Opinion
Decided December 4, 1934.
Where the terms of a fire policy declare it void if there exists other insurance without the insurer's consent, the insurer, though informed by the applicant that other insurance had existed, is under no duty to ascertain if such coverage is still existing. In such case lack of knowledge on the part of an insurer as to the prior existence of coverage does not impose any duty to acquire knowledge thereof and failure to inquire in such case does not constitute notice in the absence of an agreement or undertaking of the insurer to make inquiry. Where an applicant for fire insurance having informed an insurer's agent that there had been prior insurance said he thought it had expired but "to make sure, you call up my brother and he can tell you" whereupon the agent undertook to take care of the matter, the agent was required to make due inquiry as to the prior insurance. A general agent of an insurance company fully representing it in the issuance of policies has authority to do for the purpose of obtaining business not only what is customary but whatever is reasonably incidental to that end.
ASSUMPSIT, upon a fire insurance policy. Trial by jury and verdict for the plaintiff. One defence was that the property insured had other insurance on it at the time of the loss without the defendant's consent, the policy in suit containing a clause that it would thereby be void. The plaintiff had insured the property in another company. His brother was its agent and retained the policy. Trouble arose between them and they were on unfriendly terms. When the defendant's policy was issued, its local agent to whom the plaintiff applied for insurance inquired about other insurance. The plaintiff informed him of it, saying he thought it had expired, but "to make sure, you call up my brother, and he can tell you." The agent was aware that the brothers "didn't agree," and promised the plaintiff he would make the inquiry.
The defendant excepted to an instruction that it was chargeable with notice of the other insurance, thus making ineffective the clause relative thereto, if its agent in due care would have made inquiry to find out about it.
A bill of exceptions was allowed by Woodbury, J.
Tilton Tilton (Mr. Frederick A. Tilton orally), for the plaintiff.
Thorp Branch (Mr. Branch orally), for the defendant.
The agent's knowledge was the defendant's. (P.L., c. 276, s. 5. He knew, however, not that there was, but that there had been other insurance, and he was uncertain if it was still in force. The insurer giving the insured no reason to believe otherwise, the policy is the full measure of the latter's rights. Unless he is led by the insurer to understand that he buys more or differently than the policy provides, its terms control. The insurer is not liable for mistake or misunderstanding it does not cause. Lauze v. Insurance Co., 74 N.H. 334; Sargent v. Insurance Co., 82 N.H. 489, 490; Duval v. Insurance Co., 82 N.H. 543, 544; Karp v. Insurance Co., 86 N.H. 124, 125.
By the prevailing rule lack of knowledge is not enough to show a duty to acquire knowledge. The mere failure of inquiry does not, constitute notice, although the inquiry would furnish it. The reason that the insurer does not undertake to inquire except as it may see fit or may agree. Sanders v. Cooper, 115 N.Y. 279; Dumas v. Insurance Co., 12 App. (D.C.) 245; Waller v. Assurance Co., 10 Fed. Rep. 232; Aetna c. Ins. Co. v. Kennedy, 161 Ala. 600; Parsons, Rich. Co. v. Lane, 97 Minn. 98; Riley v. Insurance Co., 80 W. Va. 236.
More is involved here than the agent's ignorance of the other insurance through omission to inquire about it. The plaintiff testified that he left it with the agent to make any necessary inquiry about that insurance. Without understanding how it would affect the insurance he ordered, he relied upon the agent to protect him in regard thereto. And the agent undertook to take care of the matter. These deductions from the testimony cannot be doubtful. The jury were instructed that if the testimony were accepted and the agent was reasonably required to make due inquiry about the prior insurance, the defence on account of it would be overcome. The verdict for the plaintiff demonstrates the acceptance of the testimony and its truth is therefore established.
Inquiry by the agent was demanded since he undertook to make it. The charge was unduly favorable to the defendant in limiting the duty to reasonable conduct. The agent was required to do what he gave the plaintiff to understand he would do. It was necessarily reasonable that he make the inquiry.
It was stated in the instruction that failure to inquire if inquiry was a duty, was the equivalent of notice. If the statement was not strictly accurate, it was not prejudicial. The result of estoppel is the same, and at most the error was harmless.
Inquiry would in all probability have proved informative. The agent was therefore accountable to the plaintiff for the latter's mistake in assuming that the prior insurance would not affect the new.
The agent's failure to inquire is the defendant's fault. He was a general agent, fully representing the defendant in issuing policies. In obtaining business he might do not only what is customary (Federal c. Ins. Co. v. Sydeman, 82 N.H. 483, 485, and cases cited), but also whatever was reasonably incidental thereto. He was undeniably acting for the defendant. What he undertook to do was part and parcel of the negotiations for placing insurance by it. If actual authority is not shown, apparent authority is. If his undertaking was also a service for the plaintiff, it was consistent with his agency for the defendant and led to no incompatibility of duty. (Ib., 484).
Judgment for the plaintiff.
BRANCH and WOODBURY, JJ., did not sit: the others concurred.