American Casualty Co. v. Ricas

Forsythe, J., delivered the opinion of the Court. The appeal in this case is from a decree of the Circuit Court for Baltimore County decreeing that a policy of ⁶²⁹ insurance issued on June 23rd, 1938, by the appellant, the American Casualty Company of Reading, Pennsylvania, a corporation, to the appellee, Charles T. Ricas, be reformed so that the said policy became effective from June 15th, 1938. From the record, it appears that on June 15th, 1938, the appellee Ricas, having purchased an automobile, called his friend Samuel Wormser, who had written life insurance for him, and asked him to secure two policies of insurance, one covering fire and theft, and one covering property damage and public liability. Wormser immediately called up the Insurance Service Corporation, and placed with it an application for the two policies.

The Insurance Service Corporation was the agent in Baltimore for a number of insurance companies, one of which was the appellant. The Insurance Service Corporation, through a Miss Belle T. Ziff, who was the secretary of the corporation, placed the application for the fire and theft policy with the Insurance Company of the State of Pennsylvania, and a policy was issued effective as of June 15th, 1938. On the same day, June 15th, 1938, Miss Ziff informed Wormser that the application for the property damage and public liability policy would be submitted to the appellant, the American Casualty Company, for its approval and that the acceptance of the policy would depend upon an investigation which would have to be made because the business in which the appellee was engaged, that of conducting a lunch room, was on the prohibitive list, and a policy could not be issued without the approval of the company. Wormser admitted he had been told that the acceptance of the risk depended upon an investigation, but he did not inform Ricas that his application had not, at that time, been accepted, but left him under the impression the policy had been issued, and he was insured.

On June 15th, Miss Ziff submitted the appellee’s application to the appellant in a letter in which she asked the company “to rush” approval. The appellant, in a letter dated June 17th, acknowledged receipt of the application, ⁶³⁰ and said, “in view of the occupation of this risk we are arranging to have this line inspected and just as soon as same has been completed we shall be pleased to advise as to the acceptance of the line, thanking you to mark your records accordingly.” On the same day the above letter was written, the appellee had an accident in which the automobile sought to be covered was involved. But it does not appear in the record that the appellant had notice of that accident. When this case was heard below, practically all the facts were admitted, and the only disputed question was whether Wormser, at the time the application was secured, and also at the time the policy was issued, was an agent of the appellant with authority, either express, or implied, to make a contract of insurance binding upon the appellant.

And that is the only question raised on this appeal. The evidence upon which that question must be determinéd is found, principally, in the testimony of Wormser, and of Miss Ziff. In this testimony, it appears, Wormser had a rather vague idea of his exact status in the insurance business. He was a life insurance solicitor, and, from time to time, submitted applications to agents of insurance companies for other kinds of insurance.

On direct examination Wormser testified he was the agent of the appellant, and had submitted a number of applications to it through Miss Ziff. But later in his testimony, Wormser admitted that he was an “independent solicitor,” and placed his business through agents of various companies; that he had no “contract of employment” with the appellant, or with any other companies; that when he turned in an application for insurance to an agent, that agent was at liberty to place it with any company represented by the agent; that he never knew with which companies his applications would be placed. Also, Wormser testified he “never had anything but a solicitor’s license.” The record discloses that at the time he gave the appellee’s application to the Insurance Service Corporation, he had no license of any kind. ⁶³¹ Courts everywhere have carefully considered various transactions between insurance companies and the public, and have fixed by settled rules of law, the respective rights, powers, authority and liabilities of all who in any way are connected with the business, whether principal, agent, broker or solicitor. The first uniform rule is that whether an agency in fact has been created, is to be determined by the relations of the parties as they exist under their agreements, or acts.

The question ultimately is one of intention. 2 Am. Jur., sec. 24, p. 26, Restatement (Agency) sec. 8. Authorities everywhere agree that an insurance agent, so far as the insurer is concerned, is a person expressly or impliedly authorized to represent it in dealing with third parties in matters relating to insurance, and an insurance solicitor, or broker, is one who acts as a middle man between the assured and the insurer, and who solicits insurance from the public under no employment from any special company, but having secured an order, either places the insurance with a company selected by the assured, or in the absence of any selection by him, then with a company selected by the broker. Ordinarily, the relation between the insured and the broker is that between principal and agent.

An insurance broker is ordinarily employed by a person seeking insurance, and when so employed, is to be distinguished from ordinary insurance agent, who is employed by insurance companies to solicit and write insurance by, and in the company. 29 Am Jur. sec. 86, p. 110; Cyclopedia of Insurance Law, Crouch Vol. 2, p. 1298; Gay v. Lavinia State Bank, 61 Mont. 449 , 202 P. 753 , 18 A. L. R. 1204; Arff v. Star Fire Ins. Co., 125 N. Y. 57 , 25 N. E. 1073 , 10 L. R. A. 609, 21 Am. St. Rep. 721 ; Pacific Fire Ins. Co. v. Bowers, 163 Va. 349 , 175 S. E. 763 ; Abuc Trading & Sales Corp. v. Jennings, 151 Md. 392, 410 , 135 A. 166 .

In this case the fact is clearly established by Wormser’s own testimony, that at the time he placed the appellee’s application with the Insurance Service Corporation, he was not a duly selected, or appointed, agent of the appel ⁶³² lant. From all the facts as disclosed in the record, and in accordance with the rules as above stated, it is clear the legal conclusion