Arrott v. Walker , 118 Pa. 249 ( 1888 )

Opinion,

Mr. Justice Williams:

The plaintiff in the court below was a manufacturer owning buildings and machinery. The defendant was an insurance agent in the city of Pittsburgh, representing a number of fire insurance companies. On August 28, 1884, James Walker, a son of the plaintiff, called upon the defendant to obtain insurance upon his father’s property. In consequence of this interview Arrott visited the works of the Walker Manufacturing Company, in Ohio, and made a survey and examination of them with a view to determine the character of the risk. On the first day of September during the forenoon, James Walker again came to the office of Arrott and stated that the amount of insurance desired upon the whole property was $47,500, of which $21,000 was to be upon the terra cotta and brick works. Arrott promised to place the amount desired at two and one fourth per cent., risk to begin at noon of that day, and Walker to have sixty days in which to pay the premiums. On the 12th day of the same month the terra cotta and brick works Avere destroyed by fire. Arrott had succeeded in placing only $16,800 of insurance upon the property destroyed at the time the fire occurred. This action was brought to recover the difference between $21,000, the amount of insurance which Arrott undertook to place upon the property, and the amount realized from the policies actually secured.

The first question was as to the nature of the contract sued on. If it Avas an undertaking by an insurance agent to procure insurance for his customer, if responsible companies could be found to carry the risk, he Avas bound to the exercise of diligence and good faith in his effort to procure insurance to the promised amount. He was liable for a failure to obtain the insurance because of failure in the faithful discharge of his duty, and not otherwise. No such complaint was made against him, and the court in answer to a point calling' attention to this subject distinctly told the jury that there was no evidence before them‘from which such a finding could be made. If the contract of Arrott was that of an agent, it was clear that he had fully performed it. The plaintiff’s right to recover depended, therefore, upon the position that the contract was a personal undertaking by Arrott, that the property should be insured against fire from twelve o’clock noon of September 1, whether responsible companies could be found to carry the risk or not.

To this view of his liability the defendant replied that such a contract, if made, was void under the act of Feb. 4,1870, P. L. 14, which provides that “it shall be unlaxvful for any person, partnership, or association to issue, sign, seal, or in any manner execute any policy of insurance or guaranty against loss by fire or lightning without authority expressly conferred by a charter of incorporation given according to law ; and every such policy, contract, or guaranty hereafter made, executed, or issued shall be void.” Accordingly, in his fourth point the defendant’s counsel requested, the court to instruct the jury that the alleged contract, if made, was void and afforded no basis for a recovery. The court refused the instruction saying: “ I refuse that point. I refuse to instruct you that it Avas a contract of insurance and therefore void.” In answer to another point raising the same question the court said: “It is substantially the same question as suggested in the fourth point, and for the purposes of this case is refused.”

These points should have been affirmed. The contract as set out in the plaintiff’s narr. was a contract to place insurance upon the property of the plaintiff for the sum of $47,500 at rates agreed upon, “and to have the risk commence at 12 o'clock noon of the first day of September and cover all loss by fire in the premises insured.” The testimony of James Walker, by whom proof of the alleged contract was made, is as follows: “ I told Mr. Arrott that we wanted the insurance placed that day, and that we would like to have it placed at once. He said he would place the insurance that day at 12 o’clock noon. Your works will be covered for this amount at twelve o’clock.”

According to the theory of the plaintiff, if a fire had occurred during the afternoon of September 1, before any policies had been obtained by Arrott, he would have been personally liable for the entire sum of $47,500 if the loss had been total, or for such proportionate part thereof as might be necessary to cover the loss sustained. If no companies could be found willing to carry the risk or any part of it, still, according to this theory, the plaintiff was nevertheless insured, for Arrott’s undertaking was not that of an agent to obtain, if possible, the insurance from insurance companies, but to be personally liable for loss by fire from noon of September 1st. How it is possible to state a case more squarely within the prohibition of the act of Feb. 4, 1870, P. L. 14, it is not easy to see. The contract declared on is a contract to place $47,500 insurance upon the property, risk to commence at noon of September 1st, “ and cover all loss by fire in the premises insured.” Insured by whom ? Not by insurance companies, for this action is brought to recover several thousand dollars for which the defendant, after the exercise of a degree of diligence with which the plaintiff does not find fault, was unable to procure a policy in any company. The contract declared on is therefore a contract of insurance by the defendant. The testimony of James Walker is made use of to show a personal undertaking by the defendant. The plaintiff’s counsel, in their second point, put their case upon this theory. They asked the court to charge “ that if the jury find that the defendant agreed to place said amount of insurance to cover the risk from twelve o’clock noon of September 1, 1884, he is bound by said agreement, and liable to the plaintiff for the loss resulting from its breach, and the fact that certain insurance companies refused the risk is no defence in law and affords the defendant no relief from, an absolute undertaking to place the insurance.” The court affirmed this point, and submitted to the jury the question whether the defendant did agree “to cover the risk from twelve o’clock, noon, of September 1, 1884,” with the instruction that, if the defendant made such an agreement, “ he was bound by it, and liable to the plaintiff for the loss resulting: from the breach of it.” There is no mistake, therefore, that the recovery in this case was upon a finding by the jury that Arrott had contracted to be liable for loss by fire up to the entire amount of the insurance agreed for. To say nothing upon the subject of consideration, it is clear that such a contract, if made, was a contract of insurance or guaranty against fire; that it was made by a private person whose incompetency to make it both parties were bound to know, and that under the provisions of the act of Feb. 4,1870, P. L. 14, it is absolutely void. As this is conclusive of the plaintiff’s case it is not necessary to discuss the other assignménts of error.

The judgment entered in the court below is reversed.