"v. CITIZEN:'.,' IKS.
(Uircuit Oourt, D. Indiana.
January, 1881. )
The Citizens' Insurance Company, a.corporation of Indiana, doing an insurance business at Evansville, in that state, issued an open policy No. 38, to its own agents, Drew & Bennett, at Evansville, to cover all risks indorsed thereon, or certified in insurance slips to be covered thereby. It appointed Hudson & Bro., of Ohio, to solicit and obtain risks for it in the latter state, and, to avoid the laws of that state in relation to foreign insurance COmpanies doing business in the state issued slips to Hudson & Bro. covering such property, under the policy No. 38, issued to its agents at Evansville, as Hudson & Bro. might agree to insure. Hudson & Bro. obtained a risk from tbe plaintiff, Daniels, of $2,500 upon 2,500 bushels of salt, then in a barge towed by tbe steamer Robin, and received the premium, $45, from Daniels therefor. The insurance company, through its agents, Hudson & Bro., issued an insurance slip certifying that Hudson & Bro. were insured in the property therein described under policy No. 88 preViously issued to Drew & Bennett. Hudson & Bro. had- no interest in the salt. Held, 'fhat Daniels could sue the insurance company in bis own name upon the insurance contract, and prove by parol that the insurance was taken out for his benefit; that the insurance company was bound to know wbat its agents, Hudson & Bro., knew, and could not set up their want of interest in the property, or that the contract, as shown by the policy No. 38 and the insurance slip, was not legal and binding upon them.
3. PAROL CONTRACT OF INSURANCE.
And hel,d,!urther, that even if the contract, as shown by the writings, was void for the reason that Hudson & Bro., while acting for the insurance company, couid not insure themselves, yet that Daniels could recover, as the writings and the parol proof showed an agreement to insure Daniels, which was valid as a parol contract of insurance. 4. INSURANCE-Loss PAYABLE TO CONSIGNEE-Wno MAy SUE. The insurance slip insured Hudson & Bro.; loss, if anv, payable to John K. Speed. The salt was c nsigned to Speed, and he f"as e:l. pectcd to receive and pay drafts on account thereof, and to him for such payments the ioss was made payable to him. The property having been lost before any such payment was made by Speed. held, that tbe suit was properly brought by Daniela in bis own name. -Reported by Florien Giauque and J. C. Harper, of the Cincinnati bar,
T. D. Lincvht, for plaintiff.
A.Ba Iglehart, for defendant.
D. J. The complaint alleges that the Citizens' Insurance Company is a corporation organized under the laws of Indiana, located at Evansville, and doing a general marine insurance business'; that on the eighteenth day of December, 1878, the plaintiff was the owner of 2,500 bushels of salt, of the value of $2,500, then in a seaworthy barge in the Ohio river, at Middleport, Ohio, in tow of the steamer Robin, and bound from Middleport to Memphis, Tennessee; that Hudson & Bro., citizens of Middleport, were agents of the Citizens' Insurance Company at that place in soliciting business; that it was the practice of the insurance company and its agents, Hudson & Brd., to give to persons who insured their property with said agents slips certifying that Hudson & Bro. were insuredin the propel"ty therein described, under an open policy numbered 38, which the insurance company had previously issued to Drew & Bennett, its own managing agents at Evansville; that on the eighteenth of December, 1878, Hudson & Bro., inconsideration of· $45 paid to them by the plaintiff, agreed 'to insu.re him agl;tinst the perils of the river in the sum of $2;500 on his cargo of salt, the loss, if any, to be payable 60 days after proof; that by the laws of Ohio no foreign insurance company was allowed to do business in that state without complying with cettain enumerated conditions and obtaining from the commissioner' of insurailce license; that the Citizens' Insurance Company adopted this mode of doing business, through its agents in Ohio, under the open policy numbered 38, and issuing certificates certifying that its own agents in Ohio were insured under said open policy, to avoid the provisions of the Ohio statute prescribing terms upon which foreign insurance companies might do business in that state ; that in putting the insurance in this form it was intended by the insurance company to insure Hudson' & Bro., on account of the plaintiff, in the sum of $2,500 on his cargo ofsaH; that the salt had been shipped by the:plaintiffto John K. Speed & Co., of Memphis, who was expectc:d to m3.ke advances thereon and pay charges therefor,
CITIZENS' INS. CO.
for which reasons John K. Speed, one of the ftl'lIl, was made appointee in the slip, or insurance certificate, to receive the insurance in case of loss for the plaintiff; that on the nineteenth of December the barge was grounded while in tow of the steamer Robin, and the· salt became a total loss by the perils insured against, and that the proof was, made of the loss and the plaintiff's interest therein. The defendant demurred to the complaint, and it is ineisted, in support of the demurrer, that the intention of the parties must be found in the open policy and the slip certif:ying that Hudson & Bro. were insured, al1dnot the plaintiff; that there is nothing in either the open policy or slipindi. eating that Hudson & Bro. were insured as agents, or in any trust capacity, for the plaintiff or anyone else; and that, being unambiguous, parol evidence cannot be received' to alter or modify the instruments sued on. Admitting the facts in the complaint to be true, as the demurrer does, the insurance company issued an open policy to its own agents at Evansville to cover all risks in Ohio indorsed thereon or certified to be Cdveredthereby. Agents employed in Ohio to solicit and transact business in were that state, but, to evade the laws of that sta.te; the insurance obtained by these agents was made to run in their own names; the intention, however, being to insure, not the property of the agents, but the property of 6thers. Hudson ,& Bro., of Middleport, Ohio, were agents to represent the insurance company at that place. They received the premium from the plaintiff,and made out and delivered to him a 'slip certifsing that they, the agents, were insured under the open policy. The insurance company knew that the plaintiff;and not Hudson & Bro., were the owners of the salt, and' that the barge upon which it was laden was seaworthy, and in tow of the steamer Robin, bound for Memphis. In short, the insurance company knew eversthing that was material to the risk, and that it was the purpose by this arrangement to insure the property, not of Hudson & Bro., but of the plaintiff. After adopting this unusual, not to sas questionable, mode of doing business to evade the lawB of Ohio, the contract
should be enforced according to the real intention of the parties. Having taken the plaintiff's money, and induced him to believe that he was insured, the insurance company will not be allowed to say that the contract is void because the effort to make it conform to the rules of law was a fail· ure. The insurance company is bound by the acts of Hudson & Bro. What the agent knew the principal must be held to have known. The plaintiff paid his premium to the insurance company, and for its own purposes it put the insurance in the name of its own agents, and delivered the written instrument to the plaintiff as that he was insured, Effect should be given to the. pllJ,in intention of the parties by allowing the plaintiff to pI'ove by parol that the insurance was put in the name of .Hudson &. Bro. for his benefit. Courts take notice of the well.known method of doing insurance business. Underwriterl3 are trusted to, make, their policies express the intel).tions of the parties" stop to read and. study their policies beforeaQcepting thepl. and paying thei1' premiums. Knowing that:they arethulil trusted, underwriters must ad in the. utmost good faith with those who deal with them. I,na,pplying insuranoe contracts to the proper subject-matter, and the party or pal,ties intended to be covered by the risk, courts have been liberal in receiving parol testimony in favor of the assured. It is well-settled that when a written. contract is made by an 'agent, in. his own name, the u,ndisclosed prindpal may sue upon it and prove by parol evidence that the contract was made for his benefit; and this may be done although the other, party had no knowledge of the agency and supposed that he was dealing with one who was acting for himself. Huntington v. Knox, 7 Cush. 371; Story on Agency, § 61. In Insurance Co. v. Chase, 5 Wallace, 509, William Chase, J. W. Mungen, and three others were trustees of a church, and held the legal title to it in trust for the society. Mungen was also agent of the Howard Insurance Company. As such agent he took a fire risk of $5,000 for his company on the church property, in favor of William Chase, who paid the premium out of his private means on account of the parish, with the
assent of' cb'trustees. isdJiety was' inc1ebtedto jam the policy was fuade payable, in case of loss, to G. :M:. Chase. The church was destroyed by fire, the insur· ance companyxefused to pay the loss, and G. M. Chase, the payee in the polic'y, brought suit. ' The declaration 'averred that William Chase, being the owner in trust for the Union Congregational church for a premium paid in money, e,ffected the insurance. The court held that the action could be main· tained for the full amount of the policy,' although William Chase was but one of five trustees. In the case of Shawmut Sugar'Refining 00. v. Hampden Ins. Co. 12 Gray, 540, the policy was to P. E. Kingman and oth· ers, of Boston, on their sugars, payable in case of loss to the Shawmut Sugar Refining Company. The property belonged to a corpqratjon i1;1 whioh I'.,E. Kingman were stockholders. Their only interest in the company was as stockholders." There was no reformation of the policy, and tIw notwithstanding the f3¥liliar parol evidence cannot be received to contradiet,vary, or ex· plain 'a,' written. contract. If a';policy runs to A. B. for'whom it may \ioncern, 'or A. B: as agent orjn sOD;le an action at law may be brought, incase of loss, in the name of A. D., disclosing the name of thp real party in interest, or by the real owner of the property. Rider v. The Ocean Ins. 00. 20 Pick. 259. That being the case if written contract made in the name of one person, not an agent, but really for the benefit of another, from whom the consideration moves, as iii this case, th,ere is no good reason why the latter may not sue on it in his own name and prove by parol evidence that the can· tract was made for his benefit. In support of the plaintiff's right to maintain the action in his own name, lilee, also, Arch. angel v. Tlwmpson, 2 Camp. 620; 1'hompson v. Rail1'oad Co. 6 Wall. 137; Insurance Co. v. Wilson, 6 Ohio St. 561; Anson v. Winneshiek Ins. Co. 23 Iowa, 85. If the written contract should be held void for the reason that Hudson & Bro., while acting for the insurance com· pany, could not insure themselves, the defendant is eqnall,
ullfortunate, for, then we have a parol contract of insuranee. have already seen, all the facts material to the risk were known to the insurance company, and it agreed to insure the plaintiff on hiscMgo of salt for $45. The premium was paid, and the agreement was complete in all its parts before any effort was made to reduce it to writing. It is now well settled that contracts of insurance may be made by parol unless prohibited by statute. Relief Ins. Co. v. Eggleston, 96 U. S. 574; Sanborn v. Fireman'8 In8. Co. 16 Gray, 448. The demurrer is overruled.
GARDNER 17. UNION CENTRAL LIFE
(Circuit Court, S. D. Ohio. December, 1880.)
1. LIFE 'lNSURAROE -
INTEREST UPON LoANS -PREMIUMS-POLICY CoNSTRUCTION-FoRFEITURE.
Where a paid-up policy for $1,500, issued on the Burrenderof a previous recited as a part of the consideration for its issuance "the annual interest of $24.18 to be paid on or before the eighth day of October in every year during the continuance of this policy, and of all loans outstanding " thereon, and acknowledged the receipt of a sum entitling the assured, under the original policy, to a pl,lid-up policy for 1,1100, the following indorsements appeared upon the policies: On the original, "Loans out, $403;" and on the paia.up policy," Loans outstanding on Oint. Mutual polley 1789, $103 i" and there was no other evidence as to how the amount of interest was arrived at, or tl:e condition in which the principal was held. The policy provided that the non-payment of t, JY!'einium,q,' '' '' '' on or before the day upon which they became due," forfeited the policy; and the annual interest was not paid, llr-?d, that the sum of $403 was a loan, and that the annual interest sl ipllJated for was not a' premium, the non-navment of which would forfeit the policy. ' ,
The policy sued on was a paid.up endowment policy. It matured on the twenty-eighth of October, 1879,dl,tring tho life of the assured..
'*Reported by Messrs. Florien Giauquo and J. C. Harper, of the CIncinnati har.