Phoenix Insurance v. Seegers , 192 Ala. 103 ( 1915 )

THOMAS, J.

This is an appeal from rulings on pleadings, from the Andalusia city court of law and equity. Such appeals are provided by the act relating to procedure in that court. The plaintiff declared on the common counts and on the case. The reporter will set out the first count of the complaint as amended.

(1) The court properly sustained a motion to strike that part of the first count, claiming attorney’s fees for defending suit against the company on the insurance policy. Defendant’s other grounds of demurrer to this count Avere properly overruled.

Defendant then filed pleas 1, 2, and 3 of the general issue, and payment, to the complaint, to' which no demurrer Avould lie. Defendant’s pleas 4, 5, and 6 were to the effect that the damages claimed arose out of a contract of insurance made by the defendant while acting as the agent of plaintiff non-resident insurance company, Avhich was “legally authorized to do business in this state through regularly commissioned and licensed agents located in this state, but that at the time of the making of the contract of insurance described in the complaint, and out of which the plaintiff claims its damages arose, plaintiff had not'obtained from the insurance commissioner of Alabama a certificate of authority for defendant as agent of plaintiff to write or solicit insurance in this state” by a certificate issued in January, 1913. Plaintiff’s fourth, fifth, and sixth grounds of demurrer to defendant’s pleas 1, 5, and 6 should have been-sustained. The pleas were no answer to- the complaint.

(2) The count claimed damages from the agent for violating positive instructions not tó issue a policy on the “stock of ladies’ and gents’ furnishings of one Wilks at Andalusia, Ala.,” charging that, contrary to his instructions from the principal, the defendant agent issued a policy on this stock of goods for this Mr. Wilks at Andalusia. — Adams v. Robinson, 65 Ala. 586; White v. Chapman, 1 Stark, Rep. 113; Dodge v. Tileston, 12 Pick. (Mass.) 328; Story on Agency, § 333. In Adams v. Robinson, supra, Justice Somerville thus states the rule: “Where * * * an agent violates his positive instructions given him by a principal, this would constitute gross negligence, which would render him liable for such loss or damage as may, be occasioned by his misconduct; and, on a principle well recognized in many cases of tort, every doubtful circumstance would be construed unfavorably to the rights and interests of the agent thus perpetrating the wrong.” — 1 Mechem on Agency, §§ 1213, 1211; McAnaw v. Moore, 163 Mo. App. 598, 117 S. W. 220; Rush v. Rush, 170 Ill. 623, 48 N. E. 990; Cooper v. Cooper, 90 Neb. 209, 133 N. W. 213; Persons v. Smith, 12 N. D. 103, 97 N. W. 551; Wilts v. Morrell, 66 Barb. (N. Y.) 511, 598; Marshall v. Ferguson, 91 Mo. App. 175, 67 S. W. 935; Pape v. Westcott (1891), 1. Q. B. 272.

If an agent, instructed to insure property, without sufficient excuse neglects to do so, or to notify his principal, he will be liable, if loss occurs, for the full insurable value of the property, less the amount of the premium. — Pash. v. Homond, 4 Camp. 344; Perkins v. Wash. Ins. Co., 4 Cow. (N. Y.) 645; Thorne v. Deas, 4 Johns (N. Y.) 84; Shoenfeld v. Fleisher, 73 Ill. 404; Kaw Brick Co. v. Hogsett, 73 Mo. App. 433.

Where an agent was instructed by his principal to cancel a policy, but without sufficient reason delayed, and the property was destroyed by fire and the company was compelled to pay the loss, the company could recover the amount so paid from the agent. — Phoenix Ins. Co. v. Frissell, 142 Mass. 513, 8 N. E. 348; Franklin Ins. Co. v. Bears (C. C.) 21 Fed. 290; Kraber v. Union Ins. Co., 129 Pa. 8, 18 Atl. 491.

In Continental Insurance Company v. Clark et al., 126 Iowa, 274, 100 N. W. 524, Chief Justice Deemer pertinently says: “If the defendants fraudulently and negligently issued the policy against the express direction of their principal* and continuously and purposely failed to make report thereof, and plaintiff, through this fraud, was compelled to pay a loss which it might otherwise have avoided, there is every reason for'holding them liable, not only for the premium they should have exacted, but also for the full amount of the damages suffered by it in consequence of defendants’ wilful wrong.” — State Insurance Co. v. Jamison, 79 Iowa 245, 44 N. W| 371; Sun Fire Office v. Ermentrout, 11 Pa. Co. Ct. R. 21; Am. Cent. Co. v. Hagerty, 92 Hun, 26, 36 N. Y. Supp. 558.

The principal may recover such damages as he can show he has sustained by reason of the disobedience of the agent. — Whitney v. Merchants’ Union Exp. Co., 104 Mass. 152, 6 Am. Rep. 207; Brown v. Arrott, 6 Watts & S. (Pa.) 402; Harvey v. Turner, 4 Rawle (Pa.) 232.

(3, 4) Though the defendant received no commission to write insurance, he had been acting as plaintiff’s agent in the city of Andalusia, and which fact was well known to Wilks when the agent issued the policy to him. The plaintiff was liable to the insured on the policy ; the defendant would likewise be liable to the plaintiff for issuing the insurance without authority, although the agent may not have received his commission as agent, from the state, to write insurance. — Phoenix Ins. Co. v. Pratt, 36 Minn. 412, 31 N. W. 454; Ganser v. Fireman’s Fund Ins. Co., 34 Minn. 372, 25 N. W. 943; Brooklyn Life Ins. Co. v. Bledsoe, 52 Ala. 538; Whetstone v. Bank of M., 9 Ala. 875, 884; Nat. Bank v. Whitney, 103 U. S. 102, 26 L. Ed. 561; Schuyler Nat. Bk. v. Gadsden, 191 U. S. 458, 24 Sup. Ct. 129, 48 L. 7d. 458. This question has been decided by Mr. Justice Mayfield in the case of Meridian Life Insurance Company v. Dean, 182 Ala. 127, 62 South. 90, where it is held thair the insurance statutes were intended for the protection of the citizen, and that a violation of these statutes by an insurance company does not render the policy void. If the positive instructions of the company to the agent have been negligently or fraudulently disregarded by the agent, who knew he had no authority to write insurance in the state, he cannot excuse himself by pleading his disability, or his negligence or fraud. The case of Pride v. Commercial Insurance Company, 9 Ala. App. 334, 63 South. 803, is not in conflict with the view herein expressed. In the Pride Case the agent was seeking to collect commissions on insurance unlawfully issued, and his right to claim a benefit from an illegal contract was denied. It could not be said that if appellant had instructed appellee not to write other policies of insurance until the state authorities had issued to him an agent’s' commission, he would be permitted to plead the nonissiiance of the commission, to justify his wrongful conduct in violating positive instructions'of his principal. “The law will not allow a right to spring from its own violation.” —Jemison et al. v. B. & A. R. Co., 125 Ala. 378, 28 South. 51.

(5, 6) The amount paid by appellant to Wilks in settlement of the suit on the policy issued by appellee contrary to the express instructions' of appellant was less than the face of the policy for which the company was liable. The pleas were no answer to the complaint that the judgment against appellant was rendered by consent; and the facts averred in said pleas do not show a ratification of appellee’s unlawful act in issuing the policy of insurance.

Demurrers to pleas 7 and 8 should have been sustained.

The judgment is reversed, and the cause remanded.

Reversed and remanded.

Anderson, C. J., and Mayfield and Somerville, JJ., concur.