Sprott v. New Orleans Insurance Association

• Decision Date: 03 May 1890
• Citation: 13 S.W. 799,53 Ark. 215
• Parties: SPROTT v. NEW ORLEANS INSURANCE ASSOCIATION
• Court: Arkansas Supreme Court

13 S.W. 799

53 Ark. 215

SPROTT v. NEW ORLEANS INSURANCE ASSOCIATION

Supreme Court of Arkansas

May 3, 1890

APPEAL from Nevada Circuit Court, C. E. MITCHEL, Judge.

Sprott sued the New Orleans Insurance Association upon a policy of insurance. The facts appear in the opinion. The following are the instructions referred to therein.

Plaintiff asked the court to instruct the jury as follows:

1. "If they believe from the evidence that J. H. Van Dyck was authorized by the general agents of the company to solicit business for the company, to take and forward applications for acceptance, to deliver policies, and to collect and remit premiums thereon, and that the company paid him for his services, then he was the agent of the company and the defendant will be bound by his acts and knowledge. And in this case if the jury find from the evidence that there were false statements or representations contained in plaintiff's application as to the situation, description or diagram of the property insured, but that the said false statements were made by the said VanDyck without the knowledge or consent of the plaintiff, then the defendant company will be estopped and precluded from setting up such false statements or diagram as a defense to this suit."

The court refused to give this instruction as asked, but amended it by adding the following clause: "Unless you further find that the said diagram is carried into the policy of insurance as a warranty by plaintiff."

The instructions given at the request of the defendant to which plaintiff objected are as follows:

1. "If you believe from the preponderance of testimony that the plaintiff made application to the defendant company for insurance, and that said applicant made false and fraudulent representations respecting the condition and situation of the building and property insured by falsely representing on the diagram that said building was one of three only in the same block, and each from twenty-five to forty feet apart, when in fact said block contained six or more frame buildings with only small spaces between them, and that such representations were made a warranty by the terms of plaintiff's application and policy, then you are instructed that such warranty is binding upon plaintiff, and, if false, avoids the policy, and your verdict should be for the defendant."

2. "If the jury find from the evidence that the plaintiff in making the application to the defendant company for this insurance, knowingly made, or permitted to be made, a false statement of the situation and relative position of the building insured and of the situation of the property insured therein, which statement was material to the risk and was acted upon by the company believing it to be true, then the verdict should be for the defendant unless you further find that the defendant company by its agent knew the falsity of the representations."

6. "If the jury find from the evidence that the plaintiff did not keep his books and last inventory securely locked in a fire-proof safe by night, or that he did not so keep them at all times when his store was not actually open for business, or that he did not keep them in some secure place not exposed to a fire which would destroy the building where the goods and business were, but kept them in the same building with his goods where said books or inventory were destroyed by the fire which burned the building, then the verdict should be for the defendant."

7. "The court instructs the jury that under the pleading in this case it is not competent for the plaintiff to show that the diagram on the application for insurance and referred to therein, and also mentioned in the policy of insurance, in the plaintiff's proof of loss and in the complaint in this case of which said policy is made a part, was not made by him or his authority, but that the same is to be considered by the jury as the plaintiff's own representations, and if the same is not true in a material respect, their verdict should be for the defendant."

9. "If the jury find from the evidence that after the fire was discovered plaintiff did not use reasonable means or make reasonable efforts to extinguish the same, but willfully and negligently permitted the said fire to destroy his house and goods, when by the use of reasonable means said house and stock could have been saved, then you will find for the defendant in whole or in part, according as you may believe from the evidence that the same could have been saved in whole or in part."

10. "If the jury find from the testimony that the plaintiff warranted in his application and policy that he would so keep his books of account that in case of a fire the defendant could ascertain from said books the amount of said loss, and you further find from the testimony that he failed to do so then you are instructed that such failure avoided the policy as to the goods, and your verdict should be for the defendant as to that extent."

11. "If the jury find from the evidence that the defendant granted insurance on the plaintiff's building, based upon false and fraudulent statements, either as to location or value, knowingly made by the plaintiff, this would avoid the policy upon said building, and your verdict should be for the defendant as to said building."

14. "The court instructs the jury that the application for insurance and the diagram thereon are made a warranty by the policy, the contract of insurance, and if the diagram is not true, then the plaintiff cannot recover whether the diagram was known to be false or not by the solicitor for the insurance."

Judgment reversed cause and remanded.

Feazel & Rodgers and R. B. Williams for appellant.

1. VanDyck, the solicitor, in all he did in the taking, filling up and forwarding the application, upon which the policy was issued, was the agent of the company, acting within the scope of his authority; he made the false diagram, and the company is bound by his acts and knowledge, and will be estopped from setting up the false diagram as a defense, or the false answers written by himself. 21 N.E. 898.

Agency will be implied where one accepts the benefit resulting from the acts of another acting ostensibly as his agent. 49 Iowa 126; 8 How. (U. S.), 134; 2 W. & M. (U. S.), 217; 10 N.H. 538; 59 Ind. 93.

While the fact of agency cannot generally be established by proof of acts of the professed agent in the absence of evidence tending to show the principal's knowledge of such acts or assent to them; yet where the acts are of such a character and so continuous as to justify a reasonable inference that the principal had knowledge of them, and would not have permitted them, if unauthorized, the acts themselves are competent to prove the agency. 78 Ala. 94; 115 Ill. 138; 11 S.W. 1016; 52 Ark. 11; 18 P. 291. A policy is not forfeited when the company's own agent makes all the false statements contained in the application. 18 P. 291.

The rule is not changed by a stipulation in the policy that the acts of the agent shall be deemed the acts of the insured. 8 S.E. 616.

If one must suffer, it must be the company which clothed him with authority to take applications and for which he was acting, rather than the assured who acted in good faith and innocently. 8 P. 112; 4 A. 817; 1 A. 528. See also 16 N.W. 420; Wood on Ins., ch. 12; May on Ins., sec. 120; 10 N.E. 85; 55 Miss. 489; Wood on Ins., sec. 49; May on Ins., sec. 141; 55 Miss. 489; 18 P. 117, 758, 291; 28 N.W. 607; 13 Wall. 222; 21 Wall. 152; 16 N.W. 430; 8 P. 112; 17 N.E. 792; 71 Ill. 620; 28 N.W. 47.

When one claiming to be an agent sends an application as such agent, and a policy is issued and premiums received, the company is estopped to deny the agency. 35 N.W. 430; 13 P. 156.

The principal is bound by the knowledge of the agent. 29 N.W. 411; 29 N.W. 605; 40 N.W. 386; 43 Mo. 149. The rule is not changed by reason of the warranty in the policy. Appellant assumed, as he had a right to do, that the agent would act fairly and make a correct diagram. 14 Ark. 21; 11 Ark. 149.

In view of these principles, the law should have been declared as asked by appellant.

Eben W. Kimball and T. E. Webber for appellee.

1. There is no identification of the instructions in the bill of exceptions. It was a mere skeleton bill, and presents no question for the court to pass on. 45 Ark. 485.

2. There was an express warranty that he should keep his books and inventory in an iron safe, or place where they would not be burned by a fire destroying his store. La. Superior Court, 1888; 79 Ga. 666; 17 Ins. Law Jour., p. 813.

3. The policy makes the diagram a warranty, and it clearly misstates the situation.

4. The evidence shows that VanDyck was in no sense the agent of the company till it had accepted the insurance proffered, and by so doing the company did not ratify any act he had done before and make it its own. He was a general insurance solicitor, presenting applications to any company he saw fit. He was under no contract with the company or with Adams & Boyle, its agents.

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