Insurance Company v. Colt,
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87 U.S. 560 (1874)
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U.S. Supreme Court
Insurance Company v. Colt, 87 U.S. 20 Wall. 560 560 (1874)
Insurance Company v. Colt
87 U.S. (20 Wall.) 560
1. When the charter of an insurance company, in the same clause which authorized its president and directors to make insurance against fire, and for that purpose to execute such "contracts, bargains, agreements, policies, and other instruments" as might be necessary, declared that every such contract, bargain, agreement, and policy should be in writing or in print and be under the seal of the corporation and be signed by the president and attested by the secretary or other officer appointed for that purpose, held that this requirement of the charter had reference only to executed contracts or policies of insurance, and not to the initial or preliminary arrangements for insurance which precede the execution of the formal instrument by the officers of the company.
2. An agent for an insurance company authorized to take and approve risks and to insure is by general usage also authorized to allow credit for the premium. Its allowance does not impair the validity of the preliminary contract to insure.
3. When a preliminary contract for insurance is valid, it may be enforced in a court of equity against the company, and being enforced by the procurement of a policy, an action can be maintained upon the instrument, or the court, in enforcing the execution of the contract, may enter a decree for the amount of the insurance.
4. When an agent is authorized, after a preliminary contract for an insurance is made by him, to fill up a blank policy duly signed and attested by the officers of the company sent to him for the purpose, he is authorized to fill up such policy after a loss has occurred. When thus filled up, the policy becomes the property of the assured, and upon a refusal of the company to surrender it, two courses are open to him: either to proceed by action to recover the possession of the policy or to sue upon the policy to recover for the loss, and in the latter case to prove its contents upon failure of the company to produce the instrument on the trial.
6. Where, at the time the preliminary contract for an insurance is made, it is expressly stipulated that the policy when filled up shall be held by the agent in his safe for the assured, no actual manual transfer of the policy to the assured after its execution is essential to perfect his title.
Error to the Circuit Court for the District of Connecticut, in which court Colt sued the Franklin Insurance Company of Philadelphia on a policy of insurance which he alleged had been executed by the company, an allegation on its part denied.
The uncontradicted case was thus:
The insurance company aforesaid was one incorporated
by Pennsylvania and having its principal office in Philadelphia. One section of its charter gave to its president and directors power to appoint such "agents" as should be necessary for conducting and executing its business elsewhere than in Philadelphia as well as in that city, and the company accordingly was doing business in Hartford, Connecticut, and had as its general agents there for the transaction of its business of fire insurance, with power to take and approve risks and insure and countersign policies, a firm known as Nevers & Havens.
Another section of the charter, the eighth, was in these words:
"§ 8. The said president and directors shall have full powers on behalf of the said corporation to make insurance against losses by fire on any house, tenement, manufactory, or other building . . . and to make, execute, and perfect such and so many contracts, bargains, agreements, policies, and other instruments, as shall or may be necessary and as the nature of the case shall or may require, and every such contract, bargain, agreement, and policy to be made by said corporation shall be in writing or in print and shall be under the seal of the said corporation, signed by the president and attested and signed by the secretary or other officer who may be appointed by the president and directors for that purpose."
With this charter in force, the said Nevers & Havens, as agents of the company, on the 26th of August, 1870, made proposals to Colt to insure certain premises belonging to him. He thereupon made an application for insurance for the sum of $10,375, from August 26, 1870, for a term of five years, to be placed in the company. And a parol contract of insurance was then completed with the said Nevers & Havens, agents as aforesaid, to insure this said property with the company for five years from the said date, the insurance to be binding on and from that date, at a premium then fixed and agreed to. Credit was given for the payment of the premium till the 1st of October then next, and it was agreed that a policy should be made and that Nevers & Havens should keep it in their possession for Colt till the
1st of October, for his convenience, he saying that he had then no safe and convenient place in which to keep papers of that character.
The property was destroyed by fire without fault of Colt, on the 20th day of September, 1870, and proofs of loss were duly made and presented.
No policy was made until after the fire, when Nevers & Havens, upon the request of Colt, filled out a blank policy of the company, properly signed and countersigned. They declined, however, to surrender the possession of the same to Colt till they should have consulted the company.
The company had no knowledge of the said negotiations or of the contract to insure (except as the knowledge of the said agents might be the knowledge of the company) till after the fire, and no communication respecting the negotiations or contract had been made by Nevers & Havens to it till after the fire.
The policy was subsequently, after such consultation, returned by the agents to the company.
Colt tendered to the agents the premium on the 22d of September, 1870, and demanded the policy, and it not having been produced, he demanded the insurance money (again tendering the premium), and, the insurance money being refused, he brought suit against the company at law, and on the trial proved the contents of the policy.
The counsel for the defendant requested the court to charge the jury:
1st. That the eighth section of the company's charter prescribed the manner in which every contract, bargain, and agreement of insurance should be made, and that no contract having been made in writing or print and executed as therein required during the existence of the property claimed to have been insured, the company was not liable in the action.
2d. That under and by virtue of the charter of the company, it was not authorized to make a parol contract of insurance, and that any such contract was void at law.
3d. That under the said charter an action at law could not
be sustained against the company upon a parol agreement to insure or a parol contract of insurance.
4th. That it being a fact in this case admitted by the plaintiff that the parol contract of insurance was not executed or evidenced by a written policy until after the destruction of the property by fire, the company's agent had no authority subsequent to the fire to make and execute a written policy which should be binding upon it.
The court refused thus to charge the jury, and charged, contrariwise, that upon the uncontradicted case, the plaintiff was entitled to their verdict. To this charge the company excepted, and verdict and judgment having gone against it, it brought the case here.