Case Name: James H. Ruggles, Resp't, v. The American Central Insurance Company, App'lt
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1889-06-04
Citations: 23 N.Y. St. Rep. 847
Docket Number: 
Parties: James H. Ruggles, Resp’t, v. The American Central Insurance Company, App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 23
Pages: 847–851

Head Matter:
James H. Ruggles, Resp’t, v. The American Central Insurance Company, App’lt.
(Court of Appeals, Second Division,
Filed June 4, 1889.)
1. Principal and agent—When principals bound by act of general AGENT CONTRARY TO SPECIAL INSTRUCTIONS.
A general agent may bind his principals by acts within the scope of his authority, although it may be contrary to his special instructions.
2. Same—Insurance (fire)—Manner of conducting business—Effects of.
The manner of conducting the business of insurance is so well known that persons may reasonably assume, that one having the apparent power of a general agent is not limited by his instructions as to class of risk he may insure. Persons dealing with agents in good faith have the right to assume that they possess the powers usually exercised by that class of officers, and unless the limitation on their authority is brought to their knowledge, the contract made with them will be binding upon the company. This rule applies to corporations organized under the laws of other states and having their general officers in those states, who do business in this state through agents.
3. When appointed general agents.
S. and H. having applied to the defendant to act as its general agents in and for the city of Brooklyn, received from an agent of that company a letter containing the following: “ If your appointment is confirmed, your jurisdiction will be the city of Brooklyn outside the shore line, but we shall 'expect you to write no large risk for us until you know for certain that we are notin through our New York office. As we are now on all Brooklyn specials of any size that we will write, please do not undertake to write any specials for us at present,” and a few days later they received a letter from the secretary of the company, which states: “We take very great pleasure in forwarding to your address by mail to-day a commission of authority, as agents of this company, in the city of Brooklyn. We deem it unnecessary to enter into any detailed instructions as to the conduct of our business at your agency, as our Mr V. has written you upon that subject.” Held, that H. and S. were general agents authorized to take special risks within the shore line in the city of Brooklyn,
Appeal from a judgment of the supreme court, general term, second department, affirming a judgment in favor of the plaintiff, entered upon the verdict of a jury.
J. Stewart Boss, for appl’t; A. C. Aubery, for resp’t.
Affirming 1 N. Y. State Rep , 572,

Opinion:
Brown, J.
The court properly submitted to the consideration of the jury the question whether there was a binding agreement for insurance, between the plaintiff's broker and the firm of Sedgwick and Hammond.
The testimony of the witness, Barker, was positive, that the agreement was full and complete. Written application for the insurance, specific in all its details, had been filed with Sedgwick and Hammond, and the premium upon the risk was agreed upon, and there was evidence that the usage of the business was to extend a credit to the broker for the premium, until the end of the month. As to the oral agreement, the evidence of this witness was, that after Hammond had shown to him the letter from the company appointing his firm agents, and had stated'that he "would bind the-risk provided the company was not on," he said to Hammond, "it is understood that the policy is binding, provided the company is not on the risk," and Hammond replied "Yes." Asked, "when it was binding from?" He answered, "from the sixteenth, from that time, from that conversation."
If this evidence was to be credited, it justified the inference of a complete binding agreement from the date of the conversation. It was for the jury to draw the inference, and such a contract, if made, was á valid agreement for insurance, upon which a recovery could be had. Ellis v. The Albany Ins. Co., 50 N. Y., 403.
A more serious question is presented as to whether the-agreement thus made was binding upon the company.
At the close of the testimony, the counsel for the defendant asked the court to dismiss the complaint upon the ground that it appeared that the letter appointing Sedgwick and Hammond agents for the defendant, limited them against insuring special risks, and risks within what was called " the shore line," which motion was denied, and to-such denial defendant excepted.
The court was also asked tv charge the jury, that the-plaintiff's premises were within the shore line, and, also, if the jury should find that the risk was a special risk, that the agents had no authority to bind the defendant, and it was not liable.
Both requests were refused, and defendant excepted to-each refusal.
The location of the "shoreline" was a disputed fact on the evidence.
By the map called "Higginson's Map," the plaintiff's-property was within the line. According to the location of' the line by other witnesses, it was not. The determination of this fact, if it was a material one, was properly left to the jury. No question can arise on this appeal upon that, branch of the case.
The request to charge that if the jury should determine that the risk was special, the defendant was not liable, raised no other or different question than that presented by the motion to dismiss the complaint, as the risk was conceded to have been a special one, and the jury would have-been bound so to find. The request was, therefore, equivalent to asking for a direction of a verdict for defendant.
The point of the appellant's contention was that the-court should have decided, upon the letter which contained the agents' delegation of authority, that they possessed no power to bind the defendant upon a special risk, and this-question is the most serious one presented, upon this-appeal.
It may be conceded that the commission of authority had not, at the time of making the agreement, reached the agents. It had, however, been mailed from St. Louis, as the letter of the secretary of the company, dated October thirteenth, refers to it as having been forwarded by mail on that day.
It may also be conceded that it did not reach the agents, until October twentieth, the day after the fire, as Hammond, in his letter to the plaintiff, under date of October twenty-first, speaks of the agents' not having power to bind the company "until yesterday," and Sedgwick testified that the two letters introduced in evidence were the only communications they had received from the company with reference to their acting as agents, prior to the fire, which occurred on October nineteenth.
The evidence upon the question of power is, therefore, to be found entirely in the two letters last mentioned.
The first of these letters bears date, October eleventh, and was written to Sedgwick & Hammond, by Mr. VanValkenburgh, a general agent of the company. In it he says " if your appointment is confirmed, your jurisdiction will be the city of Brooklyn outside the shore line, but we shall expect you to write no large risks for us until you know for certain that we are not in through our Hew York office. As we are now on all Brooklyn specials of any size that we will write, please do not undertake to write any specials for us at present."
The second letter was written by the secretary of the company, from St._ Louis, dated October thirteenth, and addressed to Sedgwick & Hammond. It states: "We take very great pleasure in forwarding to your address, by mail, to day, a commission of authority as agents of this company in the city of Brooklyn. We deem it unnecessary to-enter into any detailed instructions as to the conduct of our business at your agency, as our Mr. Van Valkenburgh has written you upon that subject, etc."
Whatever authority the agents had, they derived from these letters. The risk was a special one, and so admitted by the plaintiff upon the trial.
Was authority to insure such a risk withheld from the agents ? We do not so interpret the letters. It is true that Van Valkenburgh wrote that the agents should not write any large risks until they knew that the company was not on through their Hew York office, and should not undertake to write any specials for the company, but this limited authority is not confirmed in the letter from the company.
In that letter the authority is broadly stated to be "agents of the company in the city of Brooklyn." There was no-exception in the territory named, nor limitation as to the character of the risks to be insured. The other expression in the letter that "we deem it unnecessary to enter into any detailed instructions as to the conduct of our business at jour agency as our Mr. Valkenburgh has written' you upon that subject" does not in anj waj limit the agents' power. Its plain reference is to the manner of conducting the business, and not to the authoritj to be exercised by the agent. That this view is the one entertained by the agent is plain from Hammond's letter to the plaintiff under date of October twenty-first, in which he places his denial of the existence of an agreement to insure, on the fact that they had not at the date of the alleged agreement received their commission of authority, and not at all upon the ground that such a contract was in excess of their power.
We think, therefore, that the letter of October thirteenth, fairly interpreted, constituted Sedgwick & Hammond general agents' of the company, and that the utmost that could be claimed from the direction contained in Van Valkenburgh's letter, which I have quoted, was that they were instructions for the guidance of the agent, which would, in no way, affect contracts with third parties having no notice or knowledge of such instructions.
A general agent may bind his principals by an act within the scope of his authority although it may be contrary to his special instructions. Story's Agency, § 133; Walsh v. Hartford Fire Ins. Co., 73 N. Y., 5; Lightbody v. North American Ins. Co., 23 Wend., 18; Angell v. Hartford Fire Ins. Co., 59 N. Y., 171.
In Walsh v. Hartford Fire Ins. Co., the rule is stated as follows: "A restriction upon the power of an agent not known to persons dealing with him, limiting the usual powers possessed by agents of the same character, would not exempt the principal from responsibility for his acts and contracts which were within the ordinary scope of the business entrusted to him, although he acted in violation of special instruction."
Lightbody v. North American Ins. Co., was a case very similar to the case under consideration, The_ plaintiff owned property in Utica, upon which he procured insurance in the defendant company, by paroi agreement with an agent in Troy, whose authority was limited to " Troy and vicinity," and who was denied the power to insure special risks. The plaintiff's property was a special risk. The supreme court held the agreement to be binding on the defendant, Brunson, J., saying: "Although he" (the agent), " must answer to his principals for departing from their private instructions, he clearly bound them so far as third persons dealing with him in good faith are concerned."
The manner of conducting the business of insurance is so well known that a person may reasonably assume that one having the apparent power of a general agent is not limited by his instructions as to the class of risks he may insure. Corporations organized under the laws of other states, and having their general officers in those states, do business in this state through agents who are entrusted with policies signed by the officers of the company, and which become binding contracts upon the endorsement of the agent. Such agents have power to make original contracts of insurance, and this mode of conducting the business is so well established that it has become a part of the common knowledge of the community, and judicial notice must be taken of it. Ellis v. Albany Fire Ins. Co., 50 N. Y., 406-7.
Persons dealing with such agents in good faith have the right to assume that they possess the power usually exercised by that class of officers, and, unless the limitation on their authority is brought to their knowledge, the contracts-made with them will be binding upon the company. Walsh v. Hartford Ins. Co., supra.
There was nothing in the transaction between Barker and Hammond, as shown by the evidence, from which the court could assume that Barker had any notice of any limitation on the agent's power.
At the time of making the agreement, Hammond showed him a letter from the company, and it having been proven by Sedgwick that prior to the fire but one letter from the company was received, it must be assumed that the letter shown was that of October 13 th. As I have already shown, this letter constituted Sedgwick & Hammond the general agents for the city of Brooklyn, and no one in reading it could have supposed that by the reference to the Van Valkenburgh letter, the company intended to place any limitation upon the agents' power, but that the direction contained therein related to the manner of conducting the company's business at the agency.
We think the contract made with Hammond was, therefore, binding upon the company.
There being no other question in the case requiring discussion, the judgment must be affirmed, with costs.
All concur.