U.S. Supreme Court
Hartford Fire Ins. Co. v. Wilson, 187 U.S. 467 (1903)
Hartford Fire Insurance Company v. Wilson
Argued November 10, 1902
Decided January 6, 1903
187 U.S. 467
Where a policy of insurance is written at the request of a broker, and delivered to him by the agent of the company on his promise not to regard it as binding until the company shall have inspected and accepted the risk, the policy being subject to immediate cancellation, and the company thereafter promptly inspects and rejects the risk, and the agent of the company so notifies the broker, who thereupon agrees to return the policy, and no premium is charged or paid as between the broker and agent, there is no final and absolute delivery of the policy, but the delivery is conditional only; and, as no completed contract of insurance is ever actually entered into, the fact that the policy, by inadvertence on the part of the broker, is not returned as promised to the agent, but is sent to the person named therein as insured, will not render the insurance company liable in case the building insured is destroyed by fire, even though the policy came into the bands of the insured prior to the fire and without any knowledge on his part of the action of the company or the mistake made by the broker in delivering the policy.
This case was commenced in the Supreme Court of the District of Columbia by Albert A. Wilson and John B. Larner, trustees, against the Hartford Fire Insurance Company to recover upon two policies of insurance, charged to have been executed and delivered by the company to the plaintiffs on April 17, 1895, and insuring certain property of the Ivy City Brick Company, for the benefit of the trustees, the plaintiffs. The declaration alleged the destruction by fire of the property on May 17, 1895, notice of the loss to the company, and its refusal to pay. After the pleadings had been completed, the case was submitted to the court upon an agreed statement of facts. The facts agreed upon, so far as they are pertinent to the question presented, are as follows:
"1. Prior to April 17, 1895, C. C. Duncanson, treasurer of the Ivy City Brick Company of the City of Washington, D.C., authorized the firm of Tyler & Rutherford, of said city, at their
request, to place insurance for the company, loss, if any, payable to Albert A. Wilson et al., trustees under a deed of trust given by said company, as interest might appear, said Duncanson averring the amount to be placed to be the sum of ten thousand dollars ($10,000), and Tyler & Rutherford averring a much larger sum."
"On said April 17, 1895, said Tyler & Rutherford, under the aforesaid authority, proposed to one Barrett, an agent at said City of Washington, of the Hartford Fire Insurance Company, of Hartford, Connecticut, for insurance on properties of the said Ivy City Brick Company."
"2. Said Barrett stated to said Tyler & Rutherford that the proposed risk was a special hazard, and that the doubted his authority to accept it before reference to his principal, but that he would issue policies amounting to $2,000, equally divided on the buildings and machinery, upon the condition that the same should be held by said Tyler & Rutherford, and not delivered to their principals until the decision of the Hartford Fire Insurance Company on the acceptance of the risk was duly had, and should be subject to immediate cancellation (the five days' notice in the policy conditions being waived) by notice that said company rejected the risk."
"3. This condition was accepted by said Tyler & Rutherford, and the two policies of insurance in the declaration set forth were thereupon written and placed in their hands."
"4. A short time thereafter, to-wit, on the 27th day of April ensuing on the first inspection visit to Washington after the issue of said policies, William R. Royce, the special agent of the Hartford Fire Insurance Company, known by said Tyler & Rutherford to be the representative of the company, having authority to inspect, confirm, or cancel risks for and in behalf of said company, went to the office of said Tyler & Rutherford and informed them that the Hartford Fire Insurance Company refused to carry the risk, and ordered the cancellation of the said policies, and on the same day the said Barrett, being on his way to the office of Tyler & Rutherford, met R. K. Tyler, a member of that firm, who had made the negotiation for the policies, had the same in his custody, and had exclusive charge
of the matter, and announced to him that the company ordered their cancellation; to which the said Tyler responded, 'All right; send up and get them.'"
"5. The said Barrett sent three times to the office of Tyler & Rutherford for the policies. Each time his employee was informed by one of the clerks of Tyler & Rutherford that Mr. R. K. Tyler, who had charge of the policies, was absent from the office, and they would have to see him."
"6. Said Barrett was taken sick and did not appear at his office for some days, but had immediately ordered the entry clerk to make the customary entry in such cases on the register where the policies were noted, 'Canceled by order of the company,' which was accordingly done."
"7. On the first day of May ensuing, the customary mutual accounts of business between the offices of said Barrett and said Tyler & Rutherford were settled, and the two policies were treated as dead, no charge for their premiums being presented on the one hand or asked for on the other."
"8. The existence of the two policies was never reported to the said Duncanson, nor to anyone connected with said Ivy City Brick Company by mortgage or otherwise, nor did he or they have any knowledge of or connection with said policies until they came into the hands of said Duncanson on May 16, 1895, and at no time prior to the fire had any party connected with or interested, by mortgage or otherwise, in the Ivy City Brick Company any knowledge of the transaction between said Barrett and said Tyler & Rutherford hereinbefore set forth."
"9. The two policies had been overlooked by Tyler & Rutherford, and lay in the drawer along with a number of other policies issued by other insurance companies which had been secured by said Tyler & Rutherford for the purpose of filling the above order. Of this fact no one connected with the Ivy City Brick Company in any interest whatever was informed until after the fire."
"10. Tyler & Rutherford had found great difficulty in procuring the desired insurance, and aver that the entire amount proposed was never secured. Some of the agencies insisted on the same conditions as to cancellations as those fixed between
said Barrett and said Tyler & Rutherford, and cancellation by orders of the different companies were so frequent that said Tyler & Rutherford could not, at any time before May 16, know how much of binding insurance was in hand. Of all these facts the said R. K. Tyler avers that he informed the said Duncanson in the progress of the effort to secure insurance and some time prior to the fire. The said Duncanson denies that he had information as to any of these facts at any time prior to the fire, except the fact that there was difficulty in procuring the desired insurance. No specific mention, however, of the two policies of the defendant was made to sct that there was difficulty in procuring the desired insurance. No specific mention, however, of the two policies of the defendant was made to sct that there was difficulty in procuring the desired insurance. No specific mention, however, of the two policies of the defendant was made to said Duncanson or anyone connected in any interest with the Ivy City Brick Company."
"11. On the 16th of May, 1895, a clerk of Tyler & Rutherford was directed to make up the account of the policies on hand and put them in a package for delivery. The two policies of the Hartford Fire Insurance Company, which had been overlooked and were then lying in the same drawer with the other policies taken in fulfillment of this order, were included in the account and placed in the package with said other policies by said clerk of Tyler & Rutherford without the personal knowledge of said Tyler & Rutherford, and both were handed to said Duncanson by said R. K. Tyler, said Tyler not examining the same. Said Duncanson took the package and engaged to pay the account on the Monday week following, to-wit, May 27, 1895."
"12. On the morning of May 17, after the fire, which occurred about 1 o'clock A.M. on that day, said R. K. Tyler came to said Duncanson and asked for the return of the two policies, stating that they had been handed him by mistake and the fact of their previous cancellation, said Tyler averring that he did not know that the property described as insured had been destroyed. Later on that day, when the fact was known that the property described in the policies was destroyed, Tyler & Rutherford, by telephone, informed the Washington Loan & Trust Company, the beneficiary of the trust held by Wilson et al., trustees, that the Hartford policies had been delivered by mistake, and requested it to send back the two policies, and were answered that they were locked up, but would be returned the next morning. "
"Of this request and answer by the telephone it is agreed that the Ivy City Brick Company knew nothing at the time, and when informed of said request directed that the policies be not returned. The policies were not returned, and sundry correspondence followed between said Tyler & Rutherford, said Duncanson, and the Washington Loan & Trust Company, in the course of which said Duncanson sent a check to Tyler & Rutherford for the settlement of the account above referred to. Tyler & Rutherford refused said settlement, stating that the two policies of the Hartford were void and had been sent in by mistake, and returned the check, with a corrected account, excluding these policies. The correspondence between said Duncanson, said Tyler & Rutherford, and said Washington Loan & Trust Company and the policies sued on may be filed with this statement and considered as part of this agreed case."
The policies, which are alike, contained the following provisions:
"No. 20,229 $1,000"
"By this policy of insurance, the Hartford Fire Insurance Company, of the City of Hartford, in the State of Connecticut, in consideration of the stipulations herein named and of seventeen and 50-100 dollars premium, does insure Ivy City Brick Company for the term of one year from the 17th day of April, 1895 at noon, to the 17th day of April, 1896 at noon, against all direct loss or damage by fire, except as hereinafter provided, to an amount not exceeding one thousand dollars, to the following described property, while located and contained as described herein, and not elsewhere, to-wit: Ivy City Brick Company. $1,000. On machinery of every description, dryers, cars, apparatus, equipments, and tools, contained in their one-story brick and frame structure with metal roof (about 118 x 165 feet) and one-story frame and brick addition with metal roof. Situate on their tract known as 'Ivy City,' about one mile northeast of Washington, D.C. Other concurrent insurance permitted without notice until required. Loss, if any, payable as interest may appear to Albert A. Wilson and John B. Larner, trustees. (Mortgagees' clause with full contribution attached.)
Attached to and made a part of policy No. 20,229 of the N.Y. Underwriters' agency."
"Thos. F. Barrett, Agent"
"* * * *"
"This policy shall be cancelled at any time at the request of the insured, or by the company, by giving five days' notice of such cancellation. If this policy shall be cancelled as hereinbefore provided, or become void or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy or last renewal, this company retaining the customary short rate, except that, when this policy is cancelled by this company by giving notice, it shall retain only the pro rata premium."
"* * * *"
"This policy is made and accepted subject to the foregoing stipulations and conditions together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto, and no officer, agent, or other representative of this company shall have the power to waive any provision or condition of this policy except such as by the terms of this policy may be subject of agreement indorsed hereon or added hereto, and as to such provisions and conditions no officer, agent, or representative shall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached."
"In witness whereof, this company has executed and attested these presents this seventeenth day of April, 1895."
"This policy shall not be valid until countersigned by the duly authorized agent of the company at Washington, D.C."
"Geo. L. Chase, President"
"P. C. Royce, Secretary"
"Thos. Turnbull, Ass't Secretary"
"Chas. E. Chase, 2d Ass't Secretary"
"Countersigned by --"
"Thos. F. Barrett, Agent"
Upon these facts, judgment was, on December 13, 1899, entered in favor of the defendant. This judgment was taken on appeal to the Court of Appeals of the District and by that court on June 12, 1900, reversed, and the case remanded with directions to enter judgment for the plaintiffs. 17 D.C.App. 14. Thereupon the case was brought here upon certiorari. 181 U.S. 617.