Federal Insurance Co. v. Sydeman , 82 N.H. 482 ( 1927 )

The rule that the same person may not act as agent for both the insurer and the insured does not apply unless the dual agency thus created requires the agent to assume incompatible duties. Ostrander, Fire Ins., s. 41. Accordingly, it has been held that an insurance agent who represents several companies may also represent a property owner for the purpose of selecting companies and keeping the property insured, and that he may therefore cancel subsisting policy and substitute another in its place. Allemania Fire Insurance Co. v. Zweng, 127 Ark. 141; Phoenix Insurance Co. v. State, 76 Ark. 180; Hartford Fire Insurance Co. v. McKinley, 74 Fla. 186; Todd v. Insurance Co., 2 Ga. App. 789; Warren v. Insurance Co.,161 Iowa, 440; Hamm Realty Co. v. Insurance Co., 84 Minn. 336; Dalton v. Insurance Soc. (Tex.), 213 So. W. Rep. 230; Hollywood Co. v. Insurance Co.,80 W. Va. 604. Additional authorities will be found in 32 C.J. 1255. On the question of dual agency attention is called to the case of Wilson v. Atwood, 81 N.H. 61, and to the finding of the trial court in the present case that in canceling the intervener's policy and substituting the plaintiff's therefor the Derry agency acted in accordance with the custom and regular course of dealing in the fire insurance business.

While it is the general rule that no custom or usage can be shown which is contrary to law (Rogers v. Allen, 47 N.H. 529; Scribner v. Hollis,48 N.H. 30), the statutory stipulation relating to notice of cancelation was merely for the protection of the defendant, who could waive it himself or authorize the agents to waive it for him. Kelsea v. Insurance Co.,78 N.H. 422, 425. Consequently, if he knew of the practice of insurance companies to disregard such stipulations in analogous cases, there can be no question but that he impliedly authorized the agents to follow the practice in his particular case. Martin v. Maynard, 16 N.H. 165, 167. But neither he nor Davidson testified at the trial, and it does not appear that either of them had any knowledge on the subject.

This does not dispose of the matter, however, for even if ignorance of a custom may render the custom ineffectual as between a principal and his agent, it does not necessarily affect the rights of a third person who contracts with the agent on the basis of the custom. Backman v. Charlestown, 42 N.H. 125, 132. And the Home company here occupies the position of a third person.

It is agreed that the agents had authority to replace policies when necessary. Cancelation without notice was customary in such cases, and a third person in dealing with the agents had a right to assume that they were empowered to transact the business entrusted to them in the usual way. Atto v. Saunders, 77 N.H. 527; Mulhall v. Company, 80 N.H. 194, 208; Schwartz v. Casualty Co., ante, 177. The statement has many times been made by this court that a principal is bound by his agent's act if "it is one agents in that line of business are accustomed to do." Davison v. Parks,79 N.H. 262; Wilkinson v. Company, 79 N.H. 335; New Hampshire c. Fruit Co. v. Paine, 80 N.H. 540.

This is not, however, a case of undisclosed restrictions on the agent's authority, for the Home company by virtue of the dual agency had all the knowledge relating to the agents' authority to act for the defendant that the agents had themselves. It may be that under such circumstances there is no difference between the agents' actual and apparent authority, but the question need not be decided, since it is the extent of the agents' apparent authority which here controls.

That the agreement was to "keep the property insured" is not only uncontroverted, but established by a definite finding. "When the facts are undisputed, the question whether an agent has the requisite authority to bind his principal, is a question of law for the court." Gulick v. Grover, 33 N.J. Law, 463, 473. Such is the situation in the present case.

The essential inquiry is not what authority the defendant intended to confer, but what authority a reasonable person in the position of the Home company would naturally suppose he had conferred. Atto v. Saunders, supra.

The object of stipulations requiring notice is to give the insured an opportunity to procure new insurance. Where, as here, the insured has arranged for constant protection the stipulation is of trifling importance. The selection of companies had been left to the agents in the first instance, and there is no suggestion that the defendant did not desire that arrangement to continue.

If the agents were required to give notice of cancelation and await the defendant's approval of the substituted policy, then their agreement to keep the property insured was of no special significance. They would have so acted if there had been no agreement at all. The defendant must have intended to confer some authority upon them, and the only fair inference to be drawn from his conduct is that he expected the agents, if occasion to revoke a policy should arise, to waive notice of cancelation, and substitute a new policy forthwith. No reasonable person possessed of all the knowledge which the Home company had by reason of the dual agency could have understood the contract to mean anything else.

The general conclusion of the trial court is therefore held to be unwarranted by the special findings. The policy was effectually canceled, and the Home company is not liable.

In this view of the situation it is unnecessary to decide whether the defendant's demand on the Federal company for payment and his subsequent suit and answer to the plaintiff's bill constituted a ratification of the agents' act.

Before the bill was filed, Sydeman had brought an action at law on each policy. Davidson was later joined as party plaintiff. No reason is apparent why the rights of the parties could not be adequately determined in the trial of these actions. But inasmuch as a decision is desired at this time, the question presented has been considered. Whether the Federal company is liable on the merits of the controversy, and if so, whether it is liable to Sydeman or to Davidson, are questions to be decided in the superior court.

Exceptions sustained.

BRANCH, J., did not sit: the others concurred.