Russell v. O'Connor

• Decision Date: 20 December 1912
• Citation: 120 Minn. 66,139 N.W. 148
• Parties: RUSSELL v. O'CONNOR.
• Court: Minnesota Supreme Court

120 Minn. 66

139 N.W. 148

RUSSELL

v.O'CONNOR.

Supreme Court of Minnesota.

Dec. 20, 1912.

Appeal from District Court, Itasca County; C. W. Stanton, Judge.

Action by D. D. Russell against George E. O'Connor. From an order denying a motion for judgment notwithstanding the verdict or for a new trial, defendant appeals. Reversed, and new trial granted.

Syllabus by the Court

Instruction given by a property owner to an insurance agent to ‘write out a thousand dollars insurance’ on a certain building, and the agent's acceptance thereof by saying that he would ‘attend to that right away,’ held, under the facts of the case and in view of the prior course of dealing between the parties, to create a contract whereby the agent undertook to use reasonable diligence to procure the insurance and seasonably to notify the plaintiff in the event of the failure of such attempt, though, by reason of the condition and statuts of the building, the agent had no authority to write the insurance at the time of the conversation.

Evidence in an action for the breach of such contract considered, and held sufficient to take the case to the jury upon the question as to whether the defendant fulfilled the obligations imposed upon him by the said agreement.

The fact that the defendant's evidence, in such action, tending to show that he fulfilled his obligations under the contract, was uncontradicted by other evidence, did not require either the court or the jury to accept the defendant's contention in such regard as established, where such evidence was itself contradictory, and the defendant also failed to produce other evidence at his command to sustain his claim.

Insruction in such action held to constitute error prejudicial to the defendant, in that it was calculated to lead the jury to believe that the defendant could be held liable on the theory that he had authority to write the insurance at once and failed so to do, or that his liability depended upon whether a policy written by him at such time would have bound his principal, the insurance company. C. C. McCarthy, of Grand Rapids, for appellant.

George H. Spear, of Duluth, for respondent.

PHILIP E. BROWN, J.

Action to recover damages, in the sum of $1,000, for the breach of a contract to obtain insurance on the plaintiff's building. The plaintiff had a verdict, and the defendant appealed from an order refusing to grant him a judgment notwithstanding the verdict or a new trial.

The complaint is to the effect that the defendant was, at all times here material, a fire insurance agent, engaged in such business at Coleraine, and representing several fire insurance companies, the names and number thereof being unknown to the plaintiff, and, further, that on October 18, 1909, the plaintiff, being the owner of a building situate on lots 22 and 23, in block 2, of Bovey of the value of $2,500, entered into an agreement with the defendant wherein, in consideration of the plaintiff's promise to pay the premiums, the defendant agreed to insure forthwith this building against loss by fire in the sum of $1,000 in one or more of the companies represented by him as agent, and to deliver the policies to the plaintiff, all of which he failed and neglected to do, whereby the plaintiff was damaged in the sum of $1,000 when his building was destroyed by fire on October 25, 1909. The answer admitted that during the time stated the defendant was engaged in business as a fire insurance agent at Coleraine, and placed in issue all other averments of the complaint.

The uncontroverted evidence established the plaintiff's ownership of the building, the failure of the defendant to cause it to be insured, the destruction thereof by fire on October 25, 1909, and that its value exceeded $1,000. The evidence also established the following facts: On the dates mentioned the plaintiff's building, and also certain other adjacent buildings which constituted exposures, were unfinished, and the plaintiff's building contained inflammable materials, and constituted a risk known in insurance parlance as a ‘special hazard’; that the building had not been rated for insurance, and that the defendant was without authority to write insurance thereon in any of the companies represented by him until the rate had been fixed by the directing officers or agents of such companies, after which, upon notice thereof, he could have written what is known as a ‘builder's risk’ upon the building. All of these facts were known to the defendant at all times mentioned. It furthermore conclusively appeared that the defendant was a resident of Coleraine, and cashier of the First National Bank of Coleraine. This village is connected by telephone with Bovey, about a quarter of a mile distant, where the plaintiff lived. The defendant did an insurance business in both places. Prior to October, 1909, the defendant had written four insurance policies, each for the term of one year, on properties of the plaintiff in Bovey or Coleraine, without the plaintiff's designation of the companies which were to carry the same, and these policies had been delivered to the plaintiff without his paying the premiums in cash, a bill being thereafter rendered therefor.

In addition to the foregoing, there was evidence from which the jury might well have found, notwithstanding the defendant's denials in this regard, that the plaintiff's wife, pursuant to his instructions, on October 18, 1909, telephoned the defendant at Coleraine that the plaintiff had gone away early that morning, and wanted her to advise the defendant ‘to write out a thousand dollars insurance on that building we had in Bovey, lots 22 and 23, on block 2,’ and that the defendant replied, ‘Thank you, Mrs. Russell; I will attend to that right away’; and that subsequently no communication occurred between the parties until after the fire. It appeared from the defendant's own testimony that, at the time he had conversation with Mrs. Russell, he knew what building was referred to by her, that it was new and unfinished, and constituted a ‘hazardous risk,’ upon which a rating would have to be obtained from agents either at St. Paul or Duluth before it could be insured, and that such insurance could issue for only one year.

[1] 1. The first question is whether the telephone conversation between the defendant and the plaintiff's wife created a contract, and, if so, what was its nature and legal effect? The defendant contends that this conversation created no contract whatever, and placed him under no legal obligation to the plaintiff, for the reason, among others, that the plaintiff's building was not insurable as contemplated by him, or as requested by him, the same being unfinished, unrated, and a ‘special hazard,’ on which the defendant was not authorized to write insurance in any of his companies. If this conversation occurred, which, as we have held, was a question for the jury, we have no doubt that a contract was created. There was evidence tending to show that the defendant represented a number of complanies, and had previously written several policies for the plaintiff on other properties, as before stated, himself selecting the companies and delivering the policies previously to the payment of the premiums, which were subsequently paid by the plaintiff on demand. The defendant's claim that no contract resulted, based on the contention that the failure to agree upon the premium prevented a meeting of minds sufficient to contract, is untenable. The relation between the parties arising from the conversation created an implied obligation on the plaintiff's part to pay the premium if the policy had been written. Campbell v. American Fire Ins. Co. of Phila., 73 Wis. 100, 109, 40 N. W. 661. Beyond question, in such event, the plaintiff could...