because the contract Wal!l ,made with her busband, since, if these "questioDs:'shouldbe resolved in her favor, it would still remain that, unless she should restore or offer to restore that which she namely, or clailU of acquired ,from the defendant and the Cumberland Lumber & Transportation CQmpan;r, she cannot avoid the effect of the acceptance of the deeds as fulby pefendant of . " · ,,',Tb;'e\ judgment, however" ,was erroneous. hi form. The' court sMiint',have entered a judgment of nonsuit, whereas it found genin ,favor of the defendant upon his pleas; so that, as we take 'it",#ie, is a bar to, any ,further action by the plaintiff. will therefore be reversed, with costs, andth'e cause retnaQded, with direction to the court below to enter judgment of prejudice to such further proceedings as the plaintiff R1,a, be, advised to take. ''
POTTER et at v. PHENIX INS. CO. (Circuit Court, W. D. Missouri. May 21, 1894.)
1. FIRJjl INSURANCE-VERBAL CONTRACT-IsSUANCE OF POLICY.
of a policy is not to a valid contract of Insur,lln<;e: '8.l,1d if a verbal contract to issue, is made with an authoriied agent .of itlie company, without mentioning any date for the insurance to take : efteet;ithe risk commences immediately. between the agents of, the parties, respectively, of collecting premiums on, the 1st of ,each month for insurance effected during the previous month, operates as a waiver of immediate payment, 'when no special demand Is made.
OF PAYMENT OF, PREMIUMS-CUSTOM.
INTl!;ltPRETATION OF CONTRAC'])-WORDS USED IN SPECIAL SENSE-CUSTOM.
be 'appl1ed according to their ordinary signification; and if it is claimed that' they I,ad acquired a; special and technical meaning in the particular locality, and among the class of bU!iliness men COncerned, this fact must ,beestabUshed by a of the evidence, and it must further bernade to appear the using them understood, and intended to use the technical sense. But the fact of his knOWledge may be presumed from the generality of the understanding among men engaged In the same business.
4. SAMll;,.-EvIDENCE-SUBSEQ,UENT CONDUct AND STATEMENTS.
one party claims thl1t a,contract was effected,must, as a general rule.
unampiguous words, used in a conversation, by which
and cOl,1duct of the par"ties lilpbsequent to a conversation during which it is clalIpEld' that a contract was made are competent only as they tend to show what was their real understanding as to that transaction; and not for the purpose of controlling or in any way changing the effect of the conversation.
5. FIRE INSURANCE-AUTIIQJWI'Y OF AGENTS...,..PRESUMPTIONS.
When an insurancecOD+pany appoints an agent in a large city, ana sends ,a commission to !;l1m to solicit applications, the public is warranted, in the absence of any notice of limitations on his authority, in assuming that: he is clothed with power to receive and act on applications, and bind the company. An agent doing business in Kansas City, Mo., was asked to Insure pruperty located in the state of Kansas. It is the, statutory policy of Kansas tl) reqUire foreign companies desiring to do business in the state to have
POTTER V. PHENIX INS. CO.
established agents therein, who mUli!t comply with certain conditions, and to prevent other agents from taking any insurance there. The company whose agent received the application in Kansas City had an estab· lished agent in Kansas, which fact was known to both parties. Held that, if the applicant knew of the statutory policy of Kansas, there could be no presumption in his favor that the agent was authorized to insure property in that state.
This was an action by Anna Botter and others against the Phenix Insurance Company to recover under an alleged contract of fire insurance. Warner, Dean, Gibson & McLeod and I. J. Ketchum, for plaintiffs. Karnes, Holmes & Krauthoff, for defendant. PHILIPS, District Judge (charging jury). The court will first give you in charge some instructions which have been conceded to the parties in the case, that they may be gotten out of the court's way before it proceeds to the further charge in the case. On behalf of the plaintiff the court concedes these declarations of law:
"The court instructs tile jury that the plaintiff in this case seeks to recover upon a contract of insurance, no policy having been issued to her by the defendant The issuance of a policy is not n('Cessary to render a contract of insnrance valid. It may be effected by a verbal agreement between the parties, and if you believe from the evidence that the agents of defendant on the 26th day of August, 1892, entered into a parol agreement with the agents of the plaintiff for the insurance of her dwelling house in the snm of $2,500, then such agreement took effect immediately, although you may further believe from the evidence that no time was mentioned in which it was to take effect; and, if you find that such agreement was entered into, then it was the duty of the defendant to deliver to the plaintiff the policy of writing in the usual form issued by it, and that such verbal agreement remained in full force, although no policy was delivered."
'fhe court thdl adds to this instruction. "pr'ovided the jury find from the evidence that said agents had authority to make such contract."
"The court instructs the jury that if you believe from the evidence that one Van Guilder, a member of the firm of Walter J. Bales & Co.. while acting as the agent of the plaintiff Mrs. Anna Potter, went to the office of Hunter & Whitaker, the agents of the defendant, the Phenix Insurance Company, and then and there informed Mr. 'Vhitaker, one of the defendant's agents, of the property of the plaintiff described in the petition, on which he desired to secure insurance, and at that time gave the amo.unt of insurance required, and if you further believe that the rate of premium was then and there agreed upon for insuring plaintiff's property in the d'efendant's company, and that Whitaker, the agent or defendant, then and there said, he 'would try it on in the Phenix,' and if the jury find from the evidence that such words were the cnstomary words used among insurance agents in Kansas City, Mo., to express an acceptance of the application for insurance, and that the plaintiff's agents, with the consent of the defendant, left the description of the property to be insured with instructions as to the delivery of the policy of, insurance when written, the court instructs the jury that this constituted a contract of insurance of the plaintiff's to take effect from 12 o'clock that such contract was made." noon of the
The court observes, for your consideration in tha.t connection, that his recollection of the evidellee is that nothing was said 'in
the interview between Whitaker and Van Guilder with respect to the delivery of the policy of insurance when written. That is a matter, however, for the jury.
"When the interpretation of words constituting a contract depend upon the seilse in which they are used in view of the subject to which they relate, the relation of the parties, and the surrounding circumstances properly applicable to it, then the intention of the parties becomes a matter of inquiry for the jUry, and the interpretation of the language is a question for your determination under the restrictions and modifications given you by the court. The rule of interpretation in such cases is that when two interpretations, equally fair, may be given to the words used, that which gives the greaterindemllity shall prevail. The words used by the insurer to the insured will be deemed to contain, not only all the language but all that can be fairly deducible therefrom, in the light of the circumstances under which they were made. "The court instructs the jury that although no premium was paid in this case, 01' tende,red, before the destruction of plaintiff's property by fire, yet if you should further find from the evidence that it was the custom between the agents of the defendant and WlUter J. Bales & Co., acting as the agents of the plaintiff, to collect premiums from each other on the 1st of each month for insurance placed the preceding month, then this constituted a waiver of the payment or tender of premium, unless you shall further believe from the evidence that the agents of defendant demanded such premium. "If you find for the plaintiff, you wlll assess her damages at $2,500, with six per cent. interest thereon from· the 1st day of December, 1892, and the form C)f your verdict, if you so find; w111 be, 'We, the jury, find the issues for the plaintiff Anna Potter, and assess her damages at $-.' "
On the part of the defendant:
"Before the jury can find for the plaintiff they must believe that Whitaker was the agent of the defendant, fj.uthorized to insure property in the state of Kansas, and that on August 26, 1892, as such agent, he entered into a contract by which he agreed that the property of plaintiff should be insured from that date. "The court instructs the jury that the burden of proof is on the plaintiff to show-First, that Whitaker was authorized to bind the defendant by entering into a contract of insurance; and, second, that as such agent he did make such a contract,-and that it is not sufficient for plaintiff to show that the insuring of plaintiff's property was considered by Whitaker, but you must further believe and find that the minds of both Van Guilder and Whitaker agreed that from that date the property should stand insured. "If the jury believe that Whitaker received the proposition from Van Guilder to insure said property, and in doing so stated that he could not insure the same from his office, but that he would submit it to G. A. Bailey, agent for the defeildant in the state of Kansas, then this constituted no contract of insurance, so as to bind the defendant, and your verdict will be for the defendant. . "Any knowledge possessed by Van Guilder at the time of the lUleged agency for her will affect the plaiutlt'f to the same extent as if she bad possessed it herself."
Gentlemen of the jury, you doubtless have observed from the pleadings and from the evidence and arguments in this case that the single and decisive question for your determination is whether or not on the 26th day of August, 1892, a contract of inllurance was entered into between Whitaker, representing the defendant company, and the witness Van Guilder, representing the plaintiff in this ca.se. The determination of that question turns and depends entirely upon the construction to be placed upon the interview that occurred between the two parties on the 26th day of August, 1892. Tha.t conversation is the predicate, the basis,
PHENIX INS. CO.
or sole foundation for the imputed contract in this case. What transpired there, what the ,real c()nversaHOIJl was between the parties, you are the sole judges of that question of fact, and are at liberty to draw your own conclusions and inferences. It is the province of the court to direct your attention to some of the salient features in the case, and the law as applicable thereto. There seems to be little dispute or controversy between the contending parties here that in the course of, or at some point in, the interview that occurred between Van Guilder and Whitaker on that day, the expression was used by the agent Whitaker, "1 will try it on in the Phenix," and the question is what constructi1on is to be applied to those words? The statute of this state (section 6570), among its rules for the construction of statutes, says: "Worda and phrases shall be· taken in their plain or ordinary and usual sense, :but technicaJ words and phrases having a peculiar and appropriate meaning in law shall be understood according to their technical import."
So the general rule O'f the common law is that words are to be considered and understood according to their usual and ordinary import, in their common' acceptation auwng men in the community. &> where the words employed in a conversation between two persons are plain, ordinary words, without any ambiguity about them, they must, as a general rule, speak for themselves, and the jury are left to consider and apply them according to their ordinary signification. The law recognizes an exception to this rule, as where certain terms and phrases acquire a technical or a particular meaning among certain trades, professions, or special classes of business men, and they are so employed in such technical sense by and among such classes of men, then such technical or special import and meaning may be imputed to them; but before such special or technical meaning can thus be applied to words and terms, which ordinarily would not attach to them, the jury must find and believe from the evidence that such words and phrases as "1 will try it on," "1 will try it on in the Phenix," as applied to insurance companies, had acquired a special meaning and import among insurance agents at Kansas City at the time in question. Nor would this alone be sufficient to bind the defendant company in this instance, but the evidence must go further, and satisfy you that such special -or technical purport of the language used was known to and understood by Whitalwr, defendant's agent, at the time he was employed by it, and that fact you would have to ascertain from the evidence in the case as to what his knowledge was, or from the generality of the understanding of such meaning, as being generally known, and thereby create a presumption that what was generally known to others might be known to a particular individual. If he was ignorant of any such usage, or technical or special significance to the words in question, and did not intend to use them in that particular sense, then it is not sufficient to bind the defendant company that Van Guilder mayor did so understand them in, such technical sense. The language, ''1 will try it on in the Phenix," in their grammatical sense, v.63F.no.3-25
FEDERAL ltEP&hER, vol. 63.
-a see . like..',
aluture '''I will try it on in the Phenix,'" experimentally ascertained, as if'he would the''Fllerlix Company wduld say and do about it, .and the isla. matter for the jurY,-for your own judgment, observation. And if the words, in their ordi· nary sense, do not'implywhat t;he plaintiff contends for, then the burdeil 0'1 p1'0ofdev6lves' upon the plaintiff to satisfy you by a of' eViqen<;e that such expression had, at the time and place acquired gene-taily among insurance agents at Kansas Oity tlie ,sJ>eeialsignUicance contended .for on the part of the plaintiff. the jur,yshtmld be eai'eful, in the consideration of this to distiIigulsh between the statement of some of the witnesses as to hOw"1:ie might or would have understood such language, andithefact ·aato whether, or not it ha.d ..acquired the special meaning generally' among insurance agents, .fo1' the understanding of one man, or If'few men out ofa large number of men, mlJ,y or (lustom or unders1fulding. gentlemen, in. cQIl!iltruittg the in question, ·you should consider it in itsco;nt.ext, in its connection with other con: versation the if any. had, at the same.· time, with all in evidence. If, f9rt: at bme of:,pi .,c.9nnectlO:Q WIth the ''1 will try lt on m the, llhenix/' tM:,.,ttention of Whitaker. an(i, Van was called to the fact by tlJre witness:M;iss Holmes that the defendant company ha,d to Jake a riflk uPOJ;l that property; and Whit· that he would write that evening, the »itiley, the general agent ill Kansas, then you it or to infer f"om. the, that Whitaker intended to be under· li\tol;ld, or that'Viw Cl;luld havl'!. reasonably .understood him tQ lntend, to make a binding contract fur the aJ>pIication prior to . action on the risk, by Mr. Bailey. i real issue in this case, as already stated to you, gentlemen of the jury, is, was there a made on the 26th day of August, 1$92" by w¥ch the defendant became bound from that day for any loss that might arise after that time, .unless notified that the risk was not accl'!pted by the Hompany? Such contract is to be found if whattr::nspired in that interview Van Guilder and Wllltaker; a:Qd if you cannot find such contract m that conversation, taking it as a whole, it never existed, and you should in that eventr:eturn.;1. verdict for the defendant. 'Much evide.nce, some velevant and ,some otherw,ise, has been heard as to prior arid ,subsequent conduct and conversations between the parties to the transaction. No subseqllent statements made or acts done by either,of these parties can afiect or control the e,ffect of the conversation bad between Van Guilder and Whitaker, relied on by plaintiff basis of the alleged contract of insurance. They are only competent as they may tend to show what was the real understandiJ;lg by the parties as to that transaction. For instance, Van Guilder testified abol# calling at Hunter & Whitaker's office the morning after the fire, arid chiding him or speaking 00 them
POTTER V. PHE:>orx nSB. CO.
about not sending the policy: "You are nice fellows. Have to come around for policies,"-something to that effect. In the first place there was nothing apparent from the alleged conversation on Friday, the 26th of August, which would indicate that it was the duty of Hunter & Whitaker to take the policy to Van Guilder, and the jury have a right to consider the fact that when Van Guilder went around to Hunter & Whitaker he had heard of the fire. He also testified that he said to them, "If you had notified me of Bailey's declining to take the risk, I might have placed it elsewhere." Such statement by him was apparently argumentative, and cannot affect the question as to whether or not there was a binding contract made on the preceding Friday. Evidence has been heard and argument has been made respecting the action of Hunter in tearing up the letter from Bailey on Monday, and not advising Van Guilder of its receipt. Of course, gentlemen, if there was a valid contract or understanding made or had on Friday that the risk was taken pending an answer from Bailey, their failure on Monday to communicate to Van Guilder the information of Bailey's declinature would not release the defendant company; but if, on the other hand, the jury should find from the evidence, as heretofore charged, that Whitaker stated to Van Guilder that all he could do was to send the matter to Bailey (or that in substance), there was no obligation on Hunter & Whitaker to notify Van Guilder of Bailey's refusal, as in such case the risk would not attach until Bailey accepted the offer, and if Van Guilder wished to learn of the action of Bailey he should have called on or communiI:ated with Hunter & Whitaker. And it is a matter of consideration for the jury whether it is not a circumstance in favor of Whitaker's understanding of the legal effect of the conversation of "Friday that he did not notify Van Guilder of Bailey's rejection of the offer, as indicating his understanding that no risk was assumed unless Bailey accepted the proposition. The next aspect of this case to which your attention is now respectfully and earnestly invited, gentlemen of the jury, is the matter of agencY,-of power, of authority, on the part of Whitaker to bind the company on that occasion. The general rule of law is that a person who deals with an agent, knowing him to be an agent, must take notice of the extent of the powers and authority of that agent. He should make inquiry, and inform himself of the limitation, if any, upon the authority of the agent; and if he neglects this, and it transpires that the agent had not the authority delegated to him to do the thing or make the contract, the person for whom he assumes to act would not be bound. An exception to this general rule is found in the dealings of insurance agents. As, for instance, when an insurance company appoints an agent, and sends a commission to him to solicit applications in a city like this for insuran<;e, and he has thus been held out to the community as such agent, then the public, in dealing with him, in the absence of any knowledge or notice of any special instructions limiting his authority, have the right to assume that such agent is clothed with all the power neces-
sary to enable hIm to receive and act on such applications, and to bind the company; but, notwithstanding this recognized and establili!hed exception, yet, if the party dealing with such agent knows or is advised of the fact that certain restrictions theretofore were imposed by the company or a public statute upon the powers and acts of the agent, then the company is not bound by any act done or contract made by the agent with snch person within the terms of such restrictions and instructions. 'In this connection your attention is called, as no doubt it has already J>een evoked, to the alleged conversation between Whitaker and Van Guilder, some two weeks beforehand, with respect to the Fredonia transaction, and the conversation that the witness Pinkney testified to having had with Bales and Van Guilder some time prior thereto. The recollection of the court is that the witness Van Guilder said he did not recollect the inter"iew With regard to Fredonia to which the witness Whitaker testified. 'I don't remember that their attention was called to the restimony,or the interview that Pinkney testified about. That is a matter for the recollectio;u, however, of the jury. So if you find from the evidence that Pinktiey, who was acting general agent of J,he Phenix Insurance Company of Brooklyn, N. Y., for the state of Missouri, with supervisory jurisd.iction over the local agencies, instJ.'ucted such agents, including Hunter & Whitaker, in substance, that in no event were they to take risks or undertake to make contractflto bind the company on property situate in the state of Kansas, and that in a conversation with the firm of Bales & CO.,-that is, with Bales and Van Guilder,-b'fore the transaction in question, of August 26, 1892, he notified them of the fact of said injunction upon said agents, and that conversation had with them, in the ,language oft,he liupreme court in the case of The Distilled Spirits, 11. 'Wall. 356,was "so recently as to make it incredible that he should have forgOtten it, his principal will be bound by such information thus communicated to him." In other words, if these conversations were in fact had between Whitaker and Van Guilder and Pinkney and Van Guilder. and Bales at a time so comparatively recent before the 26th of August, 1892, that it would be incredible to believe it ha4 passed' from their mind, or was not then present in their mind,'then VanGuilder had notice of the limitations placed by the F):j,ehix Insurarioo Company upon Hunter & Whitaker; an,d the compilhywould bound, even though the jury should believe that Whitaker undertook to make a binding contract, as tes.tified to by Van Guilder: And in this connection,gentJemen of the jury, on tIle' question of notice, the court begs to call your at· teI;ltion to the statutes of the state of Kansas, as they bear upon and are related to the matters here at issue. The state of Kansas, in the exercise of its unquestioned sovereign right t9 legislate upon s'llch que8tions,has declared that it shall be unlawful for any person, company, or,corporation in this state either to procure, receive, or forward applications for insurance in any company or companies not organized under the laws of this state, or in any manner to aid in the transaction of the business of insurance with any such company.
That pertains to companies in that state. foreign companies:
Then the next respects
"Any insurance company not organized under the laws of this state. may appoint one or more general agents in this state, with authority to appoint other agents of said company in this state. A certified copy of such appointment shall be filed with the superintendent of insurance. and agents of such company, appointed by such general agent, shall be held to be the agents of such company as fully. to all intents and purposes, as if they were appointed . directly by the company. Agents for any such company in this state may be appointed by the president, vice-president, chief manager or secretary thereot. in writing, with 01' without the seal of the company; and when so appointed. shall be held to be the agents of such company as fully as if appointed by the board of directors 01' managers in the most formal mode."
Section 3354 of the Kansas statutes provides:
"It shall not be lawful for any insurance company, association or partnership, incorporated, organized or associated under the laws of any other state of the United States. or any foreign government, for any of the purposes mentioned in this act, directly 01' indirectly to transact any business of insurance in this state without first procuring from the superintendent of insurance a certificate of authority so to do; stating also that said company has complied with all the requisitions of this act applicable to such company; nor shall it be lawful for any insurance company, association or partnership mentioned in this section, directly or indirectly to take risks, or transact any business of insurance in this state. unless of the amount of actual capital required of similar companies. organized under the laws of this state."
The statute proceeds further to require them to establish agents on whom process can be served in case of litigation. Then section 3381 provides that:
"The superintendent of insurance is prohibited from issuing a license or authority to write policies of fire insurance, or to solicit and obtain and transact fire insurance business, to any person, agent, firm or corporation, unless such person, agent, firm or corporation is a legal resident of the state of Kansas at the time such authority is issued. And whenever any person. agent 01' corporation so authorized to issue policies of fire insurance and solicit and transact fire insurance business shall rpmove from the state of Kansas, the authority issued to such person, agent. firm or corporation shall be revoked, and the same shall be null and void." "Any fire insurance company authorized to do business by the superintendent of insurance is hereby prohibited from authorizing or allowing any person, agent, firm or corporation, who is a non-resident of the state of Kansas from issuing or causing to be issued any policy or policies of insurance on property located in the state of Kansas."
Now, gentlemen of the jury, it appears clearly enough-or at least so to the mind of the court, whatever you may think about it-that Van Guilder, as well as Whitaker, and in fact most if not all the insurance agents in this city, knew of the Kansas statute, and that it was the policy of the state that insurance companies wishing to transact business in that state must have established agents in the state, as has already been indicated to you, and they must do certain things to prevent being expelled for transacting business in that state. It was further known to Van Guilder that where an insurance company had an established agency in Kansas the agent here could not write policies on property situate in Kansas. In fact he gave that as a reason for not writing the policy on the property of Mrs. Potter in the companies which he
represented here, as they had agencies over tnere, or in those companies that had agencies over there. From this fact, gentlemen of the jury, you may infer that Van Guilder knew that an agent of the'})Mni.; Oompany llocated in Kanli\as City, Mo., when it had a localagep.qn Kansasdvas not authorized, as a rule, to write policies on property in Kansas. He knew it was against the statntory policy of that state. And although you from the evidence that some of the.?-gents in Kansas City, Mo., did do business' through what they termed "dummies" in Kansas, such habit or method by any companies could not bind this defendant. It would be necessary for plaintiff's evidence to go further, and make it appear to thesath.faction of the jury that Hunter & Whitaker, QrWp.itaker, as defendant's agents, or either one of them, in Kanlilas City, Mo., were in the habit of doing that thing, and that Van.Guilder dealt. with them on the faith of that custom, practiced by them. Now, gentlemen of thejury, there is no evi· dence in, this case that Hunter & Whitaker did any such thing. There is no.evidence in this case that they, in any instance the court recalls, took applications here, and underrook to bind the company; prior to the acceptance of the risk by the Kansas agent, whenthecoplpany had an agent in that state. On the contrary their direct testimony is that they did not do business in that way. So tbat if you should find from this evidence that, as a matter of fact, Whitaker & Huntel' did not undertake, or had not theretofore undertaken, to so bind the Phenix Insurance Company by tak· ing any risks here before it was submitted to Mr. Bailey, then there was i1(') custom or usage upon their part upon which Van Guilde,r could establish his claim in the acUon in thus dealing with them. So it would fOllow that if Van Guilder had notice of the legal statutory policy of the state of Kansas, as above indicated, and that the defendant company had an agency in Kansas, then there was no presumption of law that the local agents in Kansas Oity, Mo., had authority to accept an application, and make a bindingcontract of insurance on property situate in Kansas, and in such a case it would deV'olve on 'Qle plaintiff to show that Hunter .& Wbitaker had special authority from the defendant company to make the contract relied on by plailltiff. The plaintiff has under· taken to supply this evidence through the testimony of Van Guilder, who testified that whenhe went to Whitaker, on the 26th of August, he asked him,In substan.ce, if he insured property over in Kansas, and that he answered in the affirmative. Now, whether that occurred or n6tyou are to. determine from the weight of evidence between the witnesses on that subject. Even though you should :accept his statement as true, that Wlould not be sufficient to bind 'the defendantcoillpany,llS a party cannot establish the existence of ,an agencyt,o do a particular thing by the mere declarations of the alleged, HewouId. have to go further, and show that tbe company, with knowledge of the agent's declaration or act in similar casea, ·or. ,under other circuIhstances, had recognized it,that is, ratified itin some way, as thatthe defendaut had received the benefit of the agent's act, or had acknowledged that the agent
WALTERS 'V. WESTERN & A. R ·. CO.
was acting in its behalf; and did not repudiate his conduct. In other words, gentlemen of the jury, that the court may be more explicit, and that you may not possibly misunderstand the court's meaning, if, as a matter of fact, these parties, in dealing with each other, were advised of the statutory policy of the state of Kansas, and that where there was agent of a company here, which company did business in Kansas through an agent there, or that the defendant company here, through its agents Hunter & Whitaker, had never undertaken to take risks over there, as the plaintiff contends in this case, and that Van Guilder had notice through Pinkney and through Whitaker, by conversation before that, of the restrictions and injunctions placed upon their agents here, if he went there with that knowledge and dealt with them, then no mere statement made by this agent outside of the authority delegated to him by the company, as known to Van Guilder, could bind this company. Otherwise, it would be utterly useless for any company to place limitations upon the authority of its agent, if he could on binding them, outside of his authority, with a party who was advised of the existence of the limitation placed upon his authority. These are the salient points and the real issues in this case, and you are asked, gentlemen, to decide it according to the law as given you in charge, and according to the evidence as you understand it. The court, with its observation and experience with this jury during this term, hardly deems it nE'cessary to enjoin upon you to do justice between these parties, and to decide this case according to the law and the evidence, regardless of the person of the plaintiff, or the fact that the defendant is an insurance company. You may take the case.
The jury returned a verdict for defendant, and no appeal was taken.
WALTERS et aI. v. WESTERN & A. R. CO. (CAPITAL CITY BANK, Intervener). (Circuit Court, N. D. Georgia. May 8, 1894.)
CARRIER OF GOODs-LIABILITY TO ASSIGNEE OF BILL OF LADING.
Where the consignor's sight draft is attached to the bill of lading, and the carrier deliyers the goods to a purchaser from the consignee without requiring the bill of lading to be delivered up, such carrier is liable to a bank which advances the money to the consignee to pay the draft, and takes the bill of lading as security therefor.
This was a suit by William T. Walters and others against the Western & Atlantic Railrond Company, in which the Capital City Bank intervened. The receivers of defendant excepted to the master's report. GOQdwyn & Westmoreland and John C. Reed, for intervener. Julius L. Brown, for defendant. NEWMAN, District Judge. The authorities cited by counsel for the receivers seem undoubtedly to establish the proposition that
where a timednift is drawn by the:consignor of,goods, and attached to a bill of lading for the goods, and draft is. sent to a bank for collection ,at" the place to which the goods are consigned, an acceptanceby:the drawee entitles him to have the bill of lading delivered to him ; the reason given for this ruling being that the consignettllJ e;x:pected to sell the. consigned goods in order to realize funds 'dthulWhich to take up the draft by the time it matures. National:-:ltankof Commerce v. Merchants' Nat. Bank, 91 U. S. 92; Woolen v.-Bank, 12 Blatchf. 359,' Fed. Cas. No. 18,026; Bank v. Wright, 48N.-Y. 1; Bank v. Luttgren (Minn.) 13 N. W. 151; Erwin v. Harris, 87';Ga. 335, 13 S. E. 5Hk .The difficulty abo:u.t the application of that· proposition to the prel!lentease is that;the drafts here are aight drafta,and the reason JJ.pon which those, cases rest does not apply ; $ecQnd, the facta of the transaction here are otherwise entirely different from those in, the cases which have been cited as authority.for the proposition above referred to, In the case at bar. the draft was drawn on G·. ]3: Everett & 00., and was paid by the intervener, the Capital City Bank, at the request of G. B. Everett &00., and the money chmrged to their account At the time of the payment of. these drafts by the intervener,. the goods seem to have been sold by Everett & Co. toAkel'$ & Br08'j and what is called on the one .hand a promissory note, and on the other a: 'lllere agreement to purchase".was given by Akers & Bros. The foUowing is a copy of··one of the papers, all of the others being of the same character, except as toaItloun1:a, number of caes, and dates:
Due Dec. 16. "Atlanta, ·Ga·· Oct 6th. 1889. "Forty-e1ght days after date, we will pay to G. B. Everett' & Co., on presentation of bills of lading for cars 18x12624, five hundred and forty-two 28-100 dollars. "Net, - - . Int, 7.05.
'Akers & Bros."
The method of proceeding of the bank was to take this paper made by Akers & Bros., attach'it to the bill of lading which covered the same cars of grain, and hold the same as security for Akers & Bros.' obligation.' It appears, also, that Everett i & Co. continued to be bound to the or at least that firm so considered itself from other evidence in the case, which it is not deemed material to go into now. At all'events, 'it is clear that the bank held the bills of Iltd1ng a.s securHt t,or. monel adv,-:t.need 9n. the faith of the con· signment covered.-by the varlOusbllls of ladmg. It is !laid, apP1ying- the rule to be adduced from the authorities have, been to above. as cited by counsel for the reo ceivers, that, if a,nacceptor of a time draft is entitled to the bill of lading,equally so is the drawee when he pays off the bill of lading; and it is urged that when the Capital City Bank paid the drafts, and sent the money on to the drawer, charging the SlUUe to Everett & 00., Everett & Co. were entitled to receive the bills of lading. Then it is said that, Everett & Co. having sold the grain to Akers the .latter ·firm were entitled to have the bills of lading turned over to them; and if the railroad company delivered the cars
WALTERS V. WESTERN & A.B. 00.
of grain to the persons who, in law, really the bills of or ought to have had them, they should be acqUitted of any lIabIlIty in the matter of injury to other persons. If the bank in this case had been paid the amount of the draft, and there had been no other transactions with them, then there might be some force in the position assumed for the receivers, but the additional facts appear which have just been stated. The bank paid the draft for Everett & Co" holding the bills of lading for the advance thus made, in connection with the. paper made by Akers & Bros" copied above. The whole question comes back to this: that the railroad company should have required the bills of lading to be given up before delivering the goods, and, when they allowed Akers & Bros. to receive these goods without at the same time receiving from them the bills of lading, they did so in violation of the rights of this intervener, who seems in the utmost good faith to have advanced the money upon the credit of the goods covered by the bills of lading, and of their being in possession of the railroad company. While it is conceded that bills of lading are not "negotiable instruments," in the full sense of that term, still they do represent the goods which they cover, and may be taken as security for money advanced while the consignment is in the hands of the railroad company. Among the cases which might be referred to, the following are named, because they are supreme court decisions, and the .doctrine they enunciate controlling: Conrad v. Insurance Co., 1 Pet. 386; The Thames, 14 Wall. 98; North Pennsylvania R. Co. v. Commercial Nat. Bank, 123 U. S. 727, 8 Sup. Ct. 266, and cases therein cited. It is apparent that the bank would have been fully protected if the railroad company had required the bills of lading to be delivered, or had exercised any reasonable degree of diligence in ascertaining the person entitled to receive the goods before releasing possession. The Friedlander Case, 130 U. S. 416, 9 Sup. Ct. 570, can have no application here. There is no claim whatever that these bills of lading were accomplished. In the case of Inman, intervener, against these same receivers (56 Fed. 3(9), the contention was that the bills of lading had been delivered up and reissued by the agent. No claim of that kind can, of course, be interpOf;ed here. What the Friedlander Case decided was that where the agent of a railroad company fraudulently issued bills of lading for goods, when no goods had, in fact, been delivered, such agent goes entirely beyond .the scope of his authority, and his principal (the railroad company) is not bound. It is held that his authority from the company is to issue bills of lading for goods delivered, and that that is the scope and extent of his agency, and, when he goes beyond that, he cannot bind the company by his actions. It is unnecessary here to go into the facts of the agency at Mclvors, at which point these goods were delivered, ana the method of Akers, as agent, and of· Akers & Bros., in transacting their business, as they were fully discussed . in Case of Inman, supra, and further reference to the matter here would be a mere repetition. As to the question of demand, and as to whether or not Mr. · Dickey, the general freight agent, was the proper official on whQm
is,'slJ,fficientto Sliyttiat he seems to have undertaken to represent tllerailroad ilZOmpany in the matter, a.nd made no question whatevel'asto his authority to act in,the premises.' He and from this desig. natIon It would seem that benaii,g.eneral supervision over aU' its freightbuainess, and really appea1'Slto have been the proper person, of all others, upon whom demand: should have been made. If not, heat least shouldha.ve TeferredthE! representative of the intervener to some one else who had authoritY to act in the ma.tter. The exception:$ must be. overruled, and the report of the master be confirmed.
CHIQAGO, R. 1.& P. RY. 00. v. SUTTON. (Circuit Court of Appeals, Eighth Circuit September 10, 1894.)
Is Ilable for an 'injury cau$edby the concl,1rrlng negligence of hImself and a third party to the same 'extent as for one caused entirely by his own '. negligence.
In Error to the Circuit Court of the United States for the District of Kansas. ,',' This was an action, by Fred. Sutton the Chicago, Rock Island & Pacific Railway Company to recover damages for personal injuries. W. F .. Evans (Y. A. Low andJ. E. Dolman, on the brief), for plaintiff in error. ThofuasP:Fenlon,Jr. (T. P. FenIon, on the brief), for defendant in error. BefQre.1H1ElWER, ,Circuit Justice, and CALDWELL and SAN· Judges. SANBORN, Circuit Judge. On October 23, 1892, while Fred Sutton, the defendlPlt in error, was performing his duties as a .brakemlUl on one of the trains of the Chicago, Burlingt.on & Quincy RaUJX)8.dCompany ata raill'oadcrossing near Reynolds, in the state of Nebraska, an engine and train of cars of the Chicago, Rock Island &'Pacific Railway Oompany,:the plaintiff in error, collided ,with the. train of the Bnrlington COmpany, and injured bim. He ;sued the Rock Island Oompanyfor damages for this injury, which be was caused by its negligence. That company denied any negligence on its part, and alleged that.the negligence of tbe Burlington Company caused the injury, and that the defendant in ervor was guilty of contributory negligence. There was no evidence· of any contributory negligence on the part of the defendant ih (error upOn' the trial, and ·the court, without objection, so charged the jury. The question "ihether or not the Rock Island ,Oompany wasgnilty of negligence that was the proximate cause of the injurY was submitted to the jury under instructions to which: