Opinion
Submitted February 6, 1914
Decided March 3, 1914
Charles P. Ryan for appellant. James H. Merwin for respondent.
The plaintiff rests its case on the proposition that the knowledge which Hatfield possessed was the knowledge of the defendant, and no further notice of the accident was required by the policy. The argument is that Hatfield was the plaintiff's manager, charged with the duty of giving notice, and that he was the defendant's agent, charged with the duty of receiving such notice, and that it would have been a useless formality for Hatfield to give notice to himself; and further, that the defendant had knowledge of Hatfield's dual agency.
In Exchange Bank v. Nebraska Underwriters Ins. Co. (120 N.W. Rep. 1010), a somewhat analogous situation was presented. The assistant cashier of the plaintiff, who was also the agent of the defendant, issued policies of insurance upon certain property. The property was thereafter by bill of sale conveyed to the bank as security for a loan and with it was transferred the policies of insurance. The defendant had no further information of the bill of sale than that possessed by its agent, the assistant cashier of the bank. Under the provisions of the policy a sale of the property insured made without the knowledge and consent of the defendant invalidated the insurance. In a suit brought by the bank against the insurance company it was held that the plaintiff could not recover. The court said: "We think it may be regarded as well established that where an agent's duty to his principal is opposed to, or even remotely conflicts with his own interest, or the interest of another party for whom he acts, the law will not permit him to act, nor will it hold his acts or his knowledge gained in such transaction obligatory upon his principal."
The case in Nebraska was followed by the Supreme Court of North Dakota in First National Bank of Nome v. German American Ins. Co. (134 N.W. Rep. 873). In that case the agent of the defendant was also the cashier of the plaintiff, a fact known to the defendant. As agent of the defendant the cashier issued policies of insurance on the bank's property, and afterward obtained for the bank additional insurance upon the same property in another company. He gave no notice of the additional insurance to the defendant as its policies required. It was held, after a loss, that the insurance company was not liable to the bank upon the policies issued by the cashier as the defendant's agent.
The object of these provisions for immediate notice of a possible loss in an insurance policy is to give information to the insurance company in order that it may protect itself. The duty of furnishing such information rests on the insured. The primary duty of Hatfield in the present case was to take, in behalf of the plaintiff, the first step required by the policy after the accident occurred, and give the insurer notice thereof.
Hatfield was in full control of the plaintiff's business. He acquired knowledge of the accident on the day it occurred while in the discharge of his duties, and it was then within the scope of his duty to give the insurer notice as provided for in the policy. He did not give the notice because the plaintiff believed that no claim would arise out of the accident. Some six weeks later he endeavored to settle the liability of the plaintiff to the injured employee, and took from him a statement that the milk company was not to blame for the accident. In all of this he was not acting in his capacity as an agent of the defendant, but in behalf of his own company, in which he was a stockholder and director, as well as treasurer and manager thereof.
But it is argued that Hatfield was also the agent of the defendant, the insurance company, and that it would have been a useless formality for him to give notice to himself. I regard that argument as unsound. The observance of formalities is sometimes necessary to protect substantial rights. It may be that if Hatfield had given notice of the accident to himself, he would have been aroused to a sense of his duty to his principal, the insurance company, and would have forwarded the notice to the home office of the company. At any rate, the result of his inaction as the plaintiff's agent left the defendant without the information to which it was entitled under the policy.
Upon the facts found, Hatfield's knowledge should not, in my opinion, be imputed to the defendant ( Atlantic State Bank of Brooklyn v. Savery, 82 N.Y. 291, 307), or be held ground for dispensing with the written notice which the policy required.
I recommend that the judgment appealed from be reversed, and a new trial ordered, with costs to abide the event.
WILLARD BARTLETT, Ch. J., HISCOCK, COLLIN, HOGAN and MILLER, JJ., concur; WERNER, J., absent.
Judgment reversed, etc.