Wallace v. Hartford Fire Ins. Co.

• Decision Date: 27 June 1918
• Citation: 31 Idaho 481,174 P. 1009
• Parties: J. E. WALLACE, Respondent, v. HARTFORD FIRE INSURANCE COMPANY, a Corporation, and LEE A. STRICKFADDEN, Appellants
• Court: Idaho Supreme Court

174 P. 1009

31 Idaho 481

J. E. WALLACE, Respondent, v. HARTFORD FIRE INSURANCE COMPANY, a Corporation, and LEE A. STRICKFADDEN, Appellants

Supreme Court of Idaho

June 27, 1918

INSURANCE-PRINCIPAL AND AGENT-NEGLIGENCE-DAMAGES.

1. The failure of an insurance agent, through negligence, to issue a policy of insurance, under the circumstances disclosed in the following opinion, is a tort for which both the principal and agent are liable in damages.

[As to estoppel of insurer to rely on limitations placed on agent's authority, see note in Ann.Cas. 1914A, 590]

APPEAL from the District Court of the Second Judicial District, for Nez Perce County. Hon. Edgar C. Steele, Judge.

Action for damages. Judgment for plaintiff. Affirmed.

Judgment and order affirmed. Costs awarded to respondent.

Fred E Butler, for Appellants.

A general statement of the fundamental principles is sufficient to show that this is an action in contract and not in tort. (38 Cyc. 426; Atlantic & P. Ry. Co. v. Laird, 164 U.S. 393, 17 S.Ct. 120, 41 L.Ed. 485; 1 C. J. 929.)

Where an agent acts on behalf of a disclosed principal, his acts and contracts within the scope of his authority are generally considered as the acts and contracts of the principal, and in the absence of an agreement otherwise, involve no personal liability on the part of an agent to the third person, except in an action for tort. (2 C. J. 812.)

An agent who, acting within the scope of his authority, enters into contractual relations for a disclosed principal, does not bind himself in the absence of an express agreement to do so. (31 Cyc. 1552.)

It is a general rule both at common law and under the codes, that an agent is not the proper party to actions against third persons. If he has kept within the scope of his employment, acted and contracted merely as agent for a disclosed principal, all suits which concern the business must be brought in the name of the principal and not in the name of the agent. Likewise where it is the third party who institutes the suit, it is the principal and not the agent who must be made defendant. (Citing many cases.) (16 Ency. Pl. & Pr. 890.)

Nor is the agent who acts without authority or beyond his authority liable on a contract that he attempts to enter into for a disclosed principal, even when all the elements of a contract are present. The only remedy against the agent is an action in tort, not on the contract, but in the nature of a trespass on the case for fraud and deceit. (Long v. Colburn, 11 Mass. 97, 6 Am. Dec. 160; Clark v. Foster, 8 Vt. 98; Webster v. Larned, 6 Met. (Mass.) 522; Gilmore v. Bradford, 82 Me. 547, 20 A. 92; Teele v. Otis, 66 Me. 329; Bartlett v. Tucker, 104 Mass. 336, 6 Am. Rep. 240; Ballou v. Talbot, 16 Mass. 461, 8 Am. Dec. 146.)

Eugene A. Cox and Charles H. Chance, for Respondent.

The failure of the agents to write the policy should not prevent a recovery by the plaintiff, and whatever conditions may have been embraced in the policy if written are not now in the case. (Chenier v. Insurance Co. of North America, 72 Wash. 27, Ann. Cas. 1914D, 649, 129 P. 905, 48 L. R. A., N. S., 319; Carroll v. Hartford Fire Ins. Co., 28 Idaho 466, 154 P. 985.)

"Many torts arise out of a state of facts which constitutes also a breach of contract, and in that event the injured party may elect to bring his action either ex contractu or ex delicto." (28 Am. & Eng. Ency. of Law, 2d ed., 255.)

Under the code all that is now necessary is to plead the essential facts. With the agency of Strickfadden admitted the case is one upon a contract. Had the agency not been established, the action would have been in tort against Strickfadden and an amendment to conform to the proof might have been required.

MORGAN, J. BUDGE, C. J., Concurring. RICE, J., Dissenting.

OPINION

MORGAN, J.

This is an action for damages which was, by agreement of the parties, tried to the court without a jury. It grew out of the following facts, either admitted or established by a preponderance of the evidence to the satisfaction of the trial court, and which we will assume to be true, in conformity with the well-known rule that "an appellate court will not disturb the judgment of a trial court, because of conflict in the evidence, where there is sufficient proof, if uncontradicted, to sustain it." (Sweeten v. Ezell, 30 Idaho 154, 163 P. 612; Davenport v. Burke, 30 Idaho 599, 167 P. 481; Lambrix v. Frazier, ante, p. 382, 171 P. 1134.)

On and about June 2, 1913, and continuously thereafter until subsequent to July 8th of that year, appellant, Strickfadden was the agent, at Ft. Lapwai, Idaho, of appellant, Hartford Fire Insurance Company, authorized to make and negotiate contracts of fire insurance, write and deliver insurance policies, collect premiums therefor, and, generally, to represent it as its agent in all matters relating to such contracts in that community. At the same time he was cashier of the bank at Ft. Lapwai and from prior to June 2, 1913, until several months thereafter respondent had a deposit in the bank, in the form of a checking account, continuously, in excess of $ 200, from which Strickfadden had full authority to withdraw the amount of the premium which, as will be hereinafter shown, he agreed to issue in appellant company. From prior to June 2, until July 8, 1913, respondent was the owner of a stock of drugs and drug-store furniture and fixtures, at Ft. Lapwai, of the value of $ 5,200. During all the time respondent resided in Ft. Lapwai his insurance policies were kept in the bank and Strickfadden had access to them, and the latter, prior to June 2, 1913, had, as agent for a fire insurance company, other than the Hartford, insured respondent's stock of goods, furniture and fixtures, and had collected the premium by deducting the amount thereof from his deposit and making out a cashier's charge slip therefor which was delivered to him with his canceled cheeks. In addition to the insurance procured from Strickfadden respondent had a policy, written by an agency in Spokane, Washington, in a company other than the Hartford, in the sum of $ 1,500, $ 1,200 of which was on his stock of goods and $ 300 on the furniture and fixtures. The premium on this policy was $ 31.50 and its term of existence was one year, from July 1, 1912, to July 1, 1913. It was placed in the bank, for safekeeping, and Strickfadden had access to it. Prior to June 2, 1913, Strickfadden solicited from respondent the insurance business represented by this last-mentioned policy, when it should expire, and on the last-named date he was in the latter's place of business when he received by mail and called attention to a notice from the Spokane agency that the date of expiration was July 1st. Strickfadden, at that time, again requested to be allowed to write the insurance and it was agreed between him and respondent that he should write it in appellant company in the same amount as that expressed in the expiring policy, and that he should procure and refer to said policy for data necessary to enable him to prepare the one he was to issue. Twice thereafter, during the month of June, respondent asked Strickfadden if he had written the policy and on each occasion he stated he had not, but would attend to it the next morning. Relying upon this agreement and assurance respondent permitted his policy to expire on July 1st, without procuring a renewal or other insurance in lieu thereof, and on July 8th his stock of goods, furniture and fixtures except property of the value of $ 1,000, which was salvaged, were destroyed by fire. The loss was partly covered by a valid policy amounting to $ 1,500, which was paid, leaving a net uninsured loss of $ 2,700. The trial court found that by the neglect and failure of appellants to make the policy of insurance, according to the agreement, respondent was damaged in the sum of $ 1,500, less $ 31.50, the amount of the premium he would have paid had the policy been issued, together with interest, amounting in all to $ 1,719, for which sum, and costs, judgment was entered. This appeal is from the judgment and from an order denying a motion for a new trial.

Appellants in their briefs of argument, seem to proceed upon the theory that this action is based upon an oral contract of, or for, insurance. This is erroneous. The nature of the action is to be determined from the pleadings. The substance of the complaint is that appellants, for a valuable consideration, agreed to insure respondent's property; that he relied upon their agreement and did not procure insurance; that his property was destroyed by fire, and that, by reason of the negligence of appellants, in that they failed to issue the policy and insure the property, he has been damaged. Reference to the agreement to issue the policy is made, in the complaint, by way of inducement, showing how the duty to issue it arose. The gist of the cause of action is that respondent was procured to not obtain insurance, and that appellants, by negligence, failed to perform that duty whereby he suffered damage. Strickfadden's answer is a denial of such allegations of the complaint as are not admitted by his failure to answer them. It may be said to place the material allegations of the complaint in issue. The Hartford Fire Insurance Company, in its answer, admits its corporate existence and its right to transact business in the state of Idaho; denies the allegations of the complaint, and further denies, among other things, that it ever agreed to, or was obligated to, write any policy of insurance in favor of respondent. This is not to be confused with that class of cases wherein actions have been brought to recover, in whole or in part, indemnity provided for in contracts of insurance, executed or executory, written...