
    Charles M. Walrath, Respondent, v. Hanover Fire Insurance Company, Appellant.
    Third Department,
    June 29, 1910.
    Insurance — delivery of policy — revocation of agency — effect of statements by former agents — estoppel — withdrawal of policy — notice — evidence.
    A policy of insurance is not a valid obligation until delivered.
    Where in an action on a policy of insurance it appears that plaintiff, the ’ owner of a farm, had been- insured against loss from fire for some years by the defendant through certain insurance brokers; that the policy was in the possession of the mortgagee and was about to expire; that the brokers, whose agency had been revoked a year before, applied on their own motion to defendant’s new agent for-an extension of the policy and a new policy was delivered to them, which they falsely informed plaintiff they had delivered to the mortgagee, and that later, but before the new policy was to take effect, the defendant withdrew it and it was returned by the brokers, the plaintiff cannot recover for a loss occurring after the expiration of the old policy on the theory that defend-" ant was estopped from denying that it issued the new policy because plaintiff had had no notice that the agency of the former agents had been revoked.
    
      If the former agents of the defendant were the agents of plaintiff to accept delivery of the new policy, the plaintiff is chargeable with their knowledge ■that the policy was recalled and delivered back to defendant before it became operative.
    The withdrawal of a policy before it becomes operative is not a cancellation within the meaning of the Insurance Law so as to require notice to the insured.
    
      It seems, that if the insurance brokers had in fact been agents of the defendants at the time, their statement that the policy had been delivered to the mortgagee, though false, would have estopped the defendants from denying the delivery.
    Evidence examined, and held, to show that plaintiff knew before the expiration of the old policy that the brokers had ceased to be agents of the defendant.
    Smith, P. J., dissented, with memorandum. •
    Appeal by the defendant, the Hanover Fire Insurance Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the cleric of the county of Albany on the 12th day of November, 1909, upon the verdict of a jury, and also from an-order entered in..said clerk’s office on the 15th day of November, 1909, denying the defendant’s motion for a new trial made upon the minutes.
    
      Thomas S. Jones, for the appellant.
    
      Michael D. Reilly and William E. Woollard, for the respondent.
   Houghton, J.: .

The plaintiff is the owner of a farm the house and outbuildings on which had been insured for some years from loss against fire by the defendant, through the agency of George H. Rus'seTl or George H. Russell & Son. The policy had been in the custody of a mortgagee, and expired on May 15, 1908. A year previous to that time the agency of Russell & 'Son was revoked and Rose & Kiernan were appointed agents of the defendant in their stead. About the sixth of May, apparently of their own motion, Russell &.Son applied to Rose & Kiernan for a policy continuing the insurance upon plain- . tiff’s buildings for another three years and a policy was delivered to them. On the agents reporting the issuance of the policy to the defendant they were, instructed to withdraw the policy as the company had ceased insuring farm property, and before the fifteenth of May, when it was to take effect, on demand Russell & Son returned it to them-

The Bussells' testified that they informed the plaintiff on the thirteenth of May that the defendant had ceased to write policies on farm property and that they were no longer agents of the defendant, and that they were unable to procure-, a policy in the defendant company on his buildings and that they were endeavoring to obtain other insurance for him, having no company of their own which would insure farm property, and that before any company would insure he must make certain alterations and improvements to his buildings.

The plaintiff denies that they told him that their agency in behalf of the defendant had been revoked or that the defendant would not issue a policy on his buildings, but admits that the only conversation he had with them was on the thirteenth day of May and that they then told him that he must make certain alterations and improvements before they could obtain insurance by any company, which alterations he immediately made.

As the plaintiff claims on the fifteenth of May, and as the Bus-sells testify on the sixth of May when they received the policy which was subsequently recalled, they sent to the plaintiff a bill for the premium, describing this defendant as the company issuing the policy and its number, and stating that it had been delivered by them to the mortgagee. Such premium was not paid, the plaintiff testifying that credit was given, therefor.

The Bussells procured no other insurance and the plaintiff appears to have paid no further attention to the matter until the 12th of July, 1908, when some of the buildings were burned. He personally notified Bussell & Son and was informed that there was no policy of insurance. He furnished- proofs of loss to the defendant, however, and brought this action upon the policy which the defendant had instructed their agents to withdraw and which had been withdrawn prior to the day of its taking effect.

On the trial the plaintiff conceded that the policy had not been actually delivered and on motion of the defendant the trial court ruled that under the pleadings and proof the plaintiff was not entitled to recover on an oral contract of insurance nor for damages for failure to issue a policy of insurance upon a valid contract therefor.

The theory upon which the plaintiff has recovered is that the defendant is estopped from denying that it issued the policy in question because Russell & Son were their former agents and had been accustomed without solicitation to renew policies about expiring upon plaintiff’s property, and that the plaintiff had no notice of the revocation.of their agency and was entitled to rely upon their repre-' sentation that a policy had been issued and delivered to the mortgagee, and that the policy which was issued could not be legally canceled or. recalled even before it took effect without notice to him.

We are of opinion the plaintiff cannot recover on such theory. He was not entitled to notice of withdrawal of the policy from the hands of Russell & Son before it went into effect on May fifteenth. The defendant did not cancel the policy. It simply withdrew it or recalled it before it became operative. Such a withdrawal was not a cancellation within the meaning of .the law requiring notice to the-insured. If the plaintiff had requested Russell & 'Son -to issue a policy iú behalf of defendant in place of the one about expiring, and they, notwithstanding-the revocation of the agency of which the plaintiff had no notice', had assented to the proposition there might be some ground for the claim that the defendant was estopped or that a good oral contract for insurance had been made. But the plaintiff made no request' to them to issue a policy. They took it upon themselves to solicit for the plaintiff a policy in the defendant’s company from its authorized agents.

A policy of insurance is not a valid. obligation until delivered, and confessedly the policy in question was never delivered to the plaintiff himself. If Russell & Son were still agents of the defendant as to the plaintiff because he had had no notice of the revocation of their former agency, delivery of the policy to them was not delivery to the plaintiff. The only way in which it Can be said that the policy was delivered at all is to assume that they were agents of the plaintiff. If they were such agents to accept delivery, they were mere brokers acting for' him and the plaintiff is chargeable with their knowledge 'that the policy was recalled and redelivered to the defendant before it became operative. (I Keller v. Hartford Fire Ins. Co., 24 Misc. Rep. 136.) Aside, therefore, from the express stipulation, of the plaintiff made on the trial that there was no delivery there was never any delivery of the policy issued by the defendant. If Russell & Son had been actually agents of the defendant their statement that the policy had been delivered to the mortgagee would doubtless be deemed delivery though they had not delivered it to him. But not in fact being agents their declaration that it was so delivered is not binding on. the defendant. If there be any doubt, however, as to this proposition the preponderance of evidence is that the plaintiff was informed that they were no longer agents of defendant and the judgment should be reversed on that ground.

Any question as to the right of the plaintiff to recover on an oral contract of insurance was expressly eliminated on the trial.

If these views be correct it follows that the judgment and order must be reversed, with costs, and a new trial granted.

All concurred, except Smith, P. J., dissenting, in memorandum.

Smith, P. J. (dissenting):

The plaintiff having dealt with Russell & Son as the defendant’s agents, might continue to deal with them as such until notice of the revocation of the agency. In Claflin v. Lenheim (66 N. Y. 301) the head note in part reads as follows “ Where'one has been constituted and accredited as agent to carry on a business for another, his authority to bind his principal continues after actual revocation as to those who have been accustomed to deal witii him as such agent until notice of the revocation is brought home to them.” (See, also, 31 Cyc. 1305, and cases there cited.) The declaration of Russell & Son that a new policy had been issued and delivered to the mortgagee, therefore, estops the defendant from disputing its delivery. Plaintiff was told that certain improvements had to be made to render the insurance valid. These improvements he made and notified Russell & Son thereof. He might thereafter assume that a valid insurance existed in accordance with the previous notice. I do not agree with Mr. Justice Houghton that the verdict is against the weight of evidence. The conflict in the testimony is clear, and the acts of all parties would seem to support the plaintiff’s contention. I, therefore, vote for an affirmance of the judgment.

Judgment and order reversed and new trial granted, with costs ■to appellant to abide event.  