Action commenced by plaintiff Homeland Insurance Company of America against defendant Carolina Insurance Company for the recovery of $5,100 paid by the plaintiff upon a loss sustained by the assured. Defendant filed its answer and counterclaim for $11,900. From a judgment dismissing the complaint and awarding defendant $5,100 and costs on its counterclaim, plaintiff appeals.

The Sangamon Paper Mills of Kaukauna, Wisconsin, through Samuel J. Cohen, one of its partners, instructed James T. O'Connell, a local insurance broker, to obtain $100,000 use-and-occupancy coverage on its mill and to keep the mill insured for that amount. Pursuant thereto, O'Connell obtained $50,000 of such coverage from companies not involved in this action. With reference to the remaining $50,000 coverage, O'Connell called Lester C. Dobbert, who is the general agent of both companies who are parties to the action, with regard to writing that amount in the defendant company. Dobbert expressed doubt that the company would be willing to take that amount of coverage, and O'Connell told him that if it should be unwilling to do so, Dobbert should place the coverage in other companies. Dobbert thereupon wrote a $50,000 policy in the defendant company, dated January 31, 1944, and issued his daily report notifying the company of the issuance of the policy. On February 15, 1944, Dobbert received a telegram from the company instructing cancellation of the policy. That same day Dobbert wrote three substitute policies aggregating $50,000 in other companies for which he was also general agent. One of these companies was the plaintiff, which policy was written for $17,000 coverage. This policy was also dated January 31, 1944. The premium for the coverage thus provided was remitted by Dobbert to the plaintiff and accepted by it. The defendant company received no premium on its policy.

On February 29, 1944, a fire occurred at the mill of the assured and action was subsequently commenced by it against the three substitute companies, and, in the alternative, against the defendant company. Thereafter an agreement was reached by the four insurance companies and the assured that payment of the agreed amount of the loss should be made to the assured, such payment being prorated among the four companies. Under said agreement the defendant company paid $15,000 and plaintiff paid $5,100 to the assured.

The trial court found that under the instructions given him by O'Connell, Dobbert had the authority to cancel the Carolina Insurance Company policy without the five days' notice provided for therein and substitute the Homeland Insurance Company policy and the other two policies therefor. It also found that under the agreement to pay the loss of the assured each of the insurance companies paid the proportion which its policy bore to the total coverage as if the policies of all four companies were in force, reserving the right to have their respective liability determined by the courts; that the proper share of said loss payable under the policy of the Homeland Insurance Company was $10,200 and that having paid $5,100 to the assured, there is due to the Carolina Insurance Company $5,100 on its counterclaim.

MARTIN, J.

The principal question on this appeal is whether the Carolina policy was in force at the time of the loss, and this depends upon whether Dobbert had authority to cancel the policy, waiving the five days' notice, and substitute the policies of the Homeland Insurance Company and the other two companies.

According to the testimony of Mr. Cohen, Mr. O'Connell was instructed to get $100,000 use-and-occupancy insurance and to keep the mill insured for that amount; O'Connell was free to place the insurance in whatever companies he saw fit so long as he kept the mill continually insured up to that amount.

O'Connell wished to place the second $50,000 coverage in the Carolina Insurance Company, but instructed Dobbert that if the Carolina did not want to accept the risk, Dobbert should place the insurance elsewhere.

There is, therefore, credible evidence to sustain the trial court's finding that Dobbert had authority to waive the notice, cancel the Carolina policy "flat," and substitute the other policies. Obviously, the five days' notice requirement is for the protection of the assured, and Dobbert, having been advised by O'Connell that the assured was relying on him to keep the mill insured, provided that protection by writing the substitute policies. When a state agent for an insurance company is clothed with the highest authority to act in behalf of the assured, a policy countersigned and issued by him is effective immediately. Thus, when the appellant's policy was issued by Dobbert, together with the others, the coverage on the property for use and occupancy was $100,000, the amount demanded by the assured. The five-day notice could therefore be of no benefit to the assured. More than $100,000 coverage was not contemplated by the parties. Dobbert not only had authority to waive the five-day notice; it was his duty to do so.

This court has held that under these circumstances a policy may be effectually canceled even though the assured is not notified, Schauer v. Queen Ins. Co. (1894), 88 Wis. 561, 60 N.W. 994; and has recognized the practice of canceling a policy "flat," that is, cancellation without the payment of premium, Seifert v. Northwestern Nat. Ins. Co. (1926), 189 Wis. 305, 206 N.W. 832.

Courts in other jurisdictions have so held. In Rose Inn Corp. v. National Union Fire Ins. Co. (1932), 258 N.Y. 51, 54, 179 N.E. 256, it was said:

"It is a principle of almost universal acceptance that where an assured has applied for insurance to an agent, having authority to write policies for many companies, has left to the agent the selection of the companies, with instructions to maintain the insurance in an amount stated, and the agent has undertaken so to act, the agent, upon notice from his companies to cancel, has power to waive for the assured the five-day period of cancellation, to cancel the policies at once, and immediately to write new policies in other companies the assured, so that the new policies become at once effective."

To the same effect is Insurance Co. of North America v. Burton (1931), 147 Okla. 112, 115, 294 P. 796:

"There is a well-established rule that, where an owner constitutes the agent of a fire insurance company his agent to keep the property insured with power to select the insurer or insurers, such agency carries with it the power to cancel a policy without notice to the insured and substitute therefor a policy in another company, as he may be the agent for the insured for such purpose, and as such, may, for the insured, waive notice."

"Many cases hold that an agent of fire insurance companies to issue their policies may also be constituted by the insured his agent to receive the policies, and to keep and care them, with plenary power to keep the property insured in accordance with general directions of the insured, and attend to all renewal, cancellation, and replacement of insurance, without consulting the assured in respect to particular policies or other details." Kerr v. Milwaukee Mechanics' Ins. Co. (8th Cir. 1902), 117 Fed. 442, 447.

The cases relied upon by appellant do not present a comparable set of facts. In John R. Davis Lumber Co. v. Hartford Fire Ins. Co. (1897), 95 Wis. 226, 234, 70 N.W. 84, the agent's authority was limited to the procurement of the policies, and the court held that service of the notice of cancellation upon him was ineffectual, although it recognized that under other circumstances a broker "may be so clothed with authority as to have full power to act for the insured in canceling, as well as procuring, policies." In Wicks Bros. v. Scottish Union Nat. Ins. Co. (1900), 107 Wis. 606, 608, 83 N.W. 781, the court conceded that "the parties to an insurance contract may agree upon terms of cancellation different from those stipulated in the policy," but found no facts establishing the existence of any such agreement. In Gabriault v. Genske (1935), 219 Wis. 383, 263 N.W. 86, proper notice had been given to the assured, but the cancellation was held not to be effective because the company had not returned the unearned portion of his premium. The case of Liner v. Mittelstadt (1950), 257 Wis. 70, 42 N.W.2d 504, is likewise distinguishable.

A further argument is made by appellant to the effect that in canceling the Carolina policy "flat," charging no premium for the period between January 31st and February 15th when the respondent company admittedly insured the mill, Dobbert in effect gave a rebate to the assured in violation of the provisions of sec. 201.53 (2), Stats. We see no merit in this argument. As stated above, the practice was apparently approved in the Seifert Case, supra, but in any event this issue was not raised in the court below and cannot now be raised.

It is not disputed that immediately after February 15th the appellant knew of the issuance of its policy by Dobbert; that it received and retained the premium paid by the assured; that it did not question the risk or attempt to cancel the policy before February 29th. The policy was therefore in full force and effect at the time the loss occurred, and appellant was liable thereunder for its prorata share of the loss.

In the agreement between the four insurance companies each reserved the right to litigate its liability. As was said in Liner v. Mittelstadt, supra (p. 80):

"The device of the loan, rather than an immediate payment of money as insurance, to avoid prejudice to the rights of parties until doubtful questions may be resolved has had the commendation of the supreme court of the United States in the opinion of Mr. Justice BRANDEIS appearing in Luckenbach v. McCahan Sugar Co. (1918), 248 U.S. 139, 39 Sup. Ct. 53, 63 L.Ed. 170."

Appellant has pleaded the facts respecting the agreement in its complaint and has presented the question of its liability as against that of the respondent. Since the Carolina policy was not in effect on February 29th, appellant's proper share of the loss, as the record shows, was $10,200, of which it paid $5,100 to the assured under the agreement referred to. The trial court was therefore correct in awarding damages of $5,100 to the respondent company on its counterclaim.

By the Court. — Judgment affirmed.