Schwarzchild & Sulzberger Co. v. Phoenix Ins. Co. of Hartford

• Decision Date: 02 May 1902
• Citation: 115 F. 653
• Parties: SCHWARZCHILD & SULZBERGER CO. v. PHOENIX INS. CO. OF HARTFORD.
• Court: U.S. District Court — Southern District of New York

115 F. 653

SCHWARZCHILD & SULZBERGER CO. v. PHOENIX INS. CO. OF HARTFORD.

United States Circuit Court, S.D. New York.

May 2, 1902

William Vannamee, for plaintiff.

Wheeler H. Peckham, for defendant.

WALLACE Circuit Judge.

This is an action upon a policy issued by a Connecticut corporation through an agent at Kansas City, insuring the plaintiff against loss by fire, in the sum of $50,000, upon property in the state of Kansas. The question in the case is whether there had been a cancellation of the policy prior to October 6, 1899, the date of the fire.

The policy contains this provision:

'This policy shall be canceled at any time at the request of the insured, or by the company by giving five days' notice of such cancellation. If this policy shall be canceled as hereinbefore provided, or become void or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy or last renewal,-- this company retaining the customary short rate,-- except that, where this policy is canceled by this company by giving notice, it shall retain only the pro rata premium.'

The cancellation, if there was one previous to the fire, was effected by the telegrams and letters exchanged between Merriam, the local agent of the defendant, and Anderson, who had full authority to represent the plaintiff. The former was the agent of a number of insurance companies at Kansas City. The latter was an insurance broker at New York City, carrying a line of insurance amounting to several hundred thousand dollars with Merriam. There was an open account between them and throughout the period of the correspondence between them there was a balance on Anderson's books to the credit of Merriam of over $2,000. Prior to September 20, 1899, there had been correspondence between Merriam and Anderson about the unwillingness of Merriam's companies to carry insurance upon the plant of the plaintiff at the existing rate of premium; and Merriam had been instructed by Magill the general agent of the defendant, that the policy must be canceled. September 20, 1899, Merriam, apparently in reply to a telegram received from Anderson, sent Anderson a telegram as follows:

'No; our companies won't carry. Cancel Phoenix fifty thousand.'

The same day Merriam wrote Anderson as follows:

'We had to reply to your telegram * * * that it would be necessary for us to call for the immediate cancellation of the 50,000 in the Phoenix of Hartford. It does not appear to us, from what information we can get from our insurance companies, that companies are open to write this risk at 1%. In fact, though we were enabled to hold the Phoenix on over the union meeting, since then they appear to be more anxious than ever, and have telegraphed us four times in four days about the policy. We regret very much to lose the business, but, on the other hand, when they insist upon an immediate cancellation we are powerless.'

September 20th, Anderson, hoping to induce the defendant's general agent to countermand his instructions to Merriam, wrote to Magill, and on September 23d wrote Merriam as follows:

'We note your communication in regard to the Phoenix of Hartford's $50,000 policy. We wrote Mr. Magill a long letter, explaining this matter, and stating to him that we were now receiving applications from various companies to accept of this business at 1%. * * * We think he will, no doubt, either advise you or ourselves of his intention to write the line. This we say in confidence.'

September 27th Merriam wrote to Anderson as follows:

'Mr. Magill, of the Phoenix, has telegraphed us very urgently for their policy on this line, and it is necessary that it be promptly canceled. The last telegram we had from them was subsequent to your letter to them. * * * It is impossible to hold them on, as they do not deem that the rate is sufficient for the risk.'

On October 3d Anderson wrote to Merriam as follows:

'Mr. Magill has made no reference to our letter regarding his policy. * * * We wrote Mr. Magill by last night's mail again, asking him if he had not decided to retain the policy.'

October 4th Merriam sent the following telegram to Anderson:

'Cancel immediately Phoenix Hartford Schwarzchild. Your action is absolutely necessary.'

Upon the same day he wrote to Anderson as follows:

'The special agent of the Phoenix of Hartford has been here twice to see us in reference to that policy, and is strenuously objecting to staying on so long after cancellation order has been given us. Owing to an urgent telegram from Mr. Magill he insisted upon our notifying the insured of our decision to cancel, but this we did not do; simply wiring you that the case was urgent, and that there must be an...