Equity Mut. Ins. v. General Casualty Co. of America

MURRAH, Circuit Judge

(dissenting).

For many years preceding the. event which precipitated this lawsuit, the LaBrunerie Agency had written all of the insurance for the Motter family, including the insured herein. When the insured' purchased a new automobile in the State of Kansas, he merely called the LaBrunerie Agency at St. Joseph, Missouri, .giving it the necessary data, with instructions to write a casualty insurance policy in accordance with the understanding which had existed between the Agency and the Motter family for about 14 years. Motter was interested only in coverage for his automobile, and the type and kind of coverage which he wanted was already well known to the Agency. LaBrunerie, an insurance agent in Missouri, was not authorized to write and deliver the policy in the State of Kansas, consequently he secured the policy from a Kansas agent, paid the premium, and charged Motter *727therefor on his books. When, on August 19, 1941, the insurer (Equity Mutual Insurance Company, appellant here), notified the LaBrunerie Agency of its intention to cancel the policy as of September 1, 1941, instructing the Agency to pick up the policy not later than that date, it became incumbent upon the Agency to secure other insurance if it was to keep Motter covered in accordance with its “past business practice”. Accordingly, the Agency procured the issuance of another policy in the General Casualty Company (appellee), for which it was a policy writing agent in the State of Missouri, but not in Kansas. Consequently, the application for the policy was submitted to the general agency in St. Louis, Missouri, which issued the policy and caused it to be countersigned by a policy writing agent in Kansas. The policy was dated August 28, 1941, effective August 27, 1941, and the premium thereon was paid by crediting the insured with the unearned premium on the first policy, and charging his account for the balance. By this transaction, LaBrunerie canceled the first policy and substituted the other.

The trial court concluded that the LaBrunerie Agency “did, pursuant to past business practice, assume to see that the said Motter was covered by liability insurance.” In my judgment, this factual conclusion is amply supported by the facts of record, and as recited by the majority.

Where an insurance agent is merely employed to write or procure certain insurance, his authority for the insured is exhausted when he has done so, and he has no authority to consent to its cancellation, to waive the five-day rule, or to accept a substitute policy. Merchants’ Ins. Co. v. Shults, 8 Kan.App. 798, 57 P. 306; Grace v. American Cent. Ins. Co., 109 U.S. 278, 3 S.Ct. 207, 27 L.Ed. 932; Couch on Insurance, Vol. 2, p. 1342, Sec. 474. But where such agent is authorized by the insured not only to procure insurance, but also to keep the property covered, he has implied authority to do whatever is reasonably necessary to accomplish that object, and he may waive the five-day clause, cancel or accept cancellation of the existing policy, and substitute other like insurance, all without notice or consent of the insured. Rose Inn Corp. v. National Union Fire Ins. Co., 258 N.Y. 51, 179 N.E. 256, 83 A.L.R. 293; Pelaggi & Co. v. Orient Ins. Co., 102 Vt. 384, 148 A. 869, 873; Kerr v. Milwaukee Mechanics’ Ins. Co., 8 Cir., 117 F. 442, 447; Federal Ins. Co. v. Sydeman, 82 N.H. 482, 136 A. 136; Orkin v. Standard Fire Ins. Co., 99 N.J.L. 114, 122 A. 823; Insurance Co. of North America v. Burton, 147 Okl. 112, 294 P. 796. See also Annotation 83 A.L.R. 298, sub. IV; Couch on Insurance, Vol. 2, Sec. 474, p. 1447. The majority hold merely that the facts do not bring this case within the rule, which would authorize the LaBrunerie Agency to cancel the policy in the Equity Mutual Insurance Company (appellant), without the knowledge or consent of the insured.

It seems to me that in these circumstances, the LaBrunerie Agency had implied authority to take the necessary steps to keep Motter covered by insurance. When the Equity Mutual served notice of its intention to cancel the subsisting policy, it became necessary for the LaBrunerie Agency to procure other insurance if it was to keep Motter covered in accordance with its “past business practice.” Thus, when LaBrunerie procured the second policy, and canceled the first policy, it acted not only within the scope of its authority, but faithful to its assumed responsibilities. The decision here does not turn on the narrow question whether LaBrunerie was empowered to accept notice of cancellation for and on behalf of Motter. The cancellation was effected not by the acceptance of notice, but by the affirmative act of cancellation, followed by the substitution of another like policy. Cf. Rose Inn Corp. v. National Union Fire Ins. Co., supra.

It is argued that the last policy was void or voidable from its inception because of a false answer to a question which was material to the risk. In answer to a direct question in the policy, it was stated that no insurer had canceled any authomobile insurance issued to the insttred during the past year. The question and answer was material to the risk involved, and was false as the LaBrunerie Agency well knew. Although LaBrunerie was the agent of Motter for the purpose of procuring other insurance, it was also a policy writing agent of the insurer, and in these circumstances, knowledge of the agent was the knowledge of the company he represented. Continental Ins. Co. v. Pierce, 39 Kan. 396, 18 P. 291, 7 Am.St. Rep. 557; Standard Life & Accident Ins. Co. v. Davis, 59 Kan. 521, 53 P. 856; Colonial & U. S. Mortgage Co. v. Elsea, 85 Kan. 106, 116 P. 249, Ann.Cas.1912C, 1145. *728Cf. Wilson v. German-American Ins. Co., 90 Kan. 355, 133 P. 715; Rosedale Securities Co. v. Home Ins. Co., 120 Kan. 415, 243 P. 1023; Riddle v. Rankin, 146 Kan. 316, 69 P.2d 722; Reser v. Southern Kansas Mutual Insurance Co., 150 Kan. 58, 91 P.2d 25. The policy of the General Casualty Company was not void or voidable, but was'valid and subsisting from the date of its issuance.

I would reverse the lower court in accordance with these views.