Case Name: Insurance Company v. Williams
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1883-01
Citations: 39 Ohio St. 584
Docket Number: 
Parties: Insurance Company v. Williams.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 39
Pages: 584–589

Head Matter:
Insurance Company v. Williams.
A soliciting agent, procuring for an insurance company risks and applications on which policies are issued, who fills up the application, is, in so doing, the agent of the company, and not of the insured; and if the agent make a mistake in wrongly stating facts which were correctly given him by the insured in preparing the application, the company is bound by and responsible for such mistake.
Error to tlic District Court of Allen county.
In December, 1876, at Allen county, Williams made application in writing to the Farmers’ Insurance Company (a stock company), for insurance upon his dwelling-house, household furniture and clothing therein, and received a policy of insurance thereon from the company. The application and policy constituted the contract.
The application was made upon the solicitation of, and written by, Kemer, the company’s agent, whose duties, powers and authority wore confined and restricted to soliciting risks for the company, receiving applications therefor, and forwarding the same to the comjiany, and collecting premiums upon policies issued. To enable the agent to prepare it, Williams gave him a faithful and true statement of the conditions and surroundings of the property; and among other things, that the flue in the kitchen part of the house was an iron stovepipe, and passed up through the roof of the kitchen, and was in good condition, and he directed the agent to state the same in the application ; but the agent, by mistake, and without the knowledge, of Williams, stated in the application that the flue was made of brick. In ignorance of this mistake and believing the application contained the statement that the flue was iron stovepipe, which was the intention and contract of said parties, Williams signed the application without reading it or hearing it read, but without fraud or falsehood on his part, and delivered it to the agent to be sent to the company for its action.
In the application Williams covenanted and agreed with the company that the statements and representations contained therein were a just, full and true exposition of all the facts and circumstances in regard to the condition, value and risk of the property, and agreed to keep the flue in good condition. The soliciting agent sent the application to another agent of the company, and this last agent sent it to the company for action thereon. The policy was issued and sent to Williams, witliout knowledge of the mistake coming to the last mentioned agent or to the officers of the company ; and the premium was paid.
April 12, 1877, the property (which was of greater value than the insurance thereon) was consumed by fire -which did not originate with said flue, of all which the company had due and legal notice and proof. The risk of the property by reason of the flue being of iron stovepipe, was very much increased from what it would have been had it being made of brick.
Payment of loss was refused by the company, and Williams brought suit in the court of common pleas of Allen county, praying that the application and contract by and between the parties might be reformed, and the mistakes therein corrected ; that the actual representations made be inserted in the application and held to be a part of the contract of insurance; and that he have judgment for the amount of his loss insured.
Trial was had and the prayer of the petition was granted, and the cause appealed to the district court of Allen county.
On the trial in the district court on the above as “ agreed facts ” in the case, it was adjudged and decreed by the court that the application be reformed. That the representation therein contained shall read : “ That the flue for the escape of the smoke in the kitchen was made of iron, commonly called stovepipe, and that the stovepipe passed out through the roof of the kitchen,” in accordance with the actual contract of the plaintiff and defendant, and that plaintiff has ever since main-' tained the same in as good and like condition as the same was at the time of making the application by the plaintiff and the issuing of the policy by the defendant, and thereupon rendered, judgment for Williams against the Farmers’ Insurance Company for the amount of the loss insured, as-prayed for by Williams.
This case is in this court on alleged errors of the district court in rendering the decree and judgment.
Critchfield <& Graham, for plaintiff in error:
1. This was an action for equitable relief in the reformation of a contract and specific performance. Courts of equity will relieve a party from the consequences of fraud, but will not permit him to set up a contract into which the other party never entered.
2. It is not claimed that the agent acted fraudulently, or that he misled the defendant by concealing the error from him, or that he induced him to forego reading it or having the application read to him. He signed the proposal knowing that it was to be sent to the company for others than the agent to pass upon. It was his duty, therefore, to use that diligence that careful and prudent men exercise in matters of such importance, and see to it that his application, when signed, contained nothing but what was true, and fairly representing the facts so far as they affected the risk.
Omitting to do this, lie was equally responsible with the agent for the mistake, and equity will not relieve him from his own carelessness. When the duty of the agent is restricted to soliciting risks, receiving applications therefor, and forwarding them to the company, and the applicant signs his projDosal without reading it, and the comjmny issues the policy upon the faith of the representations contained in his proposal, without notice of any mistake, or that the risk is other than that described, in the absence of fraud, the assured will be held to the contractas evidenced by the policy and application, and courts of equity will not relieve him from the consequences of any mistake for which he is in whole or in part responsible, nor require the company to perform a contract it never made. Wood on Ins. 805-808; Fowler v. Scottish Equitable Life Ass. Co., 28 L. J. Ch. 225; s. c., 4 Jur. (N. S.) 1, 69; Guernsey v. Am. Ins. Co., 17 Minn. 104; Ryan v. World Life Ins. Co., 41 Conn. 178; Cooper v. Farmers' Ins. Co., Cent. L. J. for the year 1879, p. 416; American Ins. Co. v. Gilbert, 27 Mich. 431; Cooper v. Farmers' Co., 50 Pa. St. 299; Smith v. Ins. Co., 12 Harris 320; Patterson v. Ben. Franklin Ins. Co., 81 Pa. St. 454; State Ins. Co. v. Arther, 30 Pa. St. 315; Lowell v. Middlesex Ins. Co., 8 Cush. 127; Lee v. Howard Ins. Co., Gray, 538; Richardson v. Maine Ins. Co., 45 Me. 344; Goddard v. Monitor Ins. Co., 108 Mass.; McCoy v. Metropolitan Life Ins. Co., 133 Mass.; Ayers v. Hartford Ins. Co., 17 Iowa, 176; Ætna Ins. Co. v. Cox, 29 Inch 468; Chatterton v. Canadian Ins. Co., 26 U. S. (C. P.) 450; Brice v. Lorillard Ins. Co., 55 N. Y. 240; Mead v. Westchester Ins. Co., 64 N. Y. 458; Fellowes v. Madison Ins. Co., 2 Dis. 128; Elster v. Cin. Eq. Ins. Co., 1 Dis. 412; Lydan v. Columbus Ins. Co., 18 Ohio, 459; Dayton Ins. Co. v. Kelley, 24 Ohio St. 345; State Ins. Co. v. Tates, 28 Gratt. 585; Mitchell v. Lycoming Ins. Co., 51 Pa. St. 21; Franklin Ins. Co. v. Martin, 40 N. J. L. 568.
Theo. D. Robb, for defendant in error:
Agents of insurance companies, in soliciting insurance, who undertake to prepare the application for the insured, are held to be the agent of the insurance company, in so doing, and not of the insured. See Insurance Co. v. Wilkinson, 13 Wallace, 222; Union Ins. Co. v. McGookey, 33 Ohio St. 555; Columbia Ins. Co. v. Cooper, 50 Pa. St. 340; Beebe v. Hartford Mut. Ins. Co., 25 Conn. 51; Woodbury Saving Bank v. Charter Oak Ins. Co., 31 Conn. 528; Ins. Co. v. Mahone, 21 Wallace, 152; Peoria M. F. Ins. Co. v. Hall, 12 Mich. 202; Miner v. Phoenix Ins. Co., 27 Wis. 700, and authorities there cited; McBride v. Republic Ins. Co., 30 Wis. 567; Hough v. City Fire Ins. Co., 29 Conn. 22; Planters’ Ins. Co. v. Sorrels, 1 Baxter, 352, see 235 Am. R. 781; Howard Ins. Co. v. Brunner, 23 Penn. St. 57; Mass. Life Ins. Co. v. Eshelman, 30 Ohio St. 647; Malleable Iron W'ks v. Phoenix Ins. Co., 25 Conn. 465; Beebe v. Hartford Mutual Ins. Co., 25 Conn. 51; Woodbury Savings Bank v. Charter Oak Ins. Co., 31 Conn. 519; Commercial Ins. Co. v. Spanknable, 52 Ill. 53; Keeth v. Globe Ins. Co., 52 Ill. 518; Rowley v. Empire Ins. Co., 36 N. Y. 550; Combs v. Hannibal Ins. Co., 43 Mo. 148; Ayers v. Home Ins. Co., 21 Iowa, 185; Ins. Co. v. Throop, 22 Mich. 146; Kelly v. Ins. Co., 3 Wis. 254; May v. Buckeye Ins. Co., 25 Wis. 291; Columbia Ins. Co. v. Cooper, 50 Pa. 331; N. E Ins. Co. v. Schetteler, 38 Ill. 166; Molier v. Penn. Fire Ins. Co., 5 Rawle (Penn.) 342; Eames v. Ins. Co., 94 U. S. 184; Gerhauser v. North British Merchants' Ins. Co., 7 Nev. 15; Wood on Ins. 624-5.

Opinion:
Follett, J.
Did the district court commit error % This depends upon whether or not Kcmer, in writing the application, did it as agent of the insurance company, and if he did, was the insurance company responsible for the mistake ? For if these two questions are answered in the affirmative, it is not contended that there was error, and Williams would be entitled to the decree and judgment; and if either one is answered in the negative, there was error.
The agent had power to solicit risks for the company, receive applications therefor, and forward the same to the company. It is a general rule that when a power is conferred upon an agent, he has by implication such incidental authority as is necessary to carry his power into effect; and a principal is liable for the wrongful acts of his agent acting within his employment. The principal caiinot take the benefit of the agent's acts, and avoid their burdens. So complete is the identification of principal and agent, that notice to an agent on the subject of his employment is legally notice to the principal, although it be not in fact communicated to the principal.
Applying these principles to this case, there was no error in the district court. And we are sustained in this view by the weight of modern authority.
In Woodberry Savings Bank and Building Association v. The Charter Oak Fire and Marine Ins. Co., 31 Conn. 517, the supreme court of error say, " It is the settled policy of our law to treat local agents of insurance companies, who arc authorized to procure and forward applications for insurance, as the agents of the companies, and not of the applicants, in any mistakes of the application made by them or by the applicant under their direction." In Combs v. Savings and Ins. Co., 43 Mo. 149, the supreme court say, " The authority of the soliciting agent of an insurance company to take applications for insurance carries with it the legal implication of authority to fill up the application, and do all those things which may be needful in perfecting it." That was a case sought to be defeated on the ground of false representations and warranties in the application. Here the agent wrote the application, and was given a correct description and told to write it in the application, and by mistake did not do it.
In Rowley v. Empire Ins. Co., 36 N. Y. 550, the court of appeals say: " An agent, authorized to take applications for insurance, should be deemed to be acting within the scope of his authority, where he fills up the blank application of insurance ; and if, by his fault or negligence, it contains a material misstatement not authorized by the instructions of the party who signs it, the wrong should be imputed to the company, and not to the assured." And this principle is the'settled law in the state of New York. See Baker v. Home Life Ins. Co., 64 N. Y. 648, 650; Pitney v. Glen's Falls Ins. Co., 65 N. Y. 23; Mowry v. Rosendale, 74 N. Y. 363; Flynn v. Equitable Life Ins. Co., 78 N. Y. 577. Also in Insurance Co. v. Wilkinson, 13 'Wallace, 223, the supremo court of the United States say: " lienee, when these agents, in soliciting insurance, undertake to prepare the application of the insured," . . . . " they will be regarded, in doing so, as the agents of the insurance companies, and not of the insured." And this case is approved in Ins. Co. v. Mahone, 21 Wall. 152, and N. J. Mut. Life Ins. Co. v. Baker, 94 U. S. 610. In Massachusetts Life Ins. Co. v. Eshelman, 30 Ohio St. 647, the supreme court commission say: "A sub-agent of a life insurance company appointed to represent it in a particular branch of its business, becomes, in reference thereto, the direct representative of the company, and notice of a fact to him will operate as notice to the company, and it will be bound by acts done by him in respect to that branch of its business intrusted to him."
As showing this to be the policy of our law, we now have a statute going much beyond this case, passed March 5,1879, and is now section 3644 of Rev. Stats, reading: " A person who solicits insurance and procures the application therefor, shall be held to be the agent of the party hereafter issuing a policy upon such application or a renewal thereof, any thing in the application or policy to the contrary notwithstanding."
The district court was fully justified in its decree and judgment, and in holding the insurance company to the correct facts of the application and the actual contract made.
Judgment affirmed.