N. Pelaggi & Co. v. Orient Insurance Co

• Decision Date: 05 February 1930
• Parties: N. PELAGGI & CO. v. ORIENT INSURANCE CO
• Court: Vermont Supreme Court

148 A. 869

102 Vt. 384

N. PELAGGI & CO. v. ORIENT INSURANCE CO

Supreme Court of Vermont

February 5, 1930

January Term, 1930.

Insurance---Waiver of Notice of Cancellation---Constructive Delivery---Authority of Agent Instructed To Keep Property Covered with Insurance for Specified Sum---No Particular Form of Words Requisite To Give Authority to Agent To Place Insurance and Keep Property Covered---Principal and Agent---Question of Agent's Authority as One of Law or Fact---Sufficiency of Agent's Authority To Cancel Policy and Substitute Another---Fraud---Effect on Policy of Withholding Material Facts from Insurer by Insurance Agent---Harmless Error.

1. Provision in fire insurance policy that it might be cancelled by giving insured a five days' written notice thereof being for benefit of insured, could be waived either by insured or its agent.

2. When a fire insurance 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 insured, a constructive delivery takes place, though policy remains in hands of insurer's agent, latter under such circumstances being deemed to hold policy for insured.

3. Where an insurance agent representing several companies is under an agreement with property owner to keep a risk covered to a certain amount, without specification of companies or amount for each by owner, such agent has authority to transfer risk or part of it from one company to another as occasion may reasonably require, since owner, by constituting him agent to keep property insured, thereby empowers him to select companies to carry risk, and clothes him with authority to cancel one policy and substitute another therefor.

4. When an insurance agent is employed to write or procure certain insurance, merely, his authority is exhausted when he has done so, and he has no authority to consent to its cancellation, or to waive five-day rule respecting written notice of cancellation, or to accept a substitute policy, but when, in addition such agent has implied authority to do whatever is reasonably necessary to accomplish that object he may waive five-day clause, or accept cancellation and substitution, all without notice to or consent by insured.

5. No particular form of words is required to authorize agent to place insurance and keep property covered, thereby giving agent implied authority to waive rule respecting five-day notice of cancellation, or to cancel one policy and substitute another without notice to or consent by insured but what is said between parties is to be considered and construed in light of attendant circumstances.

6. While ordinarily question of agent's authority is one of fact to be determined by jury, it is one of law where facts are not in dispute.

7. Where general agents for several fire insurance companies were authorized by plaintiff to place and keep in effect a specified amount of insurance on plaintiff's property such agents to select and apportion amount among companies to be chosen by them, and, upon cancellation of one policy by one insurance company, wrote and delivered to plaintiff policy in another company, containing provision for cancellation by giving insured five days' written notice thereof, and upon receiving instructions from latter company to cancel this latter policy immediately, treating it as legally cancelled, such agents issued another policy in defendant company to take its place, and before exchange of policies had been made and while such second policy was in plaintiff's office and policy in defendant company was still in office of agents, fire occurred, after which latter policy was delivered by agents to plaintiff, held that second policy was not in effect at time of fire, and that policy in defendant company was in force.

8. Fact that general agents of fire insurance company in issuing policy may have withheld material facts from insurer, held not to affect validity of policy as against insured having nothing to do with concealment, question being one for insurer and its agents to settle between themselves.

9. In action on fire insurance policy, where court instructed jury that burden was on defendant to show that duties imposed upon general agents of insurer by insured and insurer were inconsistent and incompatible, held that, under facts in case, these duties were not incompatible, hence submission of matter to jury was mere gratuity, and error, if any, was harmless to defendant, since court should have ruled against it.

ACTION OF CONTRACT on fire insurance policy. Answer, giving notice under county court rule 17 that defendant denied execution and delivery of policy; also specially pleading facts in relation thereto. Trial by jury at the March Term, 1929, Washington County, Graham, J., presiding. Verdict for the plaintiff and judgment thereon. The defendant excepted. The opinion states the case. Affirmed.

Affirmed.

Chas. H. Darling and Fred E. Gleason for the defendant.

There was no delivery of the policy in defendant company before the fire, and the contract was not complete until delivery. Orient Ins. Co. v. N. H. Fire Ins. Co. et al., 102 Vt. 16, 145 A. 147; Busher v. New York Life Ins. Co., 72 N.H. 551, 58 A. 41; Rose Inn Corp. v. National Union Fire Ins. Co., 232 N.Y.S. 351; Lancashire Ins. Co. v. Nill et ux., 6 A. 43, 45; Clark v. Insurance Co. of North America, 89 Me. 26, 35 A. 1008.

Instructions by plaintiff to general insurance agents to keep property insured does not give them authority to cancel policy already issued. Rose Inn Corp. v. National Union Fire Ins. Co., 232 N.Y.S. 351; Tacoma Lumber & Shingle Co. v. Fireman's Fund Ins. Co., 151 P. 91; Clark v. Ins. Co., 89 Me. 26, 35 A. 1008; Grace v. Am. Cent. Ins. Co., 109 U.S. 278, 3 & 4 S. C. R. 207; Partridge v. Milwaukee, 43 N.Y.S. 632.

The power or instruction to write insurance does not imply the power to cancel. Pauley v. Sun Ins. Office, 90 S.E. 552; Lush v. Am. Cent. Ins. Co., 91 S.E. 1078; Mutual Assurance Society v. Scottish Union et al., 10 A. S. R. 819, and note; Herman v. Niagara Fire Ins. Co., 100 N.Y. 411, 53 A. S. R. 197, and note; Condon v. Exton Hall Brokerage, etc., 142 N.Y.S. 548; Clark v. Ins. Co. of North America, supra; Commercial Union Assurance Co. v. Urbrousky, 68 S.W. 653; Brodshaw Bros. & Co. v. Fire Ins. Co., 94 N.W. 866; Cassville Roller Mill Co. v. AEtna, 79 S.W. 720; John Davis Lumber Co. v. Hartford Fire Ins. Co., 70 N.W. 84; Suedicar v. Citizens Ins. Co., 64 N.W. 35; Martin v. Palatine Ins. Co., 61 S.W. 1024; Johnson v. North British, etc., 63 N.E. 610; Green v. Star Fire Ins. Co., 77 N.E. 649; Rothschild v. Ins. Co., 41 A. R. 303; Commercial Union Assur. Co. v. State, 15 N.E. 518; Louman v. Springfield F. & M. I. Co., 195 P. 50; British Am. Assn. v. Cooper, 58 P. 592; Merchants Ins. Co. v. Shults, 57 P. 306.

Generally an insurance agent represents the insurance company, but an insurance broker represents the insured. A broker procures insurance for the insured in a company that broker does not represent. Rose Inn Corp. v. National Union Fire Ins. Co., supra; Norfolk Tire & R. Co. v. Manufacturers' Casualty Ins. Co. (Conn.), 145 A. 44--46; I. Keller v. Hartford Fire Ins. Co., 53 N.Y.S. 323; Buck v. Stuyvesant Ins. Co., 237 S.W. 840.

A person can act as agent for two parties in the same transaction only in case he has no discretion or judgment to exercise for either, and when their employment is not adverse. Empire State Ins. Co. v. American Cent. Ins. Co., 138 N.Y. 446, 34 N.E. 200; New York Cent. Ins. Co. v. National Protection Ins. Co., 14 N.Y. 85; Porter v. Woodruff, 36 N. J. Eq. 174; Pearson v. Concord R. R., 62 N.H. 537, 13 A. S. R. 590; Murray v. Bond, 102 N.Y. 505, 509, 7 N.E. 553; U. S. Rolling Stock Co. v. Atlantic & Great Western R. R. Co., 32 A. R. 380, 382; Pacific Vinegar, etc., Works v. Smith, 104 A. S. R. 42, 50; Wildberger v. Hartford Fire Ins. Co., 48 A. S. R. 558; Ramspeck v. Pattillo, 69 A. S. R. 558; Walker v. Osgood, 98 Vt. 348, 93 A. D. 168; Farnsworth v. Hermmer, 1 Allen 494, 79 A. D. 756.

The general insurance agents were seeking to act for three parties. One company had declined to renew, another wanted to get off the risk, and these facts were not reported to the defendant, although it already had one policy on the risk, and the defendant knew nothing of policy in suit until after the fire. An agent should disclose material facts to his principal, and failure to do so is fraudulent. Leno v. Stewart, 89 Vt. 286; Note to Price v. Davis, 20 A. S. R. 931; Holmes v. Cathcart, 97 A. S. R. 513; Farnsworth v. Hemmer, 1 Allen, 494, 79 A. D. 756; Herman v. Martineau, 60 A. D. 368; U. S. Rolling Stock Co. v. Atlantic & G. W. R. R. Co., 32 A. R. 380, 383; Note to Potter's Appeal, 7 A. S. R. 280; Black v. Miller, 71 Ill.App. 342; Olson v. Pettibone, 48 A. L. R. 929, 931. Gelsi Monti and Erwin M. Harvey for the plaintiff.

Physical delivery of the policy of defendant company was unnecessary to make it effective, but intention of parties as shown by their conduct or agreement will control as to what constitutes a delivery. Wilson v. German-Am. Fire Ins Co., 90 Kan. 355; Porter v. Mutual Life Ins. Co. (N. Y.), 70 Vt. 504; Hollywood Lumber & Coal Co. v. Dubuque Fire & Marine Ins. Co., 92 S.E. 858; 26 C. J. "Fire Insurance," 51, and cases cited in notes 83, 84, and 85; 32 C. J. "Insurance," 444; Dibble v. Assurance Co., 70 Mich. 1, 5; Fitzgerald v. Mut. Life Ins. Co., 90 Vt. 291, 311; The Fed. Ins. Co. of Hartford, Conn. v. Sydeman, 136 A. 136; 14 R. C. L. 489; Cooley's Briefs on Insurance (2nd ed.), Vol. 1, pp. 640, 641.

There was no evidence in this case that writing of policy in defendant company was procured by fraud, as defendant was chargeable under the law with...