Telford v. Bingham County Farmers' Mutual Insurance Company, 5868

• Citation: 16 P.2d 983,52 Idaho 461
• Decision Date: 03 December 1932
• Docket Number: 5868
• Court: United States State Supreme Court of Idaho
• Parties: JOHN L. TELFORD and LAVINNA P. TELFORD, His Wife, Respondents, v. BINGHAM COUNTY FARMERS' MUTUAL INSURANCE COMPANY, a Corporation, and W. L. SHATTUCK, Appellants

16 P.2d 983

52 Idaho 461

JOHN L. TELFORD and LAVINNA P. TELFORD, His Wife, Respondents, v. BINGHAM COUNTY FARMERS' MUTUAL INSURANCE COMPANY, a Corporation, and W. L. SHATTUCK, Appellants

No. 5868

Supreme Court of Idaho

December 3, 1932

INSURANCE-NEGLIGENCE-FAILURE TO ISSUE POLICY.

1. Verdict on conflicting evidence is conclusive.

2. Persons who seek mutual insurance are charged with notice of provisions and limitations incident to that form of policy.

3. Any person proposing to contract with mutual insurance company is charged with notice of limitations on powers of such company's agent to issue policy (C. S., sec. 5080 et seq.).

4. County mutual fire insurance company members whose outbuildings were insured held charged with knowledge of governing statutes, articles and by-laws in applying for insurance on dwelling (C. S., sec. 5080 et seq.).

5. Secretary of mutual fire insurance company could not waive prescribed requirements as against other members and enter into valid oral contract with members for additional insurance (C. S., sec. 5080 et seq.).

6. Mutual fire insurance company's secretary held acting within authority in dealing with members for additional insurance (C. S., sec. 5080 et seq.).

7. Mutual fire insurance company held liable for agent's negligence in failing to issue policy covering member's dwelling same as if mutual company was ordinary commercial one (C. S., sec. 5085, and sec. 5086, as amended by Laws 1923, chap. 58).

8. Failure of member of mutual fire insurance company to pay policy fee for additional insurance at time of application therefor held not to prevent recovery for agent's negligence in not issuing policy (C. S., sec. 5080 et seq.).

APPEAL from the District Court of the Ninth Judicial District, for Bonneville County. Hon. C. J. Taylor, Judge.

Action in tort for the negligence of the agent of a county mutual insurance company. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs awarded to respondents. Petition for rehearing denied.

O. A Johannesen, for Appellants.

It is a general rule that while an action for negligent misfeasance will lie in connection with a breach of contract, no such action will lie for a negligent nonfeasance. (Tuttle v Geo. H. Gilbert Mfg. Co., 145 Mass. 169, 13 N.E. 465; Samuel v. Novak, 99 Md. 558, 58 A. 19; notes, 12 L. R. A., N S., 929; 26 R. C. L. 758.)

Ralph L. Albaugh and Arthur W. Holden, for Respondents.

The neglect and omission of appellant, through the negligence of its authorized secretary, to issue a promised policy of fire insurance on the dwelling-house of respondents, where the said house was destroyed by fire, and thus deprived respondents of the protection that such insurance policy would have given them, is a tort for which the appellant principal is liable in damages. (Wallace v. Hartford Fire Ins. Co., 31 Idaho 481, 174 P. 1009.)

The law will presume that in the preliminary agreement the parties impliedly assented to the customary terms, conditions and limitations usually inserted or involved in the form of policy customarily issued by appellant covering like risks, or as have been before used by the parties hereto. (Wallace v. Hartford Fire Ins. Co., supra; Royal Ins. Co. v. O. L. Walker Lumber Co., 24 Wyo. 59, Ann. Cas. 1917E, 1174, 155 P. 1101; Law v. Northern Assur. Co., 164 Cal. 394, 132 P. 590.)

LEEPER, J. Lee, C. J., and Budge, Givens and Varian, JJ., concur.

OPINION

LEEPER, J.

The Bingham County Farmers' Mutual Insurance Company is a corporation, organized and existing under and by virtue of the provisions of chapter 201, article 8, of the Idaho Compiled Statutes, for the purpose of providing fire insurance to its members on a mutual plan and on an assessment basis. The plaintiffs are the owners of farm property in Bonneville county and are therefore eligible for membership in the company. In October of 1929 they applied for such membership in writing, thereby subscribing to the articles of incorporation and by-laws, and the company issued to them a policy of fire insurance covering two outbuildings upon their premises. At the time this policy was issued the dwelling-house located on the premises was covered by a policy written by an old line company, which did not expire until the following December. Prior to the issuance of the mutual policy upon the outbuildings Mr. Shattuck, the secretary of the mutual company, visited the premises of Mr. Telford, inspected both the outbuildings and the dwelling, and solicited the insurance on the latter.

Testimony adduced by the plaintiffs was to the effect that, when the old line policy on the dwelling expired, Mr. Telford went to the office of Mr. Shattuck and entered into oral negotiations for the issuance of a policy in the mutual company to cover the dwelling. He further testified that Mr. Shattuck, as an officer and agent of the company, agreed to issue such policy in the amount of $ 1,200 upon the same terms and conditions as the policy already extant covering the outbuildings, and advised him that a new application was not necessary as he (Shattuck) would insert the new insurance in the written application already executed by Mr. Telford. All this is squarely denied by Mr. Shattuck, but inasmuch as the jury found in favor of the plaintiff we must accept their version of the affair. No written policy was thereafter prepared or executed by the company, and in February the dwelling was destroyed by fire. The company was notified of the loss and denied liability, whereupon this suit was instituted against both the company and Mr. Shattuck for negligence in failing to issue the policy and insure the property. A verdict was rendered in favor of the plaintiffs and against the company in the amount of $ 1,195, the jury having deducted the five-dollar policy fee due to the company. Mr. Shattuck was exonerated.

The only serious question before us on this appeal is whether or not the fact that this defendant is a mutual county insurance company will relieve defendant from the operation of the rule announced in Wallace v. Hartford Ins. Co., 31 Idaho 481, 174 P. 1009, to the effect that an action will lie in tort against an ordinary commercial insurance company for the negligence of its agent in failing to execute and deliver a policy of insurance which he had orally agreed to issue. Otherwise, we consider the law as announced in Wallace v. Hartford Ins. Co., supra, to be controlling.

This defendant company was organized under the provisions of chapter 201, article 8, of the Idaho Compiled Statutes (secs. 5080-5087, inclusive), which relate to county mutual insurance companies. In brief these sections provide that twenty-five or more persons who are citizens of Idaho and own insurable property in the state may form a county mutual fire insurance company for the purpose of insuring each other and certain church and public property, subject to certain restrictions as to amount and location. Of particular moment as concerns this question here considered are sections 5085 and 5086, as amended by Sess. Laws 1923, chap. 58, which provide as follows:

" § 5085. All policies issued by the company must state specifically that the liability of each member is not limited. All persons becoming members of such company must sign the constitution and by-laws, and shall be held in law to comply with all the provisions and requirements of the company."

" § 5086. Such company shall in no instance have the power to insure the property of others than members of the company; but when a member of such company shall move from this state owning property in this state insured by such company, such company may continue to insure such property for such former resident if it so desires and such former resident shall continue to be a member of said company so long as he continues to own such property and said company continues to insure the same.

"Said county mutual fire insurance companies shall be permitted to insure churches or public halls located outside of incorporated cities. No such company shall insure any property beyond the limits of the territory comprised in the formation of the company, except as provided in this article, nor shall it insure any property within the limits of any incorporated city or town, except that located on tracts of land not less than five acres in area, located within the limits of any city, town or village, nor shall it expose itself to loss on any one risk to an amount in excess of that provided for in section 5073."

The import of these sections is: (1) That policies of insurance issued by the company must be in writing; (2) they can only be issued to members of the company; (3) before anyone can become a member he must sign the constitution and by-laws and thus agree in writing to be bound by them. This intent is further effectuated by the articles of incorporation and the by-laws:

"IX. Any person owning property in Bingham, Bonneville, Madison, Jefferson and Fremont Counties, Idaho, may become a member of this company by complying with its articles and by-laws, and shall be entitled to all rights and privileges appertaining thereto." (Articles of Incorporation, sec. 9.)

"X . . . The directors of the company may issue policies signed by the president and secretary, agreeing in the name of the Company, to pay all losses or damage by fire for a term not exceeding five years, to the holder of such policy, not exceeding the sum named herein. Every person so injured shall give an obligation bearing even date with the policy issued to him binding himself, his heirs and assigns, to pay his pro rata share to the Company of all losses or damages by fire which may be sustained by any member of the Company during the time for which their respective...