Isaac v. Gerretson Co.

The following opinion was filed December 27, 1922:

DoerfleR, J.

{dissenting). The defendant maintained its principal business at Milwaukee and conducted a branch at Fond du Lac. This branch business was placed under the management of the plaintiff, who was not only employed as a general manager on a monthly salary, but was also given a substantial interest in the yearly net profits of the business.

Plaintiff, prior to becoming the manager of the branch business, had years of experience in conducting a similar enterprise. He admits that when the branch store opened he was charged with the general duty .of securing adequate fire insurance, and the court so found. That placed the obligation with respect to insurance upon him, and that obligation could only be shifted by a modification of the prior agreement. It is not contended by the plaintiff that the policy of the company was changed by express agreement, but that when the general change took place with respect to the forms of the policies, which was some time in May, 1919, the defendant company took over and assumed charge of all matters pertaining to insurance.

The plaintiff admitted that at all times prior to the fire he placed every insurance policy on the stock himself, but asserted that he received directions from time to time from officers of the defendant on the subject, and that he merely carried out their expressed desires. He also testified that after the change in the form of the policies in May, 1919, all-of the policies were kept at the Milwaukee office and that the premiums were paid from such office. Nevertheless, he admitted that during the county fair, in the fall of 1919, he procured a policy for $1,000 on his own initiative, and, shortly after, procured additional polities upon the holiday stock aggregating $4,500. Plaintiff contends that before the additional insurance of $4,500 was obtained he had a conference with one of the defendant’s officers, who directed him to procure additional insurance, but that he was not instructed as to the amount.

The court’s finding on the subject is as follows:

“Upon the receipt of the winter stock in the fall of 1919, the defendant’s said principal managing officer instructed plaintiff to take out additional insurance, but did not indicate how much. Plaintiff at said time took out $4,500 additional insurance and forwarded the policies therefor to the Milwaukee office where the'same were entered on said register and thereafter kept, and all of which were in force at the time of the said fire.”

The findings of the court above quoted are not in accord-anee with the evidence, and the incorrectness • of a main fact found is conclusively shown by the testimony of the plaintiff himself. In referring to a conversation had with one of the Gerretsons after the fire he testified:

“I recall telling Mr. Gerretson just after the fire that I had additional insurance. I recall finding that additional insurance. As to how much it was, ... it was these policies that we referred to in my testimony this morning, this $4,500. They were taken from the store the night of the fire with all the books and everything, I presume by myself. . . . After Mr. Gerretson made inquiry I found them at my home, with the other office books and papers and everything.”

It also appears from the evidence that when the Gerret-sons called upon the plaintiff after the fife he did not know how much additional insurance had been taken out, notwithstanding the fact that he had policies representing $4,500 of insurance in his own home which he had taken from the safe during the fire.

So that the defendant did not have a complete record of the insurance in force; did not have in its possession all of the policies of insurance; did not even'know the amount of additional insurance taken out by the plaintiff to protect the heavy stock carried for the holiday trade; and it appears beyond controversy that after the fire the defendant did not know whether or not it was adequately covered by insurance.

Therefore the record presents this situation: That plaintiff was the manager of the branch store, charged with the duty of effecting adequate insurance; that he procured every policy of insurance effected on the stock; that he was instructed during the fall of 1919 to take out additional insurance, which instruction, properly construed, could only mean'adequate insurance; that instead of taking out adequate insurance he simply effected additional insurance to the extent of $4,500, of which amount he failed to notify the defendant, and with respect to which insurance he re-táined the policies in his own possession; and that he effected at least $1,000 of insurance without even consulting the defendant. Under these circumstances, whether there had been a change in the policy of the defendant with respect to insurance in the month of May or not, when .the plaintiff assumed in the fall of the year to effect additional insurance, which meant adequate insurance, he was charged with an obligation as manager, which if negligently or improperly performed, resulting in loss or damage to his principal, would make him liable. Plaintiff was on hand in the store as manager constantly. He had a complete record of the stock. . From time to time valuable articles of merchandise, such as furs, were left in the store for repair, of which the defendant had only a casual knowledge, and the evidence shows that at the time of the fire there were on hand furs belonging to customers aggregating in value about $4,500.

Independent of the direct testimony in the case, the facts and circumstances are of such a nature as to indelibly impress one who has carefully read the record with the conclusion that a specific and definite responsibility rested upon the manager to procure and have on hand at all times adequate fire insurance.

Adequate insurance of a business in this day and generation is not only a great protection but a necessity. It is a subject that banks carefully inquire into upon extending credit to a business. In the nature of things the duty to effect insurance is definite, and the responsibility ought not and cannot safely be divided. In the instant case it clearly rested upon the manager, and this was one of his principal obligations. True, he received advice from time to time, but this did not relieve him from responsibility. But whatever view we may take of this case, the one important and outstanding fact decisive of this branch of the case consists' of the direction on the part of an officer of the company to the plaintiff, in the fall of 1919, to effect additional insurance, which could have but one meaning, and that is adequate insurance, and this responsibility the plaintiff assumed bút failed to carry out. Plaintiff therefore should be held liable for his neglect of duty.

The law is clearly stated in 31 Cyc. 1465, 1466:

“In the absence of any instructions from the principal or any duty implied from established usage or the previous dealings between the parties, an agent will not be liable for failure to insure property of the principal in his possession; but an agent whose duty it is and who undertakes to effect insurance for his principal must exercise due care and skill in so doing, and will be held liable for losses resulting from his negligence, such as negligence in failing to effect the insurance, to procure the proper amount, to procure a valid and enforceable policy, to keep it renetved and in force, or to notify companies in which insurance has been taken of other insurance subsequently taken in other companies."

I therefore respectfully dissent from that portion of the opinion pursuant to which the plaintiff was not held liable on the subject of insurance.

Mr. Justice Jones and Mr. Justice Eschweiler concur in the foregoing dissent.

A motion for a rehearing was denied, with $25 costs, on February 6, 1923. •