Norwich Union Fire Insurance Association v. Buchalter
| Decision Date | 08 June 1903 |
| Parties | NORWICH UNION FIRE INSURANCE ASSOCIATION, Respondent, v. CHAS. F. BUCHALTER, Appellant |
| Court | Kansas Court of Appeals |
Appeal from Jackson Circuit Court.--Hon. E. P. Gates, Judge.
AFFIRMED.
Judgment affirmed.
Karnes New & Krauthoff and Willard P. Hall for appellant.
(1) The bond was given for the purpose of securing the performance by defendant of his duties as agent, and any recovery on said bond must be limited to defendant's failure to perform said duties. The extent of the bond is measured by the extent of said duties, and there can be no liability against defendant for anything upon the bond, unless he himself was liable for the same thing, as agent, outside of said bond. The bond secured the performance, by defendant, of his duties as agent. It did not purport to create any duties for him to perform, nor to define the duties already assumed by him. Lach v. McVean, 33 Mich. 473; Finley v Lynn, 6 Cranch 238; Dunbar v. Fleisher, 137 Pa St. 85; Sewing Machine Co. v. Mullins, 41 Mich. 339; Jordan v. Kavanaugh, 63 Ia. 152; Mayor v. Refrigerator Co., 82 Hun (N. Y.) 553. (2) The bond here refers to a verbal, and not a written, contract, i. e., the contract of agency between plaintiff and defendant. It does not undertake to set out even one single item of said contract, and, therefore, parol evidence is competent to identify and explain said contract. There is here a latent ambiguity open to parol explanation. Miles v. Miles, 30 So. 2, 78 Miss. 904; Fruit Grower's Assn. v. Packing Co., 134 Cal. 21, 66 P. 28; Mathews v. Robertson, 87 N.W. 190, 111 Wis. 334; Munford v. Railroad, 70 Tenn. (2 Lea) 393. (3) Upon the undisputed facts defendant never collected one dollar of premiums. He was under no duty to do so, and Lee collected all the premiums sued for, with the knowledge and consent of plaintiff. On those facts defendant was not liable as agent. Plaintiff's only claim was against Lee. 1 Ency. of Law (2 Ed.), 981-983; Whart. on Agency, sec. 277; McCants v. Wills, 4 Rich. (S. C.) 381; Bath v. Caton, 37 Mich. 199; Whitlock v. Hicks, 75 Ill. 460; Campbell v. Reeves, 3 Head (Tenn.) 226; Darling v. Stanwood, 14 Allen 504; Ewell's Evans on Agency, top p. 294, par. g; Daly v. Bank, 56 Mo. 94; Mechem on Agency, sec. 196; Robinson v. Railroad, 30 Ia. 401; Railroad v. Blair, 4 Baxt. 407; Brown v. Lent, 20 Vt. 529; Story on Agency, secs. 201, 217a; Miller v. Bank, 30 Md. 392; Wicks v. Hatah, 62 N.Y. 535; Strong v. Stewart, 9 Heisk. 137; Story on Bailments (9 Ed.), 174; Hoffman v. Parry, 23 Mo.App. 20; Railroad v. Blair, 1 Tenn. Ch. 351; Butler Co. v. Bank, 143 Mo. 13; National S. S. Co. v. Sheahan, 122 N.Y. 461, 25 N.E. 858. (4) The court erred in instructing the jury that defendant was liable if he signed blank policies for Lee and permitted him to collect the premiums thereon. (5) The trial court erred in refusing to instruct the jury that defendant was not liable for premiums collected by Lee or Lee & Dunham, as agents for plaintiff, under its authority, and to be reported directly to it, and to be accounted for directly with it. Swindle v. State ex rel., 44 N.E. 60; Faurote v. State, 110 Ind. 463, 11 N.E. 472; State v. Granite Co., 117 Ind. 470, 20 N.E. 437. (6) The trial court erred in excluding the Kansas insurance statutes from evidence. The whole transaction was a mere scheme to avoid the effect of those statutes, was in violation thereof, and the bond for that reason alone is void. Newberry Bank v. Stegall, 41 Miss. 142; Daniels v. Barney, 22 Ind. 207; Thorne v. Ins. Co., 80 Pa. St. 15.
Fyke Bros., Snider & Richardson for respondent.
(1) There is no ambiguity in the bond. The appellant accepted the appointment as respondent's agent. He countersigned and issued policies, and where an insurance agent issues a policy of insurance, the premium thereon eo instanti becomes due and payable to the agent whose duty it is to receive it, and the law authorizes the presumption that he performed the duty that is enjoined upon him. Ins. Co. v. Trimble & Pratt, 86 Mo.App. 546. (2) If he entrusted the policy to another who collected the premium and failed to account for it, it is wholly immaterial. Even if plaintiff knew that appellant expected or intended to entrust the collection of premiums to some third person, such knowledge would not relieve appellant from liability to the plaintiff.
Plaintiff appointed defendant Buchalter as its agent for the transaction of fire insurance business in Kansas City, in the State of Kansas. As such agent he executed to plaintiff a bond with one Lee and one Dunham as his sureties. There was a default in sums collected for premiums on policies issued for risks within the territorial limits of such agency, and plaintiff thereupon brought this action on the bond. The case was here on a former appeal and is reported in 83 Mo.App. 504. The judgment in the trial court was for the plaintiff.
It appears that by the statute of Kansas a foreign insurance company could not solicit patronage, or issue policies, or transact any fire insurance business, except through an agent who was a resident of that State. In view of that law plaintiff appointed defendant Buchalter its agent, as aforesaid, and he executed the bond upon which this action is based. There is no dispute as to the defalcation; but the defense is founded upon the following grounds: That plaintiff had as its agents in Kansas City, Missouri, the defendants Lee and Dunham, who are the sureties of Buchalter. That desiring to conduct a business in Kansas it appointed Buchalter as its agent and took from him the bond with the verbal understanding and agreement at the time that he should be a mere figurehead; that the business would in fact be done by Lee & Dunham, and that there should be no liability on the bond. That in point of fact the business was all done by Lee & Dunham, or by Lee, after they dissolved partnership. That the collections of premiums which compose the default were made by Lee. There was evidence introduced, together with that offered and ruled out, which tended to prove the foregoing. It was shown that Buchalter received agency supplies from plaintiff, including blank policies and agent's reports, and that in prosecuting or conducting the business in Kansas he took no part in person except that he signed all the policies in blank and delivered them to Lee & Dunham, who would issue them. The usual reports which are required of agents by insurance companies were made out by Lee & Dunham, to which they signed Buchalter's name by means of a rubber stamp procured for that purpose.
By comparing what we have just stated with the opinion in the case when here before, it will be seen that a part of the defense in the last trial was along the lines presented and determined on the first appeal, viz., that defendant should execute the bond out of mere form, and only as a figurehead, and that no liability should attach to him. We disposed of that view of the case then, and have no reason now to modify what we then said.
But counsel have advanced additional considerations on the present appeal. It is said that though the bond can not be considered a mere empty form incapable of supporting a liability, and that if Buchalter had performed any duties as plaintiff's agent, he could not have been heard to say that in consequence of a verbal understanding at the time, he was not to incur liability, yet, defendant says, as the truth was he did not collect any premiums, he could show that fact and thus escape from the bond. Undoubtedly he could, for in such case there would be no breach, and therefore no contradiction of the bond. But that is only half of defendant's claim. He maintains that not only could he show that he did not collect any premiums, but it was understood that the premiums which were collected, though arising from business in his agency and on policies signed by him, were to be collected, and were, in fact, collected by Lee & Dunham, the Missouri agents, who solicited and took insurance in his name. We are of the opinion that the law prohibits such defense.
The situation surrounding the parties to the bond and the object sought to be accomplished by them, are proper matters for consideration. From such consideration it is too apparent for dispute, that the object and purpose of the bond, considered apart from any verbal understanding, was that it secured the faithful performance of all the duties of an agent pertaining to the conduct of plaintiff's insurance business in Kansas City, Kansas. This is necessarily true for the reason that plaintiff could not do any such business except through this defendant, or else through some other resident of Kansas, and there is no pretense of any other. The bond reads that he "shall faithfully perform his duties as agent of the Norwich Union Fire Insurance Company for Kansas City, Kansas, and vicinity, and shall duly and punctually account for and pay over to said company the premiums and moneys collected by him." The only duties of an agent which could be performed in Kansas City, Kansas, and the only premiums which could be collected there would be those performed and collected by Buchalter, since Lee and Dunham, being non-residents, were prohibited by law. It therefore is apparent that proof of the...
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