Case Name: GAMBINO v. NORTHERN INSURANCE CO. OF NEW YORK
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1925-10-27
Citations: 232 Mich. 561
Docket Number: Docket No. 76
Parties: GAMBINO v. NORTHERN INSURANCE CO. OF NEW YORK.
Judges: Clark, Sharpe, Steere, and Wiest, JJ., concurred with Fellows, J.
Reporter: Michigan Reports
Volume: 232
Pages: 561–568

Head Matter:
GAMBINO v. NORTHERN INSURANCE CO. OF NEW YORK.
Insurance — Fire Insurance — Proof of Loss — Waiver by Local Agent of Insurer.
Where a fire insurance policy insuring the interest of the owners and mortgagee was surrendered by the latter and canceled without the owner’s knowledge, and later a loss occurred, statements of the company’s local agent, who had authority to solicit business, write and issue policies, and collect premiums, and of his employee, made to the owners’ agent and attorney, that the policy had been canceled and that there was no liablity thereunder, did not. amount to a waiver of proof of loss required by the policy, a Michigan standard form, in the absence of proof that either said agent or his employee had authority to adjust losses or deny liability for the company. McDonald, C. J., and Bird and Moore, JJ., dissenting, on the ground that by canceling the policy the company itself denied liability.
Error to Wayne; Driscoll (George O.), J., presiding.
Submitted June 10, 1925.
(Docket No. 76.)
Decided October 27, 1925.
Opinion on rehearing 284 Mich. 651.
Assumpsit by Vito Gambino and another against the Northern Insurance Company of New York on a policy of insurance. Judgment for plaintiffs on a directed verdict. Defendant brings error.
Reversed, and no new trial ordered.
Frederick J. Ward, for appellant.
Daskam, Fox & Reid, for appellees.
Plaintiffs were the owners of a two-family flat in Detroit upon which there was a mortgage to the Gratiot Lumber & Coal Company. Herman Fischer, the local agent of defendant, issued defendant’s policy of fire insurance on it for $3,000, loss, if any, payable first to the mortgagee, and second to plaintiff Vito Gambino. The policy was procured through one Garessi, an employee of Fischer. The premium was paid by the lumbef company and the policy delivered to it. Later plaintiff repaid the lumber company the amount of the premium. The proof shows that it was a three-year policy. About January 20, 1920, the policy was surrendered by the lumber company and canceled, and the refund paid to the lumber company. Plaintiffs had no knowledge of this fact. On September 19, 1921, the building was practically destroyed by fire. About two weeks after the fire plaintiff’s agent was informed by Garessi, of whom he made inquiry, that the policy had been canceled and the refund paid to the lumber company. On May 8, 1922, an attorney representing plaintiff called on Mr. Fischer with reference to the matter. He testifies:
“Mr. Fischer said that the policy had been returned to the home office, as it was canceled, and that he could take no steps to assist us in collecting the money due under this policy if there was any due. He said there was none due.”
Not until July following was proof of loss furnished defendant. So far as the record discloses this was the first time knowledge of the loss reached the company. The policy (Michigan standard form) contained the following:
* * * “the insured shall, within sixty days after the fire, unless such time is extended in writing by this company, render to said company a proof of loss, signed and sworn to by the insured, stating the knowledge and belief of the insured as to the following * * *
“No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, nor unless commenced within twelve months next after the liability shall have accrued.”
Mr. Fischer was called by plaintiff as an adverse witness under the statute; as to his authority to act for the company, he testified:
“We have a general insurance agency and we place insurance business in other companies other than this Northern Insurance Company. We have a general agency for about six different companies. We have not had other companies in our agency for whom we do business other than these six. Our business in connection with these companies is issuing their policies and collecting their premiums and our agency is a general agent for the companies in that respect. * * * Our office and our agency had authority only to issue policies, accept premiums and refund for premiums. We were licensed by the insurance department of the State of Michigan for that purpose.”
At the close, of the proofs both parties asked for a directed verdict. One was directed for plaintiff and judgment followed.
Fire Insurance, 26 C. J. § 359.

Opinion:
Fellows, J.
(after stating the fads). There are numerous assignments of error but we think but one phase of the ease need be considered. That the provisions of the Michigan standard form of policy which we have quoted are valid and enforceable is not questioned. Plaintiff, however, claims that the statement to his agent by Garessi and the statement of Fischer to his attorney amounted to a denial of liability by the company, hence a waiver of proof of loss, and the trial judge so held. But waiver, in order to bind the company, must be by the company through its officers or agents acting within the sphere of their authority. If the agents who attempt to speak for the company bear no authority from the company, either express or implied or by holding out, their acts beyond their authority do not bind the company. That the general rules of agency apply to insurance cases has been pointed out by this court on numerous occasions. We pass without comment the fact that the talk with Fischer did not occur until several months after the date fixed in the policy for filing proofs of loss. Fischer was the local agent and Garessi was one of his employees. Neither of them so far as this record discloses had authority either general or special to adjust losses.
The holding of the learned trial judge that the local agent of an insurance company who has authority to solicit business, write and issue policies and collect premiums, may for his company waive the clauses of the policy above quoted, is in conflict with at least two cases in this court. The equities of the plaintiff in the case of Barry & Finan Lumber Co. v. Insurance Co., 136 Mich. 42, were there noted; they were much stronger than in the instant case. In that case the local agents had stated that they were authorized to adjust the loss, but this court recognizing the well settled rule that an agent's authority may not be proven by his statements held that authority to adjust the loss had not been established, and held (we quote from the syllabus):
"The statements and acts of a local agent of a fire insurance company, authorized to receive proposals for insurance and countersign and deliver policies, cannot be received to show that he was authorized to adjust losses for the company, or had power to waive a provision of the policy requiring action to be commenced within 12 months from the time of the loss."
Mr. Justice Hooker, who wrote for the court, reviewed the authorities at length. This case was followed in Fisk v. Insurance Co., 198 Mich. 270. These two cases must be taken as settling that authority of a local agent to solicit business, write and issue policies of insurance and collect premiums, does not carry with, it authority to adjust the loss. The authorities relied upon by plaintiff are not to the contrary. Plaintiff's counsel cited upon this branch of the case the following: Improved Match Co. v. Insurance Co., 122 Mich. 256; O'Brien v. Insurance Co., 52 Mich. 131; Young v. Insurance Co., 92 Mich. 68; Morgan v. Insurance Co., 130 Mich. 427; Bird v. Insurance Co., 218 Mich. 266; Fisk v. Insurance Co., 192 Mich. 243; Popa v. Insurance Co., 192 Mich. 237; Johnson v. Insurance. Co., 224 Mich. 493. An examination of these cases discloses that they do not present the question now before us. In the Match Company and Johnson Cases, the denial of liability was by the company itself. In all the other cases, six in number, the waiver was by the adjuster of the company. Manifestly an agent authorized to adjust the loss carries not only the authority to adjust the amount to be paid but also carries as a part of and incidental to such power the authority to refuse any payment at all, to deny liability. His denial of liability is the denial of liability for his principal and waives proof of loss. But a local agent, authorized only to write insurance, having, no authority to adjust the loss, does not carry with him the power incidental to and a part of the authority to adjust. Having this in mind, it will be seen that our holdings are in no way inconsistent.
As the material facts are not in dispute and a new trial would be of no avail to plaintiff, one will not be granted.
Judgment reversed.
Clark, Sharpe, Steere, and Wiest, JJ., concurred with Fellows, J.