O'Brien v. New Zealand Insurance

Garoutte, J. This is an action upon a contract of fire insurance, and defendant is appellant, as is usual in that class of cases. One Peters was defendant’s local agent in the town of Reedly, Fresno county, and under his commission as agent he had no authority to enter into a contract of insurance. But he was appointed subagent “to receive proposals for insurance, and fix [229]rates of premium, and to receive money for policies and certificates of insurance.”

Upon July 2, 1892, plaintiff O’Brien made a written application to Peters, upon one of defendant’s blanks, for insurance upon his saloon, building, and fixtures. This application, accompanied by a letter from Peters, was deposited in the postoffice July 5th, addressed to defendant at San Francisco. The letter referred to the inclosed application, with the suggestion that the company should place the insurance, if it was deemed advisable. The plaintiff’s building was occupied as a liquor-saloon, and defendant did not take insurance upon saloons, and the agent, Peters, knew this fact. When the application was made the agent informed plaintiff that he was insured from that time. Upon July 4th, which was between the time of the making of the application and the time when the application was mailed to defendant, the property was destroyed by fire. It thus appears that the building was destroyed not only before the application for insurance was passed upon by the defendant, but before the application was ever heard of by the company.

As suggested, the agent Peters had no authority to enter into a contract of insurance with plaintiff. His powers did not go to that extent. Under a commission of authority in all material respects similar to the authority possessed by Peters it was held, in Stewart v. Helvetia etc. Fire Ins. Co., 102 Cal. 218, that the agent had no actual authority to enter into a contract of insurance. In that case it was an application for the renewal of a policy, and the court said: “The proposal of plaintiff made to such agent for a renewal of said policy was, until communicated to and accepted by defendant, nothing more than a mere offer upon the part of plaintiff to renew such policy.” That there was no actual contract of insurance in this case, as far as defendant is concerned, is apparent at a glance, for the contract could only be made with the defendant, and the defendant knew nothing of it. The defendant had the right to [230]