Detroit Trust Co. v. Transcontinental Insurance of New York

THOMPSON (R. L.), J.

This is an appeal from a judgment in favor of plaintiff in an action for indemnity on a fire insurance policy.

The plaintiff is the trustee of the Feather River Pine Mills Company, which operates its lumber-mills near Oroville in Butte County. It was successor to the Hutchinson Lumber Company. In 1923 a trust indenture was executed by the first-mentioned company to the plaintiff by the terms of which it was provided the trustee should keep the milling property insured for eighty per cent of its insurable value, payable in the name of the trustee. Marsh & McLennan were general insurance agents. However, for several years this company had acted as brokers for the milling company

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in procuring, its insurance and for this purpose became its agent. Mr. Land, president of the Feather River Pine Mills Company, testified, “They (Marsh & McLennan) were acting as our brokers.” They were not the agents of the defendant Insurance Company. Mr. Hoditz, chief accountant of this brokerage company, testified: “Marsh & McLennan did not . . . act as general agents for the Transcontinental Insurance Company of New York. Marsh & McLennan had nothing to do with the writing or issuance by the Transcontinental Insurance Company of New York of its policy numbered 79,348.” Pursuant to directions from the plaintiff said brokers procured and forwarded to it September 1, 1927, several policies of insurance on the milling plant, equipment and stock on hand aggregating a large sum of money. Included among these policies was one numbered 79,348 for $2,500 written by the defendant Insurance Company. The uniform rate of premiums on these policies had formerly been 1.319 per cent. According to custom a large amount of insurance such as is involved in this transaction was apportioned among twenty or more insurance companies so as to divide the liability. This was done in the present instance. The defendant company carried only this one small policy and another one for $6,500, which is not involved in this action. In 1927 the general rate of all such policies was increased by the Pacific Board of Underwriters to 3.14 per cent. The various insurance companies which had executed these policies had charged plaintiff’s brokers with the premiums at the increased rate of 3.14 per cent. This increased rate of insurance was charged from July 15, 1927. On September 16, 1927, seventeen of these policies, aggregating the sum of $348,750, including the $2,500 policy which is involved in this action, were returned by the plaintiff to its said agents, Marsh & McLennan, accompanied with a letter which reads in part: “Confirming conversation of yesterday, together with understanding, we advise as follows: You will cancel without charge to us, for either the so-called earned premium or otherwise, the following policies: . . . 79,348, Transcontinental, $2,500. . . . The above policies were handed to you by the writer on yesterday with advice that we would not pay for these policies and would not want any policies issued at figures above our old rate, namely, 1.319.”