Todd v. German-American Ins. Co. of N.Y.

• Citation: 59 S.E. 94,2 Ga.App. 789
• Decision Date: 11 November 1907
• Docket Number: 487.
• Parties: TODD v. GERMAN-AMERICAN INS. CO. OF NEW YORK.
• Court: United States Court of Appeals (Georgia)

59 S.E. 94

2 Ga.App. 789

TODD v. GERMAN-AMERICAN INS. CO. OF NEW YORK.

No. 487.

Court of Appeals of Georgia

November 11, 1907

Syllabus by the Court.

A completed contract of insurance exists when the minds of the insurer and of the person to be insured meet upon the essential elements, to wit, the subject-matter to which the policy should attach, the risk insured against, the duration of the risk the amount of the indemnity, and the premium to be paid, subject to the limitation that by statute in this state the policy must be written, though not necessarily delivered. All these essentials need not, however, be expressly negotiated upon, but may be understood from custom course of dealing, or other circumstances from which assent to them may fairly be implied.

It is error to nonsuit the plaintiff in an action upon a fire insurance policy, on the ground that no completed contract of insurance is shown, where it appears that the plaintiff directed an insurance agency, in which the defendant company as well as other insurers, was represented, to carry for him on the property subsequently burned, a certain amount of insurance, that policies to the amount specified were written in different companies, chosen by the agency, and that, upon one of these companies becoming bankrupt, the agency replaced the portion of insurance which was carried by that company by writing a policy of similar amount in the defendant company notwithstanding it further appears that the plaintiff did not know of the substitution of policies until after the fire occurred, and although the new policy was never actually delivered to him.

(a) The adjudication that a fire insurance company is insolvent ipso facto cancels all existing policies upon which no loss has previously occurred.

(b) From a general instruction by a customer to an insurance agency that it shall keep certain specified property of his insured in a designated amount, his assent may be implied, so as to give mutuality to a contract of insurance, in usual form, and upon the usual premium, written by that agency to replace a policy which has become canceled by the insolvency of the company originally insuring.

[Ed Note.-For cases in point, see Cent. Dig. vol. 28, Insurance, § 196.]

If one, though not duly authorized, assumes to act as agent for another, and in the name of the latter procures a fire insurance policy on his property, which is subsequently burned, the person in whose name the policy has been issued may, upon discovery of the facts, ratify the assumed agency and assert liability against the insurer, to the same extent he could have done if his authority had been originally conferred upon the person who undertook to act as his agent.

(a) While, as a general rule, public policy forbids dual agencies, and therefore forbids that the same person shall act as the agent of both the insurer and the insured, still this general rule is subject to many just exceptions.

(b) If an insurance company, knowing, or from the surrounding circumstances being reasonably aware, that its local agent is acting or assuming to act for the customers of his agency in applying for policies of insurance in their names on their property, and without depending on the skill, advice, or loyalty of the agent in the transaction, but acting upon its own judgment as to the desirability of the particular risks, authorizes the agent to write the policies, it will not be allowed to complain that such local agent was also the agent of the opposite parties to the contracts, but it will be held bound on the policy so written.

(c) "The maxim that 'no man shall serve two masters' does not prevent the same person from acting as agent, for certain purposes, of two or more parties to the same transaction, when their interests do not conflict, and where loyalty to the one is not a breach of duty to the other."

[Ed. Note.-For cases in point, see Cent. Dig. vol. 28, Insurance, §§ 127, 134; vol. 40, Principal and Agent, § 146.]

"It is relevant to put in evidence any circumstances which tend to make the propositions at issue either more or less probable." 1 Whart. Evidence, § 21.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 20, Evidence, § 123.]

"It is well settled that insurers are bound to know the customs of a place where they transact business, and are assumed to have made their contracts in reference to such customs."

[Ed. Note.-For cases in point, see Cent. Dig. vol. 28, Insurance, § 314.]

Error from City Court of Macon; Robt. Hodges, Judge.

Action by P. D. Todd against the German-American Insurance Company of New York on two fire policies. Judgment for defendant, and plaintiff brings error. Reversed.

Any circumstances which tend to make the propositions at issue either more or less probable are relevant in evidence.

Todd sued the German-American Insurance Company of New York on two policies of insurance for the sum of $2,000 each. The court, at the conclusion of the plaintiff's testimony, awarded a nonsuit, and the plaintiff brings error. We shall report only so much of the evidence as is necessary to the understanding of the points decided.

Todd purchased a stock of goods in Macon from the Dixie Company. This company was carrying insurance in several agencies, among which was that of Turpin. Todd caused some of the policies which had been carried by the Dixie Company to be canceled; others to be transferred. Of the insurance through the Turpin agency Todd requested that $6,000 be transferred and the remainder canceled. Todd testified: "I told Mr. Turpin at the time to keep me insured for $6,000, and I might give him more later. *** I thought Mr. Turpin had $6,000. I didn't know what companies. I told the agent to keep me insured for so much, and I thought I had that much." On June 6, 1906, the stock of goods was destroyed by fire. Todd had never examined any of the policies, and did not know the names of any of the companies until after the fire occurred. Upon examining the policies written through the Turpin agency, he found a $2,000 policy of the Orient Insurance Company and two $2,000 policies of the Traders' Insurance Company. Upon discovering that the Traders' Insurance Company had failed, he went to Turpin and inquired of him whether these two policies had been rewritten. Turpin then told him that he had rewritten these two policies in the German-American Insurance Company, and that he had the German-American policies in his vault. Todd inquired if he owed any further premium, and Turpin replied that he did not; that he (Turpin) at his own expense had reinsured all his Traders' business. Todd did not demand the policies at the time, and subsequently, upon instructions from the general agent of the insurance company, Turpin refused to deliver them. It further appeared from the testimony that prior to the fire the German-American policies had been sent to Todd's store by a clerk in Turpin's office for delivery, but that the clerk, finding Todd absent, had brought the policies back with him. After the fire the German-American Insurance Company denied all liability on the policies.

From the evidence it appeared that Turpin's authority to rewrite his Traders' business in the German-American Company arose in the following manner: Turpin's agency, along with other insurance companies, represented the German-American. On May 4, 1906, Turpin received from that company the following telegram: "Traders' of Chicago in the hands of receivers." Turpin then called up by telephone Reynolds, the German-American Company's general agent in Atlanta, and asked him to reinsure the risks thus canceled by the insolvency of the Traders' Company, without expense to him or his customers. Reynolds refused to do this. Turpin said: "It will be a great loss to us." Reynolds replied: "We can't help that. You can protect the business." Turpin said: "Yes, if we have got enough money." The result of the conversation was that Reynolds authorized him to rewrite the Traders' business in the German-American Company, but with the understanding that he was to pay the premiums. On May 5th the home office of the German-American Insurance Company sent a telegram, which they confirmed by letter, as follows: "General Agent Reynolds advises he has authorized you to rewrite in German-American all Traders' business, to become binding from today. We approve his action. Please forward immediately schedule of all lines in excess of $2,500, and let schedule of balance of business follow as soon as possible." On May 7th, Turpin received the following letter from General Agent Reynolds: "In re Traders' business. Please do not fail to immediately comply with company's request to forward schedule of all lines in excess of $2,500, for the reason that they want to protect their excess liability, if any exists.

*** It is my intention to visit Macon again in the next day or two when I will be able to go over the Traders' business with you, and, if there is anything we don't want, cut it out." Turpin reported to the German-American Company the premiums in the Traders' business in his May account, and in this report the premium on the Todd policies was included. On July 6th, a month later than the fire, Turpin received from the insurance company the following letter: "The purpose of this letter is to advise you that we have eliminated from your May account the premiums on canceled policies No. 5,462 and No. 5,493 [the Todd policies], reducing the balance to be remitted by you for that month to $1,192." These policies in suit were duly written along with the policies on all the other Traders' business which Turpin rewrote in the German-American Company, and they were duly entered upon the policy register of that company prior to the date of...