INSURANCE

LAW JOURNAL.

REPORTS OF DECISIONS

RENDERED IN INSURANCE CASES IN THE FEDERAL COURTS,

AND IN THE STATE SUPREME COURTS.

THE

INSURANCE LAW JOURNAL.

VOLUME XXVI.

1897. [NEW SERIES, VOLUME 6.]

REPORTS OF DECISIONS

RENDERED IN INSURANCE CASES, IN THE FEDERAL COURTS, AND IN THE STATE SUPREME COURTS.

From certified transcripts in our possession.

COURT OF APPEALS OF MARYLAND.

AMERICAN FIRE INS. CO.

18.

BROOKS ET AL.*

The policy was procured by a broker and on its termination the renewal receipt was forwarded to the broker by the general agent and delivered to the insurer who paid the premium to the broker, but the latter through illness failed to remit. A notice of threatened cancellation was thereupon directed to the broker, and subsequently a letter was sent to insured, whose interests had meanwhile passed to receiver. The party receiving this letter replied that the premium should be paid. But, not receiving it, the general agent made entries on his books understood to be equivalent to cancellation.

Held, That the broker is the agent of the insured, but his agency terminates upon the delivery of the policy.

Held, That acts relied on to establish that the broker is the agent of the insurer may be shown, although the policy stipulates that no person shall be deemed an agent unless duly authorized.

Held, That the questions whether the broker delivered the renewal and received the premium as the agent of the company was for the jury. Held, That the burden of showing compliance with conditions requisite to cancellation was on the company.

Notice of cancellation by mail is not effectual unless received. Where five days previous notice was requisite and the notice was not received until after the date fixed for cancellation, such cancellation on the date fixed would be ineffectual.

R. H. SMITH and A. S. NILES, for Appellant.

A. H. TAYLOR, for Appellees.

* Decision rendered, March 25, 1896.

PAGE, J.

This is an action on a policy of insurance issued by the appellant to Walter B. Brooks and W. H. Bosley, receivers of the Gay Manufacturing Company, upon a steam sawmill and machinery situated at Bosley, Gates County, N. C. At the time of its issuance, Archibald H. Taylor and William H. Bosley, trustees, held a mortgage upon the property; and the policy contained a provision by which, the "loss, if any," was made payable to them " as their interest may appear." This suit is now prosecuted for their use and benefit, by the receivers, in pursuance of an order of court requiring them to make collection of all unpaid claims arising upon policies of insurance on the property of the company, which had been destroyed by fire. Policy No. 5,450, being that which forms the subject of this suit, was placed through the agency of George B. Coale & Son, brokers of Baltimore City, at the request of Mr. Bosley. Mr. Coale states in his testimony that the policy was forwarded to him by Mr. Kelley, the general agent of the company, and was delivered by himself to the receivers; that he collected the premium, and paid it to the company, less his commissions; and that he was never notified by it not to collect the premium. He further testified that he informed Mr. Kelley who Messrs. Brooks & Bosley were, and what business they were engaged in. The policy was dated the 21st August, 1891, and ran for one year from the 20th August. On 1st August, 1892, a renewal receipt was sent by Mr. Kelley to Coale & Son. In his note transmitting it, Mr. Kelley states that he forwards. to the Coales, "according to order received;" but there is no evidence that the plaintiffs gave such an order, or that it was given by the Coales, as a consequence of any conversation had with them or of any act for which they were responsible. Mr. Coale delivered. the receipt to the receivers, and received from them a check for the premium; but, by reason of illness, he failed to remit the money to the company. On the 6th of October, the general agent of the company wrote to the Coales: We seem to be without your remittance for August on policy No. 5,450, and will thank you for the same;" and again on 3d November: Premium of $82.50 is still due on policy No. 5,450," etc.; "and, unless same is paid, we, of course, will consider our liability as having ceased, after receipt of this notice." Neither of the receivers nor trustees nor any officer of the Gay Company was at any time informed, before the fire, of these letters or of their contents. On the 29th of November, Mr. Kelley wrote to the Gay Manufacturing Company, directing his letter to Bosley, Gates County, N. C. The following is a transcript of this communication:

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Philadelphia, November 29, 1892. Gay Manufacturing Company, Bosley, Gates County, N. C. Gentlemen: Under date of 20th August last, at the request of your agents, .Messrs. George B. Coale & Son, of Baltimore, we re- · newed our policy No. 5,450, by issuing renewal receipt No. 1,397, covering $1,500 on your sawmill plant at Bosley, the premium agreed upon being $82.50, which has not yet been paid to us, notwithstanding we have repeatedly called the matter to your attention, through your agents, Messrs. George B. Coale & Son, 25 South Street, Baltimore, Md.; and we now write to advise you that the policy will be canceled on our books for nonpayment of premium on December 6th, proximo, in accordance with the terms of the policy, unless payment be made before that date, after which date no further liability will be recognized, and will look to you for the unearned portion of premium for the time insurance has been in force, viz., August 20th to December 6th, 108 days; amount earned, $24.41. Yours, very truly, Wm. B. Kelley, General Agent.

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This letter, thus addressed, finally came into the hands of George L. Barton. Barton's relation to receivers seems to be somewhat uncertain. He was located at Suffolk, Va., about 25 miles by rail from Bosley, and had charge of the mills at both places. He signed his name as 66 Manager," but, Mr. Bosley says, that was a selfconstituted position." He was, however, in charge of the business at both places, and was representing the receivers there, if any one was. The date when he received Mr. Kelley's letter does not clearly appear, but probably it was the 5th day of December, for on that day he wrote to Mr. Kelley: "Your favor of November 29th, addressed to our company, at Bosley, Gates County, N. C., has just been received at this office." In this letter, Barton expresses surprise that the premium had not been paid on the renewal, as Coale & Son had received it promptly, and concludes with saying: "We do not wish to lose your good company on our list, and assure you, you shall receive the premium, which we did not know had not been paid. As soon as we hear from Coale & Son, we will write you again on the subject." Not having received the premium from the Coales, on the 6th of December Mr. Kelley caused to be made on the books of his company certain entries, which, in that office, were understood to mean the policy was canceled, though that was not written in words. On the 3d of June the property was destroyed by fire. It does not appear that either of the receivers or trustees was informed of this correspondence, or of the entries on the books of the company, except that before or after the fire Barton told Bosley that the company had canceled one of their policies, because Coale had not paid the premium; and that he (Barton) had notified the company they would be responsible for it. Bosley says this conversation took place "some time" before the fire; but Barton recollects talking the matter over with him after the fire, but could neither affirm nor deny that he had had such conversation before;