Nickell v. Phenix Ins. Co.

• Decision Date: 08 June 1898
• Citation: 46 S.W. 435,144 Mo. 420
• Parties: NICKELL v. PHENIX INS. CO. OF BROOKLYN, N. Y.
• Court: Missouri Supreme Court

46 S.W. 435

144 Mo. 420

NICKELL v. PHENIX INS. CO. OF BROOKLYN, N. Y.

Supreme Court of Missouri, Division No. 1.

June 8, 1898.

INSURANCE — AGENTS — AUTHORITY — PROOFS OF LOSS — WAIVER — PLEADING.

1. An agent of an insurance company, authorized to effect insurance, countersign policies, and collect premiums, has power to waive proof of loss.

2. Evidence of waiver of proofs of loss is admissible under an allegation that proofs of loss were furnished.

Case certified from Kansas City court of appeals.

Action by J. A. Nickell against the Phenix Insurance Company of Brooklyn, N. Y. From a judgment for plaintiff, defendant appealed

to the Kansas City court of appeals, where the judgment was reversed, and the case was then certified to the supreme court. Judgment of court of appeals reversed.

J. W. Peery and J. L. McCullough, for appellant. Harry K. West, for respondent.

MARSHALL, J.

Defendant insured plaintiff's property, in his photograph gallery, at Marceline, Mo., against loss or damage by fire, for one year, commencing April 20, 1894. William Taylor, who resided at Marceline, was the agent of defendant at that place, represented the company in making the contract and collecting the premiums, and signed the policies. During the life of the policy, on September 13, 1894, the property was totally destroyed by fire. It is admitted that the property was worth much more than the amount of the policy, and no question was raised in the case as to the validity of the contract of insurance. The loss was an honest one. The day after the fire, the plaintiff went to see Taylor, and asked him what he must do, — whether he must give him or the company notice. Taylor told him he "would inform the company of the fire, and that the adjuster would be here in a few days to settle the loss. I asked him what I should do about the proof of loss. He said it was not necessary to make proof of loss; that the adjuster would be here as soon as he could get here, and the matter would be settled." The plaintiff saw Taylor again two or three times about the loss, and finally, about three days after the fire, Taylor wrote a letter to the company, notifying it of the loss, and gave the letter to plaintiff, who mailed it. A week or 10 days later, plaintiff again saw Taylor, who told him the adjuster would be there in a few days and settle the loss. Pinckney, a special adjuster for the defendant, came to Marceline, but did not meet plaintiff. About the 5th of October, Taylor told plaintiff that Pinckney had no authority to adjust the loss, and that Welch, another adjuster for the company, would attend to it. On the 12th of November, no settlement having been made, plaintiff, under the advice of counsel, sent formal proof of loss to the company, at Chicago. On the 11th of January, 1895, the company, by Welch, adjuster, returned the proof of loss, and refused to consider the claim because no proof of loss was furnished the company within 30 days after the date of the fire, as the policy called for. Plaintiff then brought this suit, setting up the contract of insurance, the loss, and averring, inter alia, that proof of loss had been given. The answer admitted the contract of insurance, but denied the other allegations of the petition. The circuit court entered judgment for plaintiff, and defendant appealed to the Kansas City court of appeals, where the judgment of the circuit court was reversed; but as one of the judges of that court was of opinion that the decision was in conflict with McCullough v. Insurance Co., 113 Mo. 606, 21 S. W. 207, the court certified the case to this court.

1. Outside of the questions of practice involved, to which reference will hereafter be made, the legal proposition to be decided is whether an agent of an insurance company, who has power to effect insurance, countersign policies, and collect premiums, has prima facie power to waive proof of loss. The plaintiff asserts the affirmative of this proposition, and the defendant denies it, and insists that, while an adjuster has been held to have such power, the agent has not; and, in order to bind the company, the burden of proof is upon the insured to show that power in the agent. In this case there is no proof as to the power of the agent, except as it may be inferred from the business transacted; nor were the duties and power of the adjuster shown. The circuit court sustained plaintiff's contention. The Kansas City court of appeals agreed with defendant's view of the law. Wood on Insurance (2d Ed., p. 915, § 429) lays down the doctrine that an agent who has authority to issue and countersign policies has no authority to adjust and settle losses, or to waive the performance of conditions in the policy; that ratification by the company of the acts of such agent must be shown. Ostrander on Insurance (2d Ed., p. 197, § 27) says the local agent's power to waive proof of loss depends upon his authority to settle claims, and that, as the duties of a local agent and of an adjuster are different, the local agent cannot waive proof of loss, unless it is shown that he had authority to settle claims, or had apparent authority, as shown by previous dealings of the company. This view of the law is also laid down in the following cases: Bowlin v. Insurance Co., 36 Minn. 433, 31 N. W. 859; Bush v. Insurance Co., 63 N. Y. 531; Van Allen v. Insurance Co., 64 N. Y. 469; Smith v. Insurance Co., 60 Vt. 682, 15 Atl. 353; Insurance Co. v. Kennerly (Ark.) 31 S. W. 155; Ermentraut v. Insurance Co. (Minn., divided court) 65 N. W. 635; Shapire v. Insurance Co. (Minn., divided court) 63 N. W. 614; Lohnes v. Insurance Co., 121 Mass. 439; Engebretson v. Insurance Co., 58 Wis. 301, 17 N. W. 5; McCollum v. Insurance Co., 65 Mo. App. 304. These cases proceed upon the assumption that an agent who has power to effect a contract of insurance, to countersign policies in order to give them vitality and binding force, and to collect premiums, is a special, limited agent, and not a general agent, and that the duties and powers of such a special and limited agent do not authorize him to waive proof of loss. On the other hand, a contrary view of the law is adopted by the following text writers, and in the following cases: May on Insurance (3d Ed., §§ 461, 463) says that the notice and proof of loss is intended for the benefit of the insurer, and notwithstanding the policy requires it to be in writing, nevertheless, if the company receives it, although it comes from a "local agent of the company, upon information communicated to him by the assured," it is sufficient; and that even in cases where the policy provides that it must be given to the manager, "or to some known agent of the company," and the policy had been negotiated through a local agent, and the business of the insurer, before the loss, was, without notice to the assured, transferred to another company, notice to the local agent is sufficient. Joyce on Insurance (section 537) says that where a foreign insurance company has no general agent in the state, but employs a local agent to represent it, such agent has power to bind the company by waiving a forfeiture, or by construing doubtful language in the policy when called on by the insured for information, and cites Hotchkiss v. Insurance Co., 76 Wis. 269, 44 N. W. 1106, as authority. The same author, in section 583, lays down the rule that "an agent intrusted with policies signed in blank, and authorized to fill out and deliver them, may waive proof of loss," and cites, in support of the text: Insurance Co. v. Coates, 14 Md. 285; Insurance Co. v. Murray, 73 Pa. St. 13; Insurance Co. v. O'Connor, 29 Mich. 241; Ide v. Insurance Co., 2 Biss. 333, Fed. Cas. No. 7,001; Norwich & N. Y. Transp. Co. v. Western Massachusetts Ins. Co., 34 Conn. 561; McBride v. Insurance Co., 30 Wis. 562. The same author, upon the authority of Ide v. Insurance Co., 2 Biss. 333, Fed. Cas. No. 7,001, states the rule to be that "a local agent who effects the insurance may waive proof of loss." Biddle on Insurance (section 1136) says proof of loss may be waived, as where the insurer or his authorized representative tells the insured not to present such proof. It has been held that an agent who effects insurance, has policies signed in blank, which provide they shall not be valid until countersigned by him, and who issues and countersigns such policies, is a general agent, and has power to waive proof of loss. Eastern R. Co. v. Relief Fire Ins. Co., 105 Mass. 570; Insurance Co. v. Helfenstein, 40 Pa. St. 289; Marsden v. Assurance Co., L. R. 1 C. P. 232; Kendall v. Insurance Co., 2 Thomp. & C. 375; Bernero v. Insurance Co., 65 Cal. 386, 4 Pac. 382; Insurance Co. v. Perry (Ind. Sup.) 30 N. E. 637; Pennell v. Insurance Co., 73 Ill. 303; Insurance Co. v. Dunmore, 75 Ill. 14; Insurance Co. v. McLanthan, 11 Kan. 538; Insurance Co. v. Munger, 49 Kan. 178, 30 Pac. 120; Kahn v. Insurance Co. (Wyo.) 34 Pac. 1059.

In most of the cases, pro and con, the conclusion is stated, and no authority referred to or process of reasoning employed. In nearly all of them there was an absence of any specific proof of the power of the local agent, and the decision reached was drawn from the fact that the local agent effected the contract of insurance, countersigned the policy, and collected the premiums. In the majority of the cases decided, and by all of the text writers, it is conceded that the local agent, unless restricted by the positive terms of the policy, as is the case here, has authority to waive forfeitures, extend the time for the payment of premiums, and the like; but a distinction is drawn between the power of a local agent to vary or waive the terms of the contract, and his power to waive proof of loss, which, it is contended, is a different thing from effecting a contract, and involves a different training and character of skill. It is pointed out that one man may be competent to draw the insured into a contract whereby money...