Stebbins v. Lancashire Ins. , 60 N.H. 65 ( 1880 )

The plaintiff employed Barber to procure insurance on his building to the amount of $4,667. Respecting the policy in the Commercial Union, written April 3, 1877, for $2,333.50, no question is raised, and the policy written by Jenne Sherman in the North British Mercantile for $2,333.50 covered the remaining insurance called for. This policy was forwarded to Doolittle, and by him delivered to Barber, the plaintiff's agent, and accepted April 17, 1877, and the full amount of insurance authorized by the plaintiff was then secured.

The North British policy, issued upon the application of the plaintiff by the authorized agents of the company, when delivered to the plaintiff's agent and accepted, became a completed contract of insurance which could be terminated only in conformity to the terms of the policy, or by agreement of the parties. The right to terminate the insurance upon giving notice and refunding the premium for the unexpired term was reserved in the policy; and it appears that the company, upon being informed of the risk, notified their agents that they preferred not to carry it, and advised that it be placed elsewhere, and that the agents attempted to change the risk and place it in the Lancashire Company. But the act of the agents in cancelling the policy upon their books and writing a policy in the Lancashire Company and forwarding it as a proposed substitute was ineffectual to terminate the contract of the North British Company until notice had been given to the plaintiff or his agent; and no such notice was receive by the plaintiff, his agent Barber, or Doolittle, until after the liability of the North British Company had become fixed by the destruction of the property by fire. After the liability of the company had become absolute, notice of their previous election to terminate the risk was of no effect. The North British policy was in force at the time of the fire. M. Steam Mills Co. v. W. A. Co., 125 Mass. 110.

The Lancashire policy never became a binding contract. When insurance on the plaintiff's building to the required amount had been secured in the Commercial Union and North British companies the plaintiff's application had been filled, and no authority remained for placing other insurance upon the property. The Lancashire policy, therefore was unauthorized by the plaintiff; and, although written in good faith by the authorized agents of the company, and designed as a substitute for the North British policy, it could have no operative force until it was accepted by the plaintiff. It was not all acceptance of a proposition for a contract of insurance, like the case of a policy issued on a previous application, which, as in the cases cited by the plaintiff, takes effect upon the acceptance of the application. As neither the plaintiff nor his agent had any knowledge of the existence of the policy previous to the fire, it was not an existing contract of insurance when the loss happened, and the subsequent delivery was ineffectual to give it validity.

The delivery of the Lancashire policy after the fire was unauthorized, and there is no estoppel. The acts of an agent are binding upon the principal only when done within the scope of the agent's authority. The agents of the Lancashire Company had no authority to insure property which had been destroyed. When the fire occurred, the North British policy was in force and the Lancashire policy had not attached. The latter was designed as a substitute to take effect upon the termination of the risk of the former. By the destruction of the property the liability of the North British Company became absolute, and the contingency, upon the happening of which the Lancashire policy was to become operative, was no longer possible; and the attempt to transfer the loss to the Lancashire Company, being an unauthorized act of the agents, created no estoppel against the Lancashire Company. Neither did the agreement of the special agent to submit the question of damages to arbitration, made in ignorance of the facts, operate to give validity to the policy. Not being in force when the loss occurred, it is not binding upon the defendants.

Nonsuit.

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