumber burned. The Greenwich policy contained the five-day clause. It was shown that a previous agreement existed between the insured and the agent that the latter should keep the lumber insured, and no particular companies' were mentioned. It was considered that the insured thereby constituted the agent its agent to select the companies, and that as such agent he could cancel the Greenwich policy and substitute the Phoenix policy therefor, without notice to the insured or regard to the five-day clause. The court said: "Ranks, though the agent of the insurance companies, could be and was made the agent of the insured for those purposes." The Phoenix and not the Greenwich was held liable.
Johnson v. North British & M. Ins. Co, 66 Ohio St. 6, 63 N. E. 610, 612, was a case wherein the insured merely arranged with the agent to place the insurance, which was done....
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