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Insurance Co. v. Midwest Transfer Co.

December 7, 1949


Author: Swaim

Before KERNER, LINDLEY and SWAIM, Circuit Judges.

SWAIM, Circuit Judge.

This is an appeal from a judgment for Insurance Company of North America, plaintiff, hereinafter referred to as "North America", against Midwest Transfer Company of Illinois, defendant, hereinafter referred to as "Midwest", for premiums on insurance purcuased by the defendant on its motor vehicles used in its transportation business.

The complaint alleged that the defendant purchased this insurance through its agent, H. E. Cotter & Company, Inc., hereinafter referred to as "Cotter"; that plaintiff quoted to defendant's agent, Cotter, a premium rate for said insurance based on plaintiff's manual for rates; that said insurance was accepted by Cotter; and that the amount due plaintiff, based on said manual rate, was $10,025.78.

The answer of the defendant denied that Cotter acted as its agent and alleged that Cotter acted as the agent of the plaintiff in all matters pertaining to said insurance; and that the defendant had paid to the plaintiff, through said agent, all except $99.70 of the premium, figured on the fleet rate, which was due for said insurance. The answer also denied that said insurance was at plaintiff's manual rates.

The trial court found that, throughout the entire transaction, Cotter was the agent of Midwest; that on behalf of Midwest, Cotter accepted the insurance coverage at the manual rates; that Midwest had paid Cotter the total sum of $7,000.00 on account of said insurance premiums; that neither Cotter nor Midwest had paid any amount to North America; and that North America could not calculate the premium, prepare the policy, or render its bill until July of 1947.

The sole issue presented by this appeal is whether Cotter, a licensed insurance broker, employed by Midwest to secure the insurance in question, became the agent of North America prior to or at the time he received the payment of the $7,000.00 from Midwest and prior to or at the time he accepted the insurance coverage at the manual rate from North America.

The question of whether the insurance broker is the agent of the assured or insurer is generally a question of fact. Middle Western Telephone Co. v. U.S. Fire Ins. Co., 296 Ill.App. 260, 16 N.E.2d 188. If the evidence supports the finding of the trial court that Cotter continued throughout this entire transaction to be the agent of Midwest, then the trial court's judgment is not erroneous and must be affirmed.

Midwest was a corporation engaged in interstate transportation by motor vehicle. In its operation Midwest used not only its own trucks but also trucks which it leased from other persons, on all of which trucks it carried fire, theft and collision insurance. The purchasing and handling of insurance for Midwest was in charge of Mr. Lipson, its secretary, who, prior to January, 1947, had procured insurance for Midwest through Cotter.

In January, 1947, the policies of Midwest, carried by the Citizens Casualty Company, were being cancelled and about the middle of that month Mr. Lipson requested Cotter to secure other insurance. Lipson left it up to Cotter to find some reputable carrier that would accept the risk. During that month Cotter, as an insurance broker, was placing insurance coverage with at least ten different companies.

In the trial court, the attorney for Midwest conceded "that Mr. Cotter didn't have a signed agency agreement with the plaintiff company; that he was a licensed broker; that he had written other insurance for our company as a broker and that when we went to him and asked him to get this insurance we went to him not as an agent of the plaintiff but as a broker. There isn't any question about that statement in the case."

After Cotter was so employed as a broker by Midwest, he first offered the insurance which Midwest desired to the Travelers Fire Insurance Company and then to the Hartford Fire Insurance Company. After both of these companies refused to write the Midwest insurance, Cotter then contacted North America to inquire if it would be willing to write the insurance desired by Midwest. This was the first contact of North America with the Midwest insurance account.

Midwest desired to have the insurance written on a fleet rate plan, that is, a rate based on a certain percentage of the value of the motor vehicles on which the insurance was written. On January 30, the next date on which Cotter called on the officers of North America, he supplied them which a partial list of the Midwest vehicles to be covered and was told that the North America would only write the insurance on a manual rate plan, a plan whereby the rate was determined on each individual vehicle after an inspection of the same, determination of the age, type and use of each vehicle. On that date Cotter accepted the coverage at such manual rate ...

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