Walters v. West American Insurance

SCOTT, J., pro tem. Plaintiff recovered judgment against one Lerner for injuries caused by the latter’s automobile, and thereafter brought this suit against defendant insurance company alleging it to be liability insurance carrier of Lerner. Judgment was awarded to plaintiff, from which this appeal is taken.

The trial court found that appellant had entered into an oral contract of insurance with Lerner insuring him against liability for injury or death of another by reason of the operation of his automobile, and that said oral contract included the right of an injured third person to sue the company on a judgment recovered against the insured.

The transaction involved, in . addition to appellant, two individuals, Laswell and Graves, and a corporation, Commercial Discount Company. The discount company was in the business of buying automobile sales contracts at discount. It owned a majority of appellant’s stock, occupied same quarters with it and one man was vice-president of both [583]concerns, exercising general supervision of operations of both. Discount company was authorized to write policies of insurance in and for appellant insurance company providing coverage usually demanded by vendors in cases of such automobile contracts, not including public liability. It is conceded that Graves was a soliciting agent of appellant, having a license as such agent issued by the state insurance commissioner, was a customer of the discount company and had never written any policy of insurance but had received and transmitted applications and premiums. Laswell conducted an automobile loan business for himself in the same office with Graves, and handled his insurance under Graves’ license. It was admitted that Graves and Laswell were not general agents with authority to write out policies in their own office.

Lerner, owner of the automobile which injured plaintiff, secured a loan on his car from Laswell, transferred the pink certificate of ownership to the latter and signed a conditional sales contract, credit statement and application for insurance. A memorandum was also signed noting his request for public liability insurance. Lerner paid for such liability coverage a premium of $24. It was understood that the liability insurance had nothing to do with the loan or the vendor’s insurance, although the premium was to be paid out of the proceeds of the loan. The documents were transmitted to the discount company, where the loan was discounted and the policies, except for public liability, were issued but were kept in files of the discount company; except that no application for liability insurance or premium therefor was ever sent to appellant or to the discount company and said policy was never issued, although the premium was not returned to applicant and he was not told that his application had been rejected. Lerner was told by Laswell that he would procure such insurance for him in a strong insurance company, but no specific company was named. There is nothing to indicate that he understood such policy would be in effect until it had been thus procured, that is, until there had been an acceptance by the company.