A perusal of the facts dictates as follows:
A New York Family Lawyer said the company managed largely through its secretary-treasurer was a general lines agent in Orlando for an Accident and Indemnity Company (“Indemnity Company”), with offices just next door to defendant-owner, who by coincidence was in the life insurance business.
On 9 October 1963, defendant-owner contacted the agent, asking for a 24 hour binder liability policy until defendant-owner could come by the agent’s office the following day to get further insurance. The agent complied with the request and bound defendant-owner for 24 hours, and arranged a meeting the following day to give defendant-owner an extended coverage, as requested. The following day, 10 October 1963, the day before his son was to drive the automobile to Tampa, defendant-owner came by the agent’s office to consummate the coverage. The agent filled out defendant-owner’s application, inserted 10 October 1963 as the effective date of the policy, and accepted defendant-owner’s premium of $27.80 at that time. It was near closing time in the agent’s office when he was interrupted by a telephone call, and, being anxious to leave the office anyway, he simply indicated to one of his secretaries to take defendant-owner’s application and money and to give defendant-owner a receipt for the premium, not even bothering in his haste to get defendant-owner’s signature on the application. In the application, which the agent filled out by questions and answers from defendant-owner, all automobile accidents and traffic violations he or his family had during the previous three years were listed by defendant-owner, who also stated that one insurance company had cancelled his insurance because of a disclosed accident. On that same Thursday, 10 October 1963, the application was sent to the indemnity company office in Orlando.
On 12 October 1963, an automobile accident occurred; the indemnity company was notified of the accident on the same day; and on 15 October 1963, the company refused to issue the policy.
A New York Criminal Lawyer said an action for damages for personal injuries in an automobile accident was filed by plaintiff, by her father and next friend.
On 5 November 1964, plaintiff recovered a judgment against defendants in the amount of $16,546.10; against defendant-driver and defendant-owner of the automobile found at fault.
On 30 December 1964, plaintiff procured the issuance of a writ of garnishment against the Accident and Indemnity Company requiring them to disclose any indebtedness to defendant-owner.
The company denied any indebtedness to defendant-owner.
On 18 January 1965, plaintiff traversed the aforesaid denial and alleged that the company was indebted to defendant-owner in the amount of $10,000.00 upon an automobile liability insurance policy issued by the company in favor of defendant-owner and that the policy was in force on the day of the automobile accident, 12 October 1963.
On 18 November 1965, the court entered a final judgment in favor of the company and against plaintiff.
Plaintiff files an appeal.
The main issue: At the time of the accident, was the company bound on a policy of liability insurance to defendant-owner?
There can be no question as to the authority of the agent. A written standard agency contract was in force whereby the agent could accept premiums for the indemnity company and issue a receipt for the same, sell policies, and even orally bind the indemnity company for all its policies, except what was known as the ‘economy’ type of policy. A Nassau County Family Lawyer said evidence indicates that the agent was using the indemnity company’s letterheads, binder forms, stationery, application forms, etc., all furnished by the indemnity company, which would bring the agency relationship. Also, when defendant-owner paid his $27.80 to the agent for what he understood was an insurance coverage, the agent gave him a credit form receipt.
Under the law, acts of an insurance agent within the scope of his real or apparent authority are binding upon his principal and the general public may rely thereon and do not need to inquire as to the special powers of the agent unless circumstances are affirmatively such as to put them upon inquiry.
In other words, an agent can contract for insurance so as to bind his company if he has the real or apparent authority, and the insurer is bound by the acts of its agent if within the scope of his apparent authority and the insured is not aware of any limitation thereon.
The powers of insurance agents are governed by the general laws of agency, and an agent possesses powers conferred on him by his principal, or such as third persons are entitled to assume he possesses under the circumstances.
Another principle of law influencing the instant case is the doctrine of estoppel.
When an insurance company makes its local agent its medium through which it receives all benefits from the insured, the company is estopped to deny the agent’s authority when benefits to the insured are involved.
A general agent of an insurance company, or an agent who, although called local agent because restricted to a particular locality, has general powers, may bind the company by waiver or estoppel so as to preclude the company from relying on irregularities or even on provisions contained in the contract of insurance with respect to conditions on which it shall have inception.
Here, a Queens Family Lawyer said the agent accepted defendant-owner’s premium money, gave him a receipt specifying the money was for auto insurance, and dated the application as the effective date of the coverage; all on the same date, 10 October 1963. The agent did not tell defendant-owner that he did not have then and there effective coverage, but on the contrary by his every act, doing, and statement, led defendant-owner unerringly to believe and assume that he had interim effective liability insurance. The company is therefore estopped to deny the legal effect of the agent’s actions, and the indemnity company is likewise estopped under the general law of agency and also because of the statutory powers of a general lines agent.
The Rationale behind the principle is: “otherwise, in case of loss subsequent to the application and prior to its acceptance or rejection the insured would not be covered, whereas if loss had not occurred during such a period, he would, in case of acceptance of the risk, have had to pay a premium covering it.”
On the issue of previous undisclosed cancellations of rejection by other companies of defendant-owner’s policies, the objection is effectually eliminated by the frank testimony of the casualty underwriting superintendent for the indemnity company to the effect that it ‘wouldn’t have made any difference’ in the issuance or rejection of the policy so long as the indemnity company disclosed the reasons why his previous policies had been cancelled or rejected, which defendant-owner had done in explaining one cancellation.
The application contained the statement ‘I understand that no insurance is afforded unless and until this application is accepted by the Company,’ but this clearly referred to a Permanent policy for which the application was prepared and sent to the indemnity company, and did not apply to an Interim insurance policy, as to which the agent had full authority to bind the indemnity company for a period of ten days, even with the ‘economy’ policy. This authority to bind interim insurance was for the obvious purpose of providing coverage while applications for permanent insurance were pending.
On the issue that the application filled out in was not signed by defendant-owner is of no material consequence. The oversight was occasioned by the hasty desire of the agent to leave his office. Moreover, the filling out and handling of the application was strictly the agent of the insurer and not defendant-owner. And if the application was not in fact signed, such physical act must be deemed to have been waived. Certainly the information contained therein was furnished by defendant-owner, and to such extent the application for insurance was ‘made’ by him.
Accordingly, judgment is reversed and the case is remanded with directions to enter a judgment in garnishment in favor of plaintiff and against the garnishee; the company was bound on the policy of liability insurance to defendant-owner.
Are you in a similar situation as the above mentioned case? If you are, you must know and understand the legal steps available to you for the enforcement and protection of your rights. Fortunately, Stephen Bilkis & Associates provides free consultation for you to be apprised of your legal options. Have a talk with our Queens Personal Injury Attorneys or our Queens Automobile Accident Attorneys.