Court Opinion

ID: 9587913
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:27:55.982006+00
Date Added: 2024-06-11T18:00:56.422484
License: Public Domain

Sharp, J.,
concurring in part, dissenting in part:
The following facts — which constitute plaintiff’s case — are either stipulated or are not controverted:
Defendant is a duly licensed fire and casualty agent as defined by G. S. 58-39.4(1). (In this opinion no distinction will be made between the individual and the corporate defendant.) On 8 November 1952 defendant undertook to procure workmen's compensation insurance for plaintiff, a customer entitled to “automatic renewals.” For six years thereafter defendant forwarded to plaintiff — without request from her — policies of workmen’s compensation insurance. From 8 November 1956 through 8 November 1958, defendant furnished plaintiff policies issued by Pennsylvania Threshermen and Farmers’ Mutual Casualty Insurance Company (P. T. & F.). Defendant’s agency contract with P. T. & F. terminated in July 1958, and he was unable to renew plaintiff’s coverage with this company. He failed to notify plaintiff of this development or of his subsequent unsuccessful efforts to procure a policy of insurance for her. Defendant never furnished plaintiff any policy, binder, or certificate of insurance covering her workmen’s compensation liability after 8 November 1958. On 29 November 1958 one of plaintiff’s employees was killed in an accident arising out of and in the course of his employment. Thereafter, plaintiff paid out $8,800 under an order of the North Carolina Industrial Commission for his death and incurred attorneys’ fees in the sum of $500.00.
Defendant’s evidence tends to show that he undertook to procure coverage for plaintiff from Royal Indemnity Company (Royal) in early October 1958 by sending it a duplicate of his office copy of the front page of the expiring P. T. & F. policy, across the top of which was written “Please issue this policy for us.” A copy of this front page was introduced in evidence as defendant’s Exhibit D. At the second trial of this case defendant contended that Exhibit D was a binder which provided plaintiff with coverage on 29 November 1958. However, as Lake, J., pointed out in the Court's opinion on the second appeal (270 N.C. 661, 667, 155 S.E. 2d 246, 251), this document “ex*487pressly provided for coverage from 8 November 1957 to 8 November 1958. Thus, by its terms, it would not constitute a binder in force at the time of the injury to the plaintiff’s employee.”
At the third trial (which we now review), defendant testified that ■“over the weekend” preceding that trial, he had made out in his own handwriting another document, which was introduced in evidence (over plaintiff’s objection) as defendant’s Exhibit E. He then asserted that when he mailed Exhibit D to Royal in October 1958 the original of Exhibit E was attached to it; that he had kept a copy of the material which was sent to Royal, but Exhibit E became detached from Exhibit D; that he knows, however, that Exhibit E is an exact copy of the paper which went to Royal.
Exhibit E, as prepared by defendant in 1968 — almost ten years after the original was purportedly made — is a form for memoranda. It is undated. At the top defendant’s letterhead is imprinted. Thereunder appears the following, the underlined words being handwritten:

Defendant now contends that Exhibit D, together with Exhibit E '(which was not in evidence at the second trial), is “in form and content” sufficient to constitute a binder which provided plaintiff with coverage on 29 November 1958 because no notice of cancellation was ever ■given plaintiff. Moore v. Electric Co., 264 N.C. 667, 142 S.E. 2d 659. The Court accepts this contention and holds that (1) if defendant did *488write and send Exhibit E attached to Exhibit D to Royal in October 1958 (as he testified he did), and (2) if defendant was then authorized to issue such a binder, he had provided plaintiff with coverage, and she cannot recover in this action. It also holds that defendant’s Exhibit G, if issued and authorized, provided plaintiff with coverage by the Dixie Fire & Casualty Company (Dixie) and precludes her recovery. On this present appeal these conclusions must be considered as established by our decision in the second appeal. However, the majority opinion — upon the premise that the burden is upon plaintiff to show that defendant breached his contract by failing to provide her with insurance — puts the burden upon plaintiff to disprove defendant’s assertion that he issued the “binders” or, if he did, to show that he lacked authority to bind the particular company. From this holding I dessent.
The issues submitted in the third trial do not isolate the determinative facts. Other issues will be required to bring into focus the defenses upon which defendant relies and to determine upon whom rests the burden of proof. I suggest the following:
1. Did defendant undertake to procure a policy of workmen’s compensation insurance for plaintiff and to renew it annually as alleged in the complaint? (It is now stipulated that he did.)
2. For the period 8 November 1958-8 November 1959 did defendant fail to procure a renewal policy providing the coverage contained in the policies he had previously procured for her? (Defendant does not contend that he secured a policy of insurance for plaintiff or furnished her any document whatever.)
3. Did defendant secure for plaintiff a binder by which Royal Indemnity Company insured her workmen’s compensation on 29 November 1958, as alleged in the answer?
4. Did defendant secure for plaintiff a binder by which Dixie insured her workmen’s compensation liability on 29 November 1958, as alleged in the answer?
5. What amount of damages, if any, is plaintiff entitled to recover of defendants? (If liable, defendants offer to stipulate that plaintiff’s damages are $9,300.00.)
Certainly, the burden of the first, second, and fifth issues is upon plaintiff. However, as this case.has now developed, when it is shown that defendant never delivered to her any policy or certificate which provided her with insurance after 8 November 1958, plaintiff becomes entitled to a peremptory instruction on the second issue. In such case, unless defendant produces evidence that he had procured for her insur-*489anee which was in effect on 29 November 1958, plaintiff is entitled to .recover. In the trial below defendant introduced documents, Exhibits D, E, and G, which — he testified and contends — “bound” both Royal .and Dixie on 29 November 1958 and constituted performance of his contract with plaintiff. If this contention be correct, suggested issues 3 and 4 must be answered YES. Before either can be so answered however, it must be shown (1) that defendant issued the respective “binder” .and (2) that he had authority to do so.
In a situation such as this it seems that common sense, as embodied in two guides usually employed to fix the burden of proof, places the burden of issues 3 and 4 upon defendant. The first rule puts the burden of proof upon the party who asserts the affirmative of the issue. “Thus, the person alleging the agency must prove not only the fact of its existence, but also its nature and extent.” 3 Am. Jur. 2d Agency § 348 (1962); accord, Harvel’s, Inc. v. Eggleston, 268 N.C. 388, 150 S.E. 2d 786; 44 C.J.S. Insurance § 146 (1945). The second rule puts the burden upon the party having peculiar knowledge of the fact in issue and therefore the better means of proving it. Stansbury, N.C. Evidence (2d Ed.) § 208 (1963). Here other than what defendant has said, plaintiff knows nothing of defendant’s transactions with either Royal or Dixie. Until after 29 November 1958, she never heard that defendant had purported to bind either in her behalf. He says that by sending Exhibits D and E to Royal and Exhibit G to Dixie, he bound each to cover her liability on that date. To this plaintiff can only answer: “I can’t know what he did or didn’t do, what Royal or Dixie had specifically .authorized him to do, or what he was accustomed to do for either. However, what he says doesn’t sound right to me!” To put the burden upon plaintiff to disprove defendant’s asserted acts or his authority with respect to the binders in question is both unrealistic and vio-lative of established rules of procedures.
Defendant admits that he failed to furnish plaintiffs a policy of insurance as he had agreed to do and as he was accustomed to do. If, as he contends, he provided her with coverage, it was not in the manner specified by his contract but by temporary insurance, a binder, which was an informal paper writing, meaningful to the trade but not to the uninitiated. Defendant concedes that he did not fulfill his contract according to its terms, but asserts that his breach was harmless to plaintiff because he had substituted a different form of coverage. He thereby interposes an affirmative defense which he must prove. The only facts in this case which are in dispute relate to defendant’s defense. Plaintiff’s right to recover, therefore, cannot be adjudicated upon the one issue, “Did the defendants fail to procure for the plaintiff workmen’s compensation insurance coverage as they undertook to do?” As *490thus phrased, the issue places upon plaintiff the burden of proving defendant's breach of contract — a breach which he is obliged to concede, but which he seeks to avoid by an alleged substitute performance.
I also dissent from the statement in the majority opinion that “The testimony of the individual defendant as to the extent of his authority, and that of the corporate defendant, so as to bind either or both of the two insurance companies was, of course, competent upon that question. . . .”
Over plaintiff’s objection (or motion to strike), defendant was permitted to testify that (1) in order to keep plaintiff continuously insured, he “bound the Royal Indemnity Co.”; (2) it was his intention to bind Royal when he filled out Exhibit D; (3) it was his “intention as agent of Dixie Fire & Casualty Co. to bind the risk of Workmen’s Compensation coverage” for plaintiff when he filled out defendant’s Exhibit G; (4) he had “bound” both Royal and Dixie; and (5) on 29 November 1958, her workmen’s compensation liability was covered by both companies. These conclusions or opinions of the witness were clearly incompetent. Stansbury, Evidence (2d Ed.) § 130 (1963). What transactions defendant had with Royal and Dixie were questions of fact for the jury; the legal effect of those transactions was for the court — not defendant. This is just another application, of the rule which prevents a witness from labeling another’s conduct negligent or certain utterances a contract.
In Cole v. City of Britton, 63 S.D. 428, 260 N.W. 266 (1935), a witness was permitted to answer (over objection) the following question: “Did you receive authority from him (the mayor) to employ men to work in and about the city?” In granting a new trial, the court said: “It was competent for the witness to state the facts and circumstances concerning the transactions between him and the mayor, leaving to the court and jury under the facts disclosed whether or not he had the alleged authority; but it was error to permit the witness to' state his conclusions." Id. at 430, 260 N.W. at 267.
The same rule which prevents a nonexpert witness from stating the legal effect of a transaction about which he has testfied also prevents him from testifying that he was the agent of a certain principal. “The facts being shown, then, whether the relation of principal and agent is created becomes a question of law for the court to declare, and not for the witness.” Parker v. Brown, 131 N.C. 264, 265, 42 S.E. 605, 606; accord, Young v. Newark Fire Ins. Co., 59 Conn. 41, 22 Atl. 32 (1890)-The rule is well stated in Chaplin v. Mutual Cash Guaranty Fire Ins. Co., 26 S.D. 632, 639-40, 129 N.W. 238, 240-41 (1910): “Where agency is the question directly involved in a case, the reputed agent as a wit*491ness may not give his opinion or state his conclusion as to such agency, but may state the facts and circumstances concerning the various transactions between him and the alleged principals, leaving the court and jury to determine under the facts disclosed, whether or not he was such agent. . . . Testimony that a party is or is not an agent is a mere conclusion of law. Likewise, testimony that an agent had authority to do a certain act is a conclusion of law.” See Annot., 90 A.L.R. 749.
The problem posed here is lucidly amplified by Stansbury, Evidence •{2d Ed.) § 130 (1963), wherein it is said that in attempting to relate facts a witness will often use words which, “though familiar to the layman’s vocabulary, also have a legal meaning. Whether this usage will constitute a violation of the opinion rule depends upon the sense in which the words are used and the nature of the issues in the case.” Thus & witness may state he was in “possession” of property, that he had ■“bought” an article, or that he did not “owe” a debt “if the words are employed in a popular sense to describe the facts rather than the legal consequences. But where the legal relations growing out of the physical facts are a disputed issue in the case, and the witness’s language appears to describe the relations themselves, the same words may be objectionable. Under these circumstances it is improper for a witness to testify . . . whether he was an ‘agent’. ... He may not testify to the legal effect of a contract or to its meaning when that is a question for the court to decide from the writing itself. . . .”
The statement is often made that, as against the principal, agency cannot be proved by the out-of-court declarations of the alleged agent, but the agent may testify under oath as to the agency. Sealey v. Insurance Co., 253 N.C. 774, 117 S.E. 2d 744. This does not mean, however, that a witness may, over objection, state bluntly, “I was an agent authorized to contract in behalf of my principal.” It merely means that he is a competent witness to testify as to the facts and circumstances upon which he contends the court should rule that he was an agent clothed with certain authority. The rule which renders an agent a competent witness to prove his agency does not abrogate the rule that the legal effect of a transaction is for the court.
“The mere opinion of an agent as to the extent of his powers, or his mere assumption of authority without foundation, will not bind the principal. . . .”3 Am. Jur. 2d Agency § 78 (1962). In this connection we note that defendant’s Exhibit G, the document which defendant ■asserts “bound” Dixie, was dated 14 November 1958 — approximately ten days after Royal had declined to provide plaintiff with coverage. Exhibit G is a form of the American Casualty Company upon which the name “Dixie Fire and Casualty Company” was written at the top. Dixie’s own form for an “application for workmen’s compensation in*492surance,” Exhibit 13, specifically instructs the agent not to bind risk if any other insurance company has refused to write a new policy in the past two years. Defendant’s written “agency agreement” with Dixie, defendant’s Exhibit K, discloses no authority for him to issue binders for workmen’s compensation insurance.
To minimize the risk of a fifth trial of this case, I call attention to another error in the admission of evidence in the third trial. Exhibits D and E, which were admitted over plaintiff’s objection, are neither original nor duplicate original documents. Indeed, Exhibit E is not a copy of any document. Instead, it is a product of defendant’s recollection, a professed reproduction of a lost copy reconstructed approximately ten years after the original document was purportedly written. “A party who seeks to prove the contents of a writing by a copy or oral testimony must first account satisfactorily for his failure to produce the original.” Randle v. Grady, 228 N.C. 159, 163, 45 S.E. 2d 35, 39. (Italics mine.) If the original writing is in existence but unobtainable, secondary evidence of the contents may be admitted upon proof, satisfactory to the trial judge (1) that the offering party had made diligent effort to obtain the original and (2) that its production is impossible or impracticable. Stansbury, Evidence (2d Ed.) §§ 192, 194 (1963).
The originals of Exhibits D and E and Exhibit G would presumably be in the files of Royal and Dixie. On 3 November 1958, in a letter written on stationery from its Richmond office (defendant’s Exhibit E) with reference to “Workmen’s Compensation coverage Mrs. Bernadine Wiles d/b/a Centerview Taxi, Front St., Kannapolis, N. C.,” Royal thanked defendant “for the captioned submission” and declined to provide coverage. (Italics mine.) On 18 November 1958, from Greer, South Carolina, Dixie advised defendant that plaintiff’s risk “will not be acceptable to the company.” It is noted that both of these letters speak in terms of an application for prospective coverage. Whether defendant’s “submission” to Royal was a binder or an application for insurance is one of the two crucial questions in this case. See 43 Am. Jur. 2d Insurance § 216 (1969).
So far as the evidence discloses defendant made no attempt to secure the originals of Exhibits D, E, and G. He, therefore, laid no foundation for the introduction of secondary evidence of their contents. In Greene v. Grocery Co., 159 N.C. 119, 74 S.E. 813, defendant offered secondary evidence of a telegram, “a material part of the contract, directly involved in the issue.” In sustaining the trial judge’s rejection of this evidence, Hoke, J., pointed out that the operation of the “best evidence” rule “is not necessarily affected by the fact that the proper custody of the written paper is no longer within the jurisdiction of the court.” It is still necessary to show its unavailability. Id. at 120-21, 74 S.E. at 813. *493See Avery v. Stewart, 134 N.C. 287, 46 S.E. 519, for a discussion by Walker, J., of when the production of the original writing is excused. See Stansbury, Evidence (2d Ed.) § 194 (1963); McCormick on Evidence § 207 (1954); 4 Wigmore (3d Ed.) §§ 1264-1268 (1940), for a discussion of ways of evidencing a document not produced.
Except as indicated I concur in the majority opinion.
Bobbitt, J., joins in this opinion.