Jonathan Woodner Co. v. Aetna Insurance Company

J. SKELLY WRIGHT, Circuit Judge

(dissenting):

As the majority opinion indicates, appellants maintained an open account with Washington Insurance Agency with respect to premiums on their policies. A dispute arose as to the amount owed WIA on the open account and appellants, because of this dispute as well as for other reasons, decided to replace WIA, who was also the general agent of Aetna Insurance Company, as their insurance agent and cancel all insurance placed by WIA with Aetna and other insurers in their behalf. WIA was advised of this decision orally on March 10, 1966. It was confirmed by letter April 20, 1966, after binders for replacement insurance had been obtained by appellants’ new agent. Appellants’ letter to WIA stated:

“We have appointed the firm A. Matarasso & Co., Inc. as our insurance agents for all properties previously handled by you.”

On June 9, 1966, Aetna returned the unearned premiums totaling $20,329.59 on appellants’ cancelled policies, not to appellants, but to Aetna’s general agent, *760WIA. WIA, instead of forwarding the money to appellants, credited it to the disputed open account with the assured it no longer represented. When appellants demanded that Aetna return the unearned premiums directly to them, Aetna replied that the matter had been turned over to Aetna’s agent, WIA. Thus Aetna favored its own agent in WIA’s dispute1 *with Aetna’s assured by paying the returned premiums on appellants’ policies to WIA rather than appellants. How this payment under the circumstances to WIA can liquidate Aetna’s indebtedness to appellants is a mystery to me.

The majority states: “[E]ven if we impute the knowledge of WIA to Aetna, plaintiffs would still be estopped from asserting that premium refunds have not been returned to them by Aetna, as the procedure used was a continuation of a long course of conduct and uninterrupted custom adopted by WIA and plaintiffs.” But the long course of conduct and uninterrupted custom had ended long before Aetna sent the money to WIA. At that time Aetna’s agent WIA was no longer the agent of appellants. Perhaps principles of estoppel might be properly invoked to protect Aetna, if Aetna were unaware of the changed circumstances. But here WIA is Aetna’s agent, and it is of course elementary, as the majority indicates, that in law notice to the agent is notice to the principal. And in the circumstances of this case it is difficult to believe that in fact Aetna did not know precisely what it was doing. Aetna’s purpose to protect its agent, WIA, continued right through the trial. At no time did Aetna attempt to bring in WIA as a third party defendant to reclaim from WIA the returned premiums in the event the court held that payment should have been made to the assured on the policies. Indeed, even on this appeal no suggestion in this direction is made.

In my judgment it is situations like the present one which prompted Congress to enact 35 D.C.Code § 1334 (1967).2 Congress wanted to make certain so far as possible that an insurer and its agent could not join hands to defeat the rights of an assured.

I respectfully dissent.

. The majority in footnote 2 suggests that the dispute concerning the open account “seems at best minor.” Mr. Rosenberg, president of WIA, testified that after crediting the open account with the returned premiums Woodner still owed WIA $9,142.93. Strangely, he could not, give a reason why no action to collect this amount has been taken. Mr. Rowen, comptroller and secretary of Woodner, testified as to the open account:

Q * * * Would you tell us what the account rendered and carried over from May 31, 1966 appears to be?
A $26,920.50.
Q Now, is that an accurate reflection of the amounts due and owing by the Woodner companies to the Washington Insurance Agency.?
A It most certainly is not.
Q Showing you Defendant’s Exhibit Number 7, looking at their statement dated February 26, 1965, would you tell us the balance due and owing as stated on this statement, of February 11, 1965?
A $42,100.83.
Q Was that an accurate reflection of the amounts due and owing by Woodner Company to Washington Insurance Agency?
A It was not.
Q Did you make known your disagreements with the balance due as carried forward in these statements over a period of years?
A I did.
Q And to whom did you make known this disagreement?
A To Mr. Rosenberg and Mr. Taylor.
Q Who was Mr. Taylor?
A Mr. Taylor was at one time Mr. Rosenberg’s associate.
Q Did you have a discussion with them about this matter?
A Yes, on more than one occasion.

. See page 758 of the majority opinion for text of the statute.