The question presented is whether the agreement of the agent to renew the policy of November 2, 1910, made as alleged in the petition, ten months before it expired, is binding on the insurance company. It will be noted that this case does not present the question of an oral contract by the agent for present insurance, but only a promise that when the policy expires he will renew it. *Page 450 Ostrander on Insurance, page 39, states the rule in this regard as follows:
"No agreement to insure at some future time, although definitely stated, will be enforceable. The contract, when completed by the distinct assent of both parties to all its terms, will be binding for a future insurance; that is to say, the insurance may take effect at some future time, but the contract must be complete in praesenti. In other words, it must be a contract of insurance, not an agreement to insure at some time in the future. In an agreement as to future insurance from the nature of the business and the circumstances of change and uncertainty which affect all classes of perishable property, contingencies may arise that would make performance impossible. A simple illustration will make plain this proposition. Suppose Brown to be a general agent of an insurance company, having full power to negotiate insurance, and to bind his company by contracts entered into either in writing or by parol, and agrees on the 20th of December with Smith, the owner of a building, that he will insure it on the 1st day of January following in the sum of $5,000, for the term of one year; the premium to be $50 and to be paid on the delivery of the policy. Thus the terms are all agreed upon. The minds of the parties have met in regard to every essential fact to the consummation of the contract, but there are possible contingencies involved which would deprive the agreement of any legal force. Suppose, for instance, the building should be destroyed by flood, hurricane, or even fire, on Christmas. When the time arrives that the contract is to become operative, the subject of insurance is no longer in existence. There is nothing to which the policy can attach. What, under the circumstances, would be the situation should the agent, in carrying out his agreement with Smith, issue a policy, and demand the stipulated premium? Could he enforce by suit a demand so absurd? Most certainly not. Nor is it clear that the case would be different if the policy had been written and delivered at the time of the *Page 451 agreement (December 20th) and a note given for the premium, payable, say, January 1st. Payment could be refused for want of consideration, the property having been destroyed before the risk began to run. We have shown in a preceding section that, when there is no obligation to pay a premium, there is no liability to pay a loss. But again the tenure of Brown's agency is uncertain. His authority to make contracts may be terminated at the will of his principal. He has agreed with Smith to execute a contract of insurance ten days in the future; and suppose, during the interim, his power is withdrawn, and when the time arrives for him to perform his agreement he is wholly without authority to act. Nor would the case be changed in any of its essential features should the sudden death of the agent prevent the execution of the contract of the 1st day of January. Smith, too, might voluntarily dispose of the property by sale, or it might be sold under legal process, and the relations so changed that he would no longer have an insurable interest. In either event, he could not be held liable to pay the agreed premium to the company which Brown represented. The agreement for his future insurance is purely a personal matter between Brown and Smith, and, should either fail in performance, it is a matter in which the insurance company has no concern. Should Brown neglect or refuse to carry out his agreement to insure the property when the time came to consummate the contract, and a loss should subsequently occur, he would, perhaps, be liable to Smith in an action for damages. Of this, however, we express no opinion, as it is not a subject for discussion properly within the scope of this work."
Clement on Fire Insurance, vol. 2, p. 499, speaks as follows:
"A general agent, with usual commission, or written authority under the New York standard form has no power to make a binding contract when he issues a policy that he will keep the same renewed or in force. Neither such commission nor the policy contemplates or authorizes *Page 452 an executory oral contract to insure property in the future. Such a promise may be the individual contract of the agent, but not of the company, and to bind the agent personally, there must be all the elements of a contract, such as acceptance of a distinct proposition."
Shank v. Glens Falls Ins. Co., 4 A.D. 516, 40 N.Y. Supp. 14, is very similar to the case at bar. In that case, the evidence was as follows:
"Then I repeated to him that I wanted him to keep it renewed, and he said that he would. I repeated it two or three times. Then when he got ready to go away I repeated it again. He said he would, and then I told him I did not understand business very much, and I always left it to agents to see to it for me. He said, 'Yes,' he would see to it. Then I said to him that I did not want it to run out as long as I held it, because I talked of selling it. * * * Then I asked him again, I said, 'Now, I will not have to pay any attention to this?' and he said, 'No.' * * Then I said to him, 'Then I won't have to look after this at all? He said, 'No,' that was his business."
The policy in that case contained the same provisions above set out, and the court says:
"A contract of insurance is one thing, and a contract to insure is quite another. The former is executed and takes effect immediately, while the latter is executory. * * * By the express terms of the policy it expired April 12, 1894, and the provision above quoted excludes the idea that an agent may orally contract that a policy may continue in force beyond the period when by its terms it expires. The terms of the policy do not provide that oral contracts to renew the policy 'may be the subject of agreement,' and such a promise, had it been * * * indorsed, would not bind the company, unless ratified by it. * * * Again, the promise testified to is not, in form or substance, *Page 453 the promise of the defendant, but the individual promise of Coburn."
Without quoting at length from them, the following cases fully support the doctrine laid down by Mr. Ostrander that a parol contract for insurance must be in praesenti, and must be a contract of insurance, and not an agreement to make a contract of insurance at some future time: Taylor v. PhoenixIns. Co., 47 Wis. 365, 2 N.W. 559, 3 N.W. 584; Idaho ForwardingCo. v. Fireman's Fund Ins. Co., 8 Utah, 41, 29 P. 826.
Another view of the question is equally fatal to the defendant in error. The policy provides that no officer or agent shall have the power to waive any condition or provision of the policy, except such as by the terms of the policy may be the subject of agreement indorsed thereon. The contract in regard to renewal is that it may be made, provided that any increase of hazard must be made known to the company at the time of the renewal, or the policy will be void. This provision clearly indicates that, before a renewal, there must be property to insure, and that the hazard has not increased from what it was when the original policy was issued. Can it be seriously argued that this provision in the contract means that the policy may be renewed after the property has been burned, and when there is nothing to insure? The authority of the agent is limited by the policy, and he can only waive a condition or provision thereon when, by the terms of the policy, they are subject to an agreement to be indorsed on the policy, and there is no agreement in regard to waiving the conditions on which the policy may be renewed. The policy provides that at its expiration it may be renewed, provided any increase of hazard is made known to the insurer, but in this case the agent attempts *Page 454 to bind the company to issue a renewal by a contract made ten months before the policy expires, and at a time when it is impossible for him to know whether or not the hazard will be increased when the time for renewal arrives. In addition to this, after the property has been burned, with the knowledge of the insured, he issues a post-dated policy, and gives no notice whatever to his principal that the property was burned when he issued the policy, and leaves them in entire ignorance of his agreement to issue the renewal, and of the fact that it was issued after the loss.
We therefore recommend that the judgment be reversed, and the case remanded, with instructions to dismiss the action.Guthrie Western R. R. Co. v. Rhodes, 19 Okla. 21,91 P. 1119, 21 L. R. A. (N. S.) 490.
By the Court: It is so ordered.