Rhode Island Underwriters' Ass'n v. Monarch

| Ky. Ct. App. | Nov 21, 1895

JUDGE PAYNTER

delivebed the opinion of tide coubt.

Tbe appellant, Rhode Island Underwriters Association, on the 21st of November, 1892, by its general agents in Owens-boro, Ky., issued and delivered to M. V. Monarch a policy of fire insurance on a certain house in that city. Before the expiration of the policy, to wit, on the 17th of November, 1893, the property was destroyed by fire. On the 8th of August, 1893, Monarch conveyed the property to the Owensboro, Falls of Rough & Green River Railroad Company. The policy purported to insure M. Y. Monarch against loss in the • sum of $900. The appellant refused to pay the amount, and this action followed.

M. V. Monarch sues for the use and benefit of the-Owensboro, Falls of Rough & Green River Railroad Company, alleging that he was not the owner of the property at the time of the issual and delivery of the policy nor at the time it was destroyed by fire; that he had purchased it for the railroad company and held it in trust for it; that the company was in possession of the property wdien the policy of insurance was issued and at the time it was destroyed by fire; that the agents of the appellant knew the character and extent of his interest in the property when the policy was issued, and, being in full possession of such facts, the agent of the appellant advised him to have the policy issued to him in the form in which it was prepared and delivered. The appellant denied the facts as alleged by appellee, and claimed that it was exonerated from liability because of certain conditions or prohibitions in the policy.

The evidence in the case establishes tEe facts to be that Monarch bought the property for the railroad company; that he was holding it for them; that appellant’s agent knew the condition of the title to the property when he., accepted the risk for his employers and issued the policy; That they advised Monarch to so accept the policy; that it was accepted on the strength of that advice; that the railroad,company paid the premium ($9) for the policy; that the notice as to the character of Monarch’s interest in the property was made known to appellant’s agent while the negotiation for the policy was going on, Monarch at the time being the president of the railroad company; that the railroad company had possession of the property when the policy was issued, which continued until it was destroyed by fire.

Among other provisions of the policy the following appears, viz: '‘This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto,-shall be void * * * if the interest of the insured be other than unconditional and sole ownership; or if the subject of insurance be a building on ground not-owned by the insured in fee simple or }f any change other than by the death of an insured take place in the interest, title or possession of the sub - ject of insurance * * by voluntary act of the insured or otherwise.”

Again: “This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements and conditions as may be endorsed hereon or added thereto, and no officer, agent or other representative of these companies shall have power to waive any provision or condition of this policy except such as by the terms of tbe policy may be tlie subject of agreement endorsed liereon or added thereto, and as to such provisions and conditions no officer or agent or representative shall have such power or be deemed or held to have waived such provisions or conditions, unless such waiver, if any, shall be written upon or attached thereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached.”

These are the provisions of the policy upon which appellant relies for exoneration from liability. •

There is no question as to the fact that Fred W. Clarke & Co., who issued the policy, were the general agents in Owens-boro for the appellant, and that Fred W. Clarke was the active one in receiving the business for the appellant. No proof was taken by the appellant to show there werc any limitations upon their agency or right to fully represent them in the transaction, except such as may appear by the terms of the policy.

It is, however, contended that they had no power to waive any of the conditions in the policy. This contention results from the language in the policy which is quoted above.

The question is not as to their power to make such waiver, but it is as to whether their principal is charged with notice as to the character of Monarch’s interest in the property. Was notice-to them notice to their principal? If it was, then the principal made a waiver of the conditions of the policy which are relied upon to defeat a recovery. The information as to the character of Monarch’s holding was not acquired before the agency began or after it had ceased, but during the, transaction.

The law presumes that the agent communicates the facts relating to the transaction to the principal. The party dealing with, the agent has the right to consider his acts and knowledge binding on the principal.

It is said in Story’s Agency, section 140: “Notice of facts to an agent is constructive notice thereof to the principal himself when it arises from or is at the time connected with the subject-matter of his agency: for upon general principles of public policy it is presumed that the agent has communicated such facts to the principal, and, if he has not’, still, the principal having entrusted the agent with the particular business, the other party has a right to deem his acts and knowledge obligatory on the principal, otherwise the neglect of the agent, whether designed or undesigned, might operate . most injuriously to the rights and interests of such party. But unless notice of the facts come to the agent while he is concerned for the principal and in the course of the very transaction or so near before it that the agent must be presumed to recollect it, it is not notice thereof to the principal.”

Insurance companies can only act through agents. There is no reason why such companies should not be affected with notice to the agent. While such companies may try to restrict the powers of their agents and seek to avoid liability for the acts of their agents by inserting conditions in their policies, still they can not commission an agent to act for them in a given transaction and then seek to avoid responsibility by denying that notice to the agent in such transaction is notice to the principal.

In such a matter they are charged with notice to the agent in the same way that other principals are in transactions performed through agents. While they may restrict the power of their agents, they can not escape being charged with notice of such facts which come to the knowledge oí the agent while engaged in the authorized transaction.

In Von Bories v. United Life, Fire and Marine Insurance Co., 8 Bush, 133" court="Ky. Ct. App." date_filed="1871-09-18" href="https://app.midpage.ai/document/von-bories-v-united-life-fire--marine-insurance-7130755?utm_source=webapp" opinion_id="7130755">8 Bush, 133, the insured had a policy on the United Life, Fire and Marine Insurance Company. The following day the insured obtained a policy on the same property from the Kenton Insurance Company.

In the policy issued by the United Life, Fire and Marine Insurance Company there was the following condition, to wit: “If there is or shall hereafter be made any further insurance on the property hereby insured or any part thereof, without being notified to this company, and its consent i hereto written hereon, then, and in that case, .this policy shall be of no binding force on this company.”

The consent of the company was not endorsed on the policy. The same agent represented both companies.

The court said: “It can not be insisted, however, that in law the company did not have notice of the second insurance. Both policies were issued by the same person, who, with the knowledge and assent of appellee, was at the time acting as general agent in Louisville for both companies.”

In that case it was held that notice to the agent was notice-to the company, and that its failure to enforce the forfeiture-before the loss waived its right to do so afterwards.

In Dayton Insurance Company v. Kelly, 24 Ohio St., 345, it appears there was a provision in the policy “that no insurance, whether original or continued, shall be considered as binding until the actual payment of the premium.“

The agent gave time on the premium. The company charged it to the agent and subsequent payment to the company constituted a waiver.

It is an elementary rule that the principal must bear a loss sustained by the conduct of the agent acting within the scope of his authority rather than a third person who has fairly dealt with him as such.

The railroad company paid the premium, as the agent of the appellant testifies. It never returned or offered- to return it. Being charged with notice of the character of interest Monarch had in the property it waived its right to treat the policy as void because Monarch did not have the unconditional and sole ownership of the property.

In Pratt v. New York Central Insurance Company., 55 N.Y., 505" court="NY" date_filed="1874-01-20" href="https://app.midpage.ai/document/pratt-v--ny-central-ins-co-3607713?utm_source=webapp" opinion_id="3607713">55 N. Y., 505, the court said: “In many cases the party who. could insist upon the forfeiture of a contract, and who could elect to abandon it, has an interest to waive the forfeiture and treat the contract as subsisting, notwithstanding the failure of the oth'er party. In this case the defendant elected to continue the insurance in force for the benefit of the plaintiff who had paid the premium, and for whose immediate benefit the policy was issued, and who was entitled to the insurance money in the case of loss, and the company could not afterward, and after the loss had occurred, abandon its election to the prejudice of the plaintiff.”

In the case under consideration the insurance was for the benefit of the railroad company, although the policy was issued to Monarch. The appellant elected to continue the risk, and it is too late, after the loss, to abandon its election to the prejudice of the railroad company.

It is insisted that Monarch was the sole owner of the property (section 2353, Kentucky Statutes) because no trust resulted in favor of the railroad company.

This statute provides that, when a deed shall be made to one person and the consideration paid by another, no use or trust shall result in favor of the latter. We do not think the insurance company can rely upon this statute. Monarch recognized the'trust and executed it, and the liability of the insurance company was not increased because -the railroad company, under the statute, might not have been able to compel tbe execution oí the trust. Both parties treated the transaction as creating a trust for the purpose of issuing the * policy of insurance. It is too late now to complain. Besides, one witness, whose testimony is uncontradicted, testifies that Monarch paid for the property and took the conveyance to himself in trust for the railroad company.

If this were true, and we assume.it to be, the trust existed. Under the statute the use or trust does not result only when the consideration was paid by one and the deed made to another.

It is urged that the policy became void because notice was not given to the insurance company when the conveyance was made by Monarch to the railroad company, and an endorsement made on the policy consenting thereto. It seems no notice was given of the conveyance, nor was any endorsement made on the policy consenting to it. We do not think it was necessary that it should be done. There was no change by the conveyance in the ownership of the property, nor as to the possession of it. The risk of the company was not increased or changed because the one taken was for the benefit of the railroad company. The object of the provis ion of the policy requiring notice of a change of ownership was to give the insurance company an opportunity to cancel the policy if it did not desire to continue the risk, because it might be willing to.carry it when the vendor was the owner, but not when it passed into other hands. In this case no such change occurred.

In Dermani v. Home Mutual Insurance Company of New Orleans, 26 La., Ann. 69, where the contract of insurance contained the following clause: “This policy is not assignable unless, by consent of this corporation, manifested in writing, and in case of any transfer, by sale or otherwise, without such consent, this policy shall from thenceforth be void and of no effect,” the court held that the prohibition did not apply to the assignment of the interest of one partner to the other partner.

The court held, in Cowan v. Iowa State Insurance Company, 40 Iowa, 551" court="Iowa" date_filed="1875-06-14" href="https://app.midpage.ai/document/cowan-v-iowa-state-insurance-7096402?utm_source=webapp" opinion_id="7096402">40 Iowa, 551, where a policy of insurance stipulated that it should become void upon an alienation of the property insured without the consent of the company, that a sale of the insured property to a firm of which the insured was a member did not vitiate his policy of insurance.

To the same effect are the cases of Burnett v. Home Insurance Company, 46 Ala., 11" court="Ala." date_filed="1871-06-15" href="https://app.midpage.ai/document/burnett--martin-v-eufaula-home-insurance-6508015?utm_source=webapp" opinion_id="6508015">46 Ala., 11, and Pierce v. Nashua Insurance Company, 50 N. H., 297.

We do not think the conveyance by Monarch to his cestui que trust avoided the policy.

. The judgment is affirmed.