Old Colony Ins. Co. v. Fagan Chevrolet Co.

• Decision Date: 25 February 1963
• Docket Number: No. 42519,42519
• Citation: 246 Miss. 725,150 So.2d 172
• Parties: OLD COLONY INSURANCE COMPANY v. FAGAN CHEVROLET COMPANY, Inc.
• Court: Mississippi Supreme Court

Page 172

150 So.2d 172

246 Miss. 725

OLD COLONY INSURANCE COMPANY v. FAGAN CHEVROLET COMPANY, Inc.

No. 42519.

Supreme Court of Mississippi.

Feb. 25, 1963.

Satterfield, Shell, Williams & Buford, Jerome B. Steen, Jackson, for appellant.

George B. Grubbs, Mendenhall, Hugh B. McIntosh, Collins, Boyd, Holifield, Harper & Graves, Laurel, for appellee.

JONES, Justice.

This case is on appeal from the Circuit Court of Simpson County, Mississippi, where the appellee was awarded a verdict of $24,000. The main question involved is a construction of Sec. 5706, Miss.Code 1942, insofar as same fixes the authority of a local insurance agent.

The case arose in this way. Fagan Chevrolet Company is an automobile agency. Appellant, of course, is an insurance company, and Zeno L. Mangum, who was a co-defendant in the cause, was the local agent of appellant in Magee, Mississippi. On or about May 2, 1959, appellee purchased from appellant a garage liability policy, the said purchase being made through the local agent Mangum. Mangum signed the policy as authorized representative, delivered it, and collected the premium. In the early part of 1960, a suit was filed in Jones County, Mississippi. Appellee had sold an automobile to a man in Jones County. It had retained title to the car. The man let his grandson operate the car and there was an automobile accident in which a person was injured. Suit was filed against the purchaser of the car and also against Fagan Chevrolet Company for personal injuries received as a result of said accident. Jack W. Thames, an officer of appellee, was served on February 24, 1960, with a summons in said cause. Thames testified that soon after the receipt of the summons he contacted Mr. Mangum and read the summons to him, then told him he was going to Laurel and see what he could learn about the case. He did go to Laurel, and when he returned, called Mangum and told him what he had found. It is claimed that Mangum, by his conduct, waived the delivery of the summons to the company. The policy itself provided that reasonable notice should be given of an accident and upon receipt of any court summons same should be immediately forwarded to the company. It is claimed herein that Mangum, as agent of the company, waived the delivery of the summons.

There was no appearance in the Circuit Court of Jones County in defense of said cause. A default judgment was taken for something over $16,000. Later, a writ of garnishment was served on appellee's bank and funds belonging to the appellee were impounded as a result of such garnishment. After some considerable dealings and after an effort to have the default judgment set aside had been denied, Fagan Chevrolet Company settled the claim for something over $5,000, and thereupon filed this suit against the insurance company to recover the damages that it had sustained. It obtained a judgment for $24,000, which prompts this appeal.

The jury returned a verdict for the local defendant Mangum and against the appellant.

It is seen from this brief statement of the facts that the question involved is the power and authority of the local agent to waive. The declaration charged that Mangum was the general agent and adjuster of the insurance company. It charged that he was empowered to do all the acts and duties with reference to the insurance coverage granted to appellee, including the signing and issuance of contracts, collection of premiums, acceptance of notice of claims and litigation, the adjustment of claims, and the handling of all endorsements on the insurance policy, and to perform every act and transaction relative to said insurance contract as a general agent of said company. The answer denied he was a general agent and charged he was merely what is generally known as a local agent. The evidence showed that he did issue policies, collect premiums, and the answer admitted that he adjusted minor claims. The evidence further showed that Fagan Chevrolet Company had reported to him various claims on cars and under the workmen's compensation act, and the claims had been handled through Mangum and paid by the company. The size of these claims was not shown. The policy contained the following provisions:

'Condition No. 9. Notice of Accident.

'When an accident occurs written notice shall be given by or on behalf of the insured to the company or any of its authorized agents as soon as practicable. Such notice shall contain particulars sufficient to identify the insured and also reasonably obtainable information respecting the time, place and circumstances of the accident, the names and addresses of the injured and of available witnesses.

'Condition No. 10. Notice of claim or suit--coverages A, B and D.

'If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative.

'Condition No. 13. Action against the company--coverages A, B, and D.

'No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company.

'Condition No. 17. Changes.

'Notice to any agent or knowledge possessed by any agent or by any other person shall not effect a waiver or a change in any part of this policy or estop the company from asserting any right under the terms of this policy; nor shall the terms of this policy be waived or changed, except by endorsement issued to form a part of this policy, signed by a duly authorized representative of the company.'

Sec. 5706 of the Miss.Code of 1942, being the statute on which appellee relied, reads as follows:

'Every person who solicits insurance on behalf of any insurance company, or who takes or transmits, other than for himself, an application for insurance, or a policy of insurance, or who advertises or otherwise gives notice that he will receive or transmit the same, or who shall receive or deliver a policy of insurance of any such company, or who shall examine or inspect any risk, or receive, collect or transmit any premium of insurance, or make or forward a diagram of any building, or do or perform any other act or thing in the making or consummation of any contract of insurance, for or with any such insurance company other than for himself, or who shall examine into or adjust or aid in adjusting any loss for or on behalf of any such insurance company, whether any of such acts shall be done at the instance, or request, or by the employment of the insurance company, or of, or by any broker or other person, shall be held to be the agent of the company for which the act is done or the risk is taken as to all the duties and liabilities imposed by law, whatever conditions or stipulations may be contained in the policy or contract; such person knowingly procuring by fraudulent representations, payment, or the obligation for the payment, of a premium of insurance, shall be punished by a fine of not less than one hundred dollars nor more than five hundred dollars, or be inmprisoned for not more than one year.'

At the conclusion of the evidence plaintiff was given the following instruction:

'The Court instructs the jury for the plaintiff that if you believe from a preponderance of the evidence in this case that Old Colony Insurance Company furnished blank insurance forms for policies to Zeno Mangum and authorized the said Zeno Mangum to sign, fill out and deliver said policies, and to collect the premiums thereon, and if you further believe that the insurance policy involved in this case was issued, as aforesaid, then, and under these circumstances, the said Zeno Mangum was the General Agent of the insurance company with the power and authority to waive the provisions of the policy involved in this lawsuit.'

There was no dispute that Mangum had issued the policy, that he had signed it, filled it out and delivered it, and that he collected the premium thereon, so that this instruction based entirely upon the code section quoted above was in effect a peremptory instruction as to the authority of the agent.

After a verdict of the jury finding for Mangum and against Fagan, appellant filed a motion for a judgment notwithstanding the verdict, and in this Court attacks the decisions of Gulf Refining Co. v. Myrick, 220 Miss. 429, 72 So.2d 217, and Canale, et al. v. Jones, 228 Miss. 317, 87 So.2d 694. However, we are unwilling at this time to overrule such decisions.

This brings us directly to the question of the authority of the local agent and since the instruction confined it to the statute above copied, necessarily we are required to examine this statute and the decisions thereunder to see whether or not the instruction was justified.

In the case of Travelers' Fire Insurance Co. v. Price, 169 Miss. 531, 152 So. 889, the authority of a soliciting and collecting agent was questioned as to matters which had been done after the issuance and delivery of the policy. This was a liability policy which had a provision calling for the unconditional ownership of the car, and also providing against the use of the car as a public conveyance for hire. Sometime after the policy had been delivered, the owner of the car transferred it to a cab company to be used as a public conveyance for hire and driven by her husband. While it was being so used, the soliciting and collecting agent approached her husband to collect the premium. He was informed by the husband of the transfer of the automobile to the cab company, and of the fact that it was being used as a public conveyance for hire, and asked the collecting agent if this fact would void the policy. He was told that it would not, and he thereupon paid the balance of the...