Case Name: The Celina Mutual Casualty Company v. Baldridge
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1937-11-05
Citations: 213 Ind. 198
Docket Number: No. 26,943
Parties: The Celina Mutual Casualty Company v. Baldridge.
Judges: 
Reporter: Indiana Reports
Volume: 213
Pages: 198–212

Head Matter:
The Celina Mutual Casualty Company v. Baldridge.
[No. 26,943.
Filed November 5, 1937.
Rehearing denied January 18, 1938.]
Connor D. Ross, George A. Henry, Leo L. Kriner, and V. Ed Funk, for appellant.
Cloe, Cloe, Campbell & Cloe, Fate W. Patrick, Thomas L. Webber, Frank A. Symmes, and Owen S. Boling, for appellee.
Edward P. Gallagher, amicus curiae.

Opinion:
Fansler, C. J.
This is an action to recover $350 for the destruction of appellee's automobile under a contract of insurance. The policy is dated July 18, 1930, but it was not actually issued until after the automobile was destroyed on November 25,1930.
The appellant answered in general denial, and in several paragraphs of affirmative answer alleged that at the time the policy was issued the plaintiff had no insurable interest in the automobile covered by the policy; that the policy was not issued until six days after the accident, and that it was procured through the connivance and collusion of the plaintiff and the local agent of the defendant, who willfully withheld and concealed the information that the car had been destroyed; that no consideration had ever been paid for the policy; that at the time the policy was issued there was in full force and effect another policy of insurance covering the automobile, with the American States Insurance Company, and that the existence of that policy was willfully withheld and concealed, in violation of the terms of the contract ; that the full amount of the premium had not been paid, but that a rebate was issued by the agent, by reason of which the policy was illegal and void from its inception; that the appellee did not have full and complete title to the automobile, which fact was fraudulently misrepresented.
There was a reply in general denial, a, trial by jury, and a verdict for $350, the full amount demanded, and judgment accordingly.
Under an assignment that the court erred in overruling the motion for a new trial, error is predicated upon the giving and the refusal to give certain instructions, the admission of certain evidence, and the suffi ciency of the evidence to sustain the verdict and judgment.
It appears without controversy that Mayme Brishaber, who wrote insurance as a "side-line," was licensed and authorized to sell insurance for the American States Insurance Company, the appellant, and other companies. In 1929, the appellee took over the car in question from his brother, who was purchasing it on installment payments. The appellee continued the payments. In January, 1930, he arranged with Mrs. Brishaber for insurance on the car, and through her a policy in the American States Insurance Company was issued to him, covering his car for six months, for which he paid her the premium. On July 2, 1930, at his request, his policy was renewed in the American States Insurance Company. Shortly thereafter a policy of the American States Insurance Company was delivered to him, which he continued to hold in his possession until after the collision which destroyed his car on the 25th of November following. On August 7th he made out a check, payable to Mrs. Brishaber, for the premium, and left it at the bank for her, and she received it. About September 20, 1930, he had notice from the American States Insurance Company that his policy had been canceled for nonpayment of premium. He went to the bank and found that his check had been marked "paid," and continued to hold the policy, assuming that the error would be corrected. After the damage to his car, he went to the American States Insurance Company and demanded settlement, and afterwards brought a suit, which he dismissed upon payment of $150, which it is contended here was not a compromise and settlement, but a "covenant not to sue." But we need not consider this question. After the policy in the American States Insurance Company was issued, appellee did not see Mrs. Brishaber, or talk to her, until after the accident which destroyed his car. At the time of the accident appellee believed that he was insured with the American States Insurance Company, and had no knowledge of any other insurance. He intended the check, which he gave the agent, as payment for the premium of the American States Insurance Company policy. After the American States Insurance Company told him that he was not insured with it (relying upon its cancellation for nonpayment of premium, which Mrs. Brishaber had never forwarded to it), he called Mrs. Brishaber. on the telephone. She then told him that she had insured him in the appellant company. Mrs. Brishaber testified that she renewed the appellee's policy with the American States Insurance Company on July 2, 1930, but that she afterwards canceled it; that on July 19, 1930, she decided to change appellee's insurance to the appellant company because the rates were lower; that she wrote an application for the insurance in the appellant company on that date, and wrote her check for the amount of the premium; that she put the application and check in a stamped envelope, and addressed it on that date to appellant, and put it in her brief case with a number of other letters; that she first discovered that she had not mailed the application and check when appellee called her and told her about the accident, and asked about the insurance; that she then looked in her file and could not find the daily report of insurance for appellant; that while appellee was on the telephone talking to her she discovered the envelope containing the application and check in her brief case, where it had been since July 19, 1930. She then immediately mailed them to the company, with a letter explaining that they had been mislaid since July 19th. She did not, however, advise the company at that time of the damage to and destruction of the car. Upon receipt of her letter and check, and without knowledge of the destruction of the car, the company prepared and sent her the policy sued upon, dated as of July 19, 1930. She then mailed a report of loss to the appellant, together with a "retention premium." She testified that it was her practice to remit premiums to the American States Insurance Company within thirty days, and to the Celina Mutual Casualty Company within forty-five days, and she did not explain why she wrote her own check for the policy in the appellant company on July 19th, the date the application was prepared.
It thus appears without controversy that the appellee held in his possession a policy of insurance, issued by the American States Insurance Company, which was in full force and effect from July 2, 1930, to and including September 20, 1930, when he had notice from the American States Insurance Company that his policy had been canceled for nonpayment of premium. Whether his policy continued in force, because of the premium having been paid to the agent, as he insisted it did to the extent of bringing a suit and receiving some payment from the American States Insurance Company, need not be considered. It is sufficient that on July 19th, when Mrs. Brishaber says she undertook to cancel his policy and procure him a new one in the appellant company, she had no authority to act for him, and he had no knowledye of her action, and she did not in fact do anything toward procuring a policy for him in the appellant company on that date, so that no contract was then consummated. Nothing further was done concerning a policy in the appellant company until after the property sought to be insured was destroyed. The company then issued its policy dated back to July 19th, without knowledge that the property sought to be insured was already destroyed.
To create a contract of insurance there must be an agreement between the insurer and the insured. There must be a meeting of the minds. It is clear that if there was a contract between appellant and appellee it was made either on July 19th or after the destruction of the property. There was no contract made on July 19th, because appellee had not authorized or requested the issuance of insurance, and had no knowledge that a contract with appellant was contemplated. He then had a policy in full force and effect with the American States Insurance Company, and one policy of insurance is all that he had authorized Mrs. Brishaber to procure for him. He had not authorized her to change his insurance, and she could not bind him by a cancellation without notice to him, so that what she may have decided to do regarding the cancellation was of no effect. In Stebbins v. Lancashire Insurance Co. (1880), 60 N. H. 65, 70, a case similar in many respects to the one at bar, it is said: "The Lancashire policy never became a binding contract. When insurance on the plaintiff's building to the required amount had been secured in the Commercial Union and North British companies the plaintiff's application had been filled, and no authority remained for placing other insurance upon the property. The Lancashire policy therefore was unauthorized by the plaintiff; and, although written in good faith by the authorized agents of the company, and designed as a substitute for the North British policy, it could have no operative force until it was accepted by the plaintiff. It was not an acceptance of a proposition for a contract of insurance, like the case of a policy issued on a previous application, which, as in the cases cited by the plaintiff; takes effect upon the acceptance of the application. As neither the plaintiff nor his agent had any knowledge of the existence of the policy previous to the fire, it was not an existing contract of insurance when the loss happened, and the subsequent delivery was ineffectual to give it validity."
"An agent of an insurance company has no authority to insure property already destroyed; and a policy written and intended as a substitute for a subsisting policy in another company, but not delivered, and of which the assured has no knowledge until after the property is destroyed by fire, is not a valid contract of insurance." Kerr v. Milwaukee Mechanics' Insurance Co. (1902), 117 F. 442, 447, and cases there cited; City of New York Insurance Co. v. Jordan et al. (1922), 284 F. 420.
A direction authorizing an insurance agent to procure a policy of insurance is exhausted by the procuring of one policy, and confers no authority to afterwards cancel and procure other or different policies. See cases above cited, and Jernigan v. National Union Fire Insurance Co. et al. (1932), 202 N. C. 677, 163 S. E. 762; Wilson v. New Hampshire Fire Insurance Co. (1885), 140 Mass. 210, 5 N. E. 818.
In Clark v. Insurance Co. of North America (1896), 89 Maine, 26, 35, 36, 35 Atl. 1008, 1011, it is said:
"The contract of insurance is to be tested by the principles applicable to the making of contracts in general. The terms of the contract must have been agreed upon. This necessarily implies the action of two minds,—of two contracting parties. If it is incomplete in any material particular, or the assent of either party is wanting, it is of no binding force. . . .
"In this case, the action of the agent in the transaction relative to the attempted change of risk to the defendant company was entirely ex parte. If we assume that he was acting with authority from the company, it was then no more than a proposition which had not been made known to the plaintiff. To give it validity required his knowledge and his consent. At the time of the loss, knowledge had not been conveyed to him, and his acceptance had not been given. The rights and li abilities of the parties are to be determined by their legal status at the time of the loss. It is inconceivable that the defendant company can be held liable for indemnity against loss when no contract for indemnity existed at the time the loss occurred.
"And if the property had been burned before any contract was entered into with the defendant company, even if we assume such contract to have been after-wards made, that fact was known to the agent, and the defendant company would not be liable. The property must be in existence to render a contract of insurance valid."
It seems clear that there never was a contract between the appellant and the appellee, or even a thought of such a contract, except in the mind of the local agent, until after the property to be insured was destroyed. There can be no contract without knowledge of the contracting parties. And if the parties can be said to have entered into a contract after the destruction of the property, and with full knowledge of the fact, and it is clear that the insurance company would not have issued the policy with knowledge, the contract is unenforceable, since an insurance company has no power to insure a thing which has already been destroyed.
It was error to overrule appellant's motion for a new trial.
Judgment reversed, with instructions to sustain the motion for a new trial, and for further action not inconsistent herewith.