Ogle Lake Shingle Co. v. National Lumber Ins. Co.

• Decision Date: 09 April 1912
• Citation: 122 P. 990,68 Wash. 185
• Parties: OGLE LAKE SHINGLE CO. v. NATIONAL LUMBER INS. CO.
• Court: Washington Supreme Court

122 P. 990

68 Wash. 185

OGLE LAKE SHINGLE CO. v. NATIONAL LUMBER INS. CO.

Supreme Court of Washington, En Banc.

April 9, 1912

Appeal from Superior Court, King County; Mitchell Gilliam, Judge.

Action by the Ogle Lake Shingle Company against the National Lumber Insurance Company. From a judgment for plaintiff, defendant appeals. Reversed and remanded, with directions to dismiss.

Granger & Clarke, of Seattle, for appellant.

Troy &amp Sturdevant, of Olympia, and A. J. Falknor, of Seattle, for respondent.

MORRIS, J.

Action to recover upon an alleged oral contract of insurance. The determinative facts are these: On June 1, 1909 representatives of the respondent called on J. B. Cutter, an insurance agent at Olympia, soliciting insurance. Cutter, not representing insurance companies carrying the character of risk represented in respondent's plant, had arrangements with Carstens & Earles, general insurance agent at Seattle representing several insurance companies, to send such business to it on a percentage basis. In accordance with this arrangement, Cutter, on the same day, wrote Carstens & Earles a letter, the material parts of which are: 'I am called upon to insure the Ogle Lake Shingle Co. * * * mill and machinery to the extent of $2,000. * * * Will you kindly issue policy for above mentioned shingle mill, covering mill and machinery to the amount of $2,000.' To this letter Carstens & Earles replied on June 2d: 'We are in receipt of you favor of the 1st inst., asking us to forward you insurance policies upon the mill of the Ogle Lake Shingle Co., in the sum of $2,000. Before we can do this we must know how you desire the insurance divided; that is, how much on the building and how much upon machinery. We enclose herewith one of our printed forms, and will ask you to please fill it out and forward to us, and we will then send you the policies.' On June 4th, Cutter replied to this letter filling out the blank upon his own responsibility, not having seen any official of the shingle company. He divided the amount desired as follows: $300 on building; $500 on engine and boiler; $1,000 on machinery; and $200 on stock incident to the business. This letter was mailed at Olympia at 11:30 a. m. In the afternoon of the same day, and while Cutter's letter was en route to Seattle, the mill was totally destroyed by fire. Carstens & Earles received Cutter's letter the next morning, and the same day wrote two policies of $1,000 each, dividing the risk between appellant and the Des Moines Fire Insurance Company. The policies were dated June 5th, and noted the insurance as commencing June 5, 1909, and expiring June 5, 1910. On the same day it made out the agent's customary daily report showing the placing of the insurance in these two companies. It was not notified of the loss of the mill until June 7th. A number of errors are suggested by the appeal, but they are all embodied in the one contention of appellant, that there was no contract upon which liability can be enforced.

It is now well established that contracts of insurance may rest in parol. It is as well established that an oral contract for insurance is not enforceable, unless all the elements essential to a contract of insurance have in some manner been agreed upon. 'In other words, nothing can be left open for future negotiations with reference to the subject-matter, parties, rate of premium, amount of duration of risk.' 1 Cooley's Insurance Briefs, 368; Wood on Fire Ins. § 5.

It will be admitted that the contract of insurance must have been complete at the time of the destruction of the mill on June 4th, or there can be no recovery. If it lacked any of the required essentials, it was not complete. Among these essentials is certainty of parties, and the risk insured against, in neither one of which particulars was there any designation or certainty at the time of the fire. Had Carstens & Earles been an insurance company, or representing only the two companies, in which the policies were subsequently written, it might be held that there was a certainty as to the parties to the contract. It is admitted that it represented several other companies at the time of the fire. There is nothing in the correspondence nor in the testimony to indicate in what companies this insurance was to be placed. At the time the representatives of the shingle company called on Cutter to effect the insurance, he had no knowledge of the companies, other than as the names appeared on the letter heads of Carstens & Earles and in the circulars sent to him. They evidently made some inquiry as to the companies to carry the risk, as Cutter says in his testimony, 'I told them it would be placed in two good companies,' but that he could not tell them in what companies. 'I did not know exactly, so I left it all to their [Carstens & Earles] discretion in which companies to place it.' Under these circumstances, no contract existed as to any one of the companies represented by Carstens & Earles. And the first essential of a contract is lacking, in that there was no meeting of minds as to the parties to the contract. So far as we have been able to determine, all the authorities agree that, where an insurance agent represents several companies and there is no designation of the company to take the risk, there is no contract because of the failure of parties. Hartford Fire Ins. Co. v. Trimble, 117 Ky. 583, 78 S.W. 462; Sheldon v. Hekla Fire Ins. Co., 65 Wis. 436, 27 N.W. 315; New Orleans Ins. Ass'n v. Boniel, 20 Fla. 815; Kleis v. Niagara Fire Ins. Co., 117 Mich. 469, 76 N.W. 155; John R. Davis Lumber Co. v. Scottish Union & Nat. Ins. Co., 94 Wis. 492, 69 N.W. 156; Michigan Pipe Co. v. Michigan Fire Ins. Co., 92 Mich. 482, 52 N.W. 1070, 20 L. R. A. 277.

The contract is lacking in another essential: There was no segregation or division of the risk insured against. Cutter's letter of June 1st requests a policy covering mill and machinery for $2,000, but he does not indicate how this risk is to be divided, how much on mill and how much on machinery. Carstens & Earles therefore write him on June 2d, inquiring how the policy is to be divided between mill and machinery, upon receipt of which information it promises to send the policies. It will hardly be doubted that in making this segregation Cutter was the agent of respondent, and there could be no meeting of the minds upon this point until Carstens & Earles had received and accepted such segregation, which was not until after the fire. Any proposal coming from Carstens & Earles to be accepted by Cutter acting for respondent would have been considered as...