Fort Valley Coca-Cola Bottling Co. v. Lumbermen's Mutual Casualty Co.

1. An application for insurance is a mere offer.

2. A "binder" for insurance is very different, in that it is not a mere offer, but is in itself a contract in praesenti — temporary, sketchy, and informal, but a contract notwithstanding.

3. A binder is a contract of insurance in praesenti, temporary in its nature, intended to take the place of an ordinary policy until the same can be issued. It is a short method of issuing a temporary policy for the convenience of all parties, to continue, unless sooner canceled, until the execution of a formal policy.

4. "Contracts made by an agent representing both parties thereto may be avoided without liability by either principal when such dual agency was without his full knowledge and consent." 3 C. J. S. 181, § 252.

5. "An agent may with full knowledge and acquiescence represent both parties to a contract and under these circumstances will bind each within the scope of the agent's authority." 3 C. J. S. 183, § (88); Pope v. Harper, 40 Ga. App. 573 (150 S.E. 470).

6. If the plaintiff selects as his agent the agent of the insurance company, he can not take advantage of his own wrong so as to avoid the contract or transaction on the ground that the agent acted as the agent of both parties. 3 C. J. S. 183, § 252 (87). If the plaintiff made McCord his agent, knowing that he was the agent of the insurance company, the company might complain, but the plaintiff could not. Fitzsimmons v. Southern Express Co., 40 Ga. 330, 337 (2 Am. R. 577).

7. "The agent is a fiduciary and owes its principal the duty of good faith and loyalty. The agent is under the duty to use care, skill, and diligence, and to obey the instructions of its principal." 2 Am. Jur. 202, § 251 (7, 8).

8. Mere allegations of agency, if proved, give rise to these duties. However, a mere failure to live fully up to them does not necessarily in and of itself impute fraud, especially where it does not appear that the agent has a personal interest conflicting with those of his principal. 2 Am. Jur. 204, § 252 (3).

9. Where binders for robbery and burglary insurance were issued, and only a formal policy for robbery was duly issued in pursuance thereof, but no policy for burglary was so issued, or premium paid therefor, the plaintiff can not, four or five years thereafter, "recover, for loss sustained by reason of burglary, from the agent and the insurance company because of the alleged failure of both to write burglary insurance after they agreed to do so."

10. Nor can the plaintiff, under the allegations of this petition, recover on the policy as written, for burglary insurance, in a court of law upon a policy which covers only robbery.

11. And knowing that the policy or policies themselves, and not the binders, were the determinative documents, yet if, instead of examining the policy himself, the plaintiff's president thought it proper to rely upon the representations of the company and McCord (even if he was a dual agent) as to whether or not said policy included burglary as well as robbery, the plaintiff had no one to blame for its credulity but itself. Allen v. Gibson, 53 Ga. 601.

DECIDED MARCH 19, 1943. The Fort Valley Coca-Cola Bottling Company brought a petition in two counts against T. A. McCord and the Lumbermen's Mutual Casualty Company. In count 1 it was alleged: That T. A. McCord was the agent of such company at Fort Valley, Georgia, at the time of all the acts complained of. "That on February 28, 1936, W. G. Brisendine, president of the Fort Valley Coca-Cola Bottling Company and representing the Fort Valley Bottling Company, notified the said T. A. McCord, as agent of the Lumbermen's Mutual Casualty Company, that he wanted for the Fort Valley Coca-Cola Bottling Company $2000 robbery insurance and $2000 burglary insurance. That the said T. A. McCord immediately phoned one N. H. Barnes of the Lumbermen's Mutual Casualty Company, at his office in Atlanta, Georgia, the said N. H. Barnes being the casualty underwriter for the Lumbermen's Mutual Casualty Company, and instructed Mr. Barnes to issue a binder for $2000 interior robbery and $2000 messenger robbery in favor of the Fort Valley Coca-Cola Bottling Company, and also to issue a binder for $2000 mercantile safe coverage on fireproof safe owned by Fort Valley Coca-Cola Bottling Company; that the said N. H. Barnes, representing the Lumbermen's Mutual Casualty Company, notified the said T. A. McCord on the telephone that the binders were being issued immediately, and on February 28, 1936, the said N. H. Barnes, representing the Lumbermen's Mutual Casualty Company, advised the McCord Insurance Agency by letter that the binders above described had been issued; and petitioner avers that the binders were issued as aforesaid, and that the Fort Valley Coca-Cola Bottling Company was insured for $2000 interior robbery, $2000 messenger robbery, and $2000 mercantile safe or burglary on the safe in the plant of the Fort Valley Coca-Cola Bottling Company in Fort Valley, Georgia; that after said binders were issued it was learned by the agent, T. A. McCord, that petitioner had burglary insurance amounting to $500, which did not expire until August, 1936, and the said T. A. McCord notified the defendant, Lumbermen's Mutual Casualty Company, that he was holding the application for the burglary insurance until August; that there was issued to Fort Valley Coca-Cola Bottling Company a policy in the Lumbermen's Mutual Casualty Company, dated March 9, 1936, said policy purporting to cover only inside and outside robbery, but your petitioner alleges and avers that from the 28th day of February, 1936, relying upon the statements made by the Fort Valley agent, T. A. McCord, he was covered for $2000 robbery insurance and $2000 burglary insurance, and that from year to year he has been furnished with a renewal of said policy, the last being dated March 9, 1940, and until after the burglary or robbery hereinafter complained of petitioner was not aware that said policy did not contain full burglary coverage, said policy, being numbered 7876460; that the same safe was in the plant on November 6, 1940, as was in the plant in February and March, 1936, and that the condition of the safe was unchanged, said safe being a fireproof iron safe having on the handle of its door the number 257686; that, relying upon the said T. A. McCord and the Lumbermen's Mutual Casualty Company to completely cover the risk, petitioner did not renew the burglary policy in August, 1936, nor had he taken out any insurance for robbery or burglary between February 28, 1936, and November 6, 1940; that he was led to believe by the agent of the Lumbermen's Mutual Casualty Company that he had both robbery and burglary insurance; that he has paid whatever premiums were demanded of him from year to year; and that the agent of said insurance company was so convinced himself that plaintiff had burglary insurance that on November 7, immediately after learning of the loss by plaintiff through burglary, he sent for an adjuster to immediately come down and adjust the loss."

The petitioner then alleges that the damages which resulted from the burglary as set out in the petition amounted to $746.79, and further: "That defendants are indebted to him in the said sum of $746.79, less any premiums that might be due said company, the amount of said premiums petitioner not being able to set out. Wherefore petitioner prays that process may issue in terms of the law, requiring these defendants to be and appear at the next term of this honorable court, to answer the complaint of your petitioner."

The first fourteen paragraphs of count 2 are, in effect, the same as the allegations in count 1. Count 2 then proceeds to allege as follows: "Said policy of insurance issued to petitioner provides as to: ``Loss inside premises. To indemnify the insured for loss of or damage to such property, premises, furniture, fixtures, and other property therein, occasioned by robbery or attempt threat committed during the hours beginning at 7:00 o'clock a. m. and ending at 12:00 o'clock midnight (within the policy period) within the insured's premises;' that in order to recover for a robbery at night there must be a custodian in charge of the property, and that such custodian must be compelled under threat of violence, after the premises are closed for business, to return and admit others therein to, or be forcibly detained elsewhere to provide information for or means of ingress to such premises; or, in other words, to collect under the inside robbery feature a custodian of the premises and property must be on hand when the actual robbery takes place, in order for plaintiff to recover; that plaintiff further shows that in answer to paragraph 6 of the application for insurance plaintiff set out that there would be no watchman or guard on duty while the premises were open for business, and defendants were put on notice that there would be no watchman or guard or custodian in charge of the property after the close of business in any day, which would notify defendants that said policy of insurance was intended to cover outside robbery and inside burglary; that said policy of insurance was intended to cover $1300 outside robbery insurance and $2000 inside burglary insurance or mercantile safe insurance; that plaintiff has been paying the premiums for such coverage ever since February, 1936, that the original policy issued at that time provided for such coverage, and that the renewal of said policy issued on March 9, 1940, carried the provisions above set out, together with a copy of the application including the answers above enumerated; and petitioner shows that the intention of the policy and the construction there of placed upon it by the agent of the insurance company and the plaintiff was that plaintiff had $1300 outside coverage for robbery and $2000 mercantile safe or burglary insurance; that it has complied with all of the conditions precedent as to notice, etc., called for by said policy; and that defendants have failed, omitted and refuse to pay the liability under such policy and reimburse plaintiff for the loss as above enumerated or any part thereof. Wherefore plaintiff prays: (1) That process may issue in terms of the law, requiring these defendants to be and appear at the next term of this honorable court, to answer the complaint of petitioner. (2) That it may have judgment against the defendants individually and collectively, jointly and severally, for the said sum of $746.79 besides interest thereon from the 6th day of November, 1940."

The plaintiff amended the petition by adding to each of the counts the following: "Petitioner attaches hereto the original contract of insurance issued on January 30, 1940, and alleges that the contract issued in 1936 was the same in every particular as the contract attached, with the exception of the date. Petitioner marks said original policy as Exhibit A, makes the same a part hereof, and refers to same for all purposes." 1. A binder is a contract of insurance in praesenti, temporary in its nature, intended to take the place of an ordinary policy until the same can be issued. It is a short method of issuing a temporary policy for the convenience of all parties, to continue, unless sooner canceled, until the execution of a formal policy. "The conventional and frequently elaborate application for insurance may well control as against a subsequently issued policy differing in terms. Haley v. Sharon Township Mutual Fire Insurance Co., 147 Minn. 190 (179 N.W. 895). It is a mere offer. So when a policy is tendered, the applicant may perhaps assume in a proper case that his offer has been accepted according to its terms, and that policy conforms to application. Very different is a binder, which is not a mere offer, but itself a contract — temporary, sketchy, and informal, but a contract notwithstanding. 14 R. C. L. 883. Usually it fixes the term and coverage of the policy, but by express reference leaves the details of the contract to the latter. 32 C. J. 1100; Salisbury v. Hekla F. Ins. Co., 32 Minn. 458, 21 N.W. 552. Hence as to such details the contemplated policy rather than the binder is the determinate document." Indiana Mutual Casualty Co.v. Pratt, 177 Minn. 36, 38 (224 N.W. 253). The binder issued on an application for insurance is a mere memorandum of the most important terms of a preliminary contract of insurance, intended to give temporary protection pending the investigation of the risk by the insurer, or until the issuance of a formal policy. In the instant case the suit was brought four or five years after the execution of the binder. In count 1, as we understand it, the plaintiff is not suing on the "binder" alone, which by its very definition is a contract temporary in its nature; nor is it suing on a "binder" for burglary insurance and a subsequent written insurance policy which expressly states that it covers such burglary insurance and which was issued to embrace the formal requisites with reference to a contract of insurance. One of the requisites is that "All contracts of insurance, including life insurance, ``to be binding, shall be in writing.'" Mitchiner v. Union Central LifeInsurance Co., 185 Ga. 194 (194 S.E. 530). But, as stated in the plaintiff's brief, "In the first count plaintiff seeks to recover for loss sustained by reason of burglary, from agent and insurance company, because of the alleged failure of both to write burglary insurance after they had agreed to do so."

"The insured may bring an action at law upon the preliminary contract in the same manner as upon the policy. He may, however, treat the contract as an agreement to insure, and resort to a court of equity to compel the delivery of a policy either before or after the happening of the loss; and being properly in that court after the loss has happened, it is according to the established course of procedure, in order to avoid delay and expense to the parties, for that court to proceed and give such final relief as the circumstances of the case demand. . . If the parties have entered into a preliminary agreement for insurance, the insurer is bound in good faith to furnish a policy in the usual form and with the usual clauses. If the policy does not conform to the previous agreement, the applicant may refuse to accept it, and recover back any money he may have paid in the premiums; or if he has accepted it, supposing it to conform to his contract with the insurer, a court of equity will reform it in a proper case." 16 Am. Eng. Enc. Law, 853. The allegations in count 1 of the petition show, in part, that the plaintiff had ample opportunity to examine the formal policy issued subsequently to the binder; that the binder was temporary in its nature and was intended to take the place of an ordinary policy until the same could be issued; that the loss occurred four or five years after the issuance of the binder; that no premium was paid for burglary insurance; and that the policy of insurance, and not the binder, would be the determinative document. Yet the plaintiff thought proper to rely on the representations of the company and McCord that he had burglary insurance. We do not think that the allegation of the facts in count 1 show that there was such a fraud, artifice, trick, or condition as to prevent the plaintiff, in the exercise of ordinary care, from ascertaining that it did not have a valid policy of insurance for burglary. Arthur v.Brawner, 174 Ga. 477 (163 S.E. 604), and cit.

2. Count 2 seeks a recovery on the policy as written, which policy states it is for robbery. Burglary is not mentioned therein. We do not think the allegations of fact therein alleged show that there was any such fraud, artifice, or trick as would prevent the plaintiff, in the exercise of ordinary care, from examining the policy delivered and ascertaining the nature and character of the same; that is, whether the policy included burglary as well as robbery insurance. Walton Guano Co. v.Copelan, 112 Ga. 319 (37 S.E. 411, 52 L.R.A. 268);Truitt-Silvey Hat Co. v. Callaway, 130 Ga. 637 (2) (61 S.E. 481); Chapman v. Atlanta Guano Co., 91 Ga. 821, 825 (18 S.E. 41); Penn Mutual Life Insurance Co. v. Taggart, 38 Ga. App. 509,512 (144 S.E. 400).

3. And knowing that the policy or policies themselves were the determinative documents, and not the binders, yet if, instead of examining and looking at the policy, the plaintiff thought it proper to rely upon the representations of the company and McCord (even if he was a dual agent) as to whether or not the policy included burglary as well as robbery, the plaintiff has no one to blame for its credulity but itself. Allen v. Gibson, 53 Ga. 601. See in this connection 3 C. J. S. 46, § 162; Benton v.Roberts, 35 Ga. App. 749 (134 S.E. 846).

4. The plaintiff having brought an action at law, the court did not err in sustaining the general demurrers to both counts, and to the petition as a whole.

Judgment affirmed. Broyles, C. J., and Gardner, J.,concur.