Critchett v. American Insurance

Adams, Oh. J.

1. INSURANCE' pajonentof ?ensiunnol0X’ time by agent. The plaintiff claims that he was not in default at the time the loss occurred, notwithstanding the nonpayment of the installment, which, by the terms r J T note> fell due oh the first day of Nov., 1876. He claims that the company had extended fame of payment. As evidence of such extension he testified that one Kennedy, the agent of the company at Oskaloosa, near where he resided, agreed with him after the installment became due to extend the time of payment until he (plaintiff) should receive a certain pension; that he received his pension March 8, 1877, and on the same day went to Kennedy’s office to pay the installment due upon his insurance note, but did not find him, and on the next day, about 4 o’clock in the afternoon, the property insured was destroyed by fire.

The defendant denies that any agreement for extension was made between the plaintiff and Kennedy, and introduced Kennedy as a witness, who testified- that nonenvas made. Upon this point the jury found against the defendant, and the '.evidence being conflicting, their finding must be taken as •conclusive. Rut the defendant insists that conceding that Kennedy agreed to an extension the defendant would not be bound by it, because Kennedy had no authority to bind .the company in that respect, and further, if he had, that the plaintiff cannot recover, because the loss .occurred after the time as extended, and the plaintiff had not paid even then.

*406Kennedy’s authority was shown by the certificate of his appointment introduced in evidence. From it, it appears that he was authorized to receive applications for insurance, and collect and transmit premiums. Kennedy testified that he was not authorized to issue policies, and it is not pretended that he was.

The court instracted the jury, in substance, that the plaintiff would be entitled to recover if they found that Kennedy agreed to extend the time of payment, and that the loss ■ occurred within such time. The giving of this instruction is assigned as error.

According to the terms of the policy, the company ceased to carry the risk at the end of thirty days from the time the installment became due. If the comjDany continued to carry it, it was by reason of a contract not contained in the policy, and that contract must have been the alleged contract with Kennedy. Now, what precisely was that contract, taking the plaintiff’s statement as to what it was? He says:, “He (Kennedy) agreed he would give me time to get my pension.” From this it will be seen that Kennedy did not undertake to contract that the company would, without payment, continue to carry the risk after it had ceased by the terms of the policy. It is doubtful, indeed, whether he even meant to bind the company not to enforce payment of the installment before plaintiff could get his pension. The words do not necessarily mean more than that he would not himself enforce it.

But we are of the opinion that if Kennedy had expressly contracted that the company should carry the risk without payment after it had ceased by the terms of the policy, such contract would not have bound the company. There is no pretense that Kennedy had any express authority to bind the company by any contract whatever. He belonged to an extensive and well recognized class of insurance agents from whom the power to make contracts is withheld. If he had the power to contract in the name of the company to carry the risk without payment after it had ceased by the terms of *407the policy, it is because the law would, imply such, power from the fact that he was authorized to collect and transmit premiums. But an agent employed to collect a claim does not thereby have authority to bind his principal even to grant an extension of time.Hutchings v. Munger, 11 N. Y., 155; Kirk v. Hiatt, 2 Carter (Ind.), 323; Corning v. Strong, 1 Carter (Ind.), 329. Still less would such agent have authority to bind his principal by a contract of insurance. We have seen no case where the doctrine contended for by plaintiff has been held. We do not say that where a policy is delivered by an agent without the prepayment of the premium it will not take effect even though the agent have no authority to pass upon and accept the risk, and even though the policy provides that it shall not take effect unless the premium is prepaid. Where an agent is intrusted with a policy for the purpose of delivering it, and does deliver it, though in violation of a provision of the policy as to prepayment, it has been held that the assured has a right to assume that prejiayment has been waived. Young v. Hartford Fire Ins. Co., 15 Iowa, 377; Bowman v. Agricultural Ins. Co., 59 N. Y., 521; Mississippi Valley Ins. Co. v. Neyland, 9 Bush., 130; Sheldon v. Conn. Mu. Ins. Co., 25 Conn., 9.

But the waiver rests not simply upon something said by the agent which could be construed into an agreement of waiver, but upon something done by the agent which he was employed to do. The authorities all agree that a mere agreement to waive prepayment will not put a policy in force where it is not delivered. It is, therefore, the delivery of the policy which constitutes the ground of waiver.

It is true that in Hallock v. Commercial Insurance Co., 2 Dutcher, 268, a recovery was allowed although the premium had not been paid nor the policy delivered. But the agreement for the insui’ánee had been made cond the pemmm tendered, which the agent declined to receive because the policy was not made out.

In Trustees of Baptist Church v. Brooklyn Ins. Co., 19 *408N. Y., 305, there was a parol contract for a renewal, but no payment of the renewal premium. It was held that the ¡ilaintiff was entitled to recover. That case was substantially like the case at bar except that the contract was-made by the officers of the compcurvy and not by an agent. The judnciple decided, therefore, was materially different.

Nor does the case at bar come within the rule held in Viele v. Germania Ins. Co., 26 Iowa, 9. That was a case where the risk was increased by the act of the assured contrary to the provisions of the policy. It appeared, however, that the agent assented to the use of the premises by reason of which the risk was increased. Such assent was held to be a waiver of the forfeiture. The doctrine of that case is unquestionably correct, but it rests upon the fact that the agent is made the judge as to whether a given use is an increase of risk or not. Mr. Justice Beck, who wrote the opinion, said: “The agent is charged, by the terms of the policy on which this suit is based, with the power to determine whether the risk is increased. If he so determines he may cancel the policy and put an end to the contract. This involves the necessity of examination of the condition of the insured property during the life of the policy, and constant watchfulness to protect the interest of the underwriters. If he determines that the risk is increased such determination is final. Such being the great and extraordinary |iowers of the agent, it follows that he is clothed with the power to dispense with conditions and waive the effect of breaches thereof in contracts of insurance made by him. If he can determine that the conditions of the contract have been broken, surely he can also determine that they have not been broken.”

In our opinion there is nothing in this doctrine that affords support to the proposition that an agent who has not the power to make the contract of insurance can bind the company by his contract to an indefinite postponement of the payment of a renewal premium, and keep the policy in force in'contravention of its provisions. In Bouton v. The Amer *409ican Mutual Life Insurance Company, 25 Conn., 542, the premium was actually paid to the ageut, though after the day it fell due. It was held that though the agent had power to make the contract of insurance, and had power to receive the premium when due, he had no power without an express authorization to bind the company by receiving it after it was due. Substantially the same doctrine was held by implication in Insurance Company v. Norton, 96 U. S., 234. In that case a recovery was allowed where the agent had extended the time of payment of premium, but the right of recovery was made to turn upon the ground that the jury was justified in inferring from the practice of the company an express authorization of the agent to extend the time of payment. There was no pretense that the agent by virtue of his power to make the contract of insurance and collect premiums could extend the time of payment. It is not uncommon, we think, for agents to keep a policy in force after a renewal premium becomes due, without actual payment by the assured. The agent sometimes credits the assured or issues a receipt to him without payment by him, the understanding being that the agent becomes personally liable to the company, and the assured to the agent. In such case as between the assured and the company the premium is regarded as paid. See Flanders on Insurance, page 164, and cases cited.

There is a class of eases where a receipt of premium by an agent paid when duo has been held to be a waiver of a forfeiture incurred by a violation of a condition of the policy. See Walsh v. Ætna Life Insurance Company, 30 Iowa, 133, and cases cited. But where an agent who is authorized to receive premiums receives a premium paid when due, he is acting within the scope of his general authority. The assured has a right to suppose that the payment is valid; that it becomes a payment to the company, and that the company by receiving it, if it receives it with knowledge of the forfeiture, waives the forfeiture. We have been unable to discover any rule in the law of insurance which would justify *410us in holding that an agent can bind the company by his consent to a postponement of a payment of a renewal premium, and keep a policy in force contrary to its provisions, unless he is expressly authorized to do so.

It has been suggested that Kennedy’s authority to receive payment of premiums should be deemed to include the authority to bind the company to carry the risk without payment, because it might be for the interest of the company to do so. But authority to an agent to do one thing does not include, by implication, an authority to do another thing merely because it might be for the interest of the principal to do the other thing. An agent has implied authority to employ the usual and necessary means to accomplish what he is expressly authorized to do. In the case at'bar'the carrying of the risk without payment of the premium was not necessary to enable the company to collect the premium; that was collectible without any new contract or consideration. In no view, then, did Kennedy have the implied power to make the contract relied upon.

In our opinion the rule contended for by plaintiff would Lave a tendency to impair the value of all insurance, both fire and life. If insurance agents can grant a valid extension of the payment of renewal premiums for a few months, as in this case, while the risk continues, they can grant such an extension for a few years, or such length of time as the policy can be renewed. No company under such rule would be safe. Liabilities would constantly tend to become disproportionate to available resources. The interests bound up in insurance are too important to be thus jeopardized.

The foregoing considerations dispose of the case without regard to the fact that the loss occurred one day after the alleged extension had expired. The evidence was not such as to justify the instruction given, nor the verdict rendered.

Reversed.