Court Opinion

ID: 9831876
Source: CourtListenerOpinion
Date Created: 2023-09-01 21:26:54.445917+00
Date Added: 2024-06-11T07:43:38.774200
License: Public Domain

On Motion for Rehearing.
[2] It is for the court, and not for the parties, to construe the meaning of the language used by them in making a contract. Such being the case, and there being no dispute as to the language used by the parties, we held on a former day of this term that the insurance agents were not authorized to cancel the binder in the North British & Mercantile Company, and substitute therefor a binder in plaintiff in error company. But the ordinary meaning of language may be’ varied by the general usage in a particular business. On motion for rehearing our attention has been called for the first time to the testimony of Mr. Friedlander, one of the insurance agents, who testified that in making such cancellation and substitution he “followed the custom of .all insurance offices.” If such is the fact, and it was not contradicted, the testimony of Friedlander *463and of Dalton that the agents were authorized to do as they did takes on a different aspect, and amounts to an explanation of the meaning of the language used as interpreted by the general custom in such cases. Every one is presumed to be acquainted with the general custom of the business in which he engages, and to intend that his language shall be construed in reference thereto. If the request of defendant in error to the agents to keep him protected authorized them under the general usage in fire insurance to cancel the binder in the North British & Mercantile Company, under the circumstances shown herein, and to substitute therefor the hinder in the plaintiff in error company, the judgment of the trial court should be affirmed. The jury so found, and the evidence supports their verdict.
[3] We adhere to so much of our former opinion herein as holds that, if the agents were not authorized to effect the insurance sued upon, the same could not be made effective by being ratified by the insured after the fire. A seemingly contrary doctrine is announced by most of the text-writers on insurance, and by a number of eases cited by able counsel for plaintiff in error. Practically all of these writers and opinions hark back to Lucena v. Crawford, 1 Tant. 325; Routh v. Thompson, 13 East. 274; and Hagedorn v. Oliverson, 2 M. & S. 485. Perhaps sufficient attention has not been paid to the fact that these policies were marine insurance, in which property may be insured “lost or not lost”; that a wager policy was valid at common law; and that the policies in those cases were not invalidated by the statute then in force in England. But, aside from this, an examination of those cases will show that they are not authority for the proposition that,, where one, without authority, insures property in the name of the owner, such insurance will be valid, and may be enforced by the owner, if ratified by him after the loss. In neither of said cases did any one take out a policy in the name of the owner, and no suit was brought in the name of the owner. On the contrary, in each of said cases the party effecting the insurance had at such times an insurable interest in the property, and took out the policy and brought suit thereon in his own name. It is true that in each case the insurance was for the benefit of all other persons as their interest might appear. The position of the insured was analogous to that of a warehouseman who takes out a policy on goods stored or to be stored in hi? warehouse owned by him or held in trust, or sold and not removed. In such case he may recover the full value of the goods. In order for the owner or owners to participate in such recovery, or share in the benefits thereof, he must show that he ratified such insurance; but it is immaterial whether the ratification in such case was before or after the loss. By • the terms of the policy, the insured' is trustee for the owners, or whoever may become an owner; and, being the agent of the owner of the property in possession thereof and charged with the duty of preserving the same, he may insure it in his own name, and such insurance will inure to the benefit of the owner, not from the time that he may ratify such insurance, but from the time such insurance is effected until he repudiates the same. It is not a case of ratifying an unauthorized act of one falsely assuming to act as agent, but is the acceptance or rejection of an option granted him by the insurance company, for a valid consideration, at the time the policy was issued, with a knowledge of the facts as evidenced on the face of the policy. As to insurance by ware-housemen, see Waters v. Assurance Society, 5 E. & B. 870; Miltenberger v. Beacom, 9 Pa. 198; Durand v. Thoron, 1 Port. (Ala.) 238; Watkins v. Durand, 1 Port. (Ala.) 251; Waring v. Insurance Co., 45 N. Y. 606, 6 Am. Rep. 146; Pittman v. Harris, 24 Tex. Civ. App. 503, 59 S. W. 1121; Storage Co. v. Dechman, 73 S. W. 545. A like rule for a like reason applies where a part owner insures for himself and his co-owner (Finney v. Insurance Co., 5 Metc. [Mass.] 192,38 Am. Dec. 397), or where one of several joint trustees insures in his own name (Insurance Co. v. Chase, 72 U. S. [5 Wall.] 509, 18 L. Ed. 524).
In Lucena v. Crawford, supra, the insurance was on certain captured ships, and was taken out by the commissioners appointed to take charge of and sell the same. They were instructed by the Lord of the Treasury to take out such insurance on the day it was taken out, and before the loss occurred. In Routh v. Thompson, supra, the insurance was likewise on a captured ship, taken out by the agent of the captors for the benefit of whomsoever might ultimately appear to be interested. In both cases the King was adjudged to be the owner, and the party to whose benefit the insurance inured, if he chose to adopt the same. The formal adoption by order of the Council in the latter case occurred June 30, 1810; the loss occurred in December, 1807. In this case Lord Ellenbor-ough, C. J., said:
“The insurance was effective by order of his [the King’s] officers whose duty it was to take care of the property, and who were responsible to him for i£”
In Hagedorn v. Oliverson, supra, license had been granted to Hagedorn to sail the ship. He was in the constructive possession of the same and had an insurable interest therein. He insured the ship “as well in his own name as in the name of all and every person to whom the same doth or may appertain.” He brought suit in his own name, and alleged that one Schroeder was part owner. No previous authority to insure for Schroeder was alleged, and no ratification was shown, except by a letter written by Schroeder two years after the loss, giving instruc-*464Rons as to how to invest the insurance money when collected. It was argued that the plaintiff ought not to recover for the benefit of Schroeder, inasmuch as he did not ratify the action of Hagedorn before the loss, and might have repudiated the same. Lord El-lenborough said -that this would be true if the suit had been by Hagedorn against Schroeder to collect the premium. Of course, as Schroeder did not authorize Hagedorn to insure the vessel, if it had arrived safely he might have repudiated the transaction, and he could not be held liable for the premium until he ratified the transaction which he could have done as between him and Hage-dorn after the loss.
“But,” said Lord Ellenborough, “I do not think that consideration governs the case now before us between this plaintiff and the underwriter.”
Le Blanc, J., said:
“This, it must be remembered, is a question between the plaintiff and the underwriter, and not Schroeder and the underwriter.”
This distinction a majority of the authors of text-books on Insurance, and courts not a few have evidently overlooked.
The distinction seems to us to be this: If Hagedorn had sued Schroeder to recover the premium advanced on his behalf, he could have replied:
“I never promised, expressly or by implication, to repay you such premium. You advanced it without my. authority, and I have not ratified your action.”
But when Hagedorn sued the underwriters he was asking only that the written contract between them be enforced. He paid the premium ; they agreed to pay him in the event of loss to the extent of the interest of those for whose benefit such insurance was effected, who were the then owners or who might thereafter become owners. He became the trustee for such owners as ratified his action, and was entitled to recover in his own name to that extent. It was no conpern of the underwriters whéther the owner or part owner ratified such insurance before the loss or afterwards. If the party procuring such insurance had the right to do so in his own name, the contract was closed when he paid the premium and received the policy, and did not need any subsequent ratification to make the same a legal contract. The party advancing the premium could not recover the same back in case of repudiation by the own.er, and neither could the underwriter cancel such policy in the event of such repudiation. That it was a completed contract, and not dependent upon the ratification of the owner to legalize it, was emphasized by the judges participating in the decision of Hagedorn v. Oliverson, supra. Le Blanc, J., said:
“ * * * The plaintiff was bound by the insurance, and could not have recovered back the premium.”
Bailey, J., said:
“A loss has happened upon which the defendant undertook to pay, and^ if the premium could not have been recovered ■ back from the defendant, there is not any circumstance here which should exonerate him from liability. I think the plaintiff never could have recovered back the premium from the underwriter.”
The reason given by these judges as to why the premium could not have been recovered back was the uncertainty whether Schroeder would adopt the insurance. If no risk is incurred, the premium may be recovered back, but, once the risk is incurred, the premium cannot be recovered back. Where the party effecting the insurance has an insurable interest, as in the three English cases supra, and in the warehouse cases above cited, a legal contract exists from the moment the insurance is effected and the risk of being liable to pay the insured to the extent of the interest of the owners who may ratify such transaction exists from that time until he or they shall repudiate the same. On the other hand, where one without authority assumes to act as the agent of another, no risk is incurred until the party for whose benefit such insurance was obtained shall have ratified the transaction.
It is urged that the contract of insurance effected by one assuming to act as agent, but without authority to do so, is valid if ratified after the loss, upon the principle that ratification relates back to the inception of the transaction. This is true where the contract attempted to be ratified is one that could legally have been made at the time of such attempted ratification, but not otherwise, for the reason that in such case there is no contract until ratification. The contract being then made by fiction of law, it is held to relate back to the time when it was attempted to be made by one without authority so to do. Under no definition of a contract known to the law could a contract be said to have been made until the minds of both parties have assented thereto. But a party, having accepted the benefit of á contract attempted to have been made for him, by ratifying same, must accept it as a whole, which includes its acceptance as of the date it was attempted to have been made. In the instant case, if the agents were without authority to insure the property of defendant in error, there was no contract of insurance with plaintiff in error until after the fire, and, the property being then nonexistent, no contract for its insurance could be made. If Dalton could not have made any contract for the insurance of the property after the fire, it follows that he could not then make one that would relate back to a time prior to thq fire.
In addition to the cases above referred to where the insurance was effected by a warehouseman, co-owner, or trustee in his own name for the benefit of all parties in interest, the following cases, cited by defendant in error, are not authority for the proposition that the owner of property may recover on a policy taken out in his name without his authority and of which .he had no knowledge *465until after the destruction of the property:
In Larson v. Insurance Co., 208 Ill. 166, 70 N. E. 31, Arnfeld v. Assurance Co., 172 Pa. 605, 34 Atl. 580, and Finley v. Insurance Co. (C. C.) 193 Fed. 195, plaintiffs had accepted the insurance money under the substitute policies, and it was held that they could not thereafter recover on the canceled- policy, upon the ground that the agent was without authority to make such substitution. Having received the benefit of the second policy, the insured was estopped to deny its authenticity. In Arnfeld v. Insurance Co., supra, the court likened insurance to a surety on a note, and said that no one should be permitted to recover twice for the same debt, however many instruments of indemnity he may hold.
In Dibble v. Assurance Co., 70 Mich. 1, 37 N. W. 704, 14 Am. St. Rep. 470, in White v. Insurance Co. (C. C.) 93 Fed. 161, in Todd v. Insurance Co., 2 Ga. App. 789, 59 S. E. 94, and in White v. Insurance Co., 103 Fed. 260, 43 C. C. A. 216, the issue was not ratification, but the original authority of the agent. Neither was ratification in the sense in which we are here discussing it, involved in Arnold v. Insurance Co., 106 Tenn. 529, 61 S. W. 1032. There the plaintiff had requested a friend to obtain insurance for him. The policy thus obtained contained a clause that, if additional insurance was procured, it would void the policy. The owner, in ignoranee of the fact that his friend had insured the property for him, took out another policy on the property. In a suit upon the policy procured by the friend it was held that the additional insurance defeated recovery.
In Insurance Co. v. Smithfield, 49 S. W. 412, there was no lack of authority on the part of the mayor to procure the insurance, but, as he was also the agent of the company, it was sought to avoid the policy on the ground of dual agency. Such fact being known to both parties, it wag held that they were deemed to have ratified his acting in such dual capacity. The policy was not void on that account but at most was only voidable.
For the reason that the jury found that the insurance agents, were authorized to cancel the binder in the North ' British & Mercantile Company, and to bind the plaintiff in error in lieu thereof, and that such finding is sustained by the evidence, the motion for rehearing herein is granted, our former judgment herein is set aside, and the judgment of the trial court is affirmed.
Motion granted. Judgment affirmed. ■
On Motion for Rehearing of -Plaintiff in Error.
[4] This case was not submitted to the jury on special issues. The issue as to the general custom of insurance agents under •the facts as testified to by defendant in error and the insurance agent was not submitted in the charge of the court. The testimony as to such custom, though uncontra-dicted and not objected to, was not in response to the question asked. No reference to such custom was made in the pleadings, and it does not appear to have received any consideration in the trial of the case, nor in the original briefs of the parties hereto. For these reasons, we have concluded that this case should be reversed and remanded, in order that the jury might specially pass upon this issue.
The motion of plaintiff in error for a rehearing is accordingly granted, and the case is reversed and remanded for a new trial in accordance with our opinions herein.
Reversed and remanded.