American Bankers' Ins. Co. v. Lee

Full title: AMERICAN BANKERS' INS. CO. v. LEE

Court: Supreme Court of Mississippi, Division A

Date published: Jul 10, 1931

161 Miss. 85 (Miss. 1931)

134 So. 836

Opinion

No. 29425.

June 1, 1931. Suggestion of Error Overruled July 10, 1931.

1. INSURANCE.

Burden of proof is on one asserting it to show either direct authorization of act of insurance agent or such course of conduct as by implication it can be presumed agent was acting within real or apparent scope of authority.

2. PRINCIPAL AND AGENT.

Before alleged principal is precluded from denying existence of agent's supposed authority, insured must show he was misled by principal.

3. INSURANCE.

General law of agencies governs with respect to powers of insurance agents.

4. INSURANCE.

Authority of accident insurer's agent to make parol contract of insurance must be proved affirmatively.

5. INSURANCE.

Statute defining who is insurance agent does not alter general law of agency (Code 1930, section 5196).

6. INSURANCE.

Evidence that special agent solicited accident insurance did not meet burden of proof on insured to show insurer had held agent out as having authority to make binding contract.

7. INSURANCE. Where soliciting agent collected premium and informed applicant accident insurance was effective immediately, and thereafter had applicant sign blank application, and accident occurred before policy was delivered, insured, not showing insurer had held agent out as having authority to make binding contract, could not recover.

The application contained provision that insurance would not be in force until payment of premium and physical delivery of policy to insured in person while he was in good health and free from injury, and agent taking the application was mere soliciting agent, and there was no evidence showing that such agent had ever written up any other insurance for defendant insurance company or that they had him act in any capacity other than as a mere soliciting agent.

APPEAL from chancery court of Pike county; HON. R.W. CUTRER, Chancellor.

Lotterhos Travis and Chalmers Potter, all of Jackson, for appellant.

Even though the agent who solicits the insurance assures the applicant that it will go into effect at once, if he signs an application which stipulates that the insurer incurs no liability until the policy is issued and delivered, the insurer incurs no liability until the policy is so issued and delivered, the theory here being that the written contract cannot be varied by parol evidence of the agent's agreement. Especially is this true where the agent was wholly unauthorized to so agree, and the agreement was unwarranted.

2 Couch Cyc. of Insurance Law, 1584.

When the appellee signed an application for insurance on which a policy was afterwards issued, these two instruments constituted the complete written contract between the parties and no evidence of oral understandings prior or contemporaneous thereto was admissible to vary or add to the terms of the written contract.

McInniss v. Manning, 131 Miss. 119, 95 So. 250; Houch v. Wright, 23 So. 422.

Every person has a constitutional right to limit the powers of his or its agents, and if it reserves a right to pass upon the contract as sent to it, and the purchaser represents in such contract, that no outside representations have been made, and the contract contains all the agreements of the parties, such purchaser will not thereafter be permitted to show statements made by the agent to him not embraced in the contract.

J.B. Colt Co. v. Odom, 136 Miss. 651, 101 So. 853; Fresno Home Packing Co. v. A.J. Lyon Co., 53 So. 585, 98 Miss. 228; Cheek-Neal Coffee Co. v. Morrison Co., 51 So. 1, 96 Miss. 835; Truly v. Mutual Life Ins. Co. of New York, 108 Miss. 453, 66 So. 970; Tropical Paint Co. v. Mangum, 125 So. 248, 155 Miss. 876; Orgill Bros. Co. v. Polk, 124 So. 649, 155 Miss. 492.

The powers possessed by agents of insurance companies, like those of any other corporation or of an individual principal, are to be interpreted in accordance with the general law of agencies. No other or different rule is to be applied to a contract of insurance than is applied to other contracts.

Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609; 32 C.J. 1062; Fisk v. Liverpool London Globe Ins. Co., Ltd., 164 N.W. 522.

No presumption exists however that the companies' agents have authority to make a parol contract to insure; such authority must be proved affirmatively.

2 Couch Cyc. of Ins. Law, 1586; 2 Joyce, p. 1298, sec. 525.

As a general rule an obligation rests upon a person dealing with an agent known to be acting under an express or special authority, to ascertain the limits of his authority to act for and bind his principal. Especially is it true, in case of a special agent, whether the authority be written or verbal, that the party dealing with him is bound to inquire into the nature and extent of the agent's authority, for the principal cannot be bound beyond the authority delegated by him.

2 Couch Cyc. of Ins. Law, 1485.

The law itself makes no presumption of agency; it is always a fact to be proved; and the person who alleges it has the burden of proving it by a preponderance of the evidence.

Mechem on Agency (2 Ed.), p. 183, sec. 255.

The burden of proof is upon him who asserts it to show either a direct authorization of the agent, or by proving such facts or circumstances, or such a course of conduct, as by implication it can be presumed that the agent was acting within the real or apparent scope of his authority. If one invests another with real authority he is bound by reason of the actual power conferred. If, however, he clothes him with apparent authority, he is bound, because he has induced others to deal with him as an agent. The one rests upon a fact; the other upon a supposed fact. But before the alleged principal is precluded from denying the existence of the supposed fact, it is necessary that the other party should show that he was misled, not by the alleged agent, but by the principal.

New York Life Ins. Co. v. O'Dom, 100 Miss. 219, 56 So. 379; Missouri State Life Ins. Co. v. Boles, 288 S.W. 271.

When the agent's authority went no further than to take applications for insurance, collect the policy fee, forward the application for insurance to the defendant for its acceptance or rejection, and deliver the policy when issued under defendant's direction, the alleged oral contract of insurance of the soliciting agent, which the defendant did not authorize or ratify, cannot be imputed to it.

Banks v. Cloverleaf Cas. Co., 233 S.W. 80; Aetna Ins. Co. v. Northwestern Iron Co., 21 Wis. 464; O'Brien v. New Zealand Ins. Co., 108 Cal. 227; Fisk v. Liverpool London Globe Ins. Co., 164 N.W. 522.

Generally it may be said that agency cannot be proved by the statements, declarations, or admissions of the agent made out of court, but must be established by tracing its source to some word or act of the alleged principal.

Barry Finan Lumber Co. v. Citizens' Insurance Co., 136 Mich. 42, 98 N.W. 761.

A soliciting agent, authorized to receive applications and to forward the same to the company for approval or rejection and to collect and transmit premiums, has no authority to make an oral contract to insure, even though he told the insured, on a prior occasion, that the insurance would take effect from the time of the application, and a policy has been issued on that application.

2 Couch Cyc. of Ins. Law, 1585.

The authority of an agent employed to solicit health and life insurance is altogether different from that of fire insurance agents, who customarily write policies for their companies, and, consequently a mere soliciting agent has no authority to make or alter contracts.

2 Couch Cyc. of Ins. Law, 1587; 32 C.J. 1116; Continental Casualty Co. v. Hall, 80 So. 335, 118 Miss. 871; Phipps v. Union Mutual Ins. Co., 150 P. 1083, 1084.

A soliciting agent has no authority to bind the insurance company by a present contract of insurance.

Patterson v. Prudential Ins. Co., 23 S.W.2d 198; Commonwealth Casualty Co. v. Kuhit, 225 P. 251; Basinsky v. Nat'l Cas. Co., 122 Wn. 1, 209 P. 1027; 26 C.J. 100; Firemen's Fund Ins. Co. v. Rogers, 33 S.E. 954; Hertz v. Security Mut. Ins. Co., 154 N.W. 745.

There was no meeting of the minds between the insurance company and the appellee.

The insurance company was acting only on a written application and the policy was not delivered until after the appellee has been injured and a contract was not consummated.

Ivie v. International Life Ins. Co., 117 So. 176; Mutual Life Ins. Co. of New York v. Shoemake, 89 So. 154, 126 Miss. 497; Newark Fire Ins. Co. v. Russell, 107 So. 417, 142 Miss. 397; Jacobs v. New York Life Ins. Co., 15 So. 639, 71 Miss. 656; New York Life Ins. Co. v. McIntosh, 38 So. 775, 86 Miss. 236; Nat'l Life Acc. Ins. Co. v. Hugger, 131 So. 75.

The elements of a contract of insurance are: (1) A subject-matter. (2) A risk or contingency insured against and the duration thereof. (3) A promise to pay or to indemnify in a fixed or ascertainable amount. (4) A consideration for the promise, known as the premium and the period of payment thereof. (5) An agreement, or meeting of the minds of the parties, upon all the foregoing essential elements. These elements are essential to a contract of insurance regardless of whether it is in writing or in parol.

32 C.J. 1095, sec. 180; 15 A.L.R. 995-1021.

Section 5196 of the Code of 1930 has been many times construed by this court since it assumed its present form, and this court has never held that said statute extends the powers of a special agent, but on the contrary this court has many times recognized and enforced the distinction between a special or soliciting agent and a general agent.

Continental Casualty Co. v. Hall, 80 So. 335, 118 Miss. 871; New York Life Insurance Co. v. O'Dom, 56 So. 379, 100 Miss. 219; Stuart v. Coleman, 81 So. 653, 120 Miss. 28; Germania Life Insurance Co. v. Bouldin, 56 So. 609, 100 Miss. 660; Interstate Fire Ins. Co. v. Nelson, 62 So. 425, 105 Miss. 437; Southern States Fire Company v. Nelson, 62 So. 426; Scottish Ins. Co. v. Wylie, 70 So. 835, 110 Miss. 681; New York Ins. Co. v. Smith, 91 So. 456, 129 Miss. 544; Indemnity Co. of America v. Jenkins, 107 So. 208; National Life Accident Ins. Co. v. Hugger, 131 So. 75.

Equitable estoppel of the principal is founded upon a false representation made for and on behalf of the principal by an agent thereunto authorized or acting within the apparent scope of the agent's authority. Unless there has been some holding out of the agent by the principal to the insuring public, or unless the agent has held himself out with the knowledge and consent of the principal, as having authority to bind the principal by a contract of insurance, then in the absence of such knowledge or holding out there cannot arise against the principal and in favor of the insured an equitable estoppel.

New York Life Ins. Co. v. O'Dom, 100 Miss. 219, 56 So. 379; Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609.

Price Price, of Magnolia, H.V. Wall, of Brookhaven, and Thomas Mitchell, of Magnolia, for appellee.

As in the case of agencies in general, an insurance company is bound by all the acts, contracts or representations of its agent, whether general or special, which are within the scope of his real or apparent authority.

32 C.J. 1063, 140; Fidelity-Phoenix Ins. Co. v. Ray, 72 So. 98; State Mutual Ins. Co. v. Latouret, 71 Ark. 242; Anderson Bank v. Home Ins. Co., 14 Cal. 507; California Ins. Co. v. Gracey, 22 Am. St. Rep. 376; Indian River St. Bank v. Hartford Ins. Co., 35 So. 228; Aetna Ins. Co. v. Maguire, 51 Ill. 342; Kerlin v. National Acc. Ass'n, 8 Ind. 628; New York Life Ins. Co. v. Chittenden, 11 L.R.A. 233; Pfiester v. Mo. State L. Ins. Co., 85 Kan. 97; Ventress v. Head, 138 Ky. 523; Richards v. Springfield F. M. Ins. Co., 38 So. 563; Rivard v. Cont. Casualty Co., 116 Me. 46; American F. Ins. Co. v. Brooks, 83 Md. 22; Shea v. Manhatten L. Ins. Co., 224 Mass. 112; Traveler's Ins. Co. v. Benj. Douglass Co., 198 Mich. 457; Fredman v. Albert Lea Const. F. M. Ins. Co., 124 Am. Rep. 608; Germania L. Ins. Co. v. Bouldin, 100 Miss. 660; Lingfelder v. Phoenix Ins. Co., 19 Mo. 252; Pacific Ins. Co. v. Frank, 44 Nebr. 320; Millville Mutual Ins. Co. v. Mechanics, etc., 43 N.J. 652; Flynn v. Equitable L. Ins. Co., 34 Am. Rep. 561; French v. Ins. Co., L.R.A. 1915D, 756; Dayton Ins. Co. v. Keeley, 15 Am. Rep. 612; Phipps v. Union Ins. Co., 50 Okla. 135; Hardwick v. State Ins. Co., 20 Or. 840; Hoge v. Ins. Co., 138 Pa. 66; Hagens v. Aetna Ins. Co., 75 S.C. 225; Smith v. Mutual, etc., Ins. Co., 21 S.D. 231; Aetna Ins. Co. v. Fallow, 110 Tenn. 720; Amarillo Ins. Co. v. Brown, 166 S.W. 658; Frazier v. Home Ins. Co., 71 Vt. 482; Continental Ins. Co. v. Kasey, 18 Am. Rep. 681; Yost v. Empire Ins. Co., 69 Wn. 167; Sheppard v. Peabody Ins. Co., 21 W. Va. 368; Glassner v. Johnson, 133 Wis. 485; Otta Agri. Ins. Co. v. Sheridan, 5 Can. S.C. 157; Vezina v. Canada Ins. Co., 9 Que. L. 65.

Where an agent, with the knowledge and consent of the principal, holds himself out to the world as having certain powers and transacts business with third parties who are deceived by the conduct of such agent into believing that he has such power, the principal is estopped from denying the powers of such agent. Such estoppel may be allowed on the score of negligent fault of the principal "As where one of two innocent persons must suffer loss, the loss will be visited on him whose conduct brought about the situation."

Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609.

The powers of an insurance agent may be limited by the company but parties dealing with him in the real or apparent scope of his agency, and having no notice of the limitation of his authority, are not affected thereby.

Rivaria v. Queen Ins. Co., 62 Miss. 720.

The powers of an agent of an insurance company are governed by the general law of agency. His powers are varied by the character of the functions he is employed to perform. He may be a general agent with general powers, or his powers may be limited by the company, or he may be a special agent with authority limited to a specific transaction. In any event an insurance agent, whether general or special possesses such powers as have been conferred by the company or as third persons have a right to assume that he possesses under the circumstances of the case; and as a general rule his powers, as to those dealing with him, are determined by the nature of the business intrusted to him and are prima-facie coextensive with its requirements.

32 C.J., p. 1062, sec. 139.

A soliciting agent is merely a special agent, and as a general rule has authority only to solicit insurance, submit applications, collect premiums and perform such acts incident to the power, yet he may bind the company by agreements and representations properly made in connection with the application for insurance.

32 C.J., p. 1067.

In the absence of statutory provision, requiring the contracts of insurance to be in writing, they may be by parol, but a parol agreement to insure is binding only until the execution and acceptance of the written policy.

1 C.J., p. 414.

Section 5196, Code of 1930 provides specifically that all such agents or brokers shall be held to be the agent of the company, for which the act done or the risk taken as to all duties or liabilities imposed by law, regardless of the conditions and stipulations contained in the policy or contract. Cases applying this statute.

Big Creek Drug Store v. Stuyvesant Inc., Co., 115 Miss. 333; Stewart v. Coleman, 120 Miss. 28; Agricultural Ins. Co. v. Anderson, 120 Miss. 278; Mutual Life Ins. Co. v. Vaughn, 125 Miss. 369; Hartford F. Ins. Co. v. Clark, 154 Miss. 418; Lamar Life Ins. Co. v. Kemp, 154 Miss. 890.

For the purpose of protecting the insuring public, it is provided by statute in many jurisdictions that persons who solicit or contract for insurance shall be deemed to be the agents of the company. Under such a provision any person who acts with reference to the procuring of insurance is an agent of the company in which the insurance is procured, in all matters relating to the application and issuance of the policy, although he is not otherwise recognized as its agent.

32 C.J. 1057; McMaster v. N.Y. Life Ins. Co., 183 U.S. 25, 46 L.Ed. 64; Noble v. Mitchell, 14 So. 381; Continental Ins. Co. v. Ruckman, 11 Am. St. Rep. 121; St. Paul Ins. Co. v. Shaver, 76 Iowa, 281; Maxwell v. York F. Ins. Co., 114 Me. 170; Keen v. Detroit Ins. Co., 204 Mich. 357; Webster v. Ferguson, 94 Minn. 86; Farber v. Am. Ins. Co., 191 Mo. 307; Bankers Ins. Co. v. Robinson, 55 Nev. 117; Liverpool Ins. Co. v. McLaughlin, 175 P. 248; Noris v. Hartford Ins. Co., 57 S.C. 358; Southern Ins. Co. v. Wolverton Co., 19 S.W. 615; Wisconsin R. Co. v. Phoenix L. Ins. Co., 123 Wis. 313.

The authority of a soliciting agent of an insurance company to take applications for insurance, carried with it the legal implication of an authority to fill up the application, and do all things needful in perfecting it. For if insurance companies clothe their agents with apparent authority to represent them in all matters in procuring the application, they are their agents in all that legally concerns it. Limitations upon the powers of a general agent do not bind third persons without notice thereof.

2 Joyce on Ins., p. 1089; Combs v. Hannibal Sav. Ins. Co., 43 Mo. 148, 97 Am. Dec. 383; Union Mutual Life Co. v. Wilkinson, 80 U.S. 222, 20 L.Ed. 617; Ins. Co. v. Mitchell, 65 So. 143.

Agent's authority is prima-facie coextensive with the business intrusted to his care, and this is especially true of insurance companies which do business by agencies at a distance from their principal office. So a soliciting agent's authority to procure applications submit them to the company and to deliver the policy, embraces all incidental and naturally connected matters covering also negotiations prior to said delivery.

2 Joyce on Insurance, p. 1090.

Parol insurance comprehending the subject of insurance, the time when the risk attaches and ends, the amount of indemnity, the party and the premium, contains all the elements essential to a binding contract of insurance and is enforceable.

Massachusetts Bonding Insurance Co. v. Vance, 15 A.L.R. 981.

The evidence was sufficient to prove the authority of the agent Hunt to make the contract in question.

10 Enc. Evi. 10; National Surety Co. v. Miozrany, 53 Okla. 322, 156 P. 651; Union Mutual L. Ins. Co. v. Wilkinson, 13 Wall. 222, 20 L.Ed. 617; Western Home Ins. Co. v. Hogue, 41 Kan. 424, 21 P. 641; Cooley Ins. p. 345; McFarland v. T.W. Lanier Bro., 50 Okla. 336, 150 P. 1097; Brownell v. Moorhead, 165 P. 408; Case v. Posey, 55 Okla. 163, 154 P. 1165; Gast v. Barnes, 44 Okla. 107, 143 P. 856; Central Mortg. Co. v. Michigan State L. Ins. Co., 43 Okla. 33, 143 P. 175; Iowa Dairy Separator Co. v. Sanders, 50 Okla. 656, 140 P. 406; Wrought Iron Range Co. v. Leach, 32 Okla. 706, 123 P. 419; Ricker Nat. Bank v. Stone, 21 Okla. 833, 97 P. 577; United States Fidelity G. Co. v. Shirk, 20 Okla. 576, 95 P. 218; Mechem, Agency, p. 83.

Having failed to deliver the policy, in accordance with the oral agreement, and plaintiff having suffered an injury in the meantime, the action was properly brought for a breach of the oral contract.

Davenport v. Peoria M. F. Co., 17 Iowa, 276; Sproul v. Western Assur. Co., 33 Or. 98, 54 P. 180; Hardwick v. State Ins. Co., 20 Or. 547, 26 P. 840; McCabe Bros. v. Aetna Ins. Co., 9 N.D. 19, 27 L.R.A. 641, 81 N.W. 426; Sanford v. Orient Ins. Co., 174 Mass. 416, 75 Am. St. Rep. 358, 54 N.E. 883.

If plaintiff, at the time of entering into the contract of insurance, paid the agent the first premium for the insurance as a part of such contract, and defendant, with notice of the nature of the terms and manner of the contract, and of the fact of plaintiff's injuries, has kept the money, or permitted the agent to keep it, and failed, after such knowledge, to return or repay him such sum, the defendant is liable on the contract.

United States Fidelity G. Co. v. Shirk, 20 Okla. 576, 95 P. 218; Minneapolis Threshing Mach. Co. v. Humphrey, 27 Okla. 694, 117 P. 203; American Bankers' Ins. Co. v. Thomas, 53 Okla. 11, 154 P. 44; Roff Oil Cotton Co. v. King, 46 Okla. 31, 148 P. 90; J.I. Case Threshing Mach. Co. v. Lyons Co., 40 Okla. 356, 138 P. 167; Whitcomb v. Oller, 41 Okla. 331, 137 P. 709.

Though the powers of an agent may be limited by definite restrictions on his authority and by the nature of his agency, the determination of his powers and consequently the rights of the insured must rest in the first instance on the general principle that the powers of an agent are prima-facie coextensive with the business intrusted to his care, and will not be narrowed by limitations not communicated to the person with whom he deals. The real question is not what power the agent has, but what power the company has held him out as having.

Cooley's Briefs on Insurance, 345; Interstate National Life Accident v. Ruble, 160 Miss. 206.

Decisions of this court have made the agent alter ego of the company within the scope of his authority. Under the statute an agent within the field of his employment and agency becomes the general agent of the company as to all things he is employed to do.

N.Y. Life Insurance Co. v. Smith, 129 Miss. 544; Agricultural Ins. Co. v. Anderson, 120 Miss. 278; Stewart v. Ins. Co., 120 Miss. 29.

The principle has been more than once announced by this court that where a soliciting agent is informed, before the policy is issued, of a fact, which, if fraudulently concealed by the applicant, would constitute a ground of forfeiture under one of its conditions and afterwards receive the premium and deliver the policy his knowledge is imputed to his principal, and whether he actually communicates the fact to the principal office of the company or not, the condition is deemed to have been waived.

Bergeron v. Ins. Co., 111 N.C. 47.

Where the insured has no knowledge of the restrictions of the local agent's authority, the company is bound by the agent's parol contract on a promise to issue a policy where said agent received the assured's money on a promise to issue the policy.

2 Joyce on Ins., sec. 525.

Insurance companies who do business by agents at a distance from their principal place of business, are responsible for the acts of their agents within the general scope of business intrusted to their care. And no limitations of their authority will be binding on the parties with whom they deal, which was not brought to their knowledge.

Mutual Life Ins. Co. v. Wilkinson, 80 U.S. 222, 20 L.Ed. 617.

Argued orally by F.J. Lotterhos and Cecil F. Travis, for appellant, and by J.H. Price and H.V. Wall, for appellee.

McGowen, J., delivered the opinion of the court.

The appellee, George W. Lee, filed his bill in equity seeking reformation of a policy of health and accident insurance issued by the appellant dated September 30, 1929, and to recover thereon, as reformed, for an injury occurring on September 22, 1929. The application for the policy was signed by the insured on September 6th. The reformation desired was that the policy be made to insure as of date of application, based upon the allegation that by an oral contract the insured and Hunt, the agent of the insurer, agreed that the policy should take effect as of that date.

The insurance company denied that it undertook any liability prior to September 30th, the date of the policy, and denied that the agent, Hunt, had any authority to make a contract of insurance. The court below entered a decree reforming the policy as prayed, and granting a recovery to the appellee, against the insurance company, from which decree an appeal is prosecuted her.

On September 6, 1929, the insured had completed all arrangements preparatory to making a motorcar trip to the Delta and return, and expected to take out travelers' insurance from the railroad company to protect him against accident from that date. Hunt, representing the insurer, and having information that Lee expected to procure accident or travelers' insurance, approached Lee, soliciting him to purchase insurance with him against accidents on the trip, telling him that he could write the same insurance that the railroad company would write, and that he was a customer of Lee, a merchant. The amount of the premium was twenty-eight dollars, which Hunt assured Lee would insure him against injury by accident from twelve o'clock of that day. Lee paid the amount to Hunt, the agent, who immediately forwarded it to the insurer. Subsequent to the oral agreement, and after the payment of the money, Hunt approached Lee again, and said to him, in effect: "I have an application that you might sign, but I assure you that it is a mere formal matter, and does not affect the contract I have made with you, and does not in any way prevent the insurance from going into effect today."

Lee testified that he relied upon this assurance, and signed the application in blank, it being afterwards filled out by Hunt; that he relied upon the integrity of Hunt, the agent, when he said that the application would be filled out in such manner that it would not affect the policy's becoming effective on that day, covering the period of his trip to the Delta.

On the 22d of September, 1929, Lee was seriously hurt in an automobile accident, and, while he was in the hospital, suffering from his injuries, Hunt delivered the insurance policy, dated September 30, 1929, saying to Lee, "Don't worry, old man, you are insured," assuring him, further, that he (Lee) was insured from the day he took out the policy. Lee stated:

That he had had nothing to do with filling out the application for insurance, that Hunt told him it was a mere formality, and "that I could sign it and he would fill it out.

"Q. It was not filled out when you signed? A. No, sir, I signed it in blank and he filled it out.

"Q. You do not know when he filled it out? A. No, sir.

"Q. You paid him the money and left on your trip thinking you had an insurance policy? A. Yes, sir.

"Q. It was on your trip back that you were hurt? A. Yes, sir."

On cross-examination this occurred:

"Q. What statements were made to you with reference to this application? A. Mr. Hunt came to my store and in the presence of that young lady, said that he had heard that I was going to get a policy from the railroad company and that he had the same kind of policy, and asked if I would not just as soon take it out with him, as he trades with me sometimes, I took out the policy with him and paid him twenty-eight dollars.

"Q. He was soliciting agent for the American Bankers' Insurance Company? A. He told me that he was representing the State Division."

The agent, Hunt, corroborated the statements of the insured in all respects; admitted that Lee signed the application in blank, and that he filled it out; that he told Lee that the application did not prevent the policy going into effect that day at twelve o'clock. Hunt testified that he only had a verbal agreement with Marshall as to his agency on September 5th, and did not have a written agreement as agent until the 13th of October; this agreement being offered in evidence.

Hunt said Lee signed the application; that he made no statement to the latter as to the contents thereof, nor did he ask him to read it. He said that Lee had an opportunity to read it if he wanted to, but that the application had nothing to do with the policy. He knew Lee was preparing to get a policy before leaving on a trip; he thought from the Travelers' Accident Insurance Company.

The policy of insurance, delivered after the accident occurred, was offered in evidence by the insurer. Depositions of two of the officers were offered in evidence, as well as the agreement between Hunt, the agent, and the insurer, subsequently entered into, and effective September 13, 1929, by which agreement Hunt was named as agent in several counties in Mississippi; was authorized to appoint such agents and solicitors and local collectors of the company in said territory, and to fix their compensation, subject to the approval of the company, to procure applications for insurance policies, write applications under the direction of the company, collect and remit the premiums, deliver policies, and other details unnecessary to mention here. Hunt had only the authority of a soliciting agent, and none to bind the company to a contract of insurance.

The following questions and answers were in the application signed in blank by the insured: "Do you apply for a policy of insurance in the American Bankers' Insurance Company based upon the following statements and represent them to be complete and true? And do you agree to accept the policy with all its provisions, the classification fixed by the company, and agree that the statements made shall be a part of any policy issued hereon? Yes. . . . Do you understand and agree that the insurance hereby applied for will not be in force until the payment of the premium in advance, and the physical delivery of the policy to you in person while you are in good health and free from injury? Yes."

The policy delivered had, among other things, the following provisions: "The copy of the application endorsed hereon is hereby made a part of this contract and the policy is issued in consideration of the statements made by the insured in the application, which the insured agrees are complete, true and material. . . ." It further provides: "The term of this policy begins at 12:00 o'clock M., standard time, on the date of delivery to and acceptance by the insured. . . ." And provides further: "This policy includes the endorsements and attached papers, if any, and contains the entire contract of insurance. . . . No statement made by the applicant for insurance not included herein shall void the policy or be used in any legal proceeding herein. No agent has authority to change this policy or, waive any of its provisions. No change in this policy shall be valid unless approved by an executive officer of the company and such approval be endorsed hereon."

The following assignments of errors as ground for reversal are urged by the appellant, the insurer: First, "That proof of a prior or contemporaneous oral contract between the parties." Second, "that Hunt was not shown to have authority to make a contract of insurance for the appellant," for the following reasons: "(a) the powers possessed by agents of insurance companies are to be interpreted in accordance with the general laws of agency as in the case of the agent of any other corporation or individual. (b) There is no presumption that the agent, Hunt, had authority to bind the appellant as alleged and the burden of showing that Hunt did have authority to act for and on behalf of the appellant rested upon the appellee. (c) It was incumbent upon the appellee to show that the agent, Hunt, had either expressed or implied or ostensible authority to bind the appellant by the contract sued on." Third, "there was no meeting of minds between the insurance company and the appellee," because "(a) the insurance company was acting only on a written application, and the policy was not delivered until after the appellee had been insured; (b) if the contract here involved rests in parol then there was no meeting of the minds of the parties thereto in the essential elements of such a contract."

From the statement of facts herein, the question is sharply presented: Did the agent, Hunt, have authority, real or apparent, to bind the principal, the American Bankers' Insurance Company, effective September 6th, based upon the bare statement of the agent that the policy to be issued by the company thereafter would be effective on that date, because the agent solicited the insurance, received the premium therefor, remitted same to the company promptly, wrote the application, and thereafter delivered the policy to the insured, after the latter had received the injury upon which the action is based?

It is contended by the appellee that in equity the appellant is estopped from asserting that it is not bound by the false representations of the agent, Hunt, to the insured. It is apparent that there was no real authority in the agent to bind the insurer, so that the case must rest upon an apparent authority of the agent, if the decree of the court below is to be upheld.

It will be observed that the agent, Hunt, had only represented this company for one day; that he never made any statement to Lee about his authority; there is no testimony in the record that Lee had any facts upon which to base a belief in the apparent authority of the agent to bind the principal to a special contract of insurance. On behalf of the appellant, it quite clearly appears that Hunt was a mere soliciting agent, clothed with no authority to execute a contract of insurance in any event. Lee never made any effort to ascertain what authority was vested in Hunt, nor did he make any sort of examination of the application. The record shows that all the knowledge that the insurer had in regard to the transaction was contained in the application, which negatives the idea that there was to be a present contract of insurance binding it. Accident and health insurance is involved here. This is not a case of a fire insurance agent having authority to execute and deliver a contract of insurance against loss by fire, thereto authorized by the principal. It is quite clear that Lee was informed that an application was necessary, that he expected to have a policy evidencing the contract, and that, in such situation, he made no sort of investigation or inquiry.

"The burden of proof is upon him who asserts it to show either a direct authorization of the agent, or by proving such facts or circumstances, or such a course of conduct, as by implication it can be presumed that the agent was acting within the real or apparent scope of his authority. If one invests another with real authority he is bound by reason of the actual power conferred. If, however, he clothes him with apparent authority, he is bound, because he has induced others to deal with him as an agent. The one rests upon a fact; the other upon a supposed fact. But before the alleged principal is precluded from denying the existence of the supposed fact, it is necessary that the other party should show that he was misled, not by the alleged agent, but by the principal." See New York Life Ins. Co. v. O'Dom, 100 Miss. 219, 56 So. 379, Ann. Cas. 1914A, 583.

In Newark Fire Ins. Co. v. Russell, 142 Miss. 379, 107 So. 417, the validity of an oral contract of insurance was recognized; but it was held that such oral contract must be established by the evidence.

In the case of Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609, 613, this court said: "The powers possessed by agents of insurance companies, like those of any other corporation or of an individual principal, are to be interpreted in accordance with the general law of agencies. No other or different rule is to be applied to a contract of insurance than is applied to other contracts."

And in that case, on the question of estoppel, the court further said: "The essence of estoppel is that the party asserting the agency was deceived by the conduct of the party against whom it is asserted, and, though fraud may be an ingredient of the case, it is not essential. The principal need not authorize the agent to practice a fraud on third parties, yet if he authorize his agent to transact the business with a third party, and in so doing the agent practices the fraud on the party, the principal is liable. The estoppel may be allowed on the score of negligent fault of the principal. Where one of two innocent persons must suffer loss, the loss will be visited on him whose conduct brought about the situation."

If we should hold in the instant case that the insurer herein is equitably estopped to deny the oral contract of insurance asserted herein, it would be tantamount to saying that the company, because of the fact that it selected an agent to solicit business, would be bound to the extent of any representation as to the insurance contract it was then proposing to make, regardless of its own scope of business.

No one would contend that, if a wholesale dealer in flour hired a salesman to solicit orders for flour, the principal would be bound until it had received and accepted the order. It is true that both parties herein were misled — the insured by the statement of Hunt that the insurance was effective at once; and the insurer by the application, which showed that the insured accepted the contract, to take effect in accordance with its usual contract, the main feature of which in the present instance is the delivery of the policy to the insured while in good health.

In the case of Continental Casualty Co. v. Hall, 118 Miss. 871, 80 So. 335, this court held that "a soliciting agent for a life insurance company is without authority to write policies or bind the company by its terms or to alter them, and is merely a special agent, whose authority is entirely dissimilar from that of fire insurance agents," who write the policies for their companies; and the court there stated that "it is also contended by the appellee that the soliciting agent represented to him that this special rider would make the health insurance effective upon the issuance of the policy." The court further said, with reference to this kind of agent: "He had no authority whatever to alter or change the terms of the insurance contract or to bind the company by any representations made by him. This court has repeatedly held this kind of agent to be merely a special agent who has no authority to change or alter the terms of the insurance policies."

It would indeed be a harsh rule to bind a principal to a contract entirely different from that which it was accustomed to make, and to charge it with notice of something that it did not authorize, which was not contemplated in its course of business, which it never ratified, in fact, never had any knowledge thereof. In the instant case, we have a transaction entirely dependent upon the conduct of another, beyond the scope of his actual authority, and without proof of such conduct as implied apparent authority. In this case the burden of showing some reasonable basis for the belief that Lee had a right to think that the agent, Hunt, had apparent authority to make a special contract of insurance must be met.

"No presumption exists, however, that the company's agents have authority to make a parol contract to insure; such authority must be proved affirmatively. Of course a parol contract to issue or renew a policy must be clearly established." See 2 Couch, Cyc. of Ins. Law, 1929, 1586; also, Joyce on Insurance, vol. 2, p. 1298, section 525; 2 Couch, Cyc. of Ins. Law, 1485; 32 C.J. 1067, 1116.

Appellee suggests to the court that section 5196, Code of 1930, defining who is an agent in this state, might be applied to the case at bar. However, he realizes that this court has said, in effect, that this statute does not alter the general law of agency, and has always recognized the distinction between a special agent, or merely soliciting agent, and an agent clothed with such authority as by implication the principal was bound by his acts. The O'Dom and Hall cases were decided in the light of the substance of this statute, which, so far as material here, has been in force in this state since the Code of 1892. See section 2327, Code 1892.

Counsel for appellee are in error when they say that the agent testified that he had authority to make the contract.

We think it unnecessary to discuss the case of Mass. Bonding Ins. Co. v. Vance, 74 Okla. 261, 180 P. 693, 15 A.L.R. 981, from the supreme court of Oklahoma, for the reason that we are in agreement with the fundamental principles of law announced in that case, but cannot agree therewith as to its application of facts on the question of apparent authority of the agent.

It is not shown in the instant case that the agent had ever written any other insurance for this company, or that they had him act in any capacity other than as a mere soliciting agent; and the bare fact of a special agent soliciting the contract is not of itself sufficient to meet the burden of proof placed upon the insured by the law, to show that the principal had held this agent out as having authority to make for it a binding contract of insurance; but the transaction here involved is one in which Lee, as a business man of intelligence, knew or ought to have known that an application must be sent to the principal, and that the principal reserved some rights as to when and how it should become liable. He was too credulous; he did not even take a receipt for the money he paid, and made no sort of inquiry or investigation.

There is nothing in this record to lead a reasonable man to believe that Hunt was the alter ego of the insurance company. The recovery in this case cannot be upheld.

Reversed, and judgment here for appellant.