Spann v. Commercial Standard Ins. Co. of Dallas, Tex.

• Decision Date: 23 March 1936
• Docket Number: No. 10380.,10380.
• Citation: 82 F.2d 593
• Parties: SPANN v. COMMERCIAL STANDARD INS. CO. OF DALLAS, TEX.
• Court: U.S. Court of Appeals — Eighth Circuit

82 F.2d 593 (1936)

SPANN v. COMMERCIAL STANDARD INS. CO. OF DALLAS, TEX.

No. 10380.

Circuit Court of Appeals, Eighth Circuit.

March 23, 1936.

Melbourne M. Martin, of Little Rock, Ark. (S. S. Jefferies, of Little Rock, Ark., on the brief), for appellant.

Henry Donham, of Little Rock, Ark. (Martin K. Fulk and Pat Mehaffy, both of Little Rock, Ark., on the brief), for appellee.

Before STONE, SANBORN, and THOMAS, Circuit Judges.

THOMAS, Circuit Judge.

Appeal from a judgment entered upon a verdict directed for the defendant in an action brought by the appellant (plaintiff) upon a policy of Public Liability and Property Damage Insurance issued by the defendant company to one Ray Worley and others on a motortruck. The appellant in this case, Spann, had secured a judgment against Worley, the assured, in the Circuit Court of Pulaski county, Ark., on April 23, 1934, for damages resulting from the negligent driving of said truck at the city of Little Rock, Ark., on March 24, 1934. Execution having been issued on said judgment and returned unsatisfied this suit was brought against the appellee (defendant) insurance company under the authority of Act No. 196 of the Acts of the State of Arkansas of 1927 (page 667).

The appellee defended upon three grounds: (1) That the policy had been canceled at the request of the insured prior to the time the appellant's cause of action accrued on March 24, 1934; (2) that the insured, Ray Worley, in violation of the terms of the policy, failed wholly to give the company notice of appellant's claim and failed to forward to the company the summons served upon him in appellant's action; and (3) a breach of warranty in the application for the policy in reference to the territory in which the truck was to be operated.

The appellee contends that all three of these issues are for determination upon this appeal, while the appellant insists that only the first, cancellation of the policy, is before us.

At the conclusion of all the testimony, the court sustained a motion for a peremptory instruction on the sole ground "that the evidence shows the policy was cancelled prior to the time the plaintiff (appellant) was injured." Exception was taken to the ruling, a verdict was directed and a judgment was entered thereon. The appeal is from such judgment.

The question of cancellation will first be considered. It is claimed by the appellant that the evidence upon this issue is in conflict, requiring it to be submitted to the jury. The appellee maintains (1) that O. Shelley Evans, acting with at least implied authority of Worley, the insured, canceled the policy prior to the accident; (2) that Worley, by giving Evans complete charge over his insurance business and by putting him in a position of apparent authority, is estopped to deny Evans' authority to cancel the policy; and (3) that Worley prior to the judgment against him knew that Evans had canceled the policy and, having made no attempt to repudiate his action, ratified the cancellation.

If uncertainty as to a cancellation of the policy exists because of a conflict of testimony, or because fair-minded men might honestly draw different conclusions from the undisputed evidence, the question of cancellation is not one of law for the court to determine on a motion for a directed verdict, but of fact to be settled by the jury. Detroit Fire & Marine Ins. Co. v. Oklahoma Terminal E. Co., 64 F. (2d) 671, 673 (C.C.A.10).

The first controverted question is as to whether O. Shelley Evans was the agent of Worley, the insured, with authority to cancel the policy of insurance. Evans was an insurance solicitor in the office of Fitch, Chadwick & Co., an insurance agency at San Antonio, Tex. Worley was a truck operator living in that city. He desired to obtain public liability and property damage as well as cargo insurance on his motortruck. His employer directed him to go to the office of Fitch, Chadwick & Co. and to see Evans. He called at their office on December 16, 1933, and interviewed Evans. Worley and Evans were strangers who had not met before. Evans was not an authorized agent for any insurance company. He was a solicitor only receiving a share of the commission on business produced by him.

The testimony of Evans and Worley as to what occurred at the interview of December 16, 1933, is in conflict in some particulars and in harmony in other respects. Evans sold Worley an accident and health policy and a policy for cargo insurance on that occasion, both of which were in companies represented by Fitch, Chadwick & Co. As to the public liability and property damage insurance, Evans testified: "Ray Worley asked me to get the insurance but he did not know in what company I was going to get it. I simply told him I would get it. * * * I told Mr. Worley that they (Fitch, Chadwick & Company) did not write this class of insurance, but that I could get it placed for him." "I explained to Ray Worley that if he had an accident he must report it at once." He testified further that he told Worley that "I told him the policy would be written by the Motor Carrier Insurance Agency in Austin (Texas), and that all subsequent premiums would have to be sent to them because I did not represent them."

Worley testified in reference to the same matters: "I told him (Evans) what I wanted and he sat down and wrote it out and gave me the receipt. I do not remember the exact conversation with Mr. Evans when I got this insurance, or that he said he could not write a policy as was issued by the Commercial Standard Insurance Company, that he had no authority to write that policy, but that he would act as my agent for the purpose of procuring that policy, but it was understood by me that he was their agent."

Worley at that time paid Evans $43.50 and received the following receipt:

"Received from Ray Worley Fortythree and 50/100 Dollars P. L. & P. D. 31.00 — balance 8.20 for 8 months cargo 12.50 balance 6.75 for 6 months.

"12/16/33 C. O. Evans."

Evans had an arrangement with the Motor Carrier Insurance Agency of Austin, Tex., to solicit business for them for one-half the regular commission. That agency was the authorized agent of the Commercial Standard Insurance Company of Dallas, Tex., appellee, and Evans had been furnished their blank applications for use. On December 26, 1934, Evans filled out one of these blanks and signed Worley's name thereto and sent it on December 28th to the Motor Carrier Insurance Agency with his personal check, saying:

"Enclosed is my check for $27.90, which represents net on $31.00, the balance to be paid $8.20 monthly for eight months.

"Please mail the policy to me, as it is not to be filed with the Railroad Commission."

The policy was drawn by the agency, dated December 26, 1933, and returned on December 29th to Evans. There was attached to the policy a Premium Payment Agreement providing for payment of the balance of the premium in eight equal monthly installments of $8.20 each beginning January 15, 1934.

The policy was kept by Evans. Worley never saw it. He never asked for it. He said: "I didn't tell him (Evans) to keep it for me, and didn't tell him not to keep it. * * * Just left it with him." "Mr. Evans told me that the company would hold the policy until fully paid for and then it would be delivered." Evans explained his retention of the policy as follows: "When we write insurance policies for truckmen on credit terms we retain possession of the original policies so that if subsequent payments are not made we can return the policies to the company for cancellation without the necessity of obtaining the policy back from the insured."

The policy had been in force but three days when on December 29, 1933, Worley was in an accident with his truck at Waco, Tex. He immediately informed Evans of the accident by telegram, and Evans reported it to the Motor Carrier Insurance Company on January 2, 1934. Worley then called at Evans' office and a detailed report was prepared by Evans and mailed to the agency on January 3, 1934. In his letter transmitting the report, Evans said: "I am sorry that we catch an accident under this policy so quick, but I believe if we sit tight and not do very much about it, that Worley and the International People might convince the claimant that maybe they aren't claimants at all."

It was while Worley was at Evans' office about January 3, 1934, that it is claimed he authorized Evans to cancel the policy. The truck was seriously damaged in the Waco accident, and Evans testified that he said to Worley on that occasion: "There is no sense of your keeping this policy any longer if you are not going to use your truck. Without the use of your truck you certainly cannot earn money to pay your premium. The best thing for you to do is to send it back to the Motor Carrier Agency and get it cancelled." He then adds: "And if I recall the conversation correctly that is what he agreed to do." Worley denied this conversation emphatically. He testified that it never occurred. He said: "In the conversation in which I told him (Evans) my truck was demolished and I had no money to fix it, which occurred between the 3rd and 10th of January, I told him it had to be fixed; I thought I would get it out of the Insurance Company, The National, Yes, I had a policy with them; I paid them something like forty dollars for it, in case of an accident they were to fix it up. It was payable to them and they were supposed to fix my truck up. I have that insurance policy now, it is down at home."

The truck was repaired, and Worley continued the use of it.

On January 10, 1934, Evans wrote the Motor Carrier Insurance Company saying: "Inasmuch as this insured had an accident which completely demolished his truck, I am returning the above numbered policy for cancellation. I will thank you to send me check for return premium." The agency canceled the policy under date of January 10, 1934, and returned it to the appellee. At the same time a...