Grace v. American Central Ins. Co.
109 U.S. 278 (1883)

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U.S. Supreme Court

Grace v. American Central Ins. Co., 109 U.S. 278 (1883)

Grace v. American Central Insurance Company

Argued October 19, 1883

Decided November 19, 1883

109 U.S. 278

Syllabus

1. A fire insurance policy contained this clause:

"This insurance may be terminated at any time at the request of the assured, in which case the company shall retain only the customary short rates for the time the policy has been in force. The insurance may also be terminated at any time at the option of the company, on giving notice to that effect and refunding a ratable proportion of the premium for the unexpired term of the policy. It is a part of this contract that any person other than the assured who may have procured the insurance to be taken by this company shall be deemed to be the agent of the assured named in this policy, and not of this company under any circumstances whatever, or in any transactions relating to this insurance."

Held that this clause imports nothing more than that the person obtaining the insurance was to be deemed the agent of the insured in matters immediately connected with the procurement of the policy; that where his employment did not extend beyond the procurement of the insurance, his agency ceased upon the execution of the policy, and subsequent notice to him of its termination by the company was not notice to the insured.

2. Parol evidence of usage or custom among insurance men to give such notice to the person procuring the insurance was inadmissible to vary the terms of the contract.

3. The doctrine reaffirmed that when jurisdiction of the circuit court depends upon the citizenship of the parties, such citizenship, or the facts which in legal intendment constitute it, must be distinctly and positively averred in the pleadings or appear affirmatively and with equal distinctness in other parts of the record. An averment that parties reside or that a firm does business in a particular state or that a firm is "of" that state is not sufficient to show citizenship in such state.

4. Where the record does not show a case within the jurisdiction of a circuit court, this Court will take notice of that fact although no question as to jurisdiction had been raised by the parties.

This is an action upon a policy of fire insurance issued September 26, 1877, by the American Central Insurance Company of St. Louis to the firm of William R. Grace & Co.

The circumstances under which it was issued are these:

A

Page 109 U. S. 279

clerk of William R. Grace & Co., charged with the duty of effecting insurance against loss by fire upon their property, employed one W. R. Moyes, a broker in the City of New York, to obtain insurance in a specified amount for his principals. Moyes instructed one Anthony, an insurance broker and agent in Brooklyn, who had on previous occasions obtained policies for Grace & Co., to procure the required amount of insurance. Anthony obtained the policy in suit from the general agents in New York City of the defendant company, mailed or delivered it to Moyes, and by the latter it was delivered to Grace & Co. not later than the day succeeding its date. On the morning of October 6, one Carrol, for the insurance company, verbally notified Anthony that the company refused to carry the risk and required the policy to be returned. There is some conflict in the testimony as to what occurred between Carrol and Anthony on this occasion. But in the view which the court takes of this case, it may be conceded that Anthony gave Carrol to understand that the policy would be returned to the company or its agents. The property insured was destroyed by fire on the night of October 6, 1877, or early on the morning of the 7th. Prior to the fire, neither the insured nor their clerk by whose instructions the policy was obtained had any knowledge or notice of the conversation between Carrol and Anthony or of the fact that the company had elected not to carry the risk. At the trial, it was admitted that the contract between the parties was fully executed upon the delivery of the policy to the insured.

The eighth clause of the policy is in these words:

"This insurance may be terminated at any time at the request of the assured, in which case the company shall retain only the customary short rates for the time the policy has been in force. The insurance may also be terminated at any time at the option of the company, on giving notice to that effect and refunding a ratable proportion of the premium for the unexpired term of the policy. It is a part of this contract that any person other than the assured who may have procured the insurance to be taken by this company shall be deemed to be the agent of the assured

Page 109 U. S. 280

named in this policy, and not of this company, under any circumstances whatever, or in any transaction relating to this insurance."

The court refused, although so requested by plaintiffs, to rule that Anthony was not, within the meaning of the policy, their agent for the purpose of receiving notice of its termination, but charged the jury in substance that Anthony was for such purpose to be deemed the agent of the insured. Exception was taken in proper form by plaintiffs, as well to the refusal to give their instruction, as to that given by the court to the jury. A verdict was returned for the company, and judgment thereon was entered.

Page 109 U. S. 281

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