Case Name: Franklin W. Baumgartner v. John C. Burt, et al.
Court: Colorado Supreme Court
Jurisdiction: Colorado
Decision Date: 1961-09-25
Citations: 148 Colo. 64
Docket Number: No. 19,640
Parties: Franklin W. Baumgartner v. John C. Burt, et al.
Judges: 
Reporter: Colorado Reports
Volume: 148
Pages: 64–71

Head Matter:
No. 19,640.
Franklin W. Baumgartner v. John C. Burt, et al.
(365 P. [2d] 681)
Decided September 25, 1961.
Rehearing denied November 6, 1961.
Mr. Raymond J. Gengler, Mr. John-David Sullivan, for plaintiff in error.
Messrs. Bradley, Carney and Johnson, for defendants in error.
En Banc.

Opinion:
Mr. Chief Justice Hall
delivered the opinion of the Court.
The parties appear here in reverse order to their appearance in the trial court. We refer to the parties as they there appeared, Burts or plaintiffs, and Baumgartner or defendant.
Burts in their complaint allege that they sold insurance to Minerals Exploration Research Company, a partnership, and that Baumgartner was one of the partners; that the partnership and Baumgartner are indebted to Burts on an open account for unpaid premiums in the amount of $3,525.82 together with interest.
Baumgartner filed an answer in which he (1) denies that he was a general partner in Minerals Exploration Research Company; (2) denies all of the allegations of the complaint; (3) alleges that the complaint fails to state a claim upon which relief can be granted. By way of affirmative defense he alleges that he was only a limited partner and as such was not answerable for the partnership debts.
Trial was to the court. Proof submitted by Burts disclosed the procurement and delivery by them as insurance agents to the partnership, composed of Baumgartner and others, of numerous policies of insurance issued by various companies, and that premiums for the policies so issued remained unpaid.
The trial judge found that Baumgartner, as a member of the partnership, became liable for premiums due on insurance written for the partnership for at least the amount of $2,938.00, and that payments totalling $800.00 should be credited on the account, leaving a balance due and unpaid of $2,138.00 for which amount judgment was entered in favor of Burts against Baumgartner.
Baumgartner is here by writ of error seeking reversal and, among other reasons therefor, urges that even though it be established that Baumgartner owes premiums for insurance issued, there is no proof that the premiums are due to Burts or of other facts entitling them to maintain an action therefor. This contention was urged in briefs filed with the trial court and disposed of by the trial court as follows:
"Defendant in his brief advances the idea, as the Court understands it, that the insurance company in some or all the instances was the real party in interest and the plaintiffs have no right to sue. It is common knowledge that insurance agents are personally liable to their principals. The payments made were all to the plaintiffs, none to the companies. Payment to the companies has never been demanded, nor offered by the beneficiaries. Defendant has nothing to fear- on this account." (Emphasis supplied.)
We do not subscribe to the trial court's observation that:
"It is common knowledge that insurance agents are personally liable to their principals," if it purports to include liability for uncollected premiums.
Dealing with this very question, the Court of Appeal of Louisiana, in Janvier and Co. v. Fritz, 180 So. 172, said:
"Apparently recognizing the necessity of showing that special circumstances take this case out of the rule that an agent cannot sue for a debt due its principal, counsel in a supplemental brief contend that we should take judicial cognizance of the fact that an insurance agent is obligated to pay the premiums due its principal by universal custom and that, therefore, this case is within the exception recognized in the Weisman Case. In the first place, we have no actual knowledge of the custom referred to and, therefore, cannot say it is sufficiently common usage to warrant judicial recognition, and, in the second place, the Weisman Case did not hold that a showing that an agent was responsible was sufficient, but that the agent should allege and prove that it was charged with and paid the premiums."
The relationship between an agent and his principal is a contractual one and the extent of the rights and duties of each is to be found in the express or implied terms of the agency contract. The record before us is devoid of proof of such rights and duties.
The policies involved were issued by the insurance companies — -Burts only countersigned as "authorized representative."
The insurance contracts are between the insurance company and the insured; they expressly provide that the company:
" agrees with the Insured, in consideration of the payment of the premium ."
Thus it appears that the insured, the party whose duty it is to pay the premiums, is a party to a contract with the insurance company, which contract imposes upon the insured no obligation to the agent.
It may well be that an insured can discharge his contractual'obligation to pay premiums due the company by paying its agent, but from that conclusion it does not follow that an agent may in his own name maintain an action to collect a premium due his principal.
The general rule of law governing the situation presented by this record is set forth in 44 C.J.S. 1339, Insurance, §358 (supported by numerous cited cases):
"Ordinarily insurer is the one to enforce liability for unpaid premiums. An agent of insurer usually does not have the right to sue in his own name to recover a pre mium, even as to a policy negotiated by him, and even where he is authorized to collect the premium, unless he is entitled thereto by way of assignment or subrogation. However, he may sue in his own name where the company holds him liable for premiums and he has paid the one in question, and an assignment is unnecessary to enable him to sue in his own name. Under some circumstances the agent may so recover, even though he has not actually paid the premium to the company. He may sue in his own name where he has become personally liable to insurer for the premium, as in the case of an agent under a duty to collect premiums, extending credit to insured for such premiums."
The same rule is found in Appleman on Insurance, Vol. 20, Sec. 11271.
Also, Rule 17(a), R.C.P. Colo., provides that:
"Every action shall be prosecuted in the name of the real party in interest; ."
For Burts to be relieved of the impediments of the general rule so as to entitle them to a recovery herein, it would be necessary for them to bring themselves within one of the exceptions set forth in 44 C.J.S., supra. This they failed to do.
The following language in the opinion in Janvier v. Fritz, supra, is applicable here:
"In the case at bar there is no showing by way of allegation or proof of any fact which would take this case out of the general rule that an agent cannot maintain a suit in its own name for an insurance premium due its principal."
Burts failed to prove that they were creditors of Baumgartner; consequently their complaint should have been dismissed and judgment entered for the defendant.
The judgment is reversed with directions to dismiss the action.
Mr. Justice Sutton and Mr. Justice McWilliams dissent.