Quinn-Shepherdson Co. v. U.S. Fid. & Guar. Co.
| Decision Date | 23 May 1919 |
| Docket Number | No. 21115.,21115. |
| Citation | 142 Minn. 428,172 N.W. 693 |
| Court | Minnesota Supreme Court |
| Parties | QUINN-SHEPHERDSON CO. v. UNITED STATES FIDELITY & GUARANTY CO. et al. |
OPINION TEXT STARTS HERE
Appeal from District Court, Hennepin County; William E. Hale, Judge.
Action by the Quinn-Shepherdson Company against the United States Fidelity & Guaranty Company and Wirt Wilson and others. Findings for defendants, and, from an order denying its motion for a new trial, plaintiff appeals. Order reversed.
An oral contract of present insurance or for insurance to be effective from date is valid.
The evidence sustains a finding that the plaintiff and the defendant did not enter into an oral contract of present insurance of the fidelity of the plaintiff's employés, or for insurance to be effective from date, but the court erred in limiting, as proof of a contract of insurance, the effect of a letter quoted in the opinion, dated October 3, 1916, to a contract made on August 2d or 3d, the pleadings being sufficient to permit proof of a contract made between August 2d or 3d and October 13th.
A contract of insurance of the fidelity of employés is an original undertaking insuring against loss through the dishonesty of employés and is not within the statute of frauds requiring a special promise to answer for the debt, default or doings of another to be in writing. Kerr, Fowler, Schmitt & Furber, of Minneapolis, for appellant.
Cobb, Wheelwright & Dille and Cohen, Atwater & Shaw, all of Minneapolis, for respondents.
Action to recover from the defendant United States Fidelity & Guaranty Company and the individual defendants Wirt Wilson, George E. Murphy and Henry F. Sprecher because of the defalcation of one Rauch, an employé of the plaintiff. There were findings for the defendants and the plaintiff appeals from the order denying its motion for a new trial.
1. The defendant company is engaged in writing surety or fidelity contracts. The defendants Wilson and Murphy are in charge of its business at Minneapolis. No claim is now made against Sprecher.
The plaintiff claims that it entered into a parol contract with the defendant company relative to the insurance of the fidelity of its employés and that this contract was either a contract of present insurance or a contract for insurance effective from date, in either of which events it claims a right of recovery.
A parol contract of present insurance is valid. Ganser v. Fireman's Fund Ins. Co., 38 Minn. 74, 35 N. W. 584;Relief Fire Ins. Co. v. Shaw, 94 U. S. 574, 24 L. Ed. 291;Hartford Fire Ins. Co. v. Whitman, 75 Ohio St. 312, 79 N. E. 459,9 Ann. Cas. 218;Insurance Co. of N. A. v. Bird, 175 Ill. 42, 51 N. E. 686;Hicks v. British Am. Assur. Co., 162 N. Y. 284, 56 N. E. 743,48 L. R. A. 424;McQuaid v. AEtna Ins. Co., 226 Mass. 281, 115 N. E. 428;Live Stock Ins. Co. v. Stickler (Ind. App.) 115 N. E. 691;Co-operative, etc., Co. v. U. S. F. & G. Co., 137 Tenn. 609, 195 S. W. 177; Richards, Ins. Law, § 80; 1 Joyce, Ins. § 44; 14 R. C. L. p. 880, § 55 et seq.; note 5 L. R. A. (N. S.) 407; note 6 Ann. Cas. 624. An oral contract to issue a policy in the future, to be effective from the present, may be enforced specifically and a recovery given, or damages may be awarded for a breach. Ames-Brooks Co. v. AEtna Ins. Co., 83 Minn. 346, 86 N. W. 344;Everett v. O'Leary, 90 Minn. 154, 95 N. W. 901;Campbell v. American, etc., Co., 73 Wis. 100, 40 N. W. 661;Sanford v. Orient Ins. Co., 174 Mass. 416, 54 N. E. 883,75 Am. St. Rep. 358;Gerrish v. German Ins. Co., 55 N. H. 355;Phoenix Ins. Co. v. Ryland, 69 Md. 437, 16 Atl. 109,1 L. R. A. 548;Sproul v. Western Assur. Co., 33 Or. 98, 54 Pac. 180; Richards, Ins. Law, § 80; 1 Joyce, Ins. § 38; 14 R. C. L. p. 879, § 53.
[2] 2. About August 2 or 3, 1916, one Warner, an insurance broker, went to Wilson's office and the two went to the office of the plaintiff, a corporation engaged in the grain business, and took up with Shepherdson, who represented it, the question of the insurance of the fidelity of its employés. The contemplated insurance was $100,000. A form of contract was selected. The amount of the premium was fixed. It was understood that Rauch was one of the men to be covered and that $20,000 of the total was applicable to him. It was agreed that the insurance was to be effective from August 1st and was to continue for one year.
The plaintiff claims that at that time they entered into an oral contract of present insurance, or that there was an agreement for insurance effective from that time which can be enforced and a recovery had. The defendant claims that an insurance contract was in negotiation, but that the negotiations did not result in a contract, though if an insurance bond were executed it was to be effective from August 1st.
For the purpose of this action it is to be assumed that Rauch defaulted between August 1 and October 13, 1916, in a considerable sum. There was an offer to so prove. It was rejected because the court concluded that no contract was proved.
The court found that the parties did not at any time contract for present insurance and that the defendants did not agree to execute or to deliver in the future a contract of insurance.
The testimony of Shepherdson and Warner was that in the conference of August 2d or 3d it was agreed that the insurance was at once effective from August 1. Shepherdson says that Wilson, in response to his statement that he wanted insurance to begin August 1st, said: ‘It will begin August 1st.’ And that as he left the office he said: ‘You are covered from August 1st.’ Warner supports this testimony; but upon cross-examination his testimony is uncertain and indefinite. Wilson says that he told Shepherdson ‘that we would be very glad, after our investigation of these men and if they are acceptable to the company, to take the bond on August 1st.’ All of these witnesses were financially or morally interested in the result of the litigation.
In certain lines of insurance it is common to cover the insured from the time the application is made. There is evidence that there is not a custom to make fidelity insurance effective at once, and without an investigation of the employés, except in the case of the renewal of insurance on the same employés, or when a policy takes the place of a policy issued by another company upon the employés covered by the new policy.
After the first talk about the insurance the parties proceeded to work out the details. The company made a formal application. The employés made applications. References were submitted to the surety company. Investigations were had. There was a considerable delay. The plaintiff was impatient and took up the matter with the broker and the broker frequently interviewed the defendants. Warner and Wilson were desirous of getting the contract executed. There was some trouble about Rauch's references. Warner saw Murphy frequently. He claims that in September Murphy assured him that the company was covered.
On September 27th, Wilson submitted a list of employés to be covered, including Rauch, to the company. On October 2d, the company wrote from its home office to its Minneapolis office that it did not look upon the class of business as desirable from a surety standpoint, because it was of a speculative character and the...
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