Standard Oil Co. v. Triumph Insurance

This case presents but a single question. Joseph L. Lord, an insurance broker, procured the policy in question of the defendant: The defendant is an Ohio corporation. By the terms of the policy, the company could raise the rate, or cancel the policy. After the policy was issued, the fact of its being issued was communicated to the defendant, and the defendant required a raise of one per cent on the rate of premium, from five to six per cent. Mr. Lord, in behalf of plaintiff, assented to this raise, and promised to bring in the policy, and have the increased rate indorsed. This was not done. The matter so stood from May 31, 1872, until July 25, 1872, when a messenger from Lord’s office brought the policy to the defendant’s agents who issued the same, and directed its cancellation. The policy had indorsed upon it, “ ret. Co.” (which is found to have meant “cancel the policy” in the business of insurance) by Joseph L. Lord, or by James S. Lord, who was the brother of Joseph L. Lord, and had a general management of his business. The defendant’s agents received the policy, and filed it as canceled. On the thirtieth of July, the property covered by the policy burned, and the plaintiff brings this action upon the policy, claiming that the Lords or their clerks made a mistake in the cancellation of the policy.

The judge has found as conclusion of law, that, if the policy was returned for cancellation by a mistake of plaintiff’s agents, and was canceled by defendant, no action could be maintained on it. We think the conclusion right.

A principal is bound by the acts and representations of his agent, because of the appointment of the agent to do the act or transact the business in and about which the representations were made. The principal warrants against the mistakes of the agent.^[3]

Lord obtained the policy from plaintiff, and the defendant knew no one else in the transaction, and had a right to suppose him invested with full power. If he could procure, he could cancel. If he canceled by mistake, the plaintiff must bear the loss occasioned by the mistake. This mistake has altered the position of the defendant,^[4]

The judgment should be affirmed, with costs.

The defendant insured the plaintiff in the sum of $5,000, on petroleum, by policy of 30th May, 1872. Thereafter, and before the happening of the fire, the defendant required, as it had a right to, an additional premium; or, in default thereof, that the policy should be canceled. The policy after this came to the hands of defendant’s agents, who had acted for the defendant in making the contract, and in demanding the increased premium, and it was marked as canceled. The fire and loss happened a few days after this event. The plaintiff avers that it was so returned unintentionally and through mistake; and judgment is asked, declaring the cancellation void, that the policy was in force at the time of the fire, and for the sum insured. The court at Special Term dismissed the complaint on the merits, after hearing the testimony on both sides.

The defendant’s general agents were Burlingame & Rankin. One Joseph L. Lord, an insurance broker, had general dealings with these agents. He acted directly for and under the plaintiff’s directions in obtaining for them a line of insurance on their property, including the risk in question. Mr.' Lord and his clerks testify that the policy was marked canceled on Mr. Lord’s books, but he says it was so marked by error or mistake, and without plaintiff’s authority. On the day of the fire, it was in the hands of the defendant’s agents, so marked canceled or returned. The words which indicated its cancellation, were written on the policy, in Mr. Lord’s office by his brother, and in the usual course of their business as insurance brokers, and the policy came to defendant’s agents so marked, about the 24th of July, 1872, a few days before the fire, and remained with them until the fire.

Judge Pbatt, in deciding the case, says: “ The defendants were thrown off their guard, and permitted to act on the assumption that the policy was canceled; and, had this fact not occurred, the defendants might have procured the policy to be underwritten, or taken other measures in respect to the risk or the premium.”

There is some evidence in the case, from which an inference may arise that the plaintiff intended a cancellation because of the demand by defendant for an increased premium.

In every stage of the transaction, the plaintiff acted by Mr. Lord,

The defendant, who had demanded an increased premium, or the return- and cancellation of the policy, had the right to assume that its return, so marked, was in pursuance of such demand. Lord’s agency for the .plaintiff, is not to be questioned simply because his compensation as broker came from the premiums réceived by the defendant. An agent, having authority to make, has implied authority to cancel or modify a contract,^[3] and third parties dealing with him, will not be permitted to suffer loss,^[4]

The mistake, if any, of the plaintiff’s agent, cannot be permitted to bring loss to the defendant, in a transaction of this character, with all its attendant facts, because it was, in law, as regards' third parties affected ’ thereby, the mistake of the plaintiff, and. the defendant was not conscious of any such mistake, nor was there anything in the course of the business, which tended to create a suspicion of error or mistake in the cancellation, but, on the contrary, the return of the policy to the defendant, and the facts preceding it, entitle the defendant to be relieved from liability. . The judgment should be affirmed, with costs.

Donohue, J., dissented.

Judgment affirmed, with costs. .