Opinion
No. 3781.
Decided January 5, 1949.
Where under the provisions of a policy of liability insurance cancellation of the policy by the insured might be effected by "surrender thereof" and in such case premium adjustments not made on cancellation were to be made as soon as practicable thereafter in accordance with the rate table provided in the policy, the insured's act in surrendering the policy to the company with notice that the vehicle covered thereby was sold constituted effective termination of the policy although the company's obligation to refund the unearned premium remained unsatisfied. An insurance company can be held estopped by the conduct of its agent only if there is evidence that his action was within the scope of his authority, actual or apparent. So also, an insurance company is not answerable for what its agent did in excess of authority not in fact bestowed upon him unless it held the agent out as having the authority to act as he did.
PETITION for a declaratory judgment to determine the rights and obligations of the parties with respect to a policy of automobile liability insurance issued to the plaintiff by the defendant company. The individual defendant is administratrix of the estate of Arnold Siart, who was fatally injured in an accident which occurred at Manchester while the automobile described in the policy was being operated by John R. Loftus with the permission of the plaintiff.
The policy was issued to the plaintiff, on December 27, 1946, by an agent of the company named Dziadkowicz, at Forest City, Pennsylvania. The plaintiff, who was in military service, was later transferred to Manchester, New Hampshire. Because of the condition of his automobile, and the probability that he would be sent overseas, the plaintiff arranged to sell it. On January 18, 1947, he wrote to the Forest City agent, advising him of his probable transfer, and stating: "I have sold the automobile that your insurance covers and I have no further use for that insurance. Enclosed you will find your bill and the insurance policy. If it is possible I would like to know if I can get some refund on the payment I had made."
The material portions of the agent's reply were as follows:
"Acknowledging receipt of your letter and policy requesting cancellation of the same, I have this day surrendered the policy to the Company for cancellation, and will be advised by our office what the return premium will be. I believe it will be about $25.00, and just as soon as I receive the notice what it will be, I shall forward you a check for the amount.
"I do notice that the identification card and the endorsement which I asked you to sign and return you have failed to return them to me, and I do ask that you return them to me to complete the proper cancellation of the policy."
The endorsement referred to was one forwarded to the plaintiff at some time after issue of the policy. It contained an agreement that the principal coverages of the policy should be afforded only while the automobile was being operated by the plaintiff or an adult member of his family. It was never signed by the plaintiff, but was destroyed before the correspondence concerning cancellation took place. The identification card requested by the agent was never returned by the plaintiff.
The policy, forwarded by the agent to the company, was cancelled and destroyed on January 22, 1947. The company sent the unearned premium refund and a cancellation voucher to the agent, but the refund was never received by the plaintiff.
The expected sale of the automobile did not materialize, and the vehicle was out of operating condition until about a week before the accident. On March 29, 1947, the plaintiff loaned it to Loftus, another soldier, and the accident occurred on that date. Suit was brought by the defendant administratrix, and the company disclaimed coverage upon the ground of cancellation.
Trial by the Court (Goodnow, C.J.), who decreed subject to the exception of the defendant company that the company is bound by the undertakings of the policy. The company excepted to certain findings and rulings, including the following: "The conduct of the insurance agent, both in writing the letter of January 22nd, and in failing to do anything further, constituted a representation to the plaintiff that the policy was still in effect, the plaintiff relied on this representation, and the company is now estopped to claim a cancellation of the policy. . . . The Court finds that [the agent] was such an agent of the defendant company as to bind that company by his conduct with regard to the terms of cancellation of this policy." The company also excepted to the refusal of the Court to rule that the agent "was without authority to bind the defendant company, by way of estoppel or otherwise, by any statements inconsistent with the terms of the written contract." Other facts appear in the opinion.
Reserved and transferred by the Presiding Justice upon the defendant company's bill of exceptions.
Green, Green Romprey, for the plaintiff, filed no brief.
Devine Millimet (Mr. Devine orally), for the defendant company.
J. Morton Rosenblum (by brief and orally), for the defendant administratrix.
For purposes of this decision, we may assume that the evidence, construed most favorably to the plaintiff, warranted the finding of the Trial Court that the conduct of the Forest City agent constituted a representation to the plaintiff, upon which he relied, that the policy was still in effect. The rulings that the agent's conduct was binding upon the company, and that it is estopped to claim cancellation are not sustained by the evidence.
There is no evidence that the company had any knowledge of the agent's reply to the plaintiff's inquiry, or of his subsequent failure to forward the unearned premium refund to the plaintiff. Under the terms of the policy, cancellation of the policy by the insured might be effected by "surrender thereof." In such a case earned premiums were to be computed in accordance with the "customary short rate tables," and a "short rate cancellation table" appeared upon the policy. It was further provided that premium adjustments not made "at the time cancellation is effected" should be made "as soon as practicable after cancellation becomes effective." Thus cancellation was not dependent upon premium adjustment, and cancellation occurred upon surrender of the policy to the company, although its obligation to refund the unearned premium remained unsatisfied. The plaintiff's enclosing letter contained no suggestion that cancellation should be postponed to any time later than the date of surrender. His action was effective to terminate the policy upon surrender. Insurance Commissioner v. Insurance Company, 68 N.H. 51, 53.
Had the company had reason to assume that the plaintiff might regard the policy as uncancelled, notwithstanding its surrender, it is a fair supposition that within the two months which intervened before the accident, it would either have insisted upon execution of the unreturned endorsement restricting its liability under the policy, or itself have cancelled the policy by five day notice as therein provided. In either case, it would have been under no responsibility with respect to the pending law action.
The defendant company can be held estopped by the conduct of the agent only if there is evidence that his action was within the scope of his authority, actual or apparent. There is no direct evidence of the extent of his authority, and none of a course of conduct on the part of the company calculated to induce a reasonable belief on the part of the plaintiff that his authority was other than special.
The printed declaration incorporated in the policy concluded with the printed words "General Agent, or Branch" followed by "Philadelphia Branch Office" in typewriting. Immediately below appeared the printed words "Agent, Sub-agent, or Broker" followed by the typewritten name "Andrew Dziadkowicz." This was indication that the authority of the agent with whom the plaintiff dealt was something less than that of a general agent. Cf. Schwartz v. Company, 82 N.H. 177.
It is true that it could be found that the agent countersigned both the declaration, and the endorsement sent to the plaintiff after issue of the policy. Further, the policy provided that it should not be binding "unless countersigned on the Declarations page by a duly authorized agent of the Company." But evidence that the agent had authority to authenticate or make effective by countersignature a policy originating with the Philadelphia Branch Office of the company is not evidence of actual authority to impose conditions precedent to cancellation not found in the policy; nor is it evidence of apparent authority to do so in view of the notice given by the policy provision that its terms shall not be changed except by endorsement signed by specified company officials, of which the agent plainly was not one.
"In order to charge a principal for the acts of his agent, in the absence of proof of express authority to act, it must appear that the principal has so conducted [his business] as to lead to the reasonable belief that he had given the agent the necessary power." New Hampshire c. Fruit Co. v. Paine, 80 N.H. 540, 541. As in Hartford c. Co. v. Lougee, 89 N.H. 222, 226, "the issue is whether the deception [of the agent] is chargeable to the [company] as a matter of estoppel. Unless it held [the agent] out as having authority to act as he did, `it was not required to protect itself by giving notice of the limits of authority.' Gibbs v. Casualty Co., 87 N.H. 19, 23. . . . The [company] is not answerable for what he did in excess of his rightful authority merely because of his pretense of authority not in fact bestowed upon him." See also, Great Am. Ind. Co. v. Richard, 90 N.H. 148.
The failure of evidence in the instant case consists of the lack of proof either of actual authority, or of conduct on the part of the company calculated to lead a reasonable man in the position of the plaintiff to believe that authority rested with the agent to keep the insurance in effect, although the procedure provided by the policy by which cancellation might be effected had been followed by the insured. In the absence of such evidence, the company is not chargeable with the agent's conduct. The decree of the Trial Court is set aside, and the order is
Judgment for the defendant company.
All concurred.