Thompson v. Equitable Life Assurance Society of United States , 199 N.C. 59 ( 1930 )

CONNOR, J.

At the trial of this action in the Superior Court, it was agreed by the parties that O. A. Moran, as the agent of the defendant, was duly authorized to solicit applications, to be submitted by him to the defendant, for policies of insurance on the lives of the applicants, and also for “Retirement Annuity Policies.” It is not contended that he had authority to issue policies in the name of the defendant, or to bind the defendant by contracts with respect to the same. He was required to submit all applications for policies procured by him to the defendant at its home office in the city of New York, for acceptance or rejection by the duly authorized officers of the defendant. He was, therefore, not a general agent of the defendant; he was merely a soliciting agent,- with such powers as are ordinarily incident to such an agency. He had no authority to receive money in payment of premiums for policies which had been issued by the defendant. He was authorized to receive and remit to the defendant money in payment only of the first annual premium on a policy applied for.

In 32 O. J., at page 1067, it is said: “A soliciting agent is merely a special agent, and as a general rule, has authority only to solicit insurance, submit applications therefor to the company, and perform such acts as are incident to that power. He may bind the company by agreements and representations properly made in connection with the application for the insurance, but ordinarily has no authority to bind it by attempted acts or contracts in its behalf, relating, not to the taking of the application, but to the subsequent contract of insurance, or to other matters not connected with the application and not within the real or apparent scope of his authority.” In the instant case, it is agreed that the agent of the defendant to whom the plaintiff paid the sum of $521.00 as premiums for the policy applied for, had no actual or real authority to receive for the defendant any money except for the first annual premium. It is agreed that the first annual premium was $105.00. All tbe money paid by the plaintiff to defendant’s agent in excess of this sum, was received by such agent without actual or real authority from the defendant. Defendant is, therefore, not liable for such excess, and was not bound by any act of its agent with respect thereto, unless its agent had apparent authority to receive such sum, and to bind the defendant by a contract with respect to said sum.

When plaintiff was solicited by O. A. Moran for an application to the defendant for a policy of insurance, she knew that the said O. A. Moran was merely a soliciting agent of the defendant — that is, an agent with limited authority from his principal. It is well settled as a principle of the law of principal and agent that an agent with limited authority cannot bind his principal by an act which is beyond the scope, actual or apparent, of the authority conferred upon him by his principal. In Robinson v. Brotherhood of Locomotive Firemen and Engineers, 170 N. C., 545, 87 S. E., 537, it is said: “We see no reason why, in a case of limited or restricted agency, the general doctrine applicable should not prevail, to the effect that one who deals with an agent of that kind, having notice of restrictions put upon his power, is bound by such limitations and may not insist on a contract which he knows is in excess of the power conferred.” The principal is not bound by or liable for the act of his agent which is beyond the actual, and not within the apparent scope of the agent’s authority. It is therefore held that a person who deals with an agent whose authority is known by him to be limited, must inquire as to the extent of the agent’s authority, if he would hold the principal liable for the act of the agent. Swindell v. Latham, 145 N. C., 144, 58 S. E., 1010. Where the act of the agent, although beyond the actual scope of his authority, is within its apparent scope, and the person dealing with the agent acts in good faith, and with reasonable prudence, the principal is bound. “The apparent authority, so far as third persons are concerned, is the real authority, and when a third person has ascertained the apparent authority with which the principal has clothed the agent, he is under no further obligation to inquire into the agent’s actual authority. The authority must, however, have been actually apparent to the third person, who in order to avail himself of rights thereunder, must have dealt with the agent in reliance thereon, in good faith, and in the exercise of reasonable prudence, in which case the principal will be bound by the acts of the agent performed in the usual and customary mode of doing business, although he may have acted in violation of private instructions, for such acts are within the apparent scope of his authority. An agent cannot, however, enlarge the actual authority by his own acts without some measure of assent or acquiescence on the part of his principal, whose rights and liabilities as to third persons are not affected by any apparent authority which his agent has conferred upon himself simply by his own representations, express or implied. Although these rules are firmly established, their application to particular cases is extremely difficult. The liability of the principal is determined in any particular case, however, not merely by what was the apparent authority of the agent, but by what authority the third person, exercising reasonable care and prudence, was justified in' believing that the principal had under the circumstances conferred upon his agent.” R. R. v. Smitherman, 118 N. C., 595, 101 S. E., 208. In Graham v. Insurance Co., 176 N. C., 313, 97 S. E., 6, the plaintiff having failed to show any authority from the company to its soliciting agent, to whom she had given her application for the policy issued by the company, to bind the company by her act, a judgment of nonsuit was affirmed. Brown, J., in his opinion in that case, quotes with approval the principle stated by Ruffin, J., in Biggs v. Insurance Co., 88 N. C., 141, as follows: “Where one deals with an agent it behooves him to ascertain correctly the extent of his authority and power to contract. Under any other rule, every principal would be at the mercy of his agent, however carefully he might limit his authority. It is true the power and authority of an agent may always be safely judged of by the nature of his business, and will he deemed to be at least equal to the scope of his duties.” See Foscue v. Insurance Co., 196 N. C., 139, 144 S. E., 689.

In the instant case, at the time she signed the application for a policy of insurance, upon the solicitation of defendant’s agent, and paid to said agent the sum of $521.00, upon his representation that he had authority to receive the said sum, and to bind the defendant to return the same if the policy was not issued, plaintiff knew that the annual premium for said policy was $105.00, and that the sum paid by her to the said agent was in excess of the said sum; the official receipt for the sum paid by her to said agent recites that said sum of $521.00 was “the first annual premium on the proposed Retirement Annuity policy” on her life, and that said receipt should not be detached “unless the 'first premium is collected.” Plaintiff was thus put on notice that the agent had authority to receive only the first annual premium, which she knew was $105.00. Had she exercised reasonable prudence and due care she would have ascertained that the agent had no authority to receive money from an applicant for a policy of insurance to be issued by the defendant in excess of the first annual premium. Upon the facts agreed in the instant case, the act of the agent was not only beyond the scope of his actual authority; it was not within its apparent scope. We are therefore of opinion that there was no error in the judgment that plaintiff recover of the defendant only the sum of $105.00, the sum which the agent had authority to receive from her at the time she delivered to him her application.

While the instant case is differentiated in some respects, upon the facts, from Lauze v. New York Life Ins. Co. (N. H.), 68 Atl., 31, cited and relied upon by defendant, the judgment herein is in accord with the principles on which that ease was decided. In that case, it was held that the apparent scope of the authority conferred by the company on the agent did not extend beyond soliciting, negotiating and delivering the contract. It was held that the agent had no authority, actual or apparent, to receive from the insured money in payment of a premium which became due after the issuance of the policy, notwithstanding the provisions of a statute in force in New Hampshire, identical with C. S., 6304. The statute by its terms applies only to the- agent who negotiates the contract, and is limited in its application to the first or initial premium. In the absence of express authority from the company, the agent who solicited the application has no power to bind the company by the receipt of money in payment of premiums which become due after the issuance of the policy. Such agent has power, under the statute to receive only the first premium which brings the policy into force, when the application is accepted by the duly authorized officers of the company.

It is said that this is a hard case. So it is. The plaintiff cannot, we think upon the facts agreed, invoke the equitable principle that where one of two persons must suffer loss by the fraud or misconduct of a third person, he who- first reposes the confidence, or by his negligent conduct made it possible for the loss to occur, must bear the loss. In proper cases, this principle is often applied by the courts, but we find nothing in the facts agreed in this case, which calls for its application.

We have not overlooked the fact in this case that plaintiff made the payment to defendant’s agent partly in money and partly in Liberty Bonds. It is well settled that an agent for an insurance company, authorized to receive money in its behalf in payment of premiums, has no authority to receive anything except money, and that the company is not bound by a payment made otherwise than in money. This principle has no application in the instant case, however, as the judgment is that plaintiff recover of defendant a sum less than the money received by the agent. Plaintiff' was denied recovery of any sum on account of the Liberty Bonds.

We find no error in the judgment. It is

Affirmed.