LACLEDE 1'. B. MANUF'GCO, fl. HARTFORD S.B: INSP. 4: INS. 00.

851

in force in the Indian Territory, provides that "the application for a. new trial must be made at the term the verdict 01' decision is rendered and (except in a case not materi.81 here) shall be within three days after the verdict OT decision was rendered unless unavoid· ablyp'1'evented." But thiS secti<:m had no application to the motion to set ai;dde"tpis default. Thl:j.t was not an application for a new trial. There been any trial, verdict, or decision., That was an apfor an opportunity to have a first trial. , It goes without saying tliat;;during the term at which it was rendered, this judgment by default was within the jurisdiction of, and under the control of, the <!otirtbelow, and it was a matter entirely within its discretion whether it would set it aside, and permit the in error to answer or not. It does not appear that there was any abuse of this discreUonin ,the action, ,taken by the eQurt below, and hence there is nothing here for this court to review. At the trial, a .jury was waived, and the parties agreed that the mortgage was valid, and the plaintiff in error entitled to recover the property, if ThOmas' F. Lane was a resident of the third judicial division of the Indian Territory when the mortgage was made, but that, if he was not, the mortgage was void, and the defendant in error entitled to judgment. Evidence was introduced upon this issue, and the court below found that Lane was not a resident of the Indian Territory, and this finding of fact is the other supposed error, complained of. There was considerable evidence in support of this finding, and section 1011 of' the Revised Statutes, which governs this court in this matter, provides' that "there shall be ,no reversal in a supreme court orin a circuit court upon a writ of error * * · for any error in fact." We could not, therefore, reverse this judgment if we were of the opinion that the court below had committed an error in this finding. This finding has the effect of a verdict upon this question of fact, and, as there was some evidence in support of it, the finding must stand. As we have reo peatedly said, when a case comes to this court upon a writ of error, the circnit court of appeals sits to review the errors of law of the court below, and those only. The method in which such errors may be presented to this court. has been repeatedly pointed out. In the case at bar no errors of law are alleged, and no rulings upon questions of law appear to have been made by the court below that the plaintiff in error seeks to review here. Trust Co. v. Wood, 60 Fed. 346. The judgment below is affirmed, with costs.

I..AOLEDE FIRE-BRICK MANUF'G CO. v. HARTFORD STEAM-BOILER INSPECTION & lNS. CO.
(Circuit Court of Appeals, Eighth CIrcuit.

1anuary 29, 1894.)

No. 318.

INSVRANOE-ORAL MODIFWATION OF POLICY.

In an action on a policy of boiler insurance, it appeared th:lt the policy only-covered seven boilers, which were all tha.t the insured had when

1,1".' ,1 . 1

"

L

JW,as . , ed.. apd th.at '. ... 1!F r.\far,ds ... . ,J.. WO,.' J!loJ'e i were . te, When ",erep,t tJ;1ey by the company's iJ.t' the request, and the ! ht..n' iliatthese boiIel'i9':were hisured. ,'It '!ippearedthat both :, "the.. hlsured. and the Inspectorerro'neoUBlY belIevelI: 1Ihll.t there" was no In using bollers thllDJ ln iIleven,lfoI;l).y seven were once; and coveredllny sevell boilers in use by the 'insured. '1lfild.. thq.t. the statement' of the inspector. did .not constitute a modUicatioD of the polley. Judge, dissenting.

J:

tb'e.

In Er,rorto the Oh-euit Courtofthe'United States for the Eaatern Distri,9t of Missomi. ,.. '. ' AellQn py the Manufacturing Company against the RarttordSteam-Boiler Illilpection & Insurance Company. Depbtained judgment. brings error. EliMcKeighan (B: D. Lee,J. P. Ellis, and H. S. Priest, on the brief), for plaintiff in error. . " LeO Bassieur (Benjamin Schnurmacher, on the brief), for defendantin evror. Betore-OALDWELLand'SANBORN, Circuit Judges, and TRAY· '. " .

SANB'onN, Circuit' .rudge. . 4t, .t4e close of the plaintiff's. evtdence the circuit court ,'directed the jury to return a verdict for the defendant. This wrl(Of error is, sued out to reverse the judgment up0:J:l; verdict. There was b\ltone question of fact in the case, and that was whether or not a pQ.icy of insprance, which, confessedl.Y:dlrior to that date, did not cover the boiler which exploded, February 24, by a verbal agreement, that 'it was ',l:lP March 21,1892, exploded.. Fire-Br1ef Manufacturing plaintiff in erl'()r, ', "Vasa corporation engagedr.iIi manufacturing .fire brick at in St. ,In MaYt 1891, it had seven steam boilers, and nR #pre" onits preIDises. .}t made a to the Hartforll Inl!1pectlOn/& Insurance Company, the de. a corporation in the business of insurance, to seven boilers aga.inst explosion; a,nd on May $, 1891, t4e wthe plaintiff its policy uPon the sevenspecified ea(lhJ)f them, in the SUIll. of $3Q,000, for three explosion, . proVided .' the pressure of steam did not years, exceed '100 llounds per, .square inch ·on six of .tp¢l>oilers '. nor pounds per square inclCon the seventh, when the' explosion 'should occur. The defendant was a Connecticut corporation. The policy provided that it should not bind the defendant unless it was countersigned by 0.0. Gardner, ,its general agent, and it:was so signed.. The in its petition that O'n February 24, 1892, this policy. was modi:tJ:ed by the agreement. of the defendant so that,without the payment of any additionaIpre:mium, it thereafter 'covered nine boilers of the plaintiff, whenever only seven were exposed to the pressure of steam,and that on tha.tday the defendant caused the two add11J.onal boilers tobej,nspected, andreported . them s.ound. The defendant, by its answer, denied the agreement

LACLEDE F. B. MANtJF'G CO. t1. HARTFORD S. B. INSP. &: INS. CO.

'353

of Dl;odification, and alleged that the plaintiff applied to it for such a modification, and in caused the,bdilers to be inspected, and found that the attachments were not completed, and the boilers were not sound, and declined to insure them until the defects were remedied, and the attachments made. In the conduct of its business, the defendant caused the boilers it insured to be inspected and tested, before taking risks upon them, and every few months during the continuance of the risks. The On men it employed to make these tests' were called February 24, 1892, Mr. Eickhoff, one of the defendant's inspectors, tested the boiler which exploded, at the request of the plaintiff, and told the plaintiff's engineer that it was sound; but it was not then inclosed, nor were the attachments to it made, and it was not subuntil March 19, 1892. There was no testijected to steam mony that the general agent or any officer of the defendant made, or was informed of, any modification of the policy; but the agreement concerning it was claimed to have been made with the inspector Eickhoff, and is based on the following testimony: Mr. Green, the president of the plaintiff, testified: That Mr. Eickhoff was one of the defendant's inspectors. That he first met him at some time while the plaintiff was insured by the defendant in the sum of $10,000 by a former policy. That, at some time subsequent to this first meeting, Mr. Eickhoff told him that he could not afford to inspect the plaintiff's boilers every few months for the money he was getting for it, and suggested that the plaintiff raise its insl,1rance to $30,000, and he replied: "All right. Go ahead, and make it thirty thousand dollars." That at that time he told Mr. Eickhoff that he might put in additional boilers, and that, if so, they would be or duplicates; that the risk would be no greater; that six boilers would be running for two weeks, and seven for the next two weeks, and the rest would be idle,-and Mr. Eickhoff said, "All right," the insurance by the policy would certainly cover this risk, as it was less every two weeks, and no greater at anyone time. That he supposes they talked this a dozen times. He testifies that, after this talk, Mr. Eickhoff either brought to him, or left on hiS' desk, the written application for the policy on the seven specified boilers then on his premises; that this application was not filled out by anyone connected with the plaintiff; that he signed the application for the plaintiff, as president, and delivered it to Mr; Eickhoff, who took it away, and brought back, and delivered to him, the policy of May 8,1891; that he never had any conversation with any agent 01' officer of the defendant, except Mr. Eickhoff, regarding his insurance, until after the explosion. He testifies that was the president of the Helmbacher Steam-Forge Company, which operated a rolling mill, and was not insured by the defendant; that shortly after the policy was issued he bought the two additional boilers, one of which subsequently exploded, for that company; that he did not then intend to have them insured, but intended to use them at the rolling mill; that before buying them he asked Mr. Eickhoff, as his friend, to inspect them for him, so that he might v.60lt'.no.3-23

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plaintiff, and took ,'tlWpl,:1;Q chelt!3P;liaJ:n, ur p .,. ,u,p. a.boR".t. i.O .. . Ij1:H .· iD ....e.ct.o.,r.;, tb3t. ,Mr". E.ickho.ff . ., . I'\fIlfed,hb:pi.'j:o,mspect;them,again, and have, the¢,tym: to,lll:f=l: 'y<?u ,to' your of .Ourin,spee1ft,oil isg09 d It afteIlIiloqp: ,tell-; he did. 1. a,s.kcd, P¥AU he considereq 1;hpse, lIdo.' .r thiS for " ,i, Hellays! l wID.:- It IS l'lght.Go ahead. He were. insured, ,and they were ill. goo(l shape; to. 'g.0." ft9. . D..d put.t.h,efll.,.walls., . up,.,.; i.:, ,T ,b .. . ...he .. s.a.re all right.": .. He all the talk,:tp.ere Wlt$ about.ins]ll'ing these bOil.e.. ,.e.,.qme th ..eYTw.ere.p .1i$I.'. ;tb th.i.S was a.t tile co,ntin...at . .u.t."' . ,that a,ndEickhoff had pad a dozen it;,.and may. have the insurthese,bollers tJilieeor four before that. ance GeQrg,.e.Jt. ' ;jl..lIM . , fo.rd,th.,. ., . '. . retary Of.'. t.Ji1. policy, an,d tlIat, when Mr. .. .tes.tme,d that to take,the the questiou. .the',t""o came up, he "said th.a t th.. ..'.,.would,1?e .. ...,J..n, un,d,el'. that policy;" that the sec. ond the with Mr. to Gardner, geJ:leral of, the cqlqIlany; that Mr· .Gardner SaId that wereI:lotLiWfp.red under that policy, and "Mr. Green then iF hjg with Mr. Eickhoff that J!)qjJerfl,were :onder th;at policy;" that at this interview stateq,1 that the boAel'S were inspected February 24, they were pot then com.plete, and imperfections were that they were not in condition to bepassedj that pointed 0H!, he a copY9fan report of that date in the book of report!', and said'1;hat a copy of that report had w,t:qe would send it another copy; that copy of such a report, which bears has. tpe words, "Take notice," "Repairs and that the boilers are defective, . and plaintiff never received any "a daYi and had never for any of boilers.;were completed. .oJ: .ofl tll-e: .eourts.are. not n::quired to submit a case to a in support of the case of jury ot but it is their duty to instruct ,the :the a agl!-1,nst: t;be party in any case in whieh 'they :verdict in his. favor, if rendered. qommissioners ;l'rOlark, $}.4: '.;U'.S.278, 284, and cases cited; iFed. 973, 980, and citea. Gowell -y.l,[arley, 6 0 .· Pr A. a character.1:llat it wouldwarJ,'aIl,tajijry Wasthili!

ought them for

the

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;t"e.

LACLEDE },'. B. MANUF'G CO.

v.

ItARTFORD S. B. INSP. &: INS. CO.

355'

inftnding a verdict ill favor the' plafutiff? " This question must be determined by n,'cQllsideration of the conversation of February 24, 1892, in the light of the'surrounding circumstances. ,Unless that talk constituted a contract of modification of the policy, it was never modified. There is nothing in the evidence regarding the inspection of the boilers and the report of Eiclili9ff on that day, or the action of, the defen,qant upon. his report, that' even approaches proof of a contract. It appears that in the course of its business the defendant caused boilers to be inspected before it insured them, to see whether or not it was wise to. do so, as well as after they. were insured, to see whether or not it was safe to continue its insurance; so that the fact that they were inspected tends as strongly, to show that they were not insured, but an applicntion to insure them had been made, as it does to show that their insurance had been effected. Nor does the fact that, on this inspection, Eickhoff reported to the plaintiff or to the defendant that the boilers were sound or unsound tend to establish any contract or modification of the policy, because he would have made one report or the other, whether such a contract had been consummated or not. His report to one or both parties that they were sound and safe to insure could not modify the policy of in· surance, or make' a contract of insurance, and certainly his report that they were unsound could not. Nor could the act of the, defend· to send,acopy of.this report to the plain. a.nt in sending, or tlff, make such a contract, or prove that It had or had not been made. Hence, we are relegated to a consideration of the con"1er$a· tion of February 24, 1892, to determine whether or not there was any contract of ,modification or of insurance made subsequent to the "date of the Before considering the effect of this conversation, it is well to 'note the charl!-cter of the contract the plaintiff seeks to base upon' it. }Ir. Green testifies that, in the talk before he sIgned his application for the policy, he told Mr. Eickhoff, and the latter admitted, that, if nine boilers were so used that only seven were exposed to the steam pressure for two weeks, and then the two idle ones, and four of those in use before were exposed to the same pressure for two weeks, and so on alternately, the risk of explosion would be no greater from the nine thus used than it would be from seven boilers constantly in use. ThiiJ was a demonstrable mistake. The risk of the explosion of Steam boilers is varied far more by the number of square inches exposed to the pressure than by the length of time the pressure continues. There is by no means twice as much risk that a, boiler will explode in two hours, days, or weeks, under a pressure of a hundred pounds of steam, as there is that it ex· ' plode in one hour, day, or week. If it cab. withstand the pressure for any appreciable time, the risk that it will explode, under proper care, for many years, is comparatively light. But the risk that one of two boilers of equal size and strength will explode under a given pressure in a given time is twice as great as that either one will explode, because there are twice as many square inches of surface exposed to the pressure, and each inch must be able to resist it. This risk of explosion is analogous to the risk of the breakage of an , irOnchaill sustaining 'a heavy weight.· That risk increases in propor.

S56
tiopt()the the

FEDERAL REPORTER,

vol. 60.

the because every link must 'is but, affected by, length of ofthatW1:i!cli ,'W()'It!d produce Cl'Ystalliiation 0t :stratifica.-. . se.!'.·.if.the. ChQln' . w.ill stan.d the,strain one . ·. cation ·.()f the 1.·l'o. monrent; it will. so _ If ,.' these boilers were able to stand, !10tln,ds pres,sure to thesql1are inchspe9i1led in the policyfOl' one week, the the three yearsnained in the poliCy. w.,.,.0. .. but Slightl,y.' :it a.,1: all,. ,d.im .. ..i,.nished by pe.run .. 'tting them to l<lle two:nlp,ths of the, !iWe, while the risJr of .from of' streIj,gth than that 'tmWseven.,. fact of these additional boilers did to,full steaDl shows thatth'e'l'iskof tl1eexposure of additional surface to was far greatQr,',tp.ail that:of continuingtlle pressure on the"kutface that had been fer months." It follows that the pif modification, the plaintiff"jn the sum of 'fdr two years aIfd tk-ree mQp:\;h.s, against the,explosion of tw(), before thelfgauges were attached or,tl;1eir connec· put in So radio thIS con,tract Q'ttght not to be lllferred, a Ii.fib.,iI.,. ..','.O.'\Ig. t. npt...t.o.', b.e imPos.,e.d defenda;nt,unless there. subs11lt;atl,Rl,eVldetfce that at the mmds of EIckhoff and Green met uIilinllJ'ld agreed to it. '.' .'. ,,' . " bow to the conve,rsa!iono!February 24, 1892, between these tWO men,and'bearing'in mind their previous 'conversations, the cont1itton of. theil'. fuind$"AAd therq., is tblj,t, they agreedtp,at the policy modified.·. their negotiation for the .andstUI' in the erroneous,!>clief that it madeno'4Ufe l'elice in boiIeJ."S, in uS,e all the" term ofjhe PClUCY, or boiler$, each of under .tl1e policy; hence, they tiotIl sl?-pposed that the modpication pleaded by, the plaintiff was immateria1.to the defendant.. Notonly tbis, but before the policy was issued, at a dozelltimes, Eickhoff had declared to Green that the seven all the ,additional boilers he acquire date of the policy, if but seven were used at a time. the policy was issued, Green says, Eickhoff contino uedto talk With hiJna1)but it; thGtt he talked about it a dozen times; that heOjAyhave sald three or four times before· the conversation of FebrUary 24:ththat the would cover the two additional boil. ers; and that the talk of February 24th was at the continuance of these c0l:\"tersatiOllS. Is it not plain, from this testimony, that both these men were of the opinion that the policy, as it was, covered the two boilers, without any modification? .It seems so to us, and the'subsequent cOnversations and acts of these men confirm this 24, 1892, a-reen sent,' not for Eickhoff, but for some inspector, not to insure his boilers, but to inspect them so that they would pass the city insJ?ection. EickhOff happened to be the inspector who I'espQnded to call. Green immediately rehim, not to insure these but to inspect them, and

.

LACLEDE F. B. MANUJ.f'G 'CO. V. HAR'tFORD S. B. INSP. " INS.

co.

357

have the city inspector test them. A long conversation followed about the method of inspection, about emptying the boilers, which were then full of water, and the necessity of calling the city inspector, which resulted in Eickhoff's agreeing to make the inspection for himself and the city also. The only reference to the insurance in this entire conversation, according to Green, was that he asked Eickhoff if he considered the boilers insured, and he said he did. Green then asked him if he would attend to this business for him, and he said he WOuld; that it was aU right; that the boilers were insured, and were in good shape. The "business" that Eickhoff agreed to attend to-the "business" that Green sent for some inspector to attend to-was the inspection and testing of these boilers, and not their insurance. The statement of Eickhoff that he consid· ered them insured, that they were insured, was but a repetition of the opinion he had always expressed,-that the policy on the seve'il boilers insured all the boilers the plaintiff could acquire, if only seven were used at a time. That this is the true construction of this talk is evidenced by the testimony of the secretary, Blackford, who said that what ·Eickhoff said was "that the boilers would be insured under that policy," and that when, after the explosion, the general agent, Gardner, informed him and Mr. Green that these additional bollers were not insured by the policy, Green replied, not that he and Eick· hoff had agreed that the policy should be changed so as to Insure them, but "that it was his understanding with Mr. Eickhoff thatthe boilers were insured under that policy." In this entire record, the only' suggestion of any contract modifying the policy, or insuring the additional boilers, subsequent to the dateo! the policy, ,appears in the pleadings, and is attributable to the superior knowledge and in· genuityof counsel. The plaintiff alleges such a contract. The !In. swer denies it, but admits that an application for such a was made. The evidence disCloses neither contract of modification nor application for a contract of modification. Green and Eickhoff en· tered upon their negotiations under two mistakes,-a mis,take of fact, suggested by Green, that the risk of explosion from nine boilers in use seven·ninths of the time for three years was not greater than the risk of explosion of seven boilers constantly in use for that term; the other, a mistake of law, based on the opinion of Eickhoff that a policy insuring seven specified boilers would cover all the additional boilers the assured might acquire subsequent to its date, if he ex· posed but seven to steam pressure at a time. Laboring under these mistakes, Eickhoff gave it as his opinion, after the policy issued as before, that it covered the additional boilers the plaintiff acquired, and that he considered them insured by that policy. Green ac· cepted that construction. ill their view, it would have been a futile act to modify or change the policy, because they thought it was it· self sufficient to accomplish their purpose. It is true that a written contract may be modified by a subsequent oral agreement, and that a contract of insurance may be made by parol. But it is nevertheless true that the contract here in question was one of considerable magnitude,-one involving $30,000; that the customary method of modifying policies of insurance and of making

are ··@ak itempQrary"

they todoofitinlle only '\mill they can be 'purSued 'by the defendPQliCy,w,uissued wl1'S' to.,issue awritteh:policy upon a ..·mMi"cation.,',t'he)faettliamitltis talk was 26 'days before the steps,·had ibeeli'takeDl :by either. party meanwhile to put of m,odi:ti.cation mlof msurancefinAvriting, and no madejb;ri1lhe,plaintUf for any:such oetidEmce of its contraqt indicates thatnpauch conwae1l'lwas ever made. In Ohief Justice Marshall, in tjae opinion, of, the sU])l'einecourt,saitli: . ."A Is as much. iUt' InstrulIl,el1t} as the policy itself.

ip.sura:p.ce f<HtJOl\g

and only be' ,in ,the manner l>l'estl'tbed by law. Tbe force lu<Jeed, te:r;wJuated by actually canceling l!-cc;>Ptract ,to. cancel it1.S.,as solemn an act as a contract .to make 'to become tne act of the: must executed according to the forms: in wblcb, bylaw; tbey'areenabled to act." ,
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InFarleyv. '!;lI.e supreme <lourt declared the, positive ,testimony pf an oral agreeone . evidence to it, in . IPt .the i,mprobaJ;>ijity that such "a contract would SOme writtooeviqeuQe ,of iit. .' In oqropinion, the :evidence in thiacase was not only to establish ,the impormnt. agreement of modification of the Qr of .9f the additional. boilers he alleges, but, in of tb;e aAmissionofcthe application- in the answer, it fails to show that, iss"llanee of the oJliginal policy, either Greeniqr Eickhoff evercqntemplated, Qr sUggested to each other, the makiqg,·Qf .any such. agreement.. This, conclusion disposes, of. this case,to:r.it is too well settled to warrant more than the the Propolilition, that the opinion Eickhoff expressed, or, if it. be so ,CaUftf!\ ,the "proxnise" he made; before the policy issued,tb,atit would coyp,r allafter-aequiJ.'ed boilers, while but seven were in.use, was merged iin. the written contract evidenced by the policy, a,nd was not available to.the,'plalntiff in this action either as a agreement,::OJ;·,all estoppel. Insurance Co. v. :U. S. 544, 5.41,549; HudsoIl Oanal 00. v. Pennsylvania Ooal 00.,: 8, Wall. Insurance 00. v. Lyman, 15 Wall. 664; ThOlnpS()D;, y. Insurance Go., 252 ; Pearson v. Oarson, 69 ¥0.550;:rT,vllCY v. Co., 104 Mo. 193, 16 S. W. 203; Inv. Neiberge.r;74 Mo. 167; Lewis v. Insurance 00., 39 , Oonn. l Q O ; , , ; rea8t>nrwhy thejudgmentbel()wshould be af" firmed,aUdtl;!at is that, tQere evidence in this record that the inspector had defendant to modify the' make a 8uppleinentahmntrad of insurance in its behalf"m,warrantaverdiptiagainstdtTo maintain'the negative of this: proposition, I&UpPOrt of the ;following propositioI!.$.'lU'wcited:Whman insuran.<lfllcompany defends against a 9JJ.!.thce ground that the pol1cy,llf. forfeited by a'false'representa·

LACLEDE F. B. MANUF'G CO. ".HARTFORD S. B. INSP.

&;

INS. CO.

359

tion in the application of the insured, it is in some cases an answer to this defense,in the absence of fraud, that the insured told the agent who solicited the insurance the truth, and the agent wrote the into the application himself. In such cases the false statement becomes the statement of the company, and not of the insured. Insurance Co. v. Wilkinson, 13 Wall. 222, 225; Insurance Co. v. U. S. 610; Co. v. Mahone, 21 Wall. 152; Insurance Co. v.Ohamberlain, 132 U. S. 304, 312, 10 Sup. Ct. 87; Insllrance Co...v. Snowden, 58 Fed. 342;1 Kausal v. Association, 31 Minn. 17-21, 16N. W. 430; Deitz v. Insurance Co., 31 W. Va. 851, .8 S. E. 616. An agent who is authorized to agree on terms of insurance may make a preliminary oral contract that the insurance to be evidenced by a policy shall commence from the date of the verbal contract. Insurance Co. v. Colt, 20 Wall. 560,568; Insurance Co. v. Shaw, 94 U. S. 574; Eames v. Ineurance Co., Id. 621; City of Davenport v. Peoria M. & F. Ins. Co., 17 Iowa, 276; Audubon v. Insurance Co., 27 N. Y. 216; Fish v. Cottenet, 44 N. Y. 538; Angell v. Insurance Co., 59 N. Y.I71. A corporation that holds one out as its agent in a particular business is bound by his acts within the scope of his apparent authority, although his real authority may be more limited, notice of the limitations is brought home to the party affected by his acts. Insurance Co. v. McCain, 96 U. S. 84; Griggs v. Selden, 58 Vt.561, 5 Atl. 504; Walsh v. Insurance Co., 73 N. Y. 5. These propositions and authorities, however, do not rule this case. There is no attempt here to avoid the policy, and no question of false representation or description in it, or in the application on which it is based. Both plaintiff and defendant admit and count upon the existence and validity of the original policy. It goes without saying that the fact that an agent assumed to do an act is no evidence of his authority to do it, where that authority is questioned. Lohnes v. Insurance Co., 121 Mass. 439, 441; Bush v. Insurance Co., 63 N. Y. 531. This case is barren of evidence that Mr. Eickhoff ever had any real authority from the defendant to make or modify contracts of insurance on its behalf. It does appear that he was not the general agent of the company at St. Louis empowered to fill out and countersign policies, and that one Gardner was. It does appear that his title was not "insurance agent," but "inspector," and that his general business was inspecting and testing boilers. There is no evidence that he ever made, or agreed on the terms of, or so. licited, any contract of insurance for the defendant, except the policy in question; so that his apparent authority to make and modify contracts of insurance for the defendant rests entirely upon his acts at the time of the issuance of that policy. What authority did he appear to have, from that transaction? He solicited the. plaintiff to take $30,000 insurance from the defendant. He told the plaintiff that this insurance would cover the seven boilers it then had, and all the boilers it ever acquired, if it used but seven at a time. If this statement was,as we believe, his opinion of the legal effect of a policy on seven boilers, it certainly could not establish his authority
1.1 C. C. A.

11160

,0·

.' FEDERiAL 'REPORTER,.vol·. 60{ lei

to constl'iUethe contractSlof the ; If· it was, as plaintiff claitns" apoomise, it :was Pepudiated'by the iS8uance of the policy. When:he;.solieitedi the 'policy, Eickhoff 'didnotrmake, or assume to lIlake,dany:oml contract:Of insurance fQrthe defebdant. He did not!.agree, 00: agree, that the term of insurance should commenee from theitime ·of that conversation.. So far as the evidencediscloses, he went away without any discussion of, or agreement the tUne when the insurance should commence, the length of the term,/lhe amount of the premium, or any of the other terms that were finally embodied ill the policy, with the single exception of the amount.: He subsequently brought to the plaintiff a written application for $30,000 insurance on the seven boilers only. There iSiloerldence that he filled out that application. The evidenceis that the plaintiff did not, and there it stops. The plaintiff signed 1t;'!Eickhoff carried it away, and brought back the policy signediby the officers amd the general agent of the defendant at St. Louis, ,btit, Eickhofl"s name does not appear on 'fhat policy did not:insure,the plaintiffllgmnst the explosion of boilers acquired sub· sequeIitto.!its date, if but seven were in and if Eickhoff's statement was a promise, and not an opinion, the policy was in itself arepudil1tion of the talk of Eickhoff, arid a notice to the plaintiff that the defendant did not recognize his authority to make terms of insuranoe./ Not only this,but the fact that no policy issued on the oral application of tMplaintiff to Eickhoff, but a written applica· tion signed by the plairttiff,containing different terms from those namedimthe oral negotiations, was reqUired, before the company would act at all, was com:plete notice and conclusive proof that the defendant not only did not hold him out as having authority to makeeontracts for it, but did not even recognize his authority to refor,insurance, OIl which it wolild act. This wasaU,the'eJVidence that this inspector had any apparent authority even to mak,e or modify contracts of insurance on behalf of the de· fendant,· and it was insufficient. Insurance Co. v. Mowry, 96 U. S. 54:4; Mo'rsev. Insurance 00;,.21 Minn. 407; Healey v. Insurance Co., 5 Nev. 268, ,274; Lohnes v; Insurance 00., 121 Mass. 439, 441. In Insurance Co. v. Mowry, supra, Mr. Justice Field, in delivering the opinion of the supreme cout't, said of a general agent of the insurance who had authority to take applications, countersign policies, and collect premiUllls: . .
"There is nothing in the record which shows that the agent was invested with authority to make au insurance for the company. In representing himself as. an agent; he only solicited an application by the assured to the com· That instrument wall to be drawn and issued by the pany company, and it shows on .its race that the authority to the agent was lim· ited to countersigning it before delivery, and to receiving the premiums."

In Morse v.Jnsurance Co., supra, an action was brought on an oral contIjRct Illade by a soliciting agent at the time he obtained a written application, to the effect that the. insurance should commenceimmediately, and a, policy should be subsequently issued. The evidence was that the year before the agent had obtained a like application from the and made a like agreement, and

LACLEDE F. B. MANUF'G CO.

11. HARTFORD

B. B. INSP. & INS. CO.

361

the company had issued a policy for a term commencing at the date when the application was obtained, but there was no evidence that the company was notified of the agreemeut made by the agent. The plaintiff hM a verdict, and the supreme court of Minnesota set it aside on the ground that the evidence of the agent's authority was insufficient to warrant it. How much stronger the evidence of the apparent authority of these agents to make insurance contracts was, than is the evidence in this case of the authority of this inspector, appears from what has already been said. Moreover, there is no evidence in this case that Eickhoff was the clerk or general representative of the general agent, in conducting his insurance business. The utmost stretch of his apparent authority reaches no further than to. make him the occasional agent of the general agent to solicit an application. deliver it to him, and carry back the policy. The functions of such an agent cease with the delivery of the policy. From an apparent authority so limited, no authority to subtract from, add to, or mod· ify the written contract of the insurance company can be inferred. Healey v. Insurance Co., 5 Nev. 268, 273; Putnam Tool Co. v. Fitch· burg Mut. Fire Ins. Co., 145 Mass. 265, 269, 13 N. E. 902; Kyte v. Assurance Co., 144 Mass. 43; 46, 10 N. E. 518; Lohnes v. Insurance Co., supra; Tate v. Insurance Co., 13 Gray, 79, 82; Wilson v. In· surance Co., 14 N. Y. 418; Hoffman v. Insurance Co., 32 N. Y. 409; Walton v. Insurance Co., 116 N. Y. 317, 322, 324, 22 N. E. 443; )fitchell v. Insurance Co., 51 Pa.St. 402, 411. The judgment below is affirmed, wlth costs. THAYER, District Judge. I concur in the order affirming the judgment of the circuit court on the ground first stated in the foregoing opinion, but would not be understood as expressing any opin' ion with reference to the further ruling that there was no evidence tending to show that the inspector had authority to modify the original contract of insurance. CALDWELL, Circuit Judge (dissenting). There was abundant evidence to go to the jury, and from which they might rightfully have found, that Eickhoff was an agent of the defendant, and clothed with authority to modify or extend the original contract of insurance, and that such a contract was in fact made. His agency is not denied in the answer, bUt, by necessary implication, admitted. In its answer the defendant says:
"And defendant states the truth and the fact to be that at some timeh1 the month of February, 1892, the plaintiff did apply to the defendant for insurance upon two additional boilers to the seven boilers mentioned in said policy of insurance, and did request the defendant to add said two boilers to said seven boilers, and did request defendant to agree that said policy of insurance issued to it in the month of March, 1891, should cover said two additional, as well as said original seven, boilers. · · ."

The testimony shows that all the dealings in reference to this insurance business-those .relating to the policy that was issued in 1891, as well as those relating to the supplementary or ancillary

'''.

','9. did you dealing$ With about..thismatter o.1!.this appllcation?,::A.,,¥:t:: Elckho1f",QJ})idypu Mr. about it'? Did you have any [IJ-egotlations] with Mr, Gardner at all? None' «tall Q. Did you ever see' any other representative of this company, either In taking out this policy or pu1tingln this anxUlary battery of lPickhoff? A. NO,sir; :\Q. dldG'ou, come to ask Eickhoff to /lD,d bqollers. for ,y"Qu? A. Wel,l, he was, lloing my insur,If' -. ','·,,'1' ,

-fq.J: ijl,e in.su Mr. f . and

,the:twO: additional boiler.s-were had . ElCkb,Qff.Mr. Green was asked:

"The the party in omitting to produce that evidence in elucidation of the subject:matter in dispute which is within his power, and which rests peculiarly within his own knowledge, frequently affords occasion for presumptions against him, since It raises strong j;usplclon that such evidence, if adduced, would' operate to his prejudice."

not a the contrary of this in the reC9:f9t; 1m;l; much Inore. to. the· ,Reading the paragraph of th;Et;.AD,Swer I have qJWted in the light of this evidence, it is perth"at the application .w4ich the answer admits was made fectly "to to, i,nsure thttwo boilel'S was the application made ,W,:Us ,agent positively that no suc;..lIDPij.cation ever to anyone else. But what 'on the question of Eickh0ff's ,agency and authorityj the the fact that he did make it, plaintifl'ls:evidence tended stroJ;lgJy W"ei5tablilihbpth,these'facta;the defendant declined to put Q-ardn:eronth:e Ijrtalld to deny them. Whether Mr. ,was aJ;lagelil;t ofthe,'C()mpany to effect insurance, and 9cid. insure two:ooilers,were facts peculiarly within whether of Q-ardner. ,well-settled rule when t:b.etproof wnds to fix ali&bUity upon a party who has it in his power to offer evidence of all the, fac;ts as they ex; isted, and rebut the which the proof tends to establish, to offer Iiluch thejul'Y a,tliberty to pre:the proof, ifproduced,JJll!!tead of rebntting, would support, hl!,ereJ;lces him. '.: R.ailway Co.v. ·Ellis, 4 C. C. A. 454, 481. In Starkie on Evidence (volume 1, p. 54), it is said:

perceive why it should not be applied to an insurance comnany. The blllofexceptions shows that the precise ground upon which the case was taken from. the jury by the circuit court was "that there was no evidence to show that Mr. Eickhoff, the defendant's inspector,had any authority from the defendant fu change or modify the policrofin;surance @1J.ed 'on." Thecase comes here upon an exception: to 'tlia,t particular ruling, and that is the only question discussed for plailltiff in error. It is now. well settled that, when a given state of fads is such that reasonable men may fairly differ upon the question, the determination of the matter is for the it appears that all reasonable men would was to .warrant a verdict that agree the court JpS,tified in from the jury. Rail-

295, 316; People v. McWhorter, 4 .Barb. 438), ,and it is difficult to

This rule is applicable to criminal cases (Com. v. Webster, 5 Cush.

LACLEDE E. B. MAN:OF'a co. 17. HARTFORD S. B. :INl!P. & INS. CO.

363

way Co. v. Ives, 144 U. S. 408, 417; 12 Stip: Ct. 679; Railway Co. v. Ellis, 4 C. C.A. 454, 54 ,Fed. 481. Upon this question of fact, one judge of this court holds that the evidence was to warrant the jury to find a verdict for the plaintiff, one that it was not, and one is in too much doubt to express an opinion. When this is the attitude of the appellate court, the cause ought, plainly, to be sent back to be tried by that tribunal appointed by the constitution to try the facts. ' , The remaining question is, did the agent Eickhoff make the ancillary contract to insure the two boilers? It is well settled that, unless prohibited by statute or other positive regulation, a valid contract of insurance can be made by parol (Insurance Co. v. Shaw, 94 U. S. 574), and that an ancillary agreement, such as was made in this case, is binding, without any written memorial of it, and that such an agreement is not' within the statute of frauds (Insurance Co. v. Colt, 20 Wall. 560). Whether the majority of the court mean to be understood as asserting that no such contract was made, or that, though made, it was void by reason of a mutual mistake of the parties, is not very clear, from the opinion. The supposed mistake.. as stated by a majority' of the court, consisted in Mr. Green and Mr. Eickhoff agreeing "that, if nine boilers were so used that only' seven were exposed' to the steam pressure for two weeks, and then the two idle ones and four of those in use before were exposed to the same pressure for two weeks, and so on alternately, the risk of ex· plosion would be no greater from the nine thus used than it would be from seven boilers constantly in use." As I undel'stand the proposition of the majority, it is that the risk of explosion of two boilers of equal size and strength, when one is used one week' and the other the next week, and so on, alternating, through the year, is just as great as if both boilers were used at the same time con· tinuously through the year. This proposition is original, in this case, with the majority of the court. It is not found in the pleadings, was not raised in the court below, and is not alluded to in the briefs of counsel. It is not sound. It ignores the wear and tear and gradual deterioration and weakening that result from con· . stant use. It takes no account of a change in the atmospheric conditions, and of the fact that boilers frequently explode from causes which are unknown, and cannot be ascertained. It is undoubtedly true that the view of the majority of the court on this questiot never suggested itself to the minds of Mr. Green and Mr. Eickhoff, although the latter is a skilled boiler inspector. But,' if the proposition be true, it was a mistake of fact, or rather a want of that scientific knowledge possessed by the majority of the court, relat· ing to a ;matter about which both parties had equal opportunities of knowing what the fact was; and, there being, confessedly, no fraud on the part of either, the validity of the contract is not affected by the mistake. The consideration for the ancillary contract was ample. Mr. Green set up the boilers, and incurred a large expense which he would not have done but for the agreement and assurance of the agent Eickhoff that they were and that he might rest easy on that subject. The contract for the an-

·

W.as c9I1lpleted,'deJ",thei written' policy. wasissned. date and. the supplementary made in Febrnary,if1892.. The ansWer admits that tin:le in the month of February; 1892, the plaintiff did apply dqfAAdant for insurance upon two additional boilers;" and evidence to gQ'. to the jUry that such insurance When. Mr. ·GreeJ;l·.called .on Mr. Gardner after the loss, the latter did not then pretend that Eickhoff did not have ,W. make the, contract, of that the contract' was not in fact mMe"but his claiIJl.was ,that "he didn't think he was liable for there,beeause it wasn't backed on the back of evidently labollJpg: under the impression that the nQt pound py the,eontract, because it had not been '. T;he testimony in this case that Mr. lltnd earefnl, .businessman; and that he had Jl.9 1>fputting,upthese bo1lers without first.haVing them ,inswed. ,ne did evevything'thata prudent man could lIewQuld not lIufchasetlLe boilers until !.l,e thatreasoD he defemlant'sagent· and, inspector, to in· liIPeet tp,(ffll More he purcMsed them. And it W81l. only upon being al'\Su:red J]y. the defendant's agent· that. the, bollena wete sound, and that.iI them' the. defendant· :would 'insure them, that he tb,e bargain for them. . When they Were set up, and \)efore casiIlg. with brick, he .had them inspected by the deagent and with a view to insuring them; and after . he was assured by. the defendant's agent,Mr. over again, that they were insured, and he laid out money upon the faith, of that assurance. When a loss occurred, payment was refused, not· because Eickhoff was not an agent, or that J:j.O contract had been made, but because the contract "wasn't bacl;redon of the policy;" and, when the company is sued, it,sets up various other defenses, which are obviously afterthoughts. insurance should be,characterized by the utmost ho:J;lesty anjlgood faith On the part of the insurer and the insured. It Ul no unCQU,l;Illpn thing. for business men to place reliance in, and actupon, the verbal agreements and aSsurances of insurance agents. Itsol;lletimesoccurs that it is inconvenient or impracticable to do t:tJ.e ;l>usinesll,! a,t .the time, in any other mode. The law does not re,quire the, of tb,e agent's authority to be made a matter o{,frecord, and.no man ever requires an insurance agent to show of.. ;tttorney to ,aetas such, before insuring with him. It supposed, and so all the courts have held, that l:J, maJ:j..a"sumed to act as an. agent for an insurance company, delivered the policies, and received the predidc8ll this), that was snfficientprima facie of .A.nd:certainly it ought to be, when neither he nC?r,.any 9tb,er agent of the company dare take the stand and deny his ageqcy. There is in this country to-day, millions of dollars' worth of property insured, and effectually insured, upon. verbal con· such was proved in this case. The doctrine of the maI

UNION PAC. RY. CO. "'. ARTIST

365

jorityofthe court does not accord with the understanding and practice of the business community, and puts it in the power of insurance companies to adopt a standard of business integrity much below that which ought to characterize the dealings of reputable business men. The question as to whether such a contract waf!t made is one for the jury to decide upon the evidence, and there was abundant evidence to entitle the plaintiff to go to the jury upon it. It has never been submitted to a jury. It . . was not passed upon by the circuit court, and has not been argued by counsel. For these reasons the judgment of the circuit court ought to be reversed, and a new trial directed. Not to do so is to deprive the plaintiff, wrongfully, of its constitutional right to have the facts of its case tried by a jury.
UNION PAO. RY. 00. v. ARTIST. (Oircult Oourt of Appeals, Eigbtb Oircuit.
No.

February 12, 1894.)

342.

1.

RELEASE AND DISCHARGE-CONSTRUCTION.

t.

A release for settlement of claim for certain personal injuries specUled in the release, and also "of and from all manner of actions, of action, claims and demands, wbatsoever, from tbe beginning of the world to this day," does not cover personal injuries not therein specified, and not known to exist at the time the release is executed, since the general terms in the release are limited by the preceding specifications. A master who sends his servant for treatmenf to a hospital maintained by the master for charitable purposes is not .responsible for injuries caused to the servant by the negligence of the hospital attendants, where tbe master bas exercised ordinary care in selecting such attendants. A hospital maintained by a railroad company for the free treatment of its employes, supported partly by the monthly contributions of all its employes and partly by the company, and not maintained for profit, is a. charitable institution.
OF MASTER-CHARITY.

MASTER AND

:8.

CHARITIES-HoSPITAI,-RAILROAD COMPANIES-N EGLTGENCE.

In Error to the Circuit Court of the United States for the District of Wyoming. Action by Andrew So Artist against the Union Pacific Railway Company. Plaintiff obtained judgment. Defendant brings error.
This writ of error is brought to reverse a jUdgment against the Union Pacific Railway Company for the malpractice of physicians and the negligence of attendants in a hospital maintained by it, for the benefit of its employes, at Denver, in the state of Colorado. The evidence tended to show these facts: The Union Pacific Railway Company requires eacb of its employes to con· iribute from his wages 25 cents a month towards the support of a medical department. The railway company contributes the amount reqUired in addition to the sum thus raised from the contributions of the employes to pay the expenses of this department. At the time the defendant in error was ireated at the hospital, the company was contributing from $2,000 to $4,000 per month for this purpose. With this fund the railway company maintained several hospitals for the treatment of its employes when they were .gick or Injured, and employed physicians and attendants to care for them at the hospitals, and physicians and surgeons to attend them outside the hospitals, at important points on its lines of railroad. All the employes of the