The record-union. [volume] (Sacramento, Calif.) 1891-1903, 1895-07-26
INTERESTING INSURANCE DECISION.
Liability Of a Company for an
Agents Act.
1t is Not Responsible for Statements
Not Authorized by His
Instructions.

The Supreme Court has reversed the
judgment and order denying new trial
In the case of Thomas II. O'Brien, plain
tiff and respondent. against the New lea
land Insurance Company. defendant and
appellant.
This is an action upon q contract OF
fire insurance, and defendant is appel
liant. as is usual in that class of cases."
says the court. zone Peters was de-
fendanrs local agent in the town OF
Reedly, Fresno County, and under his
commission as agent he had no authority
to enter into contract of insurance. But
he was appointed sub-agent to receive
proposals for insurance, and fix rates Of
premiums. and to receive money for poll
cies and certificates of insurance.
ION July ., 1892, plaintiff made writ
ten application to Peters, upon on one of
defendants blanks, for insurance upon
his saloon, buildings and fixtures. This
application, accompanied by letter from
Peters, was deposited in the POstOilice.
July 9th, addressed TO defendant in San
Francisco. The letter referred to the in
closed application, with the suggestion
that the company should place The
insurance, ii IL was deemed adj
visable- The plaintiffs building
was occupied as Il liquor saloon,
and defendant did not take insurance
upon saloons, and the agent, Peters,
knew this fact. When the application
was made the agent informed plaintiff
that he was insured from that time. On
July 18th, which was between the time OF
the making of the application and the
time when the application was mailed to
defendant, the property was destroyed by
fire. 1t thus appears that the building
was destroyed, not only before the appli
cation for insurance was passed upon
by the defendant, but before the appiica-
ton was ever heard of by the company.
las suggested, the agent, Peters, had
no authority To enter into a contract of
insurance with plaintiff. His powers did
not go to that extent. That there was no
actual contract of insurance In this case
as far as defendant is concerned, is ap-
parent at glance, for the contract could
only be made with the defendant, and the
defendant knew nothing Of il. The de-
PENDANT had the right to reject the appli-
cation when presented. and until 1T was
presented and granted no contract was
possible. II there was contract of in
surance in force from July I'd until the
application reached the defendant, then
1t was equally in force after that time
and during the entire period covered by
the policy: and such construction would
deprive the defendant of the right to re-
ject unsatisfactory applications and place
the power OF contracting in the hands of
agents like Peters, result Numerically
opposed to its purposes and practices.
Peters was not only lacking in actual
authority to enter into q contract of in
surance with plaintiff, bat the evidence
fails to show any ostensible authority in
him. Ostensible authority ia such as a
principal, Intentionally or by want of
ordinary care, causes or allows q third
person to believe the agent to possess.
| (Section 23l7, Civil Code.) Certainly in
this case the company did not inten-
tionally cause plaintiff to believe that
Peters had authority to make contract
of Insurance. and there is not word in
the evidence to Indicate a want of ordi-
dairy care upon defendants part, which
caused or allowed plaintiff to believe that
Peters was clothed with any such au-
thori:y. 1t would seem to follow inevi-
tably that this agent, having neither
actual nor ostensible authority to make
contract of insurance, plaintiff must fail
OF recovery.
The agent Peters told plaintiff that he
had no power to write policies, and that
the application would have TO be for
warded to defendant in san Francisco.
| This statement would indicate that Pc
ters did not attempt to enter into con-
tract of insurance with plaintiff. and
that plaintiff probably so understood it.
If this were all the evidence there could
hardly be question about it; but it APP
pears that Peters at the time of applica-
ton told plaintiff that his insurance
would begin at that time. While this
statement may have resulted in mislead-
ing plaintiff 1t could have no posi- bic
binding effect upon the company defend
ant. y best it was but the agents con-
clusion as to the legal effect of the trans
action. and any loss suffered by plaintiff
by reason of this mistake of the agent
is matter to be settled between
them. a reasonable view of the mean
ing of the agents language would seem
to be that the policy would take effect as
of the date of the application, if the APP
plication were accepted, for, until action
upon it by the company, it is impossible