(Oircuit Oourt,8. D. Ohio, W. D. July 2, 18k)
PRINCIPAL AND AGENT....,INSURANCE--AGENT ORDERED TO DJl:FAULT. OF 8UBAGJl:NT OR BROKER.
Where an insurance company had ordered B., its to cancel a policy whicli he had written, the policy containing a stipulatlOn for its canoellation, and &I loss occurred to the company through the failure to have the policy can· in an action by the company against S., held, that B. was not reH.eved from liability by showing he had directed the broker, who placed the insurll.nce with him, to have the policy canceled. The in procuring the cancellation, was the agent of S., and S. was responsIble for the broker's default. In such action it is incompetent, for the purpose of so relieving B. from lia,bility, to prove a custom to procure the cancellation of policies through the broker placing the insurance with the company's agent.
BAME-CHARGE OF OOURT-WHAT AMOUNTS TO NEGLIGENCE.
In such action it was not error to charge the jury that, if the broker calleCl at the place of business of the insured and finding him absent made no inquiry whether anyone present was authorized to receive for the insured the un, earned premium, when in fact such a person was present, and there was no other step taken tO,effect a cancellation until a IOS8 occurred, the broker was guiltJ' of negligence, for which S., the defendant, was liable. What is a reasonable time, is always, where the facts are undisputed, a ques,tion exclusively for the court.
REASONABLE Tum-QUESTION OF LAW, WHEN.
At Law. Wilby Wald, for plaintiff. Burnet Burnet, for defendant. SA.GE, J. The motion for a new tdal is upon two grounds: First, that the court erred in refusing to permit the defendant to introduce testimony to prove a custom to procure the cancellation of a' policy of insurance by the agency of the broker who placed the insurance with him,-a custom, the defendant offered to prove, of universal prev.alence, not only at Cincinnati, where the policy which the defendant was ordered by the plaintiff to cancel was issued, and where the property insured was located, but also at Boston, the place of the home office of the plaintiff. On the twenty-second of May, 1882, the defendant, then plaintiff's agent at Cincinnati, issued plaintiff's policy to the Central Oil Company,of which a Mr. Upson was sole proprietor, insuring certain oil works in the sum of $750 against loss by fire. On the twentyseventh of the same month the defendant wrote advising the plaintiff of the insurance. The letter was received at Boston on the twentyninth, and the plaintiff immediately mailed an order to the defendant to cancel the policy. That letter, it was admitted, was received by the defendant by due course of mail, which it was in
Reported by J. C. Harper, Esq" of the Oincinnati bar.
I'BAliltLIN IliS. 00. V. SEABS·
in this matter were with the assured. . The custom to procure the ol1Ilcellation of the policy by the agency of the broker, doubtless had its origin in the desire of insurance agents to retain the goood-will of . brokers with whom they had dealings. It is to the advantage of the broker to have the opportunity to substitute' other insurance for a canceled policy, and thereby prevent the loss of his commissions or .Of the business of the assured, his principal. There is no objection to the insurance agent favoring the broker by giving him the conduct of the cancellation, provided the agent does not thereby sacrifice the interests of his principal, the insurance company. The broker natu'rally desires to keep alive the policy which the 'company has ordered to be canceled, until he can substitute another policy equally acceptable to the assured. It is not remarkable, therefore, that instances have occurred, as stated in one of the affidavits filed in support of the motion, where the broker has suffered more than a month to elapse after notification before canceling a policy. To hold that the agent of the insurance company, under instructions to cancel a policy, discharges his duty and frees himself from further responsibility by notifying the broker according to custom, and leaving the matter entirely in his hands, would be in direct conflict with the principle of the ruling in Grace v. American Cent. Co. 109 U. S. 278, S. C. 3 Sup., Ct. Rep. 207, that it is not competent to prove a custom that notice to the broker should operate to cancel a policy. The policy issued by the plaintiff stipulates that it may be canceled at any time by payment to the assured of the unearned premium. When the agent was directed to cancel the policy it became his duty to pursue the method printed out in the policy, and to do so promptly. He might do this personally, or through the broker who placed the insurance. If he chose to act through the broker, he made the broker his agent, and was responsible for such default as was clearly proven by the undisputed evidence upon the trial. I am satisfied, therefore, that there was no error in excluding the proof of the custom. The second ground for the motion is that the court erred in charging the jury that the omission of the broker to inquire whether there was any person at the place of business of Upson, the assured, authorized to receive the unearned premium for him in his absence, was neglect imputable to defendant, and that the plaintiff was therefore entitled to a verdict. I am clear that the defendant is not entitled to a new trial on this ground. The defendant received his instructions to cancel the policy not later than the morning of the third of June; that is the latest date named in the testimony. He may have received them the morning of the first, probably did receive them not later than the morning of the second, of June. The defendant at once notified the broker. The broker called at the office of the assured, and, learning that he was absent from the city, made no reference to the cancellation of the policy, but, as he testified, left that to be attended to after Upson's return. No inquiry wasmada
FRANKLIN INS. CO. V. SEARS.
whether anyone was authorized to receive money for him in hi", sence, although his representative, with full authority, was present and conversed with the broker. The payment of the unearned premium was all that was necessary to cancel the policy. The insurance was upon property classed as extra-hazardous. No further effort was made to obey the instructions to cancel the policy until the morning of the 7th, and then the agent and the broker arrived on the ground when the property was on fire. The court charged the jury that it was the duty of the broker to make inquiry, and that if they found from the testimony that he failed to do so, there being, as was shown by the only testimony offered on that point, a person present authorizfld to receive the return premium, and it being in testimony and not that no other steps were taken to cancel the policy, he was guilty of negligence for which the defendant was liable, and the plaintiff was entitled to a verdict. The court did not undertake to determine what the facts were. That was left to the jury. The jury was instructed that if the facts were as above stated they amounted to negligence. This is in exact accordance with the ruling in C., C. « C. R. R. v. Crawford, 24 Ohio St. 631, where it was held that "if all the material facts touching the alleged negligence be undisputed, or be found by the jury, and admit of no rational infEirence but that of negligence, the question of negligence becomes a matter of law merely, and the court should so charge the jury." This ruling is in harmony with the general current of authority upon the subject. There is another view which might have been taken had the statement of what the defendant expected to prove in reference to the custom been as broad when the ruling was made excluding the testimony as is presented in the affidavit upon this motion. At the trial the offer was to prove a custom authorizing the agent to employ the broker who placed the insurance to cancel the policy. The affidavits add that the agent would hesitate for some time, the length of time varying with the circumstances,-in some instances as long as several weeks,-before interfering with the broker in the cancellation of the policy. In sv far as this feature of the custom may be construed as giving to the agent, or to the broker, the right to determine what is a reasonable time within which to cancel the policy, I think the custom is bad, and should not be recognized. On receipt of his instructions it becomes the duty of the agent to cancel the policy, or to have it canceled by the broker, within a reasonable time. The agent is justified in employing the broker, because of the argency of the order and the multiplicity of his own engagements, to facilitate prompt cancellation, and not that the broker may exercise his discretion as to the time to cancel the policy, or delay it until he can procure another policy for the assured. What is a reasonable time is always, where the facts are clear, a question exclusively for the court. Wiggins v. Burkham, 10 Wall. 129. Upon the trial the facts were not disputed. The de-
lay was unreasonable, and giving to the testimony its greatest probative force in favor of the defendant, it was without sufficient excuse, and the court might therefore properly have directed So verdic' for the plaintiff. The defendant files also, in support of the motion, the affidavit of Upson that the authority given by him to his clerk to receive money in his absence was only to receive money in the ordinary course of business. On the trial, Upson being absent from the city, it was stipulated in writing that he would testify, if present, that his clerk had authority to receive money in his absence, and this was by consent read in evidence. If the defendant made a' mistake and admitted too much, it is too late now to remedy it. Besides, the affidavit does not contradict the stipulation. It amounts only to Upson's construction of the authority, and even if it were so limited as he stated, I am inclined to the opinion, although the provision in the policy for cancellation is to be strictly construed, that the agent should at least have left with the clerk a certified check, payable to the order of Upson, for the amount of the unearned premium. The verdict was for the amount paid by plaintiff on account of the loss, with interest. As the defendant in his settlement with the plaintiff did not retain the amount of the unearned premium, the amount thereof, with interest, should be remitted. Upon condition tllat this be done, the motion for new trial will be overruled.
and others v.
Court, S. D. Iowa. M.arch Term, 1884.)
CoNTRACT-AcTION BV STRANGER-DEMURRER.
Defendlmt entered into a written contract with the Chicago, Burlington & Quincy Railway Company to construct a certain portion of its road, stipulating,among ot.herthings, that he" would pay all claims against him, or against any·subcontractor under him, for services and labor performed or materials furnished in said work, and to pay, or cause to be paid, all claims growing out of said work, whether against him or any subcontractor under him, for trespass and injury to lands, "" .. "" and all claims for provisions and supplies, and bills for board of men and teams engaged upon said work, and all similar claims; said damages to be estimated and paid as specified in the pr6'leding clause," which provided that" the resident engineer should have the right to estimate the amount of such damages, and to pay thc same to the owner or occupant of said property or land, deducting on his first estimate the amount paid from the value of the work done." Another clause provided that .. in all cases the amount of claims for labor and material furnished to defendant should be deducted and retained by the company, and paid to the claimants, or held till such dues were paid or otherwise settled." Defendant sublet the work, and his contract with the subcontractor provided that he should have the same right to pay claims against the subcontractor which the railway company had reserved to itself. The subcontractor gave orders to plaintiffs for various sums to different parties, for supplies and labor, which they paid, and for the amount so paid they brought suit against defendant. Held, that the