THE EMPLOYERS'LIABILITY ASSURANCE CORP. v. Howey
| Decision Date | 02 December 1954 |
| Docket Number | Civ. No. 1342. |
| Citation | 126 F. Supp. 343 |
| Parties | THE EMPLOYERS' LIABILITY ASSURANCE CORPORATION, Ltd., a corporation organized and existing under the laws of England, Plaintiff, v. Ray HOWEY, Willard Sullivan and Evelyn Sullivan, Defendants. |
| Court | U.S. District Court — Western District of Michigan |
Stanton, Montgomery, MacKenzie & Cartwright, Saginaw, Mich., for plaintiff.
Arthur W. Murphy, Saginaw, Mich., for defendant.
The Employers' Liability Assurance Corporation has brought action for declaratory judgment asking this court to relieve it from liability on a certain policy of insurance.
The facts are not disputed. In August, 1948, Howey purchased a public liability (automobile) insurance policy from plaintiff through one Clarence Keyser, solicitor for Schwan, Van Auken, Graebner Inc., of Saginaw, Michigan, plaintiff's General Agents.
Under that policy, the insurer agreed to pay, on behalf of insured, all sums up to limits of the policy for which insured would become liable as damages sustained by any person caused by accident arising out of the ownership, maintenance or use of the automobile described in the policy, or any automobile replacing the one described therein, but subject to certain conditions found in Paragraph IV (a) (4) of the insuring agreement as follows:
"Newly Acquired Automobile * * * an automobile, ownership of which is acquired by the named Insured who is the owner of the described automobile, if the named Insured notifies the Company within thirty days following the date of its delivery to him, and if either it replaces an automobile described in this policy * * * The named Insured shall pay any additional premium required because of the application of the insurance to such newly acquired automobile."
Between 1948 and 1952, Howey changed automobiles some ten times and on each occasion gave notice of such change to Keyser, the solicitor, who, in turn, relayed the information to plaintiff through its General Agent. Keyser collected all premiums and each time he would receive Howey's application for a change to another car he delivered a new policy to him for the newly acquired car. In fact, Keyser was the only person representing plaintiff with whom Howey had ever come in contact.
Some time during the year 1952, Keyser told Howey it was not necessary to give notice every time Howey changed automobiles provided there would be no increase in premium to be paid by Howey and provided, of course, the premium for the car that he was exchanging had been paid for the year. Later, in November of that year, Howey traded his 1952 Chevrolet for a Ford but never gave any notice of the change to plaintiff through Keyser or anybody else. It was not until January of 1953, when plaintiff, through Keyser, attempted to issue a new policy on the Chevrolet, that it learned that Howey had traded the Chevrolet plaintiff supposed it had been covering, three months previously. When it became so informed, it issued a policy covering the 1950 Ford then owned by Howey.
We deem the following facts to be of particular importance. No suggestion was made by plaintiff to Howey that the Ford car which he had received in trade for his Chevrolet had not been insured during November and December of 1952, so either plaintiff accepted any liability that might have been incurred during those two months, or it accepted a premium for insurance for two months for which it had given no insurance. And no rebate for those two months was ever given or offered to Howey and apparently if any accident had happened to that Ford car on December 31st, 1952, Howey was covered since plaintiff was undoubtedly ready to assume its obligation to pay.
Plaintiff, therefore, was undoubtedly aware in January, 1953 that Howey was not reporting changes in his cars, because it issued a new policy on the Ford which it knew it had covered for two months without notice of the change from the Chevrolet to the Ford. Nor did plaintiff ever direct Howey's attention to the fact that he must always report any such exchange of cars if he expected his policy to cover that car. It does not appear, however, that the plaintiff was aware of what Howey had been told by Keyser, but it follows that at least the General Agent knew all the details of the transaction, so that any curtailment that might cover Keyser's authority as a solicitor certainly does not apply to the General Agent.
In August, 1953, while driving a 1950 Pontiac, which had replaced the Ford more than thirty days before the August date, Howey injured Evelyn and Willard Sullivan, the other two defendants. No notice of that exchange had ever been given.
We are confronted with this question of law: Is plaintiff estopped from denying Keyser's authority to interpret or construe the policy or to waive the notice?
Ordinarily, where an insurance policy requires that notice be given, when insured changes automobiles, failure to give notice avoids liability on the part of the insurer. Mitcham v. Travelers Indemnity Co., 4 Cir., 127 F.2d 27; Continental Casualty Co. v. Trenner, D. C., 35 F.Supp. 643; Jamison v. Phoenix Indemnity Co., D.C., 40 F.Supp. 87; Province Washington Indemnity Co. v. Edes, D.C., 109 F.Supp. 813.
It is also admitted that a solicitor has no authority to waive substantial rights of the insurer granted by terms of the policy. Gambino v. Northern Insurance Co., 234 Mich. 651, 209 N.W. 119; Kilburn v. Union Marine & General Ins. Co., Ltd., 326 Mich. 115, 40 N.W.2d 90; Serbinoff v. Wolverine Mutual Motors Ins. Co., 242 Mich. 394, 218 N.W. 776.
And it has been rather consistently held that a solicitor has no authority to construe an insurance contract. Serbinoff v. Wolverine Mutual Motors Ins. Co., supra; Union Life Ins. Co. v. Burk, 10 Cir., 169 F.2d 235, unless the contract is ambiguous. U. S. Quarry Tile Co. v. Massachusetts Bonding & Ins. Co., 6 Cir., 71 F.2d 400.
And finally it is also a fundamental principle of law that the authority of the agent is not determined by the agent's conduct. Cutler v. Grinnell Brothers, 325 Mich. 370, 38 N.W.2d 893. See also Mitchell v. Western Fire Ins Co., 272 Mich. 204, 261 N.W. 300.
None of these, however, appears to be the question here. In order to...
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