Niagara Fire Ins. Co. of New York v. Johnson

• Decision Date: 09 October 1928
• Parties: NIAGARA FIRE INS. CO. OF NEW YORK v. JOHNSON.
• Court: Kentucky Court of Appeals

21 S.W.2d 794

231 Ky. 426

NIAGARA FIRE INS. CO. OF NEW YORK v. JOHNSON.

Court of Appeals of Kentucky

October 9, 1928

As Modified, on Denial of Rehearing, December 10, 1929.

Appeal from Circuit Court, Fulton County.

Action by Goalder Johnson against the Niagara Fire Insurance Company of New York. Judgment for plaintiff, and defendant appeals. Affirmed.

Frank M. Drake, of Louisville, and Hester & Stahr, of Hickman, for appellant.

F. B Martin and W. J. Webb, both of Mayfield, for appellee.

LOGAN J.

On October 28, 1926, appellant issued a policy insuring the appellee against loss by fire and lightning in a sum not exceeding $750 on provender contained in his barn in Fulton county. On May 6, 1927, the barn was struck by lightning and, as a result thereof, the insured property was destroyed by fire. Appellant declined to pay the loss, and suit was instituted to recover the amount of indemnity mentioned in the policy. Appellant defended on the ground that the policy contained a provision that it should become void if the property insured should be mortgaged after its issuance, and that appellee placed a mortgage against the property after the date of the policy and before the property was destroyed by fire. It is alleged that the mortgage was placed on the property without the consent of appellant. The appellee admitted the execution and delivery of the mortgage, and interposed a plea of estoppel based on the ground that he applied to the agent of appellant, who delivered the policy to him, for permission to place the mortgage against the property, and that the agent agreed and consented thereto and that the company, having knowledge of the execution of the mortgage, allowed the policy to continue in force, and took no step to cancel it. A trial resulted in a judgment in favor of appellee for $750.

The appellant is complaining because the court did not sustain a general demurrer to the petition, and because the court did not instruct the jury to return a verdict in its favor. It is the contention of appellant that the agent who acted for it in obtaining the application and delivering the policy to appellee was a mere soliciting agent, and had no power to waive any of the provisions of the policy. It is therefore contended that, even if appellee obtained permission from the agent to place the mortgage on the property, such permission is no protection to him, because the agent was without power to waive the provisions of the policy.

The facts disclosed by the evidence are brief. Appellee testified that J. D. Henry had been the agent for appellant in the town of Hickman for about 12 years, doing an insurance business under the name of the Hickman Insurance Agency; that this agency had been carrying his insurance on his properties for several years; that when he desired insurance on the property which was destroyed he requested Mr. Henry to issue him a policy for $750, which is the policy on which he sought to recover in this action; that the value of the property covered by the provisions of this policy was more than $2,000 at the time it was destroyed; that before the property was destroyed, and after the policy was issued, he executed a mortgage on the property, but before doing so he went to Mr. Henry and explained to him that he was going to give a mortgage on the property, and told him in detail about the transaction, and that Mr. Henry told him to go ahead, as it would be all right, and that he would fix the matter up; that after he had placed the mortgage on the property he again went to Mr. Henry and called his attention to the fact that the mortgage had been placed against the property, and that Mr. Henry then assured him that it was all right, and that there was no use for him to talk any more about it; that he paid the premium on the policy to Mr. Henry; that he obtained another policy on the property in another company for $750, which made his total insurance $1,500. On cross-examination the witness stated that he signed the application at the request of Mr. Henry without reading it, and that he did so because he had been accustomed to signing applications for insurance when they were presented to him by Mr. Henry. He further stated that Mr. Henry did not tell him that there was a provision in the policy rendering it void in the event he placed a mortgage on the property.

Mr. Henry testified that he did not remember whether Mr. Johnson came to him about the mortgage before it was executed or thereafter. He testified that he was a solicitor for appellant, to take applications for insurance and submit them to the company, and that the company either issued the policy or rejected it; that he had no authority to make a transfer, or an assignment or indorsement; that everything had to go to the company; that he did not have any authority to issue a policy for appellant, and that his agency was not a recording agency; that the only authority he had was to take the application and forward it to the company. On cross-examination, Mr. Henry stated that, when it was necessary to place a rider on a policy, he forwarded the slip to the home office, and it was there signed and returned to him, and countersigned by his agency before it was attached to the policy.

The appellee testified in rebuttal that he did not know anything about limitations imposed upon the authority of Mr. Henry, and that he did not know whether he was a soliciting agent or general agent; that he made application to him for the policy, and that the policy was issued, and he paid to Mr. Henry the premium.

Upon these facts appellant is insisting that it is clearly shown that the Hickman Insurance Agency, which was in fact Mr. Henry, was a mere soliciting agent, and that he had no authority to waive any of the provisions of the policy. We are unwilling to lay down any hard and fast rule, that will forever determine who are soliciting agents, and who are recording agents. While Mr. Henry testified that he had no authority in connection with this policy other than to take the application and forward it to the company, we find that his authority was greater than he understood it to be as is clearly shown by the facts in this case. He took the application and forwarded it to the company. The policy was prepared and signed at the home office, and sent to the Hickman Insurance Agency at Hickman, Ky. It was not a policy contract, however, when it was received by the Hickman Insurance Agency. The policy contained this provision:

"This policy is valid only when signed by Hickman Insurance Agency, solicitor, at Hickman,

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