(43 Minn. 177)

WILKINS V. STATE INS. Co. OF DES MOINES. (Supreme Court of Minnesota. April 24, 1890.) INSURANCE-AUTHORITY OF AGENT-NOTICE TO INSURED.

The rule that if an agent exceeds his actual authority, and the person dealing with him has notice of the fact, the principal is not bound, applied to a case where a local agent of a fire insurance company assumed to waive a provision in the policy that "no insurance would be binding until actual payment of the premium;" the policy itself containing a provision that none of its terms could be waived by any one except the secretary of the company.

(Syllabus by the Court.)

Appeal from district court, Rice county; BUCKHAM, Judge.

M. H. Keeley, for appellant. A. D. Keyes, for respondent.

MITCHELL, J. The defendant, an Iowa corporation, but doing business in this state, had an agent at Faribault, whose general duties were to solicit insurance, fill up the blanks in printed policies already signed by the general officers of the company, and left in his possession, countersign, and deliver the same, and collect and remit the premiums. It is undisputed in the evidence that this agent, having solicited the plaintiff for insurance on his stock, and the plaintff being unable then to pay the premium, assumed to waive immediate payment, and to give plaintiff a temporary credit for the premium, and delivered to him the policy on which this action is brought. The agent subsequentThe agent subsequently called on the plaintiff at least twice for the premium, but the latter failed to pay; and some two and a half months after the policy was issued the property was burned, the premium being still unpaid.

The question is whether the company was bound by the act of the agent in waiving immediate payment of the premium, and giving plaintiff credit. The policy The policy contains a provision that "no insurance shall be considered as binding until actual payment of the premium." The same rules apply to insurance companies as to any other case of agency. They are bound by all the acts of their agents within the scope of the real or apparent authority with which they have clothed them, and no further; and it would seem well settled by the great weight of authority that, at least in the case of stock companies, a perv.45N.w.no.1-1

son dealing with an agent possessing the powers exercised by this agent has a right to assume, in the absence of notice to the contrary, that he has authority, pending negotiations for a contract of insurance, to waive a provision like the one quoted, and to give a short credit for the premium. But it is the undoubted right of the company, as in the case of any principal, to impose a limitation upon the authority of its agents. And it is as elementary as it is reasonable that if an agent exceeds his actual authority, and the person dealing with him has notice of that fact, the principal is not bound; and it is upon this proposition that defendant chiefly relies. There are two provisions in the policy to which he refers in support of his contention. The first is that "no officer, agent, or representative of the company, shall be held to have waived any of the terms or conditions of this policy unless such waiver shall be indorsed thereon." Following Lamberton v. Insurance Co., 39 Minn. 129, 39 N. W. Rep. 76, which is abundantly supported by the authorities. This contains no limitation upon the authority of any class of agents, prohibiting them from waiving any of the terms or conditions of the policy. It applies alike to all representatives of the company,-executive or general officers as well as others; and, so far as it assumes to be a limitation at all, it is upon the company itself, to the effect that it can only waive the conditions of the policy in a certain way, or, rather, it assumes to provide what shall be the exclusive evidence of such waiver. This provision, therefore, will not support defendant's contention, but the other or second one does. It is as follows: "This policy is made and accepted upon the above express terms, and no part of this contract can be waived except in writing signed by the secretary of the company. The words" policy" and "contract" are evidently here used as synonymous, and the latter clause clearly means that none of the terms of the policy can be waived by any one except the secretary. Conceding that this would not prevent the company itself, through its board of directors, or other body representing it in its corporate capacity, from waiving any of the terms or conditions of the policy, yet it is a plain declaration that no representative of the company but the secre

99

tary can do so, and hence that no local agent can do it. This, being in the policy itself, was notice to plaintiff that this agent at Faribault had no authority to waive the condition that no insurance would be binding until payment of the premium. It is no answer to say that he did not read the policy, and hence did not know what it contained. He was bound to know this; and, by acceptng the policy, he is estopped from setting up powers in the agent in opposition to the express limitations contained in it. For this reason, we think the court erred in charging the jury that, if the policy was delivered by the agent to the plaintiff with the intention of giving him a temporary credit for the premium, this would be a delivery that would bind the company so that the policy would be operative, and in force. Order reversed.

(43 Minn. 126)

BROWN V. STILLMAN.

(Supreme Court of Minnesota. April 3, 1890.) SALE OF MORTGAGED Land-LIABILITIES OF VEN

DEE.

A. mortgaged a certain lot to B., and then conveyed the same to C., subject to the mortgage, without any assumption clause in the deed. C. thereupon conveyed to D., subject to the same and a second mortgage, by warranty deed, and thereby also expressly agreed to pay and discharge the sec. ond mortgage, his grantee assuming the first mortgage. Held, that the land passed to D. charged with the incumbrance of the mortgage made by A., as the primary fund for its payment, but that, C. not being personally liable to pay the same, the covenants in the deed between him and his grantee must be construed as mutual covenants of indemnity, as respects the incumbrances upon the land, and did not make D. personally liable, legally or equitably, to B., the first mortgagee, as principal debtor or otherwise.

(Syllabus by the Court.)

Appeal from district court, Hennepin County; REA, Judge.

and a second mortgage therein referred to, viz.: "Subject, nevertheless, to two certain mortgages,—one first mortgage, giv. en to secure the payment of the sum of three thousand (3,000) dollars, which said second party [defendant] assumes; and one certain second mortgage, upon which there is remaining unpaid the sum of two thousand five hundred dollars, ($2,500,) which said first party agrees to pay and satisfy on or before the 3d day of March, 1888.

The first coupon interest note, amounting to $221.94 was paid by the plaintiff as maker of the original note and mortgage, after maturity; and he now brings this action to recover of the defendant the amount so paid, on the ground that, by virtue of the stipulation in the deed above quoted, the defendant became personally and primarily liable to pay the debt secured by the mortgage. To this legal proposition we are unable to give our assent. In construing this clause, and in endeavoring to ascertain the intention of the parties, we must consider their relations to the land conveyed, and to the original mortgage thereon. As above stated, in the prior deeds referred to the land was conveyed simply "subject" to the mortgage, without any assumption clause. The effect of the deed from the original grantor to Darrow, then, was to make the land the primary fund for the payment of the mortgage, without any personal liability on the part of the grantee, so that, in case the plaintiff was com pelled to pay the mortgage debt, he might be subrogated to the rights of the mortgagee as respects the land. The land thereafter passed to the defendant's grantor charged in like manner with the same liability, such grantor owing no other debt or duty to the mortgagee or the mortgagor, this plaintiff. He conveyed to the defendant by deed of warranty. The land was. it seems, subject to two mort

VANDERBURGH, J. The plaintiff, on the 1st day of March, 1887, owned the certain town lot described in the complaint, and on that day executed a mortgage thereon to secure a certain negotiable note, with interest. A few days later the plaintiff sold and conveyed the mortgaged premises by warranty deed to one Darrow, subject to the mortgage, and thereafter, in May, 1887, Darrow conveyed the same premises by warranty deed to a corporation known as the "Barber Supply & Exchange Company," also subject to the mortgage; and, lastly, on the 3d day of September, the Barber Supply & Exchange Company sold and conveyed the same land to the defendant in this action. The mortgage was to run three years, and the first installment of interest became due March 3, 1888, being a negotiable coupon interest note. were no covenants by the grantees in the deeds to Darrow and the Barber Supply Company, respectively, to assume and pay the mortgage, but each took the land subJect thereto. But the deed to the defendant contained the following provision and stipulation in respect to that mortgage,

There

his covenants was to be qualified as respects either, it was necessary that there should be inserted in the deed a suitable stipulation expressing the agreement of the parties as to which he should pay and discharge the land from, and which he should be indemnified against. These are the circumstances under which the contract between these parties is to be construed, and the nature of the defendant's obligation ascertained. As to the second mortgage, it was clearly the intention that the grantor should remain personally liable,-not merely by virtue of his covenants in the deed, but that he should pay it off, and thereby discharge the land therefrom within the time specified. But the first mortgage he was not to become or remain responsible for by reason of his covenants in the deed. As to that incumbrance, the defendant took the land cum onere, and charged with it, as the primary fund for its payment; and the clause, "which said second party [defendant] hereby assumes, hereby assumes," was merely intended to declare, as between the parties, that the defendant assumed the incumbrance quoad the land, so as to indemnify the grantor against his covenants. Since the

grantor was not personally obligated to pay it, it could not be material to him how the mortgage was paid,-whether by foreclosure, or payment by the grantee personally, in case the latter should wish to retain the title. It certainly would not be a reasonable or equitable interpretation of this contract to hold that the parties intended, under such circumstances, to make the grantee (defendant) the principal debtor, and the land simply collateral security to such personal liability. The language must be construed with reference to the nature and purpose of the agreement entered into by the parties.

The assumption clause in this deed, under the circumstances of this case, does not fall within the rule in Follansbee v. Johnson, 28 Minn. 311,9 N. W. Rep. 882, and similar cases in this court. Here there is nothing to warrant the inference that the contract was made for the benefit of the mortgagee or the plaintiff. He was not put forward as the party to whom the consideration was to be paid, or to receive a part of it reserved in the hands of the grantee for his benefit; nor was there any debt or obligation due from the grantor which the grantee assumed to pay as part of the consideration, and thus made his own debt. Vrooman v. Turner, 69 N. Y. 284; King v. Whitely, 10 Paige, 465.

The construction we have given to this clause in the deed in question, is, we believe, in accordance with the great weight of authority, though the courts are not agreed on the question. Thomas, Mortg. § 590, and cases; 1 Jones, Mortg. §§ 755, 760. Any other rule would, in many cases, work serious injustice. Order reversed.

Several rulings of the trial court, whereby it excluded certain testimony from the jury, examined and considered.. Held, that none of said rulings were erroneous.

(Syllabus by the Court.)

Appeal from district court, Ramsey county; WILKIN, Judge.

John D. O'Brien, for appellants. Howard L. Smith, for respondents.

COLLINS, J. Maltby, one of the defendants, entered into a contract with W. A. and C. W. Fitzer, to erect and complete for them a certain building. As permitted and authorized by the terms of the statute then in force, (section 3, c. 90, Gen. St. 1878,) Maltby, as principal, with one Gregg and the appellant, Ulmer, as sureties, entered into a bond with the said Fitzers for the use of all who might do work or furnish material, conditioned that Maltby should pay all just claims for work done or to be done, and for all materials furnished or to be furnished, pursuant to the said contract, and in the execution of the work therein provided for. The plaintiffs are the material-men who furnished certain lumber used in the construction of the building. This action is upon the bond to recover a balance due on account

of the materials. Instructed so to do by the court, the jury returned a verdict for the plaintiffs, and from an order refusing a new trial Ulmer appeals. A few days after the execution of the bond Maltby, in writing, authorized and requested the Fitzers to pay over to Gregg all moneys due or to become due to him upon his contract; and the appellant insists that in refusing to allow this writing to be put in evidence, as tending to sustain his contention that the materials in question were, in fact, sold by plaintiffs to Gregg, and not to Maltby, the trial court erred. Conceding that the writing would have had the effect claimed for it, there is nothing in the settled case which indicates that plaintiffs were ever informed of the writing or the fact. ing or the fact. It is true that Maltby testified that when he first applied to plaintiffs for the lumber he said to them that Gregg would handle the money. This was not disputed by the plaintiffs, but it falls far short of even an intimation that Maltby had irrevocably authorized and directed all payments to be made to Gregg. It is evident that unless the plaintiffs had some knowledge of the writing, or of the fact evidenced by it, the testimony was wholly inadmissible for the purpose indicated. In further support of the claim that the sale was to Gregg, appellant offered to prove that soon after the plaintiffs' refusal to sell the lumber to Maltby, without further inquiry, Gregg went to see them, and thereafter the material was forthcoming, but the court declined to receive the testimony. This ruling was correct, for, if anything at all could have been inferred from the circumstances which appellant attempted to show, it might as well be that, through Gregg's intercession and representations, the plaintiffs yielded and gave the credit to Maltby, as that Gregg's visit confirmed their first impressions, and, as a consequence, the sale must have actually been made to him. the testimony been received, it would have had no significance or value whatever.

Had

The appellant also urges that the court erred in declining to receive in evidence a reply in an action brought by the plaintiffs in this same court, against the Fitzers and others, for the value of the materials herein involved, and to have the said amount adjudged a lien upon the building, and on the lots on which it was erected. There are several reasons why the court was right in its views. The offer was as to the complaint in the other action, and not as to the reply. Although the counsel now claims that it was his intention to offer the reply-in which he asserts there were some admissions which would prevent the respondents from recovering herein-instead of the complaint, and that no one was misled by his mistake, he must be bound by the offer as made. It cannot be assumed that he committed an error in his offer, that no one has been prejudiced by it, and that his real purpose was well understood. Again, if, as a fact, there were admissions in the pleading of the character specified, and which were material in the action at bar, the record fails to disclose it. The pleading itself was not produced in the court below. It was not