Court Opinion

ID: 9863829
Source: CourtListenerOpinion
Date Created: 2023-09-25 05:54:54.371482+00
Date Added: 2024-06-11T12:04:21.115100
License: Public Domain

McQUADE, Justice
(dissenting).
Simply and generally stated, the material facts in this action follow. For year one, an independent resident insurance agent contracts current workmen’s compensation insurance coverage for one of its principals, an out-of-state insurance company. The agent tells the insured the principal automatically will renew the policy. In year two the principal does so. During year two the principal revokes the agency. The principal does not renew the insured’s policy for year three. Year three commences with an accident that would have been covered had the policy been renewed.
The question raised is whether the independent agent had apparent authority to bind one of his principals to renew a policy in perpetuity, without the principal’s knowledge or consent.
As a general proposition, an agency is a mutual arrangement and its duration lasts only until the principal (or agent) revokes it; the agent’s rightful power to represent the principal then ends.1 Because the principal has power to terminate the agency relationship prior to commencement of the renewal policy’s protection period, an insured reasonably could not assume the independent agent had authority to bind *898forever the principal to legal relations not to begin until that future period.2 No authority or reasoning contained in the majority opinion warrants abandoning the basic principle of agency law that a reasonable man test determines the extent of apparent authority.3
The majority decision rests in part on Huppert v. Wolford, 91 Idaho 249, 420 P.2d 11 (1966). That decision, however, only holds that a general resident agent “ ‘engaged in * * * soliciting, selling, writing and delivering health, life, casualty, accident and fire insurance for’ ” several companies has apparent authority while his agency continues to bind one of his principal companies for a policy of public liability insurance on a logging truck. Huppert v. Wolford thus concerns only the types of risk for which a current agent may bind his principal for immediate coverage.
The majority also relies in part on statutory provisions requiring out-of-state insurers to act through Idaho agents concerning risks insured here. However, I.C. § 41-337,4 similar to I.C. § 41-901 which was the statute controlling insurance by out-of-state companies in 1960, demands only that an out-of-state insurer have or use a resident agent when protecting risks in Idaho. The statute in no way purports to change the traditional principles governing the agency relationship, such as scope of an agent’s apparent authority.
The majority opinion gives an independent resident agent power to bind in perpetuity one of his principal insurance companies for legal relations which do not begin until a time when the agent may have lost by revocation his power to represent the principal. To escape such potential liability, the majority would require the principal to notify of the revocation every insured whose policy has been placed by the agent. No authority or reasoning presented by the majority compels this result — a grave departure from basic principles of the law of agency. Thus, I dissent.

. See Restatement (Second) Agency § 118 (1958); Seavey, Agency § 46 (Hornbook ed. 1964); 2 C.J.S. Agency § 73, p. 1153 (1936) ; 2 Am.Jur. Agency § 37 (1936).

. Cf. Whalen v. Vallier, 46 Idaho 181, 266 P. 1089 (1928).

. See Clements v. Jungert, 90 Idaho 143, 408 P.2d 810 (1965); Restatement (Second), Agency § 49(a) and comment (c) to § 8.

. “41-337. Resident agent, countersignature law. — Except as provided in section 41-338, no authorized insurer shall make, write, place or cause to be made, written or placed, any policy or contract of insurance or indemnity of any kind or character, or a general or floating policy covering risks on property located in Idaho, liability created by or accruing under the laws of this state, or undertakings to be performed in this state, except through its resident insurance agents licensed as provided in this code, who shall countersign all policies or indemnity contracts so issued, and who shall keep a record of the same, containing the usual and customary information concerning the risk undertaken and the full premium paid or to be paid therefor, to the end that the state may receive the taxes required by law to be paid on premiums collected for insurance on property or undertakings located in this state. When two (2) or more insurers issue a single policy of insurance the policy may be countersigned on behalf of all insurers appearing thereon by a licensed agent, resident in this state, of any one such insurer.”