Nehring v. Bast, 37890

• Decision Date: 03 June 1960
• Docket Number: No. 37890,37890
• Citation: 103 N.W.2d 368,258 Minn. 193,85 A.L.R.2d 1400
• Parties: , 85 A.L.R.2d 1400 Bernice NEHRING, widow of Elvin R. Nehring, deceased employe, Respondent, v. M. Dale BAST, d.b.a. Bast Standard Service Station, Respondent, Auto Owners Insurance Company, Relator.
• Court: Minnesota Supreme Court

Page 368

103 N.W.2d 368

258 Minn. 193, 85 A.L.R.2d 1400

Bernice NEHRING, widow of Elvin R. Nehring, deceased employe, Respondent, v. M. Dale BAST, d.b.a. Bast Standard Service Station, Respondent Auto Owners Insurance Company, Relator.

No. 37890.

Supreme Court of Minnesota.

June 3, 1960.

Syllabus by the Court

1. Though the power of an insurance agent may be limited by definite restrictions on his authority and by the nature of his agency, the determination of his powers and consequently the rights of the insured must rest in the first instance on the general principle that the powers of an agent are prima facie coextensive with the business entrusted to his care and will not be narrowed by limitations not communicated to the person with whom he deals. The real question is not what power the agent has but what power the company has held him out as having.

2. Where an oral contract for renewal of workmen's compensation insurance is made by one authorized to act for the insurer, it is held upon the facts summarized in the opinion that the coverage afforded by the original contract remains in effect until the applicant is notified so that he may have a reasonable opportunity to procure insurance elsewhere.

3. Where an insurance company has clothed its agent with apparent authority to enter into oral contracts for insurance and where it has knowledge of and has acquiesced in the agent's business practices and usages, the company is prevented by the doctrine of equitable estoppel from denying delegation of authority.

4. The object of the Compensation Insurance Bureau is to provide insurance of all compensation risks in solvent carriers for the protection of the employer, employee, and the public. The compulsory insurance feature of the act comprehends continuous coverage. An employer who has made application for workmen's compensation insurance is entitled to notice as to the action taken by the insurance company to whom the application is submitted so that in the event his application is rejected he may be able to secure insurance elsewhere or through the offices of the Compensation Insurance Bureau which is charged with the obligation of providing coverage for rejected risks.

5. The exigencies of modern business require and justify reliance on oral agreements of insurance entered into by agents acting within apparent authority. An insurance company has an obligation to the public of placing its affairs in the hands of reliable agents and may not avoid liability because of the negligence of such agents in the performance of acts within the general scope of their authority.

6. Before it can be said that an insurance company may be estopped to deny liability for the acts of an agent whom it has clothed with apparent authority, it must appear that the insured acted as a person of ordinarily careful and prudent business habits who was led to believe that the agent possessed the authority which he exercised. Where on the record before us there was conflicting evidence on that issue presenting diverse inferences, the standard of the insured's conduct presented a question of fact for the commission.

7. In reviewing decisions of the Industrial Commission it is the function of this court to determine whether the evidence is such that the commission might reasonably have come to the conclusion which it did, and, if so, findings of the commission will not be disturbed unless they are manifestly contrary to the evidence or unless consideration of the evidence and inferences permissible therefrom would clearly require reasonable minds to adopt a contrary conclusion.

McLeod & Gilmore, Minneapolis, for relator.

Francis X. Helgesen, Minneapolis, for Standard Service Station.

Charles C. Reischel, St. Paul, for other respondent.

MURPHY, Justice.

This case is before us on certiorari from a decision of the Industrial Commission affirming findings and determination of the referee awarding to Bernice Nehring, surviving spouse of Elvin R. Nehring, compensation as a result of accidental death which occurred in the course of her husband's employment by M. Dale Bast, doing business as Bast Standard Service Station at Paynesville, Minnesota.

The sole question presented is whether the employer was insured for compensation liability by the Auto Owners Insurance Company on the date when the fatal accident occurred. It is agreed that no written policy was in force at that time. The commission held on the facts hereinafter related that there was in force an oral contract to insure, entered into between the insurer by its agent and the employer, which imposes liability for compensation benefits.

It appears from the record that the deceased was employed by Bast on July 11, 1957. While he was engaged in changing a truck tire a snap ring blew off striking him in the skull, fatally injuring him. After notifying Clifford Heitke, the local agent of the Auto Owners Insurance Company, Bast learned that no written workmen's compensation policy was in existence. From the record it appears that since about 1953 Heitke took care of most of Bast's insurance business. A workmen's compensation policy was first issued to Bast by Auto Owners Insurance Company effective April 1, 1953. This policy was renewed for the period April 1, 1954, to April 1, 1955. It is undisputed that there was an agreement between Heitke and Bast that the policy would be automatically renewed until such time as cancellation would be requested by Bast. ¹ Bast assumed that on April 1, 1955, Heitke had again renewed the policy. He also assumed that in the subsequent years beginning April 1, 1956, and April 1, 1957, Heitke had again renewed these policies. During this period from 1953 to 1957 Bast testified that he insured through Heitke's agency for 'workmen's compensation, garage liability, my home insurance, fire insurance. I have a personal property floater, sporting goods, boats and motors and guns, and so forth, polio policy, collision insurance for my personal automobile, collision insurance for my wrecker, comprehensive insurance for all the vehicles. Liability policies which are covered--I mean for the truck and cars under the garage liability plan.' Bast's fire insurance on contents of his station and on lake property which he owned was carried through another agency. Bast testified that he had an open account with the agent Heitke. There was this further testimony:

'Q. Now, when you purchased--originally purchased your workmen's compensation and employer liability policy from Mr. Heitke, was there any agreement, oral or written, with regard to the renewals of that policy?

'A. Definitely.

'Q. What was that agreement?

'A. That the policy should automatically be renewed up until such time that I should ask him to cancel the policy.

'Q. Have you at any time from the date of your original purchase of the policy and the date of your agreement you just referred to until the present time made any request, either oral or written, to Cliff's Agency for the cancellation of your employer liability policy?

'A. I have not.'

With reference to the agreement to renew there was this testimony by Heitke, the agent:

'Q. At the time you first sold workmen's compensation insurance to Mr. Bast did you have any agreement relative--oral or written with him with respect to the renewals of his workmen's compensation policy?

'A. Yes, sir. There were--my agreement with my policy holders, including Dale Bast, is to keep their insurance renewed until they advise me to cancel it out.

'Q. Have you at any time since the issuance of the first policy to Mr. Bast received any notification from him to cancel his workmen's compensation policy?

'A. No, sir.

'Q. Mr. Heitke, between April of 1954 and July 11th of 1957 did you personally on any occasions discuss with M. Dale Bast, who is operating Bast Standard Service Station at Paynesville the question whether or not he had workmen's compensation liability insurance coverage?

'A. No, sir. As far as I was concerned he had workmen's compensation that had been renewed with Auto Owners and was in full force at the time.

'Q. It was your understanding that between those dates, including July 11, 1957, he was covered for workmen's compensation liability insurance?

'A. Yes, sir.'

It appears from the evidence that the Auto Owners Insurance Company has a system for renewal of workmen's compensation policies which is different from that of most companies. They furnish their local agent with three copies of the policy, one for the policyholder, the second for the agent to retain in his files, and the third to be used as a renewal application to be retained by the agent and sent to the home office at the end of the policy year. This was the only renewal system that Heitke had in his office with regard to Auto Owners Insurance Company, and he relied upon the initiative of his employee to send the application to the company for renewal. He believed that at the end of each policy period Bast's policy had been automatically renewed.

The record indicates that in fact the renewal application was sent in to the insurance company prior to March 30, 1955. The company contends that upon receipt of the application its underwriter wrote to the agent of March 30, 1955, advising him that a review of the coverage indicated that the loss ratio experienced up to that time was too great. The letter went on to say:

'We request, therefore, that you make other arrangements for the renewal of this exposure after April 1st.

'In reviewing other coverage we have on this operation, we find that the garage liability policy under numer 8036 091255 D was recently renewed and on which it was necessary to apply a ten percent debit to the rates. If you would like to cancel that policy in order to place the entire line with another carrier, we would oblige by allowing a pro-rata refund on the minimum premium.' (Italics supplied.)

The agent testified that he did not recall receiving...