Pottsville Mutual Fire Ins. v. Minnequa Springs Improvement Co.

Mr. Justice Green

delivered the opinion of the court, May 1st 1882.

The sixth condition of the policy in suit is in the following-words : “No insurance, whether original or continued, shall be considered as binding until the actual cash payment of the premium, into the office of the company.”

The policy on its face contains as one of its terms the following provision: “ And it is moreover agreed and declared, that this policy is made and accejDted in reference to the application, also the conditions hereto annexed, which are hereby made a part of this policy, and to be used and resorted to, in order to explain the rights and obligations of the parties hereto.”

It cannot be doubted that both parties to this contract agreed that it was not to be binding until the premium was paid in cash into the office of the company. The question whether such an agreement is unreasonable, is immaterial. It is the actual contract of the parties and it binds them and necessarily controls the action of the courts, who have no power to alter the solemn contracts of parties where there is neither fraud, mistake nor imposition. In the present case the premium was never paid into the office of the company, nor was it paid in any manner to the company, or to its authorized agent. But it is claimed that in point of fact the assured did pay the premium, and that he paid it in such a manner as that the company is bound by it.

It is true that the premium was paid by the assured, and the question is whether the manner of the payment was such as to obligate the company on the policy. This leads us to consider the precise facts affecting the subject. Jacob Tome was the president of the Miunequa Springs Improvement Company, the plaintiff in the suit, aud was also a bond-holder under a mortgage on the property of the company. Desiring to have the property insured, he negotiated with one Dr. S. E. Green, wlio was engaged in the business of placing insurances, who undertook to obtain policies to the amount of §25,000 on the hotel and furniture. Dr. Green testified that he represented several companies as agent; but he did not represent the company defendant in this case. He also said that he went to Mr. Tome and solicited the insurance. Dr. Green was unable to place the whole amount of the desired insurance and he thereupon applied to H. J. Clinger, another insurance-agent and broker, but who did not at that time represent the defendant. Clinger testified that Green applied to him to place the whole $25,000 and that he did place $20,000 in companies for which he was agent, and the other $5,000 he sent to Mr. Eobt. Crane, a broker, in Philadelphia. Green and Clinger resided at Williamsport and conducted their business at that place. Crane, testified that he was an insurance agent and broker doing business in Philadelphia, but that he was not the agent of, nor had any connection with the defendant.

He further testified that as an insurance broker simply, he applied to Mr. A. S. Haeseler, the agent of the defendant in Philadelphia for a policy of $2,500 on the hotel property, to be issued by the defendant. The latter, after examination of the risk, accepted it, and made out and delivered to Crane the policy in suit, lie subsequently notified Crane that his company declined the policy and endeavored to get it back, but without success. Haeseler delivered the policy, properly executed, to Crane, without payment of the premium. Crane sent it to Clinger, who delivered it to Green, and the latter delivered it to Tome. Upon its receipt by Tome he paid the premium to Green, who paid it to Clinger. It was never paid by Clinger to Crane, or by Crane to Haeseler. As between themselves Clinger had credited Crane with the amount on his books, but he owed Crane a still larger amount, the whole of which, including this premium, was credited, but in point of fact the premium was never paid by Clinger to Crane or to any one else. The question then arises whether the defendant is liable on the policy against the express provision of the contract. It was contended that the payment of the premium was waived by Haeseler, the agent of the company, when he delivered the policy, fully executed, to Crane for the purpose of being delivered to Tome. There certainly was no express waiver, no actual agreement to dispense with the payment of the premium. There was no declaration or assertion of any kind by Haeseler that the policy would be binding before the premium was paid to him or to the company. When Tome received the policy he must be presumed to have received it with full knowledge of its contents. A mere inspection of the instrument would have informed him that the delivery of the policy to him created no obligation on the part of the company until the premium was actually paid to the company itself. He was not misled upon this subject by any act or declaration of any person. He paid the premium to one who was not an agent of the defendant, and, of course, he took the risk of the money reaching its destination. But even if any person, agent of the company or otherwise, had undertaken to wraive this condition of the policy, such attempt would have been entirely abortive, unless it was made in accordance with the terms of the policy. The eleventh condition of insurance, annexed to and made a part of the policy, contains an express condition that no waiver shall be effective, unless it “ be express, and manifested in writing under the signature of the secretary of said company. And no agent of this company shall have power to violate any of these conditions.” And the nineteenth condition provides as follows — •“ No agent of this company shall have the right or power to waive any of the foregoing conditions, unless fully authorized thereto by the secretary of this company in writing.” In the case of Waynesboro Mutual Fire Ins. Co. v. Conover, 2 Out. 38, we held the insured, bound by just such an agreement as this, and we know of no reason why we should not hold the same rule in the present case.

It is not necessary to consider the question of the necessity of a payment literally into the office of the company, because it does not arise. There was no paymeut, either at the office of the company, or to the company generally, by mail 6r otherwise, or to any agent of the company. Neither Green nor Clinger was an agent of the defendant, and Haeseler, the authorized agent of the company, never received the premium. In the case of Greene v. Lycoming Fire Ins. Co., 10 Norr. 389, in commenting upon this subject we said, “The body of the policy contained a condition that the company should not be liable by virtue of the policy, ‘ until the premium therefor be actually paid,’ and that ‘no agent is empowered to waive any of the conditions of this policy, either before or after a loss, without special authority in writing from the company.’ The’ defendant gave no written or verbal authority to Thompson, to waive any of these conditions. By sending the policy to him, the company did not waive the requirement of actual payment of the premium before delivery. Nothing in the application or in the policy indicated that Thompson could make the company liable on the policy by delivering it before the premium was paid.” In that case Thompson was the agent of the company. So here, when Haeseler delivered the policy to Crane, both he and the company had a right to rest upon'the positive provision of the policy, that it was not to be binding until the actual payment of the premium to the company. We do not decide as to what -would have been the effect of a payment to Haeseler, because the facts of the case do not raise that question. What we do decide is, that as there was no payment either to the company or to Haeseler, the policy never became operative. The same doctrine was announced in Marland v. Royal Ins. Co., 21 P. F. S. 393. On p. 396, Agnisw, J., said, “ Having no authority to deliver without payment of the premium, it is obvious Thompson’s willingness to do so, or to give credit, can create no contract with his principals .... The premiums are the very bread upon which the company feeds. All its sustenance and ability to pay its losses are drawn from this source, and the payment constitutes the only consideration and just title of the insured, to demand payment of the loss. What was testified, therefore, about the company’s having accepted the risk, and having delivered the receipt and policy to Thompson, as the broker and mutual agent of the parties, creates no contract. Accepting the risk meant no more than a willingness to make the insurance, but indicates no purpose to wraive payment of the very consideration which moves the company to insure. It changes none of the terms of the policy to be issued. To make a different contract, there must be evidence of the company’s assent to the change, of which there is not a spark in the case.”

The suggestion that Dr. Green is to be regarded as the agent of the defendant, and that, therefore, the payment of the premium to him was a payment to the company, is not tenable. It is the well settled law that where one engages another to procure insurance for him, the person thus employed is the agent of the employer, and not of the company. Thus, in Hartford Fire Ins. Co. v. Reynolds, 36 Mich. 502, it was held, that so far as an insurance agent acts as an insurance broker, lie is agent for the insured, and not the insurer.

In Standard Oil Co. v. Triumph Ins. Co., 64 N. Y. 85, it was held, that an insurance broker employed by a party to effect insurance for him, may be regarded by the insurer as clothed with full authority to act for his principal in procuring, modifying or cancelling policies; and his acts in these respects are binding upon his principal. See also May on Ins. § 123 ; Lycoming Fire Ins. Co. v. Ruben, Sup. Ct. of Ill. reported in 8 Chic. Leg. News 150.

When Mr. Tome paid the premium to Dr. Green in this case, he simply paid it to his own agent, and was not in any manner relieved of his express contract obligation to pay it to the company. The payment by Green to Ginger was in no way more effective. Ginger was Green’s sub-agent, and was merely a selected vehicle for the transmission of the money. If he failed to perform his duty, the consequences must fall upon those who engaged him for that purpose.' These considerations dispose of the case. There is no question as to the essential facts. Mr. Tome himself testified to the payment of the premium to Green, and to the procurement of the insurance through him. It is unnecessary to notice the assignments other than those which are affected by the views above expressed.

Judgment reversed.