Opinion
(Filed 31 March, 1910.)
1. Insurance — Principal and Agent — Loan to Agent — Principal's Liability — Consideration.
Checks of an insurance company signed by one agent, payable to another, and by him indorsed to one who knowingly advanced money, at the time, to the latter to enable him to remit to the company amount due it by him as such agent, may not be collected by suit of the indorsee against the company, there being a failure of consideration moving to the company.
2. Insurance — Principal and Agent — Scope of Authority — Evidence — Hearsay — Statement of Vice-President.
Hearsay evidence of a statement of a vice-president of an insurance company that its agent had authority to borrow money in its behalf is incompetent; and, not being within the usual scope of such agencies, it must be shown by direct evidence.
APPEAL by plaintiff from Lyon, J., at October Term, 1909, of CUMBERLAND.
Cook and Davis for plaintiff. (275)
Q. K. Nimocks and John W. Hinsdale for defendant.
The facts are stated in the opinion of the Court.
This is an action on two checks, for $500 each, drawn by the cashier of the Memphis agency of the defendant company in favor of R. B. Hall, its manager for North Carolina and Tennessee, and indorsed by him to the plaintiff. The plaintiff testified that Hall "told me he had to get off a balance to his life insurance company, and if I would arrange to let him have $1,000 he would return it to me." No other consideration was shown. The plaintiff was a local agent of defendant company at Fayetteville, N.C.
In brief, the manager of the defendant company, unable to remit the balance due by him to his company, borrowed $1,000 of the plaintiff, and afterwards indorsed to the plaintiff the company's check which he had caused a local agency to draw in his favor for the amount. If this was the transaction, there is no shadow of a consideration to the company for the two checks. There is no evidence that the company owed Hall the $1,000 for which these checks were drawn.
The loan was a personal debt of Hall, and the plaintiff knew the money was to be used to square Hall with his company, and he knew that Hall had no right to repay him with the company's check. His Honor properly nonsuited the plaintiff. The money, on plaintiff's own testimony, was not borrowed in the name or on the responsibility of the company, besides there is no evidence that it was within the scope of his agency to borrow money for the company, and certainly without express authority this was not within the function of an insurance agent. It was not error to reject hearsay evidence of the subsequent statement of a vice president of the company to prove such authority. If the agency had such unusual scope it should have been shown by direct evidence.
There is no evidence that any part of this $1,000 was ever sent the company, though if the money had been sent to the company by Hall to make good his balance this would not have created any indebtedness by the company to repay the plaintiff the money borrowed from him by Hall. What benefit could it be to the company to receive what Hall owed it, if thereby it became indebted to the plaintiff in that amount? There is no evidence that the company, if it received the money, knew that Hall had borrowed it of the plaintiff.
There is no evidence of ratification by the company and Hall had no authority to give the company's check for his individual liability. Barnhardt v. Star Mills, 123 N.C. 431; Sprinkle v. Indemnity Co., 124 N.C. 410. The other exceptions require no discussion. (276)
The judgment of nonsuit is
Affirmed.