Milwaukee Bedding Co. v. Graebner ( 1923 )

Owen, J.

The respondent contends that this action may be maintained upon two theories, one of which is that the conversation between Miss Graebner and Mr. ..Schilling amounted to an oral contract of insurance between Graeb-ner and the Bedding Company by which Graebner agreed to insure the company for the period of one year from' the 24th day of February, 1920. This theory cannot be sustained, for the reason that sub. 2, sec. 1941 — 64m, Stats., expressly prohibits the issuance of contracts of fire insurance by any except authorized fire insurance companies, in the following language:

“No unauthorized fire insurance company or other unauthorized insurer shall hereafter make or. issue, directly or indirectly, any policy of insurance on property in this state, except as specifically authorized by law. All such contracts are declared to- be unlawful, void and unenforceable, and no action in law or equity shall be maintained on any such contract in any court.”

This statutory provision declares void and unenforceable any policy of insurance, whether oral or written, issued by any person except an authorized fire insurance company, and further, that no action in law or equity shall be maintained on any such contract in any court. In view of this provision it is plain that the defendant cannot be held liable on the theory that he was an insurer of the property. ’

The other theory is that the defendant agreed with the plaintiff to procure additional insurance; that he failed to do soq and that he is liable for the damages resulting from his breach of the agreement to procure insurance, under the doctrine of Rainer v. Schulte, 133 Wis. 130, 113 N. W. 396. That case is authority for the proposition that if an insurance agent agrees and undertakes to procure insurance and fails to do so he is liable for the resulting damages. In order to determine whether defendant is liable upon this theory, it is necessary to- inquire, first, whether such an agreement was consummated, and second, whether, if consummated, there was a breach thereof.

It is defendant’s contention that his daughter, Miss Graebner, did not have authority as his agent to bind him upon contracts either to procure or write insurance. In order to establish her agency respondent invokes the provisions of sec. 1977, Stats., which provides in effect that any person who solicits insurance on behalf of any insurance corporation shall be held to be an agent of such corporation to all intents and purposes unless it can be shown that he receives no compensation for such services. This section refers to agents of insurance corporations and cannot be invoked to establish an agency in behalf of any one not an insurance corporation. It has no bearing upon the question whether Miss Graebner acted as the agent of the defendant in conducting the interview with the officer of the plaintiff company. The record fails to disclose any evidence that Miss Graebner had express authority to bind the defendant to either write or procure contracts of insurance. It appears that the manner in which the defendant conducted his business required applications for insurance to be approved either by himself or Mr. Wenzel before they were accepted, and that Miss Graebner had no authority whatever in this respect. It does appear, however, that it was a part, if not-the principal part; of Miss Graebner’s duties in the office to look after the renewal of expiring policies, to which end it was her usual custom to call upon patrons whose, policies were shortly to expire and to solicit them not only for a renewal of the expiring policy but for additional insurance. It was her practice to bring back cards similar to the one which she made out in this case, set forth in the statement of facts, showing what renewal business and what new business was to be written. Such cards were placed by her in the drawer and entered into the routine of the office. While it is true that the evidence shows quite conclusively that she did not have power to pass upon and accept applications for insurance, it was not necessary that she have express authority in order to bind the defendant. It was sufficient if she had apparent authority. The trial court so instructed the jury with reference to the third question, and we think the evidence warranted the jury in finding-that she did have apparent authority to bind the defendant in such respect, and that the conversation between Miss Graeb-ner and Mr. Schilling amounted to a contract by which defendant agreed to- procure for the plaintiff additional insurance to the amount of $2,000.

There was a dispute at the trial as to the time when the additional insurance was to taire effect. Miss Graebner testified that it was her understanding that it was to take effect on the 1st day of March. Mr. Schilling testified that there was nothing said as to the date when the additional insurance was to take effect; and the jury found that there was an established and generally recognized custom among brokers and insurance agents in the city of Milwaukee that fire insurance should, in the absence of directions as to the date when coverage should commence, take effect and be in force from the noon preceding the order for the same. Appellant does not contend that this finding of the jury is without support in the evidence, and this custom must be taken to have entered into and become a part of the contract, thereby supplying the incident thereof as to when the insurance should take effect. Clarke v. Maisch, 171 Wis. 225, 228, 177 N. W. 11. This view eliminates the question of whether the defendant had a reasonable 'time in which to procure the insurance before the fire.

Having reached the conclusion that there was a valid and binding agreement between the parties by which the defendant agreed to procure additional insurance to take effect February 24th, it only remains to be considered whether there was a breach of that contract. Appellant contends that there was a valid oral contract of insurance engendered between the London Assurance Corporation and the plaintiff, and that there was no breach of the contract to procure insurance on the part of the defendant, as the plaintiff could have maintained an action against the London Assurance Corporation to recover the amount of the loss upon the oral contract of insurance.

The case is argued by both parties upon the ássumption that oral contracts of fire insurance are valid in this state. It has been so held many times, and we should pass the question by without further discussion were it not for our holding in Schilbrch v. Inter-Ocean Cas. Co. 180 Wis. 120, 192 N. W. 456, that sub. 1, sec. 1960, impliedly prohibits oral contracts of health and accident insurance. That section reads as follows:

“On and after the first day of January, 1914, no policy of insurance against loss or damage from the sickness, or the bodily injury or death of the insured by accident shall be issued or delivered to any person in this state until a copy of the form thereof and of the classification of risks and.the premium rates pertaining thereto have been filed with the commissioner of insurance.”

Sec. 1941;r provides a standard form for fire insurance policies and requires the commissioner of insurance to prepare and file in his office a printed form in blank containing the provisions, agreements, and conditions specified therein. Sec. 1941 — 64 provides:

“No fire insurance company, corporation or association, except township mutual insurance companies, their officers or agents, shall make, issue, use or deliver for use any fire insurance policy on property in this state, other than such as shall conform in all particulars as to blanks, size of type, context, provisions, agreements and conditions with the printed forms of contract or policy so filed in the office of the commissioner of insurance.”

It must be conceded that on the face of these two statutes the implication against oral contracts of insurance is as strong in the one as in the other, and that if no regard be had to the subject matter dealt with by these two sections, our reasoning in Schilbrch v. Inter-Ocean Cas. Co., supra, would compel the conclusion that by the language of sec. 1941 — 64 the legislature also intended to prohibit oral contracts of fire insurance. We cannot ignore the fact, however, that in the business and insurance world oral contracts of fire insurance have been and are very prevalent. It is customary for business men to call up their insurance agent and place their order for fire insurance. It is considered by both parties that the coverage dates from the time when the insurance agent accepts the application. When the policy is written the coverage is dated from the time of the acceptance of the application, or the noon before, and the insured is charged with premium from that date.

It would operate as a serious disturbance of settled notions, as well as of the manner in which fire insurance business is conducted, to hold that the insured was without protection until the written policy was issued or delivered. We feel that the abolition of this long settled custom requires express legislative declaration. There is less reason for prohibiting oral contracts of fire insurance in view of the fact that there is but one standard fire insurance policy in this state to which reference may be made to establish the terms of the oral contract, and the further fact that the fire insurance policies are dated from the acceptance of the application and the premium is charged from that date. On the other hand, there is no such thing as a standard health and accident insurance policy. Those policies contain all sorts of provisions and are made to fit myriad conditions, and as a rule it is specifically provided in such policies that they do not take effect until they are delivered. Such a provision was in the policy under consideration in Schilbrch v. Inter-Ocean Cas. Co., supra. It is therefore our conclusion that oral contracts of fire insurance have not been prohibited, and our reason for considering the same is the thought that our decision in Schilbrch v. Inter-Ocean Cas. Co., supra, may have cast some doubt upon the question.

It remains to be considered whether there was a sufficient designation, by the agent, of the company in which the insurance was to be written, to constitute a contract between the Bedding Company and the London Assurance Corporation. It is a general rule that where an application for insurance is made to an agent who represents several companies, no contract of insurance is engendered between the insured and any particular company until such company is designated by the agent. Sheldon v. Hekla F. Ins. Co. 65 Wis. 436, 27 N. W. 315; Costello v. Grant Co. Mut. F. & L. Ins. Co. 133 Wis. 361, 113 N. W. 639; Hartford F. Ins. Co. v. Trimble, 117 Ky. 583, 78 S. W. 462; New Orleans Ins. Asso. v. Boniel, 20 Fla. 815; Michigan P. Co. v. Michigan F. & M. Ins. Co. 92 Mich. 482, 52 N. W. 1070; Kleis v. Niagara F. Ins. Co. 117 Mich. 469, 76 N. W. 155; Ogle Lake S. Co. v. National L. Ins. Co. 68 Wash. 185, 122 Pac. 990. But where the company is selected by the agent and in sorhe manner designated as the company in which the insurance is to be written, a binding contract results. Croft v. Hanover F. Ins. Co. 40 W. Va. 508, 21 S. E. 854; Connecticut F. Ins. Co. v. Bennett, 1 Ohio (N. P.) 71; Thompson v. Germania F. Ins. Co. 45 Wash. 482, 88 Pac. 941. In such case the agent becomes the agent of the insured for the purpose of selecting the company. Michigan P. Co. v. Michigan F. & M. Ins. Co. 92 Mich. 482, 52 N. W. 1070.

The memorandum which Miss Graebner made on the card clearly designated the company in which the additional insurance was to be written. That this was the import of the memorandum is confirmed by the fact that the policy deliy-ered to the messenger was that of the London Assurance Corporation. The designation was sufficient to.establish a binding contract between the Bedding Company and the London Assurance Corporation, from which it results that there was no breach of the contract to procure insurance on the part of the defendant.

By the Court. — Judgment reversed, and cause remanded with instructions to enter judgment dismissing plaintiff’s complaint.