Court Opinion

ID: 3493066
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:01:15.240639+00
Date Added: 2024-06-11T14:05:09.441412
License: Public Domain

Plaintiff, engaged in operating commercial motor trucks on and over the streets and public highways of the State and elsewhere, obtained, to be issued by defendant, a policy of insurance in the sum of $3,000 covering cargoes while being transported in or on a particular specified truck. The policy contained a clause that if it was procured from the insurer by any person, firm, or corporation other than the insured, then the person procuring the policy should be deemed the agent of the assured. The policy was procured by plaintiff through the Schwahn-Khuen insurance agency of Saginaw, Michigan, agents of the defendant insurance company, licensed by the State, at defendant's request, without limitation of authority expressed in the requisition therefor, or the license granted. The policy specified a G. M. C. three and one-half ton truck, model of 1922, motor No. 14965. This truck broke down while in service and the load was transferred to a Union truck. The proof is undisputed that the plaintiff notified the employees of the Schwahn-Khuen agency of the facts, and asked for a transfer of the policy to the Union truck. There was evidence that subsequently Mr. Schwahn, of the Schwahn-Khuen agency, told plaintiff the transfer had been taken care of. A loss of cargo occurred by the burning of the Union truck while on the public highway. The Schwahn-Khuen agency was notified of the loss and they notified Osborn  Lange, general insurance agents of the defendant at Chicago, who replied the investigation had developed that the loss occurred on a truck not covered by the policy, and consequently the claim was one for which the company was not liable. Suit was instituted by plaintiff against defendant to recover on the policy. Defendant pleaded the general issue, and *Page 386 
gave notice that the policy covered the goods only when on a particularly specified truck; that the policy had been varied without the written consent of the insurer indorsed thereon; that the policy provided that if it was procured by any other person, firm, or corporation than the insured, such person so procuring the policy should be deemed the agent of the insured, and that the loss occurred while the goods and merchandise were being transported on another truck than that named and described in the policy.
The fire occurred while the truck was on the highways, and the loss was one which would have been covered by the policy had the goods been transported on the G. M. C. truck. The questions said to be involved are:
The authority of the employees of the Schwahn-Khuen agency to act for it in the transaction of business relating to insurance;
The authority of such agents to bind the defendant company when notified of the necessity of insuring the load upon another truck than that mentioned in the policy who they consent thereto; and
The validity of the clause in the insurance policy in question providing that the persons procuring the insurance other than the insured should be the agents of the insured and not the insurer in the transaction of business in connection therewith.
The policy contained the following provisions:
"It is a condition of this policy that any broker, person, firm or corporation who shall procure this insurance to be taken by this company, shall be deemed to be exclusively the agent of the insured in any and all notices, transactions and representations relating to this insurance or connected with or arising out of the same during its continuance. *Page 387 
"If any broker or person other than the assured have procured this policy or any renewal thereof, or any indorsement thereon he shall be deemed the agent of the assured and not of this company in any transaction relating to this insurance."
The defendant asked the State to license the Schwahn-Khuen agency as its agent. There was no limitation expressed in defendant's requisition for its license to be placed on the authority of the Schwahn-Khuen agency. None was placed thereon by the State. The statute (Comp. Laws Supp. 1922, § 9100 [87]) provides:
"An agent is hereby defined as a person, firm or corporation acting under written authority from any insurance companyto solicit insurance and/or write and countersign policies ofinsurance and collect premiums therefor. A solicitor is hereby defined as any person acting under express authority from an agent, * * * but without the power or authority to issue or countersign policies or otherwise bind any company of which such agent may be the duly authorized representative."
Schwahn-Khuen agency had authority to act for defendant. Section 9100 (91) provides:
"Nor shall it be lawful for any insurance company, corporation or association to appoint or employ any general, district, State or special agent or directly or indirectly to authorize any person to transact any insurance business or in any manner to receive the benefit of any business done or services rendered by any such agent or person within this State in any other manner than as herein provided."
The Schwahn-Khuen agency did not act as brokers notwithstanding the testimony of Mr. Schwahn of the Schwahn-Khuen agency, which seeks to shield the defendant from liability by his self-serving declarations *Page 388 
by way of testimony. Under section 9100 (92) the Schwahn-Khuen agency is expressly prohibited from doing an insurance brokerage business in the State. Under the statute it may act in procuring insurance for its customers, not as a broker, but as an agent, and then only when such insurance has been refused by companies represented by it, which is not the case here, and such insurance must be procured in other companies than those represented by the agency seeking to procure it, and then it may be consummated only through a duly authorized licensed resident agent of the company taking the risk.
There is no claim the Schwahn-Khuen agency was acting or pretending to act under this provision of the statute. The defense is that it was acting as a broker. Brokers may be authorized under certain circumstances to write insurance. Section 9100 (99), Comp. Laws Supp. 1922, provides:
"The commissioner of insurance, upon the annual payment of a fee of twenty-five dollars, may issue licenses to residents of this State subject to revocation at any time, permitting the person named therein to procure policies of fire insurance on property in this State in foreign insurance companies not authorized to transact business in this State, but which are duly authorized to do business in other States having insurance commissioners." * * *
There is no claim the Schwahn-Khuen agency or the defendant in any way complied with section 9100 (99). That is, that the Schwahn-Khuen agency paid the fee of $25 or obtained a license from the commissioner of insurance as a broker. It did not procure insurance in a foreign insurance company not authorized to transact business in the State, but it delivered and collected the premium on a policy in *Page 389 
a foreign insurance company authorized to do business in this State, and of which it was the agent. It is not claimed the Schwahn-Khuen agency executed and filed with the commissioner of insurance an affidavit that it was unable to procure, in companies admitted to do business in this State, the amount of insurance necessary to protect plaintiff's property. On the other hand, it was able to procure, in a company admitted to do business in this State, the amount of insurance necessary to protect such property and did procure it. The Schwahn-Khuen agency, had it been licensed as a broker, could not as a broker procure insurance in any company not authorized to do business in this State until it had procured insurance in companies admitted to do business in this State to the full amount which said companies were willing to write on the property. The statute (§ 9100 [99]) provides:
"Before the person named in such license shall procure any such insurance he shall in every case execute and file with the commissioner of insurance an affidavit that he is unable to procure, in companies admitted to do business in this State, the amount of insurance necessary to protect said property, and shall only procure insurance under such license after he has procured insurance in companies admitted to do business in this State to the full amount which said companies are willing to write on said property."
The Schwahn-Khuen agency did deliver the policy in defendant company and collected the premium for it. It could not, and did not, under the law, act as a broker in compliance with the statutes above quoted. The provision in the policy of defendant company, under the facts in this case, is in violation of the express prohibitions of the statute, and void. *Page 390 
Defendant may not defend in reliance upon a statute containing penal provisions which have been violated by it in connection with the transaction under consideration. Defendant's agent, without limitation of authority, is the insurer's agent and not that of the assured. Ames v. Insurance Co., 225 Mich. 44;Maryland Casualty Co. v. Moon, 231 Mich. 56; Raymond v.Insurance Co., 236 Mich. 393; Kausal v. Insurance Ass'n,31 Minn. 17 (16 N.W. 430, 47 Am. Rep. 776); Union Insurance Co. v.Wilkinson, 13 Wall. (U.S.) 222.
Under the statute (Comp. Laws Supp. 1922, § 9100 [87]), an insurance agent is authorized to write and countersign policies of insurance and collect premiums therefor. The Schwahn-Khuen agency could consent to a transfer of the policy or to the removal to a new location of the property insured. There was evidence it did consent to a transfer of the policy. The question here involved is no different in principle than that involved in Pollock v. Insurance Co., 127 Mich. 460, andCoverdill v. Insurance Co., 243 Mich. 395.
Having done business contrary to law; issued the policy in question contrary to law; accepted the plaintiff's money contrary to law; inserted in the policy brokerage provisions contrary to law; it cannot be heard after loss occurred to say its agent, licensed without limitation of authority at its request, was no agent, and that his acts do not bind defendant.
Judgment should be reversed, with costs, and a new trial ordered.
CLARK and McDONALD, JJ., concurred with POTTER, J. *Page 391