some provision of the policy, or by contribution for average in some cases.1 Beside this, however, we should say that there may be a partial loss, repaired and paid for by the insurers, and a subsequent total loss for which they would be liable, without the right of requiring that the amount first paid should be deducted from the claim against them for a total loss. Nevertheless if a partial loss takes place, and then a total loss, the partial loss is merged in the total loss, so that the underwriters are liable only for the total loss, unless some expenses were previously incurred in respect to the partial loss.3

1 See cases ante, p. 419, n. 1.

2 Le Cheminant v. Pearson, 4 Taunt. 367.

3 Livie v. Janson, 12 East, 648; Schieffelin v. New York Ins. Co., 9 Johns. 21. See Knight v. Faith, 15 Q. B. 649. In Stewart v. Steele, 5 Scott, N. R. 927, the vessel sailed on her voyage, came into collision, was damaged and put back. She was then recoppered, and sailed again, but was found to be in a leaky condition and again put back. To ascertain the extent of the damage, her wales were taken off and she was found to be so rotten that they were not put on again, and the vessel was sold as a wreck. It was held, that the proper measure of damages was the immediate and necessary consequences of the collision, together with such charges and expenses as might be reasonably said to be incident thereto. The jury having found a verdict for a partial loss, allowing the expense of coppering and the estimated cost of replacing the wales, the court set aside the verdict and granted a new trial, on the ground, that the cost of replacing the wales not being actually incurred, the insured was not injured by their being taken off, as the vessel was sold as a wreck.

CHAPTER XIV.

OF AGENTS.

SECTION I.

OF INSURANCE AGENCY IN GENERAL.

THE contract of insurance may, in every respect, and in all its parts, be effected by agents; whose acts bind their principals in the same way as in other business transactions.

It is more common for the insured to act by an agent, than for the insurers; and more common for insurers against fire than for marine insurers. But insurers against perils of the sea, sometimes have their agents to originate, or even to make their contracts; and very frequently act under their own contracts, in case of actual or alleged loss, by agents.

There are no principles which belong exclusively to agency in insurance matters; none, that is, which are not recognized as a part of the general law of agency. But there are some peculiarities in the application of these principles, and it is rather of these that we propose to speak in the present chapter.

Much that belongs to this topic, has indeed been already stated, by anticipation, while considering other subjects. Thus, we have already treated of the implied authority to act as agents in effecting insurance, which persons may have because of their relations to the owners of the property; for example, as ships' husbands, or as joint-owners, or as copartners.

We have also considered quite fully, the subject of ratification of an authority; either by bringing suit or otherwise. Also,

representations or concealments by agents. Also, of the agency for the insurers, cast upon the insured or his master or servants, by a loss and abandonment.

In this chapter, after a few remarks on these and similar topics, we propose to consider, in separate sections, first, the powers of agents; secondly, the duties of agents; thirdly, the rights of agents; fourthly, of voluntary agents.

We remark in general, and rather that these universal principles may be kept in mind, than because of their especial relation to insurance, that no agreement by, or act of an agent, binds his principal, unless the agent acted therein within the scope of his authority, whether that were express or implied. Next, that any lawful act purporting to be done by an agent for a principal, may be ratified by that principal, and being so ratified, has the same effect as if done by previous authority. And even if the contract of insurance violate a statute, and a loss occur under it, which the insurers pay to the agent, he must pay it over to his principal, if the insurers have not notified him to hold it as theirs, in which case it does not rightly belong to his principal.2

The courts of England differ from those of this country, in regard to the rights of the insurers, when a contract of insurance is made by an agent. There, they seem to permit the insurers in the settlement of the loss, to set off all claims against the agent; and to consider the principal only as subrogated to the rights of the agent, without any enlargement whatever, unless there be some contrary provision in the policy. Here, if the insurance is, in effect (whatever be its form), made by A for the benefit of B, the insurers can set off against B's claims, only their

F 1 Thus, as we have already seen, ante, p. 33, n. 5, the owner of property may adopt an insurance effected by an agent. See also, Sidaways v. Todd, 2 Stark. 400.

2 Tennant v. Elliott, 1 B. & P. 3; Farmer v. Russell, id. 296. In Edgar v. Fowler, 3 East, 222, the insured had not actually paid the premium on an illegal contract of insurance, over to the defendants, who were insurance brokers, but the latter had credited the insurers with the amount, and were afterwards notified not to pay it over to the underwriters. It was held, that the latter could not bring an action for money had and received, the contract being illegal and the money not having been actually paid over. See also, Booth v. Hodgson, 6 T. R. 405.

8 See 1 Arnould, Ins. 108-142; Gibson v. Winter, 5 B. & Ad. 96; Wilkinson v. Lindo, 7 M. & W. 81.

claims against B himself. The peculiar view of the English courts seems to be derived, in some degree at least, from the peculiar usages of that country in respect to insurance brokerage. There, it would appear, nearly all insurance business is managed by insurance brokers, who constitute a regular profession, and are as distinctly recognized in the law as well as in practice, as the insurers are. As each insurance company is very likely to have many contracts effected by the same broker, it seems that both usage and law permit them to regard the broker as in some degree the principal. They usually know only him, and look to him as their security; and the broker is considered as the agent of both parties.2

SECTION II.

OF THE POWERS OF AGENTS.

The first rule is, that a special agent cannot exceed his authority, however that be conferred.

Thus, if the act of incorporation of a company provides that the business shall be conducted in a particular manner, and that the concurrence of a certain number of officers is necessary to make an act valid, the mode prescribed must be followed.3 And generally, if an agent has specific duties to perform, he cannot bind his principal by acts not within the scope of such duties.4 But a general agent may bind his principal by any act

1 See ante, p. 184, n. 4.

2 See 1 Arnould, Ins. 108-142.

* See ante, p. 20, n. 1, 4; Beatty v. Marine Ins. Co., 2 Johns. 109.

Thus, an agent of Lloyds' in a foreign port, has no power to bind the company by a certificate of the amount of damage, and such certificate is therefore not admissible in evidence. Drake v. Marryat, 1 B. & C. 473. And in Jellinghaus v. New York Ins. Co., 6 Duer, 1, it was held, that the burden was on the insured to show that the vice-president of an insurance company, had authority to bind the company by accepting goods. And the secretary of a railroad company has no authority to bind it. Williams v. Chester & Holyhead Railway Co., 5 Eng. L. & Eq. 497. Nor has the treasurer of a corporation any right to release a claim which belongs to the corpora

within the scope of his authority, although he has private instructions which limit his power, if these instructions are not known to the insured.1

If an agent having sufficient authority for his acts, fails to report to his principals (being an insurance company), facts or information which his duty to them required of him, this does not invalidate his acts as their agent, so far as the insured are concerned.2

Nor has an agent of insurers, any implied authority to annul or dispense with any specific rule of the insurers, made known to the insured. Thus, if the policy requires that certain facts (as, for example, subsequent insurance), should be indorsed on the policy, an assurance by the agent of the company that his own entry of it on his own records will do as well, has been held not to bind the insurers if the entry were not actually made on the policy.3

The second rule may be said to be, that whenever the authority of an agent arises from a necessity, it is measured by that necessity. As to authority derived from some other relation beside that of sole ownership, it may be said, in general, that wherever any actual interest in property, vests in any person, by contract, or by operation of law, or even officially, it carries with it the

tion. E. Carver Co. v. Manufacturers' Ins. Co., 6 Gray, 214; Dedham Institution for Savings v. Slack, 6 Cush. 408.

1 Lightbody v. North American Ins. Co., 23 Wend. 18. In McEwen v. Montgomery County Mutual Ins. Co., 5 Hill, 101, notice of a prior insurance given to a travelling agent of the insurer, whose duty it was to solicit insurances, make surveys, and receive applications, was held to be notice to the insurer. See also, Sexton v. Montgomery County Mutual Ins. Co., 9 Barb. 191. And notice to an agent of an incumbrance on the property insured, is notice to the insurer. Masters v. Madison County Mutual Ins. Co., 11 Barb. 624. In Mellen v. Hamilton F. Ins. Co., 5 Duer, 101, it was held, that the knowledge of a further insurance by an insurance broker who procured the policy for the assignor of the plaintiff, from the defendants, could not be considered as knowledge to them, there being no proof of his being such a general agent as would make them liable for his acts of knowledge. And in Vose v. Eagle Life & Health Ins. Co., 6 Cush. 42, 49, it was held, that the knowledge of an insurance agent, whose duty it was merely to receive the application and forward it to the company, of the condition of the health of the assured in a life policy, was not sufficient to avoid the effect of a misrepresentation by the assured on the subject of his health.

Gray, 497. See also, Wing v.

2 Gloucester Manuf. Co. v. Howard F. Ins. Co., Harvey, 5 De G. M. & G. 265, 27 Eng. L. & Eq. 140. 3 Worcester Bank v. Hartford F. Ins. Co., 11 Cush. 265.