Opinion
No. 31264.
May 21, 1934.
1. INSURANCE.
Agency to deliver policies does not necessarily imply power to collect premiums, and extent of agency in that respect must be determined by particular circumstances and relations between parties.
2. INSURANCE. Where insurance broker, with whom insured had previously dealt, placed insurance with agency which had had no previous dealings with broker, broker held, under facts, agent of insured, so that premium payments to broker did not relieve insured from liability for premiums to agency, though agency placed policies in broker's hands for delivery.
Facts disclosed that premiums were not paid to broker when policies were delivered or upon presentation of the agency's bill therefor showing a charge against the insured, but were later paid on a bill presented by broker to insured showing an alleged indebtedness to the agency, at which time insured had notice of fact that policies had been written by the agency.
3. INSURANCE.
Where fire policies were canceled for nonpayment of premiums, insurer held entitled to recover only amount of premiums earned to date of cancellation.
APPEAL from Chancery Court of Jones County.
Shannon Schauber, of Laurel, for appellant.
It is the appellant's contention that when the appellee requested or authorized McLean-Sommerville Company to obtain fire insurance for it and did not give the money to McLean-Sommerville Company with which to pay these premiums, it impliedly gave the McLean-Sommerville Company authority to obtain this insurance and have the premium charged to its, the McParland-Scanlon Lumber Company's, account.
1 Restatement of the Law of Agency, sec. 35.
In our opinion the only case on all fours with this case so far as our search enabled us to find, is the case of the Citizens' Fire Insurance Co. v. Swartz, 47 N.Y. Supp., and 81 N.Y.S. (21 Misc. Rep. 671).
If the insured employs an insurance broker to place insurance for him, he is the agent of the insured, and not the agent of the insurer. But if, acting on behalf of the company, or of an agent of the company, the broker solicits the insurance, he is the agent of the company.
Coles v. Jefferson Ins. Co., 41 W. Va. 26, 23 S.E. 732; Kings County Fire Ins. Co. v. Swigert, 11 Ill. App. 590.
The lower court erred in refusing to give appellant a decree for thirty-seven dollars and sixty-seven cents, the amount of the premiums owing on the substituted policies after giving appellee credit for the unearned premiums on the policies returned by it.
Manhattan Fire Ins. Co. of City of New York v. Harlem River Lbr. Wood-Working Co., 56 N.Y. Supp., 90 N.Y.S. 186, 26 Misc Rep. 394. Deavours Hilbun, of Laurel, for appellee.
The court below properly held that McLean was an insurance factor or broker and that appellant, under the facts in this cause, dealt with him as such; that by sending the policies of insurance direct to McLean for delivery and by entrusting McLean with authority to collect premiums thereon, that appellee, having in good faith paid the premiums to McLean, will be protected in such payment and therefore appellant is estopped and precluded from maintaining its suit against appellee.
9 C.J. 509, sec. 5, page 511, sec. 11; 25 C.J., page 340, sec. 1, page 354, sec. 25.
Premiums may be paid to one entrusted by the company with the delivery of the policy, so as to make payment to him be to the company, especially where the policy acknowledged receipt of the premiums since authority to deliver warrants the insured in relying on the implied authority of the agent to receive the premiums, and this, according to some, but not all, courts, although the policies provide otherwise, and notwithstanding the policy itself stipulates for payment at the home office.
3 Couch on Insurance, page 1936, section 599.
Argued orally by Charles R. Shannon, for appellant, and by Henry Hilbun, for appellee.
Appellant, Graves, Lindsay McLaurin, Inc., an insurance agency located in Laurel, Mississippi, instituted this suit by way of an attachment in chancery against the appellee, an Illinois corporation, which owns and operates a lumber manufacturing plant in the city of Laurel, seeking to recover premiums alleged to be due on fire insurance policies written by this agency and covering the appellee's property in the city of Laurel. The court below entered a decree dismissing the bill of complaint, and from this decree this appeal was prosecuted.
In July, 1931, George C. McLean, an insurance broker doing business in Chicago, Illinois, as the McLean-Sommerville Company, solicited of the president of appellee corporation, at his office in Chicago, the privilege of writing insurance on the appellee's property in Laurel, Mississippi. Upon McLean's solicitation he was authorized to write fire insurance on this property to the amount of fourteen thousand dollars. Thereupon, without the knowledge of appellee, McLean negotiated directly with appellant, and as a result the appellant issued five policies covering appellee's property and mailed them to McLean for delivery to appellee. With these policies there was sent a bill for the premiums thereon, which were charged to the appellee on the books of the appellant. After the delivery of the five policies, for some reason, two of them were recalled and three others were substituted; the difference in the premium charges on the three policies substituted and the return premium on the two canceled being charged to appellee.
The president of appellee company first learned that appellant issued the policies when he noticed its name stamped on the face thereof at the time the policies were delivered to him by McLean. The premiums on these policies were not paid when they were delivered; but later, on July 27, 1931, on a bill from the McLean-Sommerville Company, the appellee paid the amount of the premiums to the said McLean. The appellant endeavored to collect these premiums from McLean, but upon his refusal or failure to pay, on October 27, 1931, it, for the first time, notified the appellee that these premiums had not been paid and demanded payment of it. It now appears from the evidence that McLean had disappeared from Chicago.
The evidence further shows that the president of appellee company had known McLean for about fifteen years as an insurance agent and broker; that he was appellee's local agent in Chicago, and was referred to in correspondence as its Chicago agent; and that, upon authority so to do, McLean had secured insurance on appellee's Laurel property for the year immediately preceding the issuance of the policies by appellant. Prior to the negotiations for the insurance here involved, the appellant had had no sort of business relations or dealings with McLean or the McLean-Sommerville Company.
Upon these facts the decisive question is: Was McLean the agent of the insurers or of the insured? An agency to deliver the policies would not necessarily imply the power to collect the premiums, but the extent of the agency in that regard must be determined by the particular circumstances of the case and the relations existing between the respective parties. It does not here appear that McLean ever had any other transaction with the appellant; that it ever requested him to solicit insurance, or had any acquaintance with him further than that arising from the negotiations concerning these particular policies. The appellee authorized McLean to place the insurance for it. For several years prior to that time it had been dealing with him as its agent for securing insurance on its property, and for the period just prior to the issuance of the policies here involved it had employed McLean to secure insurance on the Laurel property, and he had placed such insurance through some eastern agency. The premiums were not paid to McLean when the policies were delivered, or upon the presentation of appellant's bill therefor showing a charge against appellee, but they were later paid on a bill presented by McLean showing an alleged indebtedness to the McLean-Sommerville Company. At that time the appellee had notice of the fact that the policies had been written by the appellant.
In Citizens' Fire Ins. Co. v. Swartz, 21 Misc. 671, 47 N.Y.S. 1107, on a state of facts practically identical with those above stated, it was held that the broker was the agent of the insured only, and that payment to him did not estop the insurance company from recovering the premiums from the insured. In Kings County Fire Ins. Co. v. Swigert, 11 Ill. App. 590, it was held that: "One who solicits insurance of the assured, and afterward procures a policy to be issued by the insurer, is not an agent of the latter. Nor does the fact that the insurer places its policy in the hands of the broker for delivery, make him an agent or give rise to a presumption of agency, except when there have been no previous dealings between the broker and the assured. If in fact, before the policy is issued, the assured has had dealings with the broker, or the latter is in any way clothed by the assured with the credentials of an agency, the insurer may treat him as the agent of the assured."
On the facts in the case at bar, we think the broker was the agent of the insured, and that payment to him did not relieve the insured from liability for the premiums sued for. However, for the nonpayment of these premiums, the insurance companies, as they had a right to do under the terms of the policies, canceled them on December 1, 1931. Therefore, only the amount of the premiums which was earned to the date of such cancellation is recoverable, which amount, by an agreement of counsel correcting the record, is shown to be one hundred nineteen dollars and sixty-nine cents. The decree of the court below will therefore be reversed, and a decree entered here in favor of the appellant for one hundred nineteen dollars and sixty-nine cents.
Reversed, and decree here for appellant.