Hankins v. Public Service Mutual Insurance

⁷² Collins, J., delivered the opinion of the Court. This is an appeal by James Edward Hankins and Ralph A. Hamer, appellants, from a declaratory judgment declaring Public Service Mutual Insurance Company, appellee, not liable, under a certain policy of liability insurance issued by the appellee, by reason of an automobile accident on August 26, 1946. On February 16, 1945, the appellee issued to the appellant, James E. Hankins, a policy of insurance from February 13, 1945, designated as a non-assessable participating national standard automobile liability policy. The effective term of this policy was one year which was extended for an additional year to February 13, 1947.

The policy in effect was an agreement on the part of the appellee to pay on behalf of Hankins all sums for which he might become obligated to pay as damages for personal injury, death and property damage arising out of the ownership, maintenance or use of his automobile. The policy contained the provision that there would be no liability on the part of the appellee unless, as a condition precedent thereto, Hankins should have fully complied with all the terms of the policy. The policy also contained the provision “when an accident occurs written notice shall be given by or on behalf of the insured to the company or any of its authorized agents as soon as practicable”. On the reverse side of the policy was also the following: “IMPORTANT—Every Accident, HOWEVER SLIGHT, MUST IMMEDIATELY Be Reported To The Home Office Of The Company”.

On August 26, 1946, the son of Hankins, while driving his father’s automobile, was involved in an accident wherein the son of Ralph A. Hamer was injured. Hank-ins’ son stopped, rendered aid and when the Hamer child had been sent to the hospital, went home and reported to Hankins what had happened. Hankins told his son to go and report the accident to the police and also to Mr. Harry O. Webster, the agent of the appellee at Linthicum Heights, from whom Hankins had bought the policy. The son reported the accident to the Ferndale Police Sta ⁷³ tion, then went immediately to Mr. Webster’s office, which is in his home, and then and there filled out a form reporting the accident.

This form was attached to an identification card. This identification card set forth the offices in Maryland equipped to render claim service. The offices mentioned were in Salisbury, Hagerstown, Cumberland and Baltimore. The identification card was given to Hankins by the appellee when the policy was written.

Hankins, Jr., left the report with Webster and Webster told him he would take care of it from thereon. The Chancellor found that the Hankins boy then “went on his way, believing he had done everything he, or his father, were required to do”. The report, however, did not reach appellee’s branch office in Baltimore until October 10, 1946. On the following day, October 11, 1946, the appellee received from an attorney a carbon copy of a letter written to Hankins, the assured, on October 10, 1946, advising Hankins that he represented the parents of the Hamer child.

On October 17, 1946, the appellee wrote a letter to Hankins reserving its rights under the policy of insurance because of his alleged failure to notify the appellee promptly of the happening of the accident. On March 26, 1947, suits for damages were filed against the appellant, Hankins, and his son by the Hamer child and his father. When the writs were served the insured and his son immediately took the copies of the declarations to Webster and he transmitted them to the appellee. On April 24, 1947, the appellee wrote Hankins and his son asking them to come to its office in Baltimore on April 28, 1947, with which request the Hankins complied.

At appellee’s office the Hankins executed a non-waiver agreement which provided that the appellee might defend the suits without waiving any “provision, term, condition or limitation in the policy contained”, but without requiring the appellee to defend. Appearances were then entered in the damage suits by appellee’s attorneys who filed the pleas. On December 3, 1947, this suit for a de ⁷⁴ claratory judgment was filed by the appellee. On December 31, 1947, Hamer filed a petition to intervene in the suit for a declaratory judgment and this leave was granted.

Answers were promptly filed by Hankins and Hamer and a hearing held in open court. From the judgment holding the appellee not liable on the liability insurance policy in question, the appellants appeal here. During the trial of this case the manager of the Baltimore branch office of the appellee testified that the appellee operates through agents who are licensed to do business in the State of Maryland by the Maryland Insurance Department. If a person agrees to represent that company it completes the standard form of license application furnished by the Insurance Department, and with a $2 fee paid by the appellee for the license, the Department at the request of the appellee issues a license to the agent authorizing him to represent appellee as its agent to do business on “classes of business that we write and that we are authorized to write in the State of Maryland”.

The appellee offered in evidence its agency agreement with Webster. This agreement characterized Webster as “The Agent”. It provided in part: “1. TERRITORY.

The Company does hereby make, constitute and appoint the agent to represent it in the prosecution and conduct of its. insurance business in the following territory, LINTHICUM HEIGHTS AND NEAR-BY VICINITY.” This agreement also provided in part: “2. DUTIES. The agent is appointed for the purpose of procuring and transmitting applications for insurance of the type set forth in Paragraph 3 therein.” (Paragraph 3, in turn, sets out the various types of insurance which are issued by the company.) “Collecting premiums on such applications and policies and paying to the company the premiums on the insurance so effected and performing such other duties as may be required by this agreement or by the company from time to time. The agent agrees to use his best ability and judgment in submitting risks to the company.” This contract also contained the following provision: “13.

LIMIT OF AU ⁷⁵ THORITY. The agent is in no case authorized to obligate the company beyond the limitations laid down in the written or printed instructions issued by the company nor to alter, modify, waive, or change any of the terms, rates or conditions of the company’s policies or contracts.” Hankins, the insured, had a fifth grade education. Harry O. Webster did not testify in this case. The primary question for our decision in this case is whether the notice given by the insured to Harry O. Webster was notice to the insurer, the appellee here.

As the insurance policy provides that “written notice shall be given * * * to the company or any of its authorized agents * * *” and as the provision on the reverse side of the policy, providing that every accident must be reported to the home office of the company does not limit the notice to the home office of the company only, the question is narrowed as to whether Harry O. Webster was an “authorized agent” of the appellee at thé time he received the notice of this accident. In reviewing the authorities outside of this State on the question as to whom notice of an accident should be given under liability insurance policies the question is annotated at some length in 76 A. L. R. pages 28 to 37, and in 123 A. L. R. 952 and 953. It is there pointed out that the clauses in liability insurance policies are “considerably lacking in uniformity” as to whom notice of accidents shall be given. Some policies use the words “the company”, others “the association”, others “the insurer”, others “at its home office”.

It is stated that the most common form provides that notice shall be given to “the company” or “its duly authorized agent”. The policy here in question, of course, provides notice shall be given “to the company or any of its authorized agents”. We have been unable to locate nor have we been referred to any case with the exact language as the one before us here with comparable facts and with a comparable contract between the insurance company and the agent who sold the policy. In Pateras v. Standard Accident Ins.

Co., 1929, 37 Ohio App. 383 , 174 N. E. 620, 621 , (auto ⁷⁶ mobile liability), the notice was required to be given to the company at its home office or its “duly authorized agent”. It was there held that such an agent must be authorized, either expressly, or impliedly, to receive such notice on behalf of the insurer. In the case of New Amsterdam Casualty Co. v. Plaza Square Realty Co., 1935, 101 Ind. App. 174 , 195 N. E. 289 , the owner, landlord and tenant public liability policy provided that the assured should give immediate written notice of an accident and notice of any claim or suit resulting therefrom to the executive office of the company in Baltimore, Maryland, or to its authorized representative.

The accident occurred on the 17th day of January, 1929. The insured had no notice of the accident until September 24, 1929. On September 27, 1929, it gave written notice of the accident to a brokerage agency through which the insurance was written. Suit was brought on November 14, 1929, and the insurance company was immediately notified by the insured of the filing of the suit.

The insurance company contested the action on the policy because it claimed that the insured had failed to notify the appellant of the occurrence of the accident within a reasonable time after it occurred, claiming that it received no notice of the occurrence of the accident until after September 27, 1929. The Court in that case held that the notice given to the appellant, through the brokerage agency by which the insurance was written, on September 27, 1929, was timely. Under the rules aiding application .of standards of interpretations of contracts it is said in the Restatement of the Law, Contracts, Section 236, page 330: “d. Since one who speaks or writes, can, by exactness of expression, more easily prevent mistakes in meaning, than one with whom he is dealing, doubts arising from ambiguity of language are resolved against the former in favor of the latter.

The other party will ordinarily be the promisee of the promise in question, so that it is generally true that the contract, if ambiguous, will be construed in favor of the promisee; but as the promisor is not invariably ⁷⁷ the draftsman of his own promise the rule is more exactly that stated in Clause (d). (Clause (d) Where words or other manifestations of intention bear more than one reasonable meaning an interpretation is preferred which operates more strongly against the party from whom they proceed, unless their use by him is prescribed by law.) This rule finds frequent application in regard to policies of insurance, which are ordinarily prepared solely by the insurance company, and therefore, the words of the policies are construed most strongly against it. In some instances, however, the exact language not only of insurance policies, but of bills of lading and other contracts, is determined by statute. In such cases there is no reason for such an interpretation.” Code, 1947 Supplement, Article 48A, (Insurance), Section 82 (b), gives the following definition of an agent: “An agent, other than a life insurance agent, is hereby defined to be an individual acting under written authority from any insurance company to solicit insurance and write and countersign policies of insurance and collect premiums therefor, and if so authorized by the company, to appoint and remove solicitors for any company for which he is licensed as agent, to report to and act through him.” Section 82(d) defines a solicitor as follows: “A solicitor is hereby defined to be any individual acting under written authority from a company or duly licensed agent for any company other than a life insurance company or a branch office of a life insurance company, having authority to appoint solicitors, to solicit insurance for such company on behalf of the agent or company or branch office of the company appointing him, but without the power or authority to issue or countersign policies or otherwise bind the company for which he is licensed.” In the case before us the contract between Webster and the appellee, although not giving him the power to write and countersign policies of insurance, does specifically appoint him “The Agent” to represent it in the prosecution and conduct of its insurance business in a definite territory.

The contract provides specifically as ⁷⁸ his duties the transmitting of applications for-insurance, collecting premiums thereon, and also provides that he shall “perform such other duties as may be required by this agreement or by the company from time to time.” Furthermore, the above definitions 'of “an agent” and “a solicitor” was adopted by Chapter 895 of the Acts of 1945 and Webster’s contract with the insurance company was continued after that Act was passed without change. This contract specifically named Webster as an “Agent”, not as a “Solicitor”. Code, 1947 Supplement, Article 48A, Section 92B provides that before the Insurance Commissioner shall issue a license to act as agent, solicitor, broker or broker’s solicitor, with certain exceptions not applicable here, he shall require the applicant to satisfy him that he has had sufficient education or experience in the insurance business and to satisfactorily pass such an examination relating to the kind of insurance to which the license may extend. Turning to the Maryland authorities, in the case of American Casualty Co. v. Ricas, 179 Md. 627 , 22 A. 2d 484, 486 , the appellee, Ricas, on June 15, 1938, after purchasing an automobile, asked his friend, Wormser, who had written life insurance for him, to secure two policies of insurance, one covering fire and theft and one covering property damage and public liability.

Wormser immediately called the “Insurance Service Corporation” and placed with it an application for two policies. This 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 its secretary, on June 15, 1938, informed Wormser that the application for the property damage and public liability policies would be submitted to the appellant, the American Casualty Company, for its approval. The secretary also informed him that the acceptance of the policy would depend upon an investigation which would have to be made, and the policy would not be issued without the approval of the company.

Wormser ⁷⁹ admitted he had been told that the acceptance of the application depended upon an investigation but he did not so inform Ricas that his application had not at that time been accepted and left Ricas under the impression that the policy had been issued and he was insured. On June 15, 1938, the secretary of the Insurance Service Corporation submitted Ricas’ application to the appellant. On June 17th the appellant acknowledged receipt of the application and advised that just as soon as the investigation had been completed the Insurance Service Corporation would be advised as to whether the application would be accepted. On the same day, June 17th, the appellee had an accident in which the automobile sought to be covered by the liability insurance was involved.

The appellant had no notice of that accident and issued the policy on June 23, 1938. Wormser admitted that he was an independent solicitor and placed his business through agents of various companies. He had no contract of employment with the appellant or with any other company! When he turned in an application for insurance to an agent he never knew with which company his application would be placed.

He also testified he “never had anything but a solicitor’s license”. This Court in finding that the proof in the case failed to show that the appellee dealt with Wormser in reliance upon any apparent authority as the agent of the appellant, said, 179 Md. at page 631 , 22 A. 2d at page 487 : “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. § 24, p. 26, Restatement (Agency) § 8. Authorities everywhere agree that an insurance agent, so far as the insurer is concerned, is a person ex ⁸⁰ pressly or impliedly authorized to represent it in dealing with third parties in matters relating to insurance, and an