Opinion
March, 1904.
Joseph Atwell, for the appellant.
W.B. Van Allen, for the respondents.
This action was brought on the oral agreement made by Babcock, the director, when he informed Loomis that the policy of January twenty-fourth was ineffective because the preceding policy was still in force. The plaintiff testified that the director said in substance that he would attend to it and this is in effect corroborated by Babcock. The full premium was retained by Babcock for the purpose of meeting the premium on the new policy. The application was not returned to the plaintiffs, but was retained by the defendant. It seems clear that it was expected by the parties that the insurance was to be continued, and if nothing further had been done Loomis had the right to expect the issuance of a new policy upon the termination of the one issued in November, 1895.
Loomis, however, did go to Babcock in the forenoon of the day that the old policy was to run out for the purpose of attending to its renewal. If we assume, as Babcock and his wife testified, that the application was not signed by the applicant we are still of the opinion that the property was insured. That was the intention of the parties. The scheme of insurance was the mutual plan and involved membership in the local grange, the payment of assessments and also a specific premium for the particular policy issued and which was graded according to the amount insured. (By-laws, § 2.)
Babcock, as a director, had in his custody blank applications to be signed by the applicant who came to him for insurance with defendant (§ 5), and it was for him to approve the application before the policy was issued (§ 4). Section 13 provides: "The president and secretary shall have power to issue policies at any time on property insured by any directors, providing such application meets the requirements of said Acts and these By-laws." That is, the director takes the application and makes the contract of insurance, but its formal confirmation by the issuance of a policy rests with the two officers named. There does not seem by the by-laws to be lodged with these officers the unqualified authority to reject an application which has received the sanction of a director. Of course, this could be accomplished in conjunction with that director or by the action of the board of directors.
But assuming that the home officers might eventually reject the application, until this was done the agreement of Babcock was valid and the insured was entitled to the protection intended thereby.
Babcock did not possess the authority to issue in form a written policy binding on the defendant. The written application must be accepted by the defendant before the policy was issued, and thereupon it became valid from its date. The director, however, did have authority to make a valid agreement on behalf of the defendant to insure the property until the defendant took definite action on the application. If a loss occurred in the meantime the defendant must pay. If, upon receipt of the application, it learned that the buildings insured had been destroyed by fire it could not allow that fact alone to induce the rejection of the application.
When the application was received by it on November twenty-seventh, it did not reject it or refuse to issue the policy. It returned it for specific corrections, implying that upon these being made the issuance of the policy would follow and it would be operative from the date of the application. The construction placed upon the agreement by Babcock was obviously one of absolute insurance for he presented the application to Mr. Loomis for his signature and correction five days after the burning of the buildings. This action was significant in that it recognized the existence of the contract of insurance. It would have been a mockery for Babcock to go through the performance of correcting this application and having it resigned if he did not understand that by his acts the defendant had become liable for the loss of this property. He was more than an ordinary soliciting agent. His position as director of the defendant with blank applications in his custody and with the duty to approve the applications invested him with authority as one of the executive officers of the defendant.
Inasmuch as the plan of insurance contemplated a written application it is insisted that no oral contract could be made as this in effect would override the requirement of an application in writing. In answer to this it may be said that there is nothing in the by-laws inhibiting a director from making an agreement for temporary insurance to be valid until the action of the home officers. In Hicks v. British America Assurance Co. ( 162 N.Y. 284) the agent of the defendant said to the applicant for insurance "you are insured from noon on the 30th day of December, 1893, to noon of December 30th, 1894." The court held this was a binding agreement for insurance embracing within it the provisions of the standard policy. In Squier v. Hanover Fire Insurance Co. ( 162 N.Y. 552) the local agents of the defendant at Jamestown had authority by their certificate of appointment "to countersign, issue and renew policies of insurance." About ten days before the expiration of a subsisting policy issued by the defendant the said agents agreed orally with the husband of the plaintiff and who represented her, that the policy would be renewed at its expiration, and plaintiff was to pay the premium within thirty days and get the policy. The old policy expired December 20, 1894, and the property was destroyed by fire December twenty-ninth, and no new policy had been issued. The plaintiff recovered the amount of the insurance and the Court of Appeals upheld the recovery. In Van Loan v. Farmers' Mutual Fire Ins. Association ( 90 N.Y. 280) the applicant applied to a director for insurance, paying the required sum. The director made the survey and notified the company, but the matter was held in abeyance for the reason that the policy was to be made out in the name of the wife of the applicant and her first name was unknown. A fire occurred in the meantime and the defendant was held liable. These cases are decisive of the present one so far as this aspect of the case is concerned. In fact the situation is far stronger here for the plaintiff, for there was an application in writing prepared in January which was withheld by the defendant and there was at least an attempt honestly made to prepare another and there was no formal rejection of it. In addition to these circumstances are the acts of Babcock, tending strongly to corroborate the position of the plaintiffs.
So far we have assumed that the last purported application was not signed by Loomis. There was proof tending to show he did in fact sign it, but we are free to add that if to uphold the recovery depended on agreeing with the jury on that proposition, we should have some hesitancy in doing so. On the practically undisputed testimony, however, we think the circumstances show an agreement, a plain understanding that the property was insured at the time it was burned.
In each written application Loomis answered the inquiry as to his title or interest by the word "deed," implying that he was the sole owner of the property. Loomis and his wife testified that they informed Babcock they owned the farm jointly, which is the fact, and supposed he so stated in the application. The jury have found with the plaintiff on this question, so Babcock, the director, possessed full notice of the ownership of the property.
In the last-attempted application Loomis stated that the premises were incumbered to the extent of $1,800, but did not give the name of the mortgagee. This form was followed in the preceding applications and no dissent was made by the defendant. By section 13 of the defendant's by-laws it is provided that the "policies may at the request of the insured be endorsed * * * payable to ________ mortgagee, as h__ interest may appear." It is not obligatory, and certainly the failure to do so does not relieve the defendant from liability.
We do not deem it important to discuss the other exceptions urged by the appellant. The real mortgagee assigned her interest in the policy to the plaintiffs.
The judgment and order should be affirmed, with costs.
All concurred.
Judgment and order affirmed, with costs.