and the placing of insurance. The court held that the dual relationship of the agent was not illegal, because he was not required to assume incompatible duties. Another view, however, is taken by the courts of Colorado1 and Georgia,2 the first deciding that either party to the contract can avoid a policy of insurance negotiated by one who acted as agent for both the company and the insured, unless both parties were aware of the agent's dual relationship and ratified the same; and the second holding that the company must give its consent before its agent can also be the agent of the applicant for insurance. It should also be stated here as a general rule, that if a company revokes its agent's authority and does not notify the insured of such revocation, the subsequent acts of such agent will bind the company.

Brokers Distinguished from Agents.-The statutory law of most of the states makes a distinction between insurance brokers and insurance agents. In section 93 (Chapter 214, Statute of 1887) of the Massachusetts law, which is illustrative of the law in many states, a broker is defined as constituting any person "who, for compensation, not being the appointed agent or officer of the company in which such insurance or reinsurance is effected, acts or aids in any manner in negotiating contracts of insurance or reinsurance for a person other than himself. Most of the laws provide that no person shall act as an insurance broker until he has procured from the insurance commissioner a certificate of authority so to act, and has paid a license fee varying in the different states from a minimum of $10 to a maximum of $200. Such certificate of authority authorizes the broker named therein to negotiate contracts of insurance, place risks, or effect insurance, with any company established in the state, or its agents, and with the agents of any foreign

'British America Assurance Co. vs. Cooper, 6 Colo. App., 25. 2Rauspeck vs. Patillo, 104 Ga. Rep., 772.

company duly authorized to transact business within the state. In a number of states such as New York, New Jersey, and North Carolina, laws have also been enacted governing the brokerage of excess lines of insurance. The law provides that the insurance commissioner may issue a license to citizens of the state permitting them to act as agents to procure policies of fire insurance from corporations or associations which are not authorized to transact business in the state, provided both the insured and licensee execute affidavits, to be filed with the insurance department, that sufficient insurance cannot be obtained in companies legally authorized to transact business in the state.

There has always been considerable disagreement in the various states in regard to the legal position which the insurance broker bears to the insured. In some states, for example, Indiana, the courts have declared (Ins. Co. vs. Hartwell, 123 Ind., 177) the broker to be the agent of the party who pays him for his services, regardless of the source of employment. As has been pointed out, this rule will always involve uncertainty until the courts fix the ownership of the fund from which the broker is compensated. According to other states the broker is considered to represent the insurance company as its agent as regards the delivery of the policy and the payment of the premium, but is the agent of the insured in all other matters pertaining to the insurance. Some states have also seen fit, no doubt for the benefit of the insured, to enact special statutes making the broker the agent of the insurance company in certain cases. In the majority of states, however, the broker is regarded as the agent of the insured in all matters, and is declared by a statutory law to represent the insured and not to be the agent of the company.

The importance of this rule to the insured can scarcely be overemphasized. When transacting business with a broker in these states it is well for the insured to bear in mind that

the broker is his agent, and that consequently the act or knowledge of the broker is his act or knowledge. Many important illustrations of this principle can be found in the cases of our state supreme courts. In Sellers vs. Commercial Fire Insurance Co. (Alabama, 16 Southern Rep., 798) the court held, "that the broker was the agent of the insured and not of the company, and that any misrepresentations in the application, due to an error of the broker, which were made warranties, avoided the policy;" and in Pennsylvania we find (Hamblet vs. City Insurance Co., U. S. D. C., 19 Pittsburg Legal Journal, 51) that "a broker who is employed to procure insurance must be regarded in such matter as the agent of those employing him, and his concealment from the company of any material fact, if such concealment be wilful or intentional, is the concealment of his employer." Another representative case, illustrating the importance of the distinction between insurance agents and brokers, is that of The Pottsville Mutual Fire Insurance Co. vs. Minnequa Springs Implement Co. (100 Pa. St., 137). According to the facts of this case, the policy required the payment of the actual cash premium to the company before becoming valid. "A," the property owner, applied to "B," a broker, for insurance, and "B" arranged to procure the policy through “C," another broker. "C," in turn, found it convenient to apply to broker "D" for the insurance, and "D" obtained the policy from an authorized agent of the company. The policy when received by "D" was delivered to "A" through the hands respectively of "C" and "B," who, it will be remembered were brokers. When "A" received the policy, he paid the premium to "B," who, in turn, paid it to "C." During the interval that "C" held the premium, and before passing it on, the property was destroyed. The company refused to pay the claim on the ground that there had been no payment of the premium, since "C," a broker, was the agent for all purposes of the insured and not the company.

The court held that since "B," "C," and "D" were all brokers and the agents of "A," payment of the premium to any of these parties was not payment to the company, and a loss having occurred, the company could not be held liable.

It should be stated, however, that the courts have decided differently in cases like the above example, where it can be shown that arrangements have been made whereby the broker makes a periodical settlement with the company for premiums collected. In the case of Riley vs. Commonwealth Mutual Fire Insurance Co. (110 Pa. St., 144), "A" requested a broker "X" to procure for him a fire policy, and "X" obtained the same from "C," who was the agent of the company. "X" received the premium from "A," but retained it, expecting to keep the same until the end of the month when the usual monthly settlement between himself and the company was to be made. While thus retaining the premium a loss occurred, whereupon "X" tendered the premium to "C," who refused to take it. Although the policy contained a provision, just as in the previous case, that there should be no binding contract until the actual cash premium had been paid to the company, the court held that, owing to the relation of debtor and creditor which existed between the broker and the agent of the company, the policy was valid and the agent obliged to accept the premium. So also in the State of New York (Bini vs. Smith, N. Y. S. C., Aff. Div., 55 N. Y. Sup., 842) it was decided that where a broker was authorized to collect premiums on policies, "and had a running account with its general manager, in which the premium was charged, and gave the general manager a note for the balance due on his account, the broker was the company's agent, and the company is liable for a loss though the premium was never accounted for."

The Powers of the Agent.-The general rule relating to the powers of 'agents is stated by Elliott as follows: "An agent may bind his principal when acting within the scope

of his authority, and his power will be determined not alone by the actual but also by the apparent or ostensible authority." A general agent's powers are coextensive with those of his principal within the limit of the particular business or territory in which such general agent operates. A special agent's powers extend to anything necessary for the accomplishment of the particular transaction in which he is engaged. From the standpoint of the insured, general powers may be assumed if the agent has apparent authority, but the assumption, as we have seen, must be based on substantial evidence.

Since the acts of the general agent are the acts of the principal, it follows that he can waive conditions in the policy and make special arrangements with the insured, subject, however, always to any legal limitations that may have been placed upon his authority, and which are known to the insured. In other words, the company is bound by the acts of its agent, if acting within the scope of his apparent authority. Wolff defines the power of waiver by the agent in the following manner:

"A provision in a fire insurance policy that a waiver of its conditions must be in writing attached to or indorsed on the policy by an officer, agent, or representative of the company" (such a provision is found in the standard fire policy) “may be waived by the company acting through such officer, agent, or representative. As between the company and insured, the company is bound by the acts of its general, local, or sub-agents, regardless of what they are called, if the insured, influenced by the manner in which the company holds him out to the world, is justified in accepting them as, and believing them to be, clothed with such authority. An insurance company may limit the authority of its agents, but such limitations must be so indicated to the insured that he, as a prudent man, will rely at his peril on any act in excess of such authority."2

1 Elliott, p. 137.

2 Wolff's "Law of Insurance Agency," p. 75.