William A. Loomis and Frances Loomis, Respondents, v. Jefferson County Patrons' Fire Relief Association, Appellant

William A. Loomis and Frances Loomis, Respondents, v. Jefferson County Patrons’ Fire Relief Association, Appellant. Oral agreement by a director of a co-operatim fire insurance company that a new policy would be issued on the expiration of an existing one — destruction of the property after the expiration of the existing policy and pending action on the application for the new policy—provision that the policy might be made payable to the mortgagee — the name of the mortgagee need not. be stated. A co-operative Are insurance company issued a policy of insurance upon farm buildings expiring November 24, 1900. The directors of the association were its soliciting agents, and in January, 1900, one of such directors named Babcock informed the insured that the policy had expired. The insured made an application for a new policy and paid a portion of the premium. A new policy was issued, but was canceled, Babcock having learned that the existing policy had not expired. The insured had, in the meantime, paid the balance of the premium and it was orally agreed between him and Babcock that, upon the expiration of the existing policy, a new policy would be issued; that Babcock would attend to the execution of the new policy and that the premium paid by the insured should be retained by Babcock and applied on the new policy. Both the application and the premium were retained by the insurance company. November 24, 1900, when the existing policy expired, the insured went to Babcock’s home and applied for a renewal of the policy. There was some dispute as to whether the insured signed the application, but it was taken by Babcock and mailed to the ofiAce of the insurance company, which received it on the morning of November twenty-seventh. On the same day a portion of the insured property was destroyed by Are. Thereafter the insurance company, without knowledge of the Are, returned the policy to Babcock for the purpose of having it signed by the applicant and of having a mortgagee clause inserted therein. Babcock was absent from home when the policy arrived, but returned a few days later, when he took the application to the insured and procured his signature thereto and the insertion therein of the name of the mortgagee. The application was then sent to the insurance company and was rejected by it. In an action brought on the oral agreement, made by Babcock at the time the new policy issued in January, 1900, was canceled, to the effect that a new policy would be issued on the' expiration of the existing policy, it appeared that Babcock, as a director, had in his custody blank applications to be signed by applicants for insurance and that his approval of the. application was required before the policy was issued; that the by-laws of the insurance company provided: “The president and secretary shall have power to issue policies at any time on property insured by any directors, providing such application meets the requirements of said Acts and these By-laws.” There was nothing in the by-laws of the association prohibiting a director from making an oral agreement for temporary insurance which should be valid until the home officers acted. Held, that while Babcock did not possess, authority to issue, in form, a written policy binding upon the defendant, he did have authority to make a valid agreement on behalf of the defendant to insure the property which was effective until the defendant took definite action on the application; That, assuming that the home officers might eventually reject the application, Babcock’s oral agreement was valid until such rejection; That the insurance company could hot reject the application simply because a loss had occurred; That a provision in the by-laws that the “policies may at the request of the • insured be endorsed, * * * payable to..........'____mortgagee, as h.. interest may appear,” did not make it obligatory upon the insured, who stated in the application that the premises were incumbered, to give the name of the mortgagee. Appeal by the defendant, the Jefferson County Patrods’ Fire Relief Association, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of Jefferson on the 19th day of January, 1903, upon the verdict of a jury, and also from' an order entered in said clerk’s office on the 19th day of January, 1903, denying the defendant’s motion for a new trial made upon the minutes. The plaintiffs are the owners of a farm in the town of Champion in the county of Jefferson and the defendant is a co-operative fire insurance company restricted in its business to the counties of Jefferson and Lewis and incorporated pursuant to chapter 362 of the Laws of 1880, as amended particularly by chapter 573 of the Laws of 1886. Every applicant for insurance must be a member of one of the local granges of defendant and is liable to the* payment of assessments to meet losses and expenses. The plaintiffs had become members of the defendant in 1890 by receiving a policy of insurance upon the buildings on their farm. This policy bearing date November 24, 1890, by its terms expired November 24, 1895, and at its expiration a renewal policy was issued for five years. The soliciting agents of the defendant were its directors and there was a director named Babcock all this time living in the vicinity of the plaintiffs and to whom the applications for these policies were made. In January, 1900, Babcock informed the plaintiff William Loomis, in whose name the policy was running, that it had expired and a new application was made and a portion of the premium paid, and another policy issued in form like its predecessor but it never was delivered to Loomis. Later. Babcock learned that the policy issued in November, 1895, had not yet expired and the one of January was canceled, although this did not occur until several months had elapsed from the date of its issuance, the precise time being in controversy and is unimportant. In any event, when Mr. Loomis learned of it he and Babcock agreed that the premium already paid, and in the meantime he had paid the balance, should be •applied in payment of the new policy which it was arranged should be issued November 24, 1900, upon the termination of the existing policy. On that day Mr. Loomis went to the home of the director and applied for a renewal of the policy and an application was filled out by Mr. Babcock and which Loomis says he signed, although that question is in dispute and will be adverted to later. On the same day, which was Saturday, Babcock took the application to Watertown, intending to deliver it to the defendant’s office but found It closed. He returned with the application and mailed it to the defendant the succeeding Monday and it was received on Tuesday morning, the twenty-seventh. It was returned to Babcock by the secretary for correction: First. To have it signed by the applicant, and, second, to have the loss, if any, payable to the mortgagee as his interest may appear. Babcock was absent from home, at the time the application arrived and did not return until Saturday. On Sunday he went with the application to the respondents and it was signed by Mr. Loomis and the name of the supposed mortgagee inserted in his stead and the application' was left with Loomis to forward to the defendant and the application was subsequently rejected. Early in the morning of November twenty-seventh and before the return of the application to Babcock by the defendant for correction the barn described in the policy was wholly destroyed by fire and the extent of the liability of the defendant, if liable at all, was stipulated upon the trial. The defendant’s secretary testified that when he returned the application he had not learned of the fíré. Mr. Loomis wrote to the secretary on the twenty-seventh informing him of the burning of the barn and its contents. Further facts appear in the opinion. Joseph Atwell, for the appellant. W. B. Van Allen, for the respondents. [MAJORITY — Spring, J.:] Spring, J.: This action was brought on the oral agreement made by Babcock, the director, when he informed Loomis that the policy of January twenty-fourth was ineffective because the preceding policy was still in force. . The plaintiff testified that the director said in substance that he would attend to it and this is in effect corroborated by Babcock. The full premium was retained by Babcock for the purpose of meeting the premium on the new policy. The application was not returned to the plaintiffs, but was retained by the defendant. It seems clear that it was expected by the parties that the insurance was to be continued, and if nothing further had been done Loomis had the right to expect the issuance of a new policy upon the termination of the one issued in November, 1895. Loomis, however, did go to Babcock in the forenoon of the day that the old policy was to run out for the purpose of attending to its renewal. If we assume, as Babcock and his wife testified, that the application was not signed by the applicant we are still of the opinion that the property was insured. That was the intention of the parties. The scheme of insurance was the mutual plan and involved membership in the local grange, the payment of assessments and also a specific premium for the particular policy issued and which was graded according to the amount insured. (By-laws, § 2.) Babcock, as a director, had in his custody blank applications to be signed by the applicant who came to him for insurance with defendant (§ 5), and it was for him to approve the application before the policy was issued (§ 4). Section 13 provides : “ The president and secretary shall have power to issue policies at any time on property insured by any directors, providing such application meets the requirements of said Acts and these By-laws.”' That is,- the director takes the application and makes the contract of insurance, but its formal confirmation by the issuance of a policy rests with the two officers named. There does not seem by the by-laws to be lodged with these officers the unqualified authority to reject an application which has received the sanction of a ,director. Of course, this could be accomplished in conjunction with that director or by the action of the board of directors. But assuming that the' home officers might eventually reject the application, until this was done the agreement of Babcock was valid and the insured was entitled to the protection intended thereby. Babcock did not possess the authority to issue in form a written policy binding on the defendant. The written application must be accepted by the defendant before the policy was issued, and thereupon it became valid fi;om its date. The director, however, did have authority to make a valid agreement on behalf of the defendant to insure the property until the defendant took definite action on the application. If a loss occurred in the meantime the defendant must pay. If, upon receipt of the application, it learned that ' the buildings insured had been destroyed by fire it could not allow that fact alone to induce the rejection of the application. When the application was received by it on November twenty-seventh, it did not reject it or refuse to issue the policy. It returned it for specific corrections, implying that upon these being made the issuance of the policy would follow and it would be operative from the date of the application. The construction placed upon the agreement by Babcock was obviously one of absolute insurance for he presented the application to Mr. Loomis for his signature and •correction five days after the burning of the buildings. This action was significant in that it recognized the existence of the contract of insurance. It would have been a mockery for Babcock to go through the performance of correcting this application and having it resigned if he did not understand that by his acts the' defendant had become liable for the loss of this property. He was more than an ordinary soliciting agent. His position as director of the defendant with blank applications in his custody and with the duty to approve the applications invested him with authority as one of the executive •officers of the defendant. Inasmuch as the plan of insurance contemplated a written application it is insisted that no oral contract could be made as this in effect would override the requirement of an application in writing. In •answer to this it may be said that there is nothing in the by-laws inhibiting á director from making an agreement for temporary insurance to be valid until the action of the home officers. In Hicks v. British America Assurance Co. (162 N. Y. 284) the agent of the ■defendant said to the applicant for insurance “ you are insured from noon on the 30th day of December, 1893, to noon of December 30th, 1894.” The court held this was a binding agreement for insurance embracing .within it the provisions of the standard policy. In Squier v. Hanover Fire Insurance Co. (162 N. Y. 552) the local agents of. the defendant at Jamestown had authority by their certificate.of appointment “to countersign, issue and renew policies of insurance.” About ten days before the expiration of a subsisting policy issued by the defendant the said agents agreed orally with the husband of the plaintiff and who represented her, that the policy would be renewed at its expiration, and plaintiff was to pay the premium within thirty days and get the policy. The old policy expired December 20, 1894, and the property was destroyed by fire December twenty-ninfh, and no new policy had been issued. The. plaintiff recovered the amount of the insurance and the Court of Appeals upheld the recovery. In Van Loan v. Farmers' Mutual Fire Ins. Association (90 N. Y. 280) the applicant applied to a director for insurance, paying the required sum. The director made the survey and notified the company, but the matter was held in abeyance for the reason that the policy was to' be made out in the name of the wife of the applicant and her first name was unknown. A fire occurred in the meantime and the defendant was held liable. These cases are decisive of the present one so far as this aspect of the case is concerned. In fact the situation is far stronger here for the plaintiff, for there was an application in writing prepared in January which was withheld by the defendant and there, was at least an attempt honestly made to prepare another and there'was no "formal rejection of it. In addition to these circumstances are the acts of Babcock, tending strongly to corroborate the position of the plaintiffs. So far "we have assumed that the last purported application was not signed by Loomis. There was proof tending to show he did in fact sign it, but we are free to add that if to uphold the recovery depended on agreeing with the jury on that proposition, we should have some hesitancy in doing so. On the practically undisputed testimony, however, we think the circumstances show an agreement, a plain understanding that the property was insured at the time it was burned. In each written application Loomis answered the inquiry as to his ■ title or interest by the word “ deed,” implying that he was the sole owner of the property. Loomis and his wife testified that they informed Babcock they owned the farm jointly, which is the fact, and supposed he so stated in the application, The jury have found with the plaintiff om this question, so Babcoek, the director, possessed full notice of the ownership of the property. In the last-attempted application Loomis stated that the premises were incumbered to the extent of $1,800, but did not give the name of the mortgagee. This form was followed in the preceding applications and no dissent was made by the defendant. By section 13 of the defendant’s by-laws it is provided that the “policies may at the request of the insured be endorsed * * * payable to ........mortgagee, as h.. interest may appear.” It is not obligatory, and certainly the failure to do so does not relieve the defendant from liability. We do not deem it important to discuss the other exceptions urged by the appellant. The real mortgagee assigned her interest in the policy to the plaintiffs. > ■ ■ The judgment and order should be affirmed, with costs. All concurred, Judgment and order affirmed, With costs,