101 Mich. 49 | Mich. | 1894
This is an action on a policy of insurance. The policy was issued from the agency of the company at Bay City, and was duly countersigned by George Washington, the agent at that place. The plaintiffs made application to Knaggs & Plum, insurance agents at Bay City, to place $10,000 of insurance on their mill. Knaggs & Plum, being unable to place the whole amount in companies represented by them, applied in turn to Mr. Washington to write the policy in question, which he did. On examining the policy, Knaggs & Plum called the attention of Mr. Washington to the fact that the mill was mortgaged, and the mortgage in process of foreclosure, and asked that the following indorsement be placed upon the policy:
“ It is understood that the mortgage on this property is in process of foreclosure, such proceedings being amicable for the purpose of perfecting the title.”
Mr. Washington replied that it was contrary to his orders to write on mortgaged mill property, but Knaggs & Plum asked if he could not make an explanation, and get the company to carry it, stating that the policy would be of no value without it. The agent Washington replied that he would submit it to the company, and thereupon made the indorsement, and delivered the policy to Knaggs & Plum, who delivered it to plaintiffs. Plaintiffs had np notice of this conversation, and paid the premium to Knaggs & Plum. A fire occurred the second day after .the policy was delivered. Notice of this was telegraphed
“In any matter relating to the procuring of this insurance, no person, unless duly authorized in writing, shall» be deemed the agent of this company.''
The sole question in this ease is whether, under the facts stated, the notice of want of authority to Knaggs & Plum was notice to the plaintiffs. The circuit judge was of the opinion that the question was ruled by McGraw v. Insurance Co., 54 Mich. 145. Counsel for defendant contends that the case referred to has been since overruled in effect,
We do not deem it necessary to decide whether the present case is distinguishable from McGraw v. Insurance Co., or whether Knaggs & Plum are to be treated as agents of the insured or the insurer. If it be assumed that they were agents of the plaintiffs, on every principle of equity the defendant is bound by the policy in suit. This is not a case where the broker has misrepresented the risk, or in which the agent of the company has been deceived in any other manner. Nor is it a case where notice of the purpose to cancel has been brought home to the broker. But the sole question is whether the plaintiffs are chargeable with notice of the want of authority on the part of the agent Washington to do what he attempted to do. We quite agree . with the. defendant's counsel
“And such notice or knowledge will not be imputed (1) where it is such as it is the agent’s duty not to disclose, and. (2) where the agent’s relations to the subject-matter, ■or his previous conduct, render it certain that he will not disclose it, and (3) where the person claiming the benefit of the notice, or those whom he represents, colluded with the agent to cheat or defraud the principal.”
In section 723 the learned author further states:
“ The rule is based, as has been seen, upon the principle that it is the duty of the agent to communicate to his principal the knowledge possessed by him relating to the subject-matter of the agency, and material to the principal’s protection and interests. This presumption, however, will not prevail where it is certainly to be expected that the agent will not perform this duty, as where the agent, though nominally acting as such, is in reality acting in his own or another’s interest, and adversely to that of his principal.”
The doctrine of the text is supported by abundant authority. See cases cited in the note.
In Innerarity v. Bank, 139 Mass. 332, it is said:
“While the knowledge of an agent is ordinarily to be imputed to the principal, it would appear now to be well established that there is an exception to the construction or imputation of notice from the agent to the principal in case of such conduct by the agent as raises a clear presumption that he would not communicate the fact in controversy; as where the communication of such a fact would*54 necessarily prevent the consummation of a fraudulent scheme which the agent was engaged in perpetrating.”
An instructive case upon this subject is Thompson v. Cartwright, 33 Beav. 178. In that case it appeared that one Montriou was the attorney of one Downes, and received a conveyance in Downes’ interest. He had knowledge of the existence of a prior incumbrance, and the question was whether his knowledge was the knowledge of Downes. The rule is very clearly stated by the master of the rolls:
“I take the rule to be, generally, that the client must be treated as having had notice of all the facts which, in the same transaction, have come to the knowledge of the solicitor, and that the burden of proof lies on him (the client) to show that there is a probability, amounting to a moral certainty, that the solicitor would not have communicated that fact to his client. The question here is whether the applicant, Mr. Downes, discharges the burden so imposed on him. Upon the whole, I think that he does. Mr, Montriou, as his solicitor, knowing of the mortgage affecting the property, prepares a deed by which the owner of the property covenants that there is no mortgage, charge, or incumbrance on it or affecting it. He prepares this deed, and causes his client, the grantor, to execute to his client, the grantee, a solemn instrument, by which he deliberately puts his hand and seal to an assertion which is false. I think that this amounts to a solemn declaration by Mr. Montriou to his client that he, Mr. Montriou, was ignorant of any charge affecting the property, and that he did not believe that any such charge existed.”
This case is not distinguishable in principle from the present. It cannot be doubted that the defendant’s agent had every reason to believe that' the policy, which was itself an assertion of his authority, would be conveyed to the plaintiffs by Knaggs & Plum as and for a binding contract. Indeed, it could have been placed in their hands by him for no other purpose. To permit the company which he represents to assert now that the plaintiffs had notice, through Knaggs & Plum, of the want of
The judgment will be affirmed, with costs.
Counsel cited, in support of this proposition, Busch v. Wilcox, 82 Mich. 315, 336; Ripley v. Case, 86 Id. 263.