Graue v. Missouri Property Insurance Placement Facility

HOLSTEIN, Judge.

Plaintiff Doug Graue brought this action following the total destruction of a dwelling house by fire in Hayti, Missouri. He alleged he had insured the house for $5,000 under a policy issued by defendant Missouri Property Insurance Placement Facility (hereinafter “Facility”). Following a trial to the court on a stipulated record that included exhibits, deposition testimony and a “chronology of . events,” judgment was entered for Graue.

After opinion, this case was transferred to this Court by the Missouri Court of Appeals, Southern District. The basis for transfer was an asserted conflict in case-law construing the statutory requirement of a “notice of cancellation or notice of nonrenewal” found in § 379.845.2.1 That issue need not be addressed because the *782facts in this case support the trial court’s conclusion that the policy was in force on the date of the loss regardless of any conflict in the construction of the statute.

The standard of review is that stated in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo.banc 1976). When the record is stipulated but not all ultimate facts or factual inferences have been conceded, this Court reviews the stipulated facts in the light most favorable to the respondent ánd disregards inferences favorable to the appellant. Murphy v. Doniphan Telephone Co., 347 Mo. 372, 147 S.W.2d 616, 620 (1941); McHenry v. Claspill, 545 S.W.2d 690, 693 (Mo.App.1976); and Adams v. White, 488 S.W.2d 289, 293 (Mo.App.1972). A bench tried judgment which reaches the correct result will not be set aside even if the trial court gives a wrong or insufficient reason for its judgment. Edgar v. Fitzpatrick, 377 S.W.2d 314, 318 (Mo.banc 1964); Clark v. Brown, 814 S.W.2d 634, 643 (Mo.App.1991); Orrock v. Crouse Realtors, Inc., 813 S.W.2d 929, 932 (Mo.App. 1991); Ernst v. Ford Motor Co., 813 S.W.2d 910, 915 (Mo.App.1991). The facts are reviewed with these principles in mind.

Facility is a statutory entity made up of all property insurers authorized to do business in Missouri. Its purpose is to provide property insurance to persons who are entitled to insurance but are unable to obtain coverage through ordinary methods. §§ 379.810 to 379.880. Facility refers to these policies as “the Missouri Fair Plan.” Graue first submitted his application for insurance to Facility through Bond & Associates, an insurance agency in Caruthers-ville, Missouri, on December 9, 1983. Thereafter the application was accepted for a period of one year. In every year from 1984 through 1988, applications for renewals were made to Facility through Bond & Associates. Facility issued a notice of renewal and quoted an annual premium in December of each year. The notices of renewal were mailed to Bond & Associates, not to Graue. Bond & Associates would then notify Graue, who would pay the premium to Bond & Associates. Apparently, Bond & Associates would then transmit the payments to Facility.

The same application process and the same notice of renewal and quotation of premium were issued by Facility on December 12, 1989, and mailed to Bond & Associates. The notice indicated that the current policy was to expire on January 9, 1990, and quoted a premium of $102 for the following year. The notice, again as usual, included the following statements:

RENEWAL In order to renew your policy with no lapse in coverage, payment must be received before the expiration date indicated above. If payment is received on or after the expiration date shown above, coverage will be effective 12:01 A.M. standard time the day following receipt of payment provided payment is received within forty-five days from expiration date.
The notice also included the following: IMPORTANT Payment must be in the form of a certified check, bank draft or money order payable to: Missouri Fair Plan for the amount due as shown and mailed to: Missouri Fair Plan, 906 Olive, Suite 1000, St. Louis, MO. 63101. Please return indicated copy of this notice with your payment. This is the only premium notice you will receive.

Below this was the following: “If you have any questions, please contact your agent.”

Several days before the insurance was to expire in 1990, Graue received a letter from Bond & Associates saying, “Bring your money to my office before [January 9, 1990] in order to keep the insurance in force on this property.” A copy of the notice from Facility was enclosed. While Facility’s notice conditioned the insurance coverage on receipt of payment, nothing in the notice says that the insurance agent could not accept payment on behalf of Facility.

In conformity with the letter, Graue appeared at Bond & Associates’ office on January 8,1990. Deanna Maclin, the insurance agent who took the money, indicated that the premium may not get to St. Louis in time. Graue responded, “Well, just go ahead and get it on up there.” When the *783agent was asked if she explained to Graue that if the money did not get to St. Louis before the policy expired, he would not have coverage, she replied, “No, I’m sure I didn’t.” Instead, she took the payment and issued Bond & Associates’ check payable to Facility in the amount of $102, mailing it late on January 8,1990, although the envelope is postmarked January 9, 1990.

The insured dwelling burned on January 11, 1990. On January 12, Graue advised Bond & Associates of the loss, and Bond & Associates called Facility. The check for the premium was received in St. Louis on January 12. On that day, Facility returned the check to Bond & Associates along with a letter explaining there was no coverage in force. This litigation ensued.

The dispositive issue in this case is whether Bond & Associates had apparent authority to accept payment of premiums as an agent of Facility. The ultimate issue of apparent authority was not directly conceded or refuted by the stipulation. Determining whether Bond & Associates had apparent authority to accept the premium on behalf of Facility necessitates some discussion not only of the law of agency but the law of insurance, the rules of contractual construction, and also the application of those principles to the facts of this particular case.

Missouri follows the Restatement of Agency rule that apparent authority exists only to the extent that it is reasonable for a third person dealing with the agent to believe that the agent is authorized. Restatement (Second) of Agency § 8 (1958); Jeff-Cole Quarries, Inc. v. Bell, 454 S.W.2d 5, 13 (Mo.1970). When a person’s conduct is such that it is reasonable to believe the person has authority to act for another, and the other has reason to know of such conduct and allows it, a third person may reasonably conclude that the conduct is authorized. Apparent authority may be created by virtue of “position if a principal puts an agent into, or knowingly permits the agent to occupy a position in which according to ordinary habits of persons in the locality, trade or profession, it is usual for that agent to have a particular kind of authority.” Utley Lumber Co. v. Bank of the Bootheel, 810 S.W.2d 610, 612 (Mo.App.1991); see also Hamilton Hauling, Inc. v. GAF Cory., 719 S.W.2d 841, 847 (Mo.App.1986). Clearly, a usual course of dealing had developed in prior years in which Facility had not only acquiesced but had cooperated by dealing with Graue only through Bond & Associates. The insurance agency was provided with the notices, coordinated inspections, processed the applications, and collected premiums.

The statutes relating to insurance reinforce the conclusion that Bond & Associates had apparent authority to receive the premium on behalf of Facility. The statute creating Facility presupposes that policies issued by Facility have been solicited by a “licensed producer.” § 379.830. Chapter 379 does not define the term “licensed producer.” The only way to breathe meaning into the word “licensed” is to refer to the general insurance law, which has provisions relating to the licensing of agents, § 375.014, and the licensing of brokers, § 375.071. These statutes are in pari materia with the provisions of chapter 379 and cannot be ignored as having no bearing on whom “licensed” insurance producers represent in the insurance transactions.

A broker may be an agent of the insurer or of the insured, depending on the facts of a particular case. Schimmel Fur Co. v. American Indemnity Co., 440 S.W.2d 932, 938 (Mo.1969). However, an insurance agent is by definition more restricted. By definition an insurance agent is ordinarily “an agent of the insurer” and not an agent of the insured. § 375.012(4). The term “licensed producer” is broad enough to include both insurance agents and brokers. Because insurance agents fall within the meaning of “licensed producers,” it follows that such agency is usually an agency for the insurer, and a broker while engaging in identical activity is acting as an insurance agent.

Ms. Maclin, one of the co-owners of what was formerly Bond & Associates, stated that she had an insurance agent’s license. She repeatedly referred to Bond & *784Associates as an insurance agent or agency and noted at one point that the bulk of their business was as an agent for one company. No direct evidence establishes that Ms. Maclin or Bond & Associates had an insurance brokers license. The only method by which one could conclude that Bond & Associates was an insurance broker is by inference. However, inferences in this record must be construed favorably to Graue. Thus, Bond & Associates will be treated as having no authority other than that of an insurance agent.

An insurance agent may be one of two types. An insurance agent may be a “general agent” who has authority to enter contracts binding on the insurer. Corder v. Morgan Roofing Co., 855 Mo. 127, 195 S.W.2d 441, 445 (1946). By contrast, an insurance agent may be merely a “soliciting agent” whose authority is limited to soliciting policies, collecting premiums and the like. American Family Mutual Ins. Co. v. Bach, 471 S.W.2d 474, 478 (Mo.1971).

The insurance program created by § 379.810, et seq., creates an amalgam insurer made up of all property insurance carriers. The amalgam insurer provides insurance coverage for certain property risks. As a matter of law and industry practice, all agents of the insurance companies involved, as well as brokers, are authorized to solicit insurance customers for the amalgam insurer. The effect is that all licensed insurance agents and licensed brokers, referred to collectively as “licensed producers,” are soliciting agents for Facility-

As a general rule, a soliciting agent for an insurance company has the implied authority2 under Missouri law to do everything necessary to discharge the business at hand, including soliciting insurance, delivering policies, collecting premiums, and waiving conditions precedent. Burckhardt v. General American Life Ins. Co., 534 S.W.2d 57, 70 (Mo.App.1975). When premiums are collected, an insurance agent does not take the money as his or her own, but receives the money as a fiduciary of the insurer. § 375.051. The statutes relating to the relationship between insurers and soliciting insurance agents establish the standard for the industry. Facility cannot claim ignorance of these statutes and practices. A member of the general public has the right to rely on the general rules of law as well as industry practices when dealing with insurance agents. Secret limitations on the authority of a soliciting insurance agent may be valid between the insurer and the agent but do not negate a soliciting agent’s apparent authority to third parties. Dudley v. Du-Mont, 526 S.W.2d 839, 846 (Mo.App.1975).

The insurance agent, Ms. Maclin, did not inform Mr. Graue that she could not accept the premium. Generally, insurance agents may collect premiums for the insurer. Facility had full knowledge of the course of dealing that had developed over the years between Graue and Bond & Associates. Facility was undoubtedly aware that Graue’s premiums were collected by the insurance agency. The premium notice did not disclaim the agent’s authority to receive the premium. Viewed favorably to respondent, the premium payment notice telling Mr. Graue to submit any questions to the agent, the letter from Bond & Associates instructing him to deliver the money to its office before January 9, and the fact that Ms. Maclin took the premium without explaining that she had no authority to collect it on behalf of Facility demonstrate that Mr. Graue’s reliance was reasonable. Ms. Maclin gave no warning that she had no authority to collect the premium nor does the notice contain a warning that the agent has no authority to collect premiums on behalf of facility. Her receipt of the premium without disclaiming such authority is entirely consistent with apparent authority.

Also reinforcing the conclusion that Bond & Associates was acting as an insurance agent for Facility in receiving the *785premium is the ambiguity of the premium notice. The premium notice was not merely a billing but was part of the contract setting forth terms of the policy and conditions precedent to the policy becoming effective. Either of two reasonable conclusions could be reached as to when payment was effective. The notice here may have meant that payment was effective when received in St. Louis or when received by one having authority to collect payment of premiums for Facility. Graue, in response to directions of the producing agent, brought his premium to the office before January 9, 1990. In doing so, he was following the directions of the agent, precisely as he was instructed to do in the form notice supplied by Facility.

Where a contract is fairly open to two or more interpretations, that construction will be adopted which is against the one who prepared the contract. John Deere Co. v. Hensley, 527 S.W.2d 363, 365 (Mo. banc 1975). Similarly, ambiguities in insurance contracts are resolved in favor of the insured. Shelter Mutual Ins. Co. v. Brooks, 693 S.W.2d 810, 812 (Mo. banc 1985). Construing the ambiguity against Facility and in favor of Graue, the payment of the premium to Bond & Associates as a soliciting agent was effectively a payment to Facility, which was accepted by Bond & Associates on behalf of Facility.

Viewed favorably to the trial judge’s decision, an ordinarily prudent person would believe that Bond & Associates was the soliciting agent of Facility and, therefore, had authority to accept the premium payment for Facility. Facility, although fully aware of the circumstances, said nothing in its premium payment notice which would disabuse Graue of such belief. In fact, Facility left ambiguities in the notice and encouraged Graue to seek the advice of the agent should there be any question. When Graue waited until January 8, 1990, to deliver his premium, he was doing so in reasonable reliance on Bond & Associates’ representation that payment should be made prior to January 9, 1990. The judgment is affirmed.

ROBERTSON, C.J., and PRICE and LIMBAUGH, JJ., concur. BENTON, J., dissents in separate opinion filed. THOMAS, J., dissents in separate opinion filed. COVINGTON, J., concurs in opinions of BENTON and THOMAS, JJ.

. All references to statutes will be to RSMo 1986, unless otherwise noted.

. We recognize that implied authority is not the same as apparent authority. The former is a grant of specific authority implied from more general express authority given an agent. Restatement (Second) of Agency § 7 cmt. C (1958). Here there is no express authorization.