Simpson v. Kerkeslager , 41 Pa. Super. 347 ( 1909 )

Opinion by

Beaver, J.,

Assuming as facts the allegations of the defendant’s affidavit of defense, the referee in bankruptcy directed the defendant, the receiver and trustee of the bankrupt estate of Isaac Wilde and George Daymon, copartners, trading as Robert Wilde’s Son, to secure fire insurance upon certain real estate described in the schedule of the bankrupt estate, and' that,.in pursuance of said direction, the defendant, as receiver of the said bankrupt estate, ordered and requested the plaintiffs to place fire insurance upon the building and the machinery contained therein, situate on the southwest corner of Leverington avenue and Wilde street as aforesaid, said insurance policies to be in the name of Milton W. Kerkeslager, receiver, owner. That, at the meeting of the creditors of the bankrupt firm, one of the plaintiffs was present and “had full knowledge of the fact that Milton W. Kerkeslager was appointed receiver and trustee of the said bankrupt’s. estate.” "That, pursuant to said order and request, all the policies mentioned in said plaintiff’s statement of claim were written and delivered by said plaintiff to said receiver in the name of the said 'Milton W. Kerkeslager, receiver, owner,’ and the premiums therefor were charged to said receiver, as appears by statement received by said receiver from said plaintiff.” “That, at the time said fire insurance policies were written, placed or delivered, he (the receiver) had no insurable interest in the said building and the machinery contained therein, situate on the southwest corner of Leverington avenue and Wilde street, as aforesaid, nor did he acquire any insurable interest in said insured premises during the life of said several policies.”

The claim is, therefore, made that the plaintiffs’ claim, as set forth in said statement of claim, is upon Milton Kerkeslager, receiver of the bankrupt estate of Robert Wilde’s Son as aforesaid, and not upon the defendant as an individual.

Assuming that the referee in bankruptcy, the trustee and receiver of the bankrupt estate, and the plaintiffs were all in error as to the ownership of the property insured, it is clearly apparent from the affidavit of defense that the defendant allowed the policies to remain in full force during the period for which they were written. It does not appear from the affidavit of defense when the defendant discovered that he had no insurable interest in the property insured; in other words, that the title to the said property had not been in the bankrupt estate prior to the adjudication in bankruptcy. It would seem, however, from the absence of- any allegation to the contrary, that he had not apprised the plaintiffs of his lack of insurable interest prior to the bringing of this suit, or at least until after the policies of insurance had expired, nor is there any denial on his part that the plaintiffs, as alleged in their statement, had paid over the amount of the insurance, less their commissions, to the companies entitled to receive the same, in accordance with the bills rendered. The practical question, therefore, is, Upon whom shall the loss for the payment of the insurance fall — upon the plaintiffs who were ordered and directed to place said insurance by the defendant, or upon the defendant who gave the direction?

In Kroeger v. Pitcairn, 101 Pa. 311, Mr. Justice Sterrett, after stating the facts of the case, in which the plaintiff who had received a policy of insurance from the defendant, as agent, representing an insurance company, in and by which the plaintiff was allowed to keep in stock a certain amount of carbon oil and after the loss of his property it was discovered that such permission was not given by the policy or allowed by the company and an attempt was made to recover the amount of the insurance from the agent, says: “Why should not the defendant be personally responsible, in like manner, for the consequences, if he, assuming to act for the company, overstepped the boundary of his authority and thereby misled the plaintiff to his injury, whether intentionally or not? The only difference is that in the latter the authority is self-assumed, while in the former (that is in the case of a president or other officer of the company) it is actual; but that cannot be urged as a sufficient reason why plaintiff, who is blameless in both cases, should bear the loss in one and not in the other. As a general rule, 'whenever a party undertakes to do any act as the agent of another, if he does not possess any authority from the principal therefor, or if he exceeds the authority delegated to him, he will be personally liable to the person with whom he is dealing for or on account of his principalStory on Agency, 264. The same principle is recognized in Evans on Agency, *301; Whart. on Agency, 524; 2 Smith’s Lead. Cases, 380, note; 1 Pars, on Cont. 67, and in numerous adjudicated cases, among which are: Hampton v. Speckenagle, 9 S. & R. 212, 222; Layng v. Stewart, 1 W. & S. 222, 226; McConn v. Lady, 10 W. N. C. 493; Jefts v. York, 64 Mass. 392; Baltzen v. Nicolay, 53 N. Y. 467. In the latter case, it is said, the reason why an agent is liable in damages to the person with whom he contracts, when he exceeds the authority, is that the party dealing with him is deprived of any remedy upon the contract against the principal. The contract, though in form that of the principal, is not his in fact, and it is but just that the loss, occasioned by there being no valid contract with him, should be borne by the agent who contracted for him without authority. In Layng v. Stewart, 1 W. & S. 222, Mr. Justice Huston says:' It is not worth while to be learned on very plain matters. The cases cited show that, if an agent goes beyond his authority and employs a person, his principal is not bound, and in such case the agent is bound.’ The plaintiff in error, in McConn v. Lady, 10 W. N. C. 493, made a contract, believing he had authority to do so, and not intending to bind himself personally. The jury found he had no authority to make the contract as agent, and this court, in affirming the judgment, said: ‘It was a question of- fact submitted to the jury, whether the plaintiff in error had authority from the school board to make the contract as their agent. They found he had not. He was personally liable whether he made the contract in his own name or in the name of his alleged principal. It is a mistake-to suppose that the only remedy was an action against him for the wrong. The party can elect to treat the agent as a principal in the contract.’ ”

Applying the principles here sot forth, it seems to us that the defendant was liable to the plaintiffs. He believed that he had the authority to make the contract for insurance, as receiver of the bankrupt firm. He had no authority, because, as appears in his affidavit, he had no insurable interest, that is, as we understand it, the bankrupt firm for which he was receiver had no title to the property. It was doubtless his duty to ascertain just what he had to insure. He cannot visit the effects of his failure to do so upon the plaintiffs, upon whom no such obligation rested. To the same effect is Wolff v. Wilson, 28 Pa. Superior Ct. 511. See also Hopkins v. Everly, 150 Pa. 117.

The defendant seeks to shelter himself behind the direction of the referee in bankruptcy, but we cannot assent to the proposition that the plaintiffs are to suffer loss because the receiver failed to discharge his duty in ascertaining whether or not there was an insurable interest in the bankrupt estate which had been transferred to him, which he was under obligation to protect.

As between the plaintiffs and the defendant, the loss, if any, should fall upon the defendant, who, although guilty of no fraud or intentional misrepresentation, has, nevertheless, by his failure to ascertain what his rights and duties were, caused it.

Judgment affirmed.