Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1904-05-13
Insurance Case Brings Out
New Point Of Law at
Guthrie Center
THE COMPANY HAD NO FUNDS
Consequently II Could Not Pay Loss
Judge Gamble Holds Agent Who
placed the Policies, Responsible For
Their vslue--Deoision Applies to All
Companies.
Special to Times-Republican.


Des Moines. May 1s.--Judge Gamble
at Guthrie Center yesterday held that
an insurance agent is liable for the val-
ue of the policies he places If the COM
pany he represents fails to pay in case
OF loss. The case brought forth a new
point of law which has never been
passed on by the supreme court. Attor-
ney w. Il. Maxey of Des Moines con-
Quoted the prosecution of the case in
the interests of the Sutherland-Flenni-
ken wholesale millinery company of this
city.
The case in question was body
GLOW to the wildcat" and unauthor-
ixed insurance companies doing bust
ness throughout the west and will
prevent the concerns securing anyone
!. to represent them.
The case was fought for three days
1t Guthrie Center and Judge Gamble
sustained q motion 10 take the case
from the jury and directed verdict
for the plaintiff.
The action was brought by Misses
Hood and Stomback. proprietors of
millinery storte at Panora, against A.
]. HemphMi, an insurance agent OF
Panora who represented the Mercan-
tile Fire Insurance Company of Chi
,cago. Mr.. Hernphill wrote policy for
81, 900 on their stock of goods about one
( year ago, and fire last year DESTROYED
!. the business, The goods were fur
A.. 10 a -1Siop N ly an
!. company OF Des Moines on credit and
when the destruction was announced,
began action to collect. The proprie-
tors of the store turned over the policy
to them.
An investigation showed that the
company was not responsible and
would not settle the loss which was in
voiced at $S32S4. Attorneys were sent
to the headquarters of the company in
Chicago to.endeavor to effect settle-
ment. They again refused and ex-
planned they had no funds with which
to meet losses. They stated their pre-
NUNS were too low to furnish funds
4 for losses. Also they We're not In the
business to pay losses but to furnish
cheap insurance to firms throughout
the country, the policies to be used
more for the purpose of securing credit
from wholesalers than anything
else.
After ascertaining these facts, At
torney Maxey began action against
HemphAn, claiming a breach of con-
tract. In his petition he cited that
Hemphill had agreed to furnish insur-
ance and the plaintiffs had relied upon
him. to secure responsible policies. In
4 arguing the case many cases were cited
to show. that the insurance agent was
responsible for the quality of insurance
he sold. the same as the dsaler in any
4 other line of business.
The case was warmly contested
4 throughout. Attorney Maxey OF Des
Moines was assisted in the prosecu-
4ion by Mr. Morris of Panora, and MT.
Fay OF Perry. Col. Nichols OF Panora,
formerly United States district atsor-
ney and Capt. Hill of Guthrie Center
conducted the defense.
Deputy Auditor of State Oleo Q. Roe
was a witness in the case, tesafyng
that the company was unauthorized 10
4 do business in Iowa, and that Hemp
Z hill had NO license. He thinks II is
q great victory for the Iowa insurance
department as we'll as serving as pro-
j lection for the public against illegal
assurance concerns and preventing
questionable dealers in defraudtns
wholesalers by giving credit on the
sSworthless policies they furnish.
1.-THE decision applied to all fire In
surance companies authorized or un-
authorized. However, authorized COM
panies relieve, their agents of the re-
sponsibiiity by the fact their capital
stock serves as protection. The wildcat
companies, however, have no capital or
assets with which to protect the agent.
Agent of authorized companies have
only one danger of being held for Losses
on policies they write and that is that
in case the company suddenly
fails.